Pay Off Debt or Invest? Calculator
Compare putting your extra money toward debt against investing it, and see which leaves you with more net worth.
The question everyone asks
If you have spare money, should it go to the debt or into investments? The answer depends on the debt rate against the return you can earn after tax. A card at 22% beats almost any investment. A 3% loan loses to investing in most cases. In between it is a close call.
How it is compared
Both plans spend exactly the same money every month. Plan A sends all of it to the debt, then invests the freed payment once the debt is gone. Plan B pays only the minimum and invests the extra. At the end, net worth is investments after tax minus any debt left.
Things the numbers do not show
Paying off debt is a guaranteed return and lowers risk. Investment returns are not guaranteed, and this tool uses one steady rate. Employer 401k matches usually beat both and should come first.
Worked example
Last reviewed November 2026. Formulas are standard and shown in the sections above; results are estimates.
Tips and common mistakes
- Always take a free employer match before either.
- Debt above about 8% is usually worth paying first.
- Try a lower investment return to see how risk changes the answer.
Learn more
Frequently asked questions
Which is better?
Compare the debt rate with your after-tax return. The tool does the math over your years.
Why is the return taxed?
Gains in taxable accounts are taxed. Use 0 for tax-free accounts.
Does risk matter?
Yes. Debt repayment is certain; markets are not.
What about a mortgage?
Low-rate mortgages often favor investing, but personal comfort matters.
Is this advice?
No. It is a comparison tool.
Money guides for this topic
All guides →Pay Off Debt or Invest? A Simple Way to Decide
Compare your debt interest rate with realistic after-tax investment returns to decide where extra money should go first.
Read guide →Snowball vs Avalanche: The Math of Getting Out of Debt
Compare the two best debt payoff methods with real numbers and learn which one saves more money.
Read guide →How to Fix Bad Financial Condition with Math: A 7-Step Recovery Plan
A step-by-step plan, with real numbers, to climb out of a money hole: find the gap, cut and earn, pay debt smartly and build a safety net.
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Open calculator →Results are estimates and not financial advice.