PayoffLab
Wealth Builder

Pay Off Debt vs Invest

Should your extra money go toward paying down debt or into investments? Enter your numbers and see which path leaves you with more net worth — with a year-by-year chart.

Your situation

Enter your debt and what you can put toward it each month.
Your debt
Your investment plan
Extra monthly amount

Path A: put all extra toward debt first, then invest freed-up payment once debt is gone. Path B: invest all extra now, pay minimums only.

Your net-worth comparison and chart will appear here.

The math behind pay off debt vs invest

At its core, this is a question of guaranteed return vs expected return. Paying off a 7.5% debt gives you a guaranteed 7.5% return — you no longer owe that interest. Investing in the stock market has historically returned around 7–10% annually, but with significant year-to-year volatility and no guarantee.

The "freed-up payment" advantage

One factor people underestimate: when you pay off debt aggressively, you eventually free up the entire monthly payment — minimum plus extra. At that point, all of it can go to investing. This calculator models that correctly: once debt is cleared, everything flows into investments.

When paying debt wins

  • Your debt interest rate is higher than your expected investment return.
  • You value the certainty of a guaranteed return over market risk.
  • The debt is a significant psychological burden that affects your decision-making.

When investing wins

  • Your debt rate is low (e.g. 3–4% mortgage) and you expect higher investment returns.
  • You have an employer 401k match — that's an instant 50–100% return you shouldn't skip.
  • Time horizon is long, giving compounding returns time to compound.

Frequently asked questions

Does this account for taxes on investment gains?

No — taxes on investment gains depend heavily on account type (taxable vs 401k/IRA), holding period, and income. For a rough estimate in a tax-advantaged account, the pre-tax return is a reasonable proxy.

Is my data saved?

No. Calculations run entirely in your browser. Nothing is stored or sent anywhere.

What about employer 401k matching?

Always capture a full employer match before extra debt payments — it's an instant guaranteed return that almost always beats the math. The calculator doesn't model the match but the principle is universal.

For educational and estimation purposes only; not financial advice. Investment returns are uncertain and past performance does not guarantee future results. Consult a qualified financial professional.