Should I pay off debt or invest first?

Great question! Deciding whether to pay off debt or start investing first depends on several factors, especially the type and interest rate of your debt. In most cases, it’s wise to prioritize paying off high-interest debt—like credit card balances—before investing. Credit card debt often carries very high interest rates (sometimes 15% to 25% or more), which usually exceed the average returns you’d expect from investments in the stock market or other vehicles. By paying down that debt first, you’re effectively earning a guaranteed return equal to the interest rate you’re avoiding. This can significantly improve your financial health and reduce stress. Once your high-interest debt is under control or eliminated, you can start directing extra funds toward investing to build wealth over time. If you have low-interest debt—like a mortgage or student loan with rates under 5%—it might make sense to balance paying down debt with investing, depending on your risk tolerance and financial goals. In summary, focus on eliminating high-interest debt first, then shift your attention toward investing. Also, ensure you have an emergency fund in place (typically 3 to 6 months of expenses) before aggressively investing or paying extra toward debt, so you have a financial safety net. This approach helps you reduce costly debt while setting yourself up for long-term financial growth.