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Finance Answers • debt payoff

Should I pay off debt or invest first?

If debt APR is high (credit cards), prioritize payoff. If APR is low, do minimums and invest. A sustainable plan is minimums + one extra debt payment + one investing contribution.

APR rule with example numbers

Use a simple threshold: if debt APR is higher than your realistic investment return, pay it down first. Example table: 18% APR card → pay down first; 6% student loan → do both; 3% mortgage → invest plus minimums.

The “do both” baseline

Keep minimums on all debts, add one extra payment to the highest‑priority debt, and set a small automatic investing contribution. This builds both habits without breaking cash flow.

Cash-flow guardrail

If your buffer drops below one paycheck, reduce investing or the extra payment temporarily. The plan should survive busy months, not just good ones.

Next step

Write down the three numbers (minimums, one extra payment, one investing contribution), automate them, and review monthly instead of daily.

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