Should I Invest or Pay off My Debt?

Should I Invest or Pay off My Debt?Should I Invest or Pay off My Debt?

Should I Invest or Pay off My Debt?

When was the last time you had a significant amount of disposable income? Maybe when you were 12 and you got a nice check from your grandparents for your birthday. Or maybe it was the last time you got a fat tax refund. For most people, disposable income is hard to come by. But for others, like high net worth individuals, disposable income is the norm. Either way, if you ever have some extra cash lying around, what should you do with it?

Consider Your Financial Goals

That’s a very broad question, because there are so many options. The reality is, it all comes down to your own personal finances. What are your personal goals for your financial situation? Of course, you could blow all that money by splurging on something you’ve always wanted, like a motorcycle, or a new boat, or use it as a down payment to remodel your home. Or, you could use the money more responsibly. Two of the best things you could use your disposable income on are investing or paying off debt.

Eliminate Debt or Invest in the Future?

Both of these options are smart. They might seem a little boring. But instead of splurging on something you probably don’t really need, you could use the money to get out of debt or invest in your long-term financial future. So which option is better? If you only have enough disposable income for one or the other, which one should you choose?

Important Things to Consider

As with many questions in life, there is no simple answer. Everyone is different so there is no one-size-fits-all response to this question. But here are some ideas that could help you make the right choice for your situation.

Start with cash flow – if you have enough steady cash coming into meet your regular living expenses, then it might be a good time to invest that extra money. On the other hand, if cash is always tight and you can barely keep up with your monthly payments, it’s probably wiser to put that extra cash towards relieving some of that debt.

What about debt – not all debts are equal. Some debts cost you a lot of extra money thanks to high interest rates. On the other hand, other debts are not nearly as bad, like a mortgage. You get to deduct your mortgage interest payments from your taxes so that helps reduce your overall interest rate.

Consider your investment opportunities – there’s no really bad time to start investing. For some people, the end of the calendar year is a great time. For example, you could invest in your personal retirement account. Any extra money you have right now could go toward fully funding your IRA for the year. If you haven’t maxed out your annual contribution amount, now is a good time to do it. You could wait till April 15, but why wait if you have the money now. It might be gone by April.


We hope you found this article about “Should I Invest or Pay off My Debt?” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at  Unfortunately, we no longer give advice to other tax professionals gratis.

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Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio is a proud sponsor of The American Dreams Show.



The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

Untitled_Artwork copy 4 (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

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