When It’s Time to Focus on Investing Instead of Paying Off Debt

NerdWallet's Smart Money Podcast

NerdWallet Personal Finance

Business, Education, Investing, How To

4.2 • 665 Ratings

🗓️ 22 July 2024

⏱️ 11 minutes

🔗️ Recording | iTunes | RSS

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Summary

Hear different perspectives on how to pay off debt — and when to stop paying off debt to focus on investing your money. When should you prioritize investing over paying off debt? What are different debt payoff methods to help you become debt-free? Hosts Sean Pyles and Elizabeth Ayoola and NerdWallet debt writer Tiffany Curtis answer a listener’s question about balancing debt payoff and investing. They start by breaking down the debt snowball and debt avalanche methods of paying off debt, then delve into the pros and cons of investing while paying off debt. In their conversation, the Nerds discuss: debt repayment, debt snowball method, debt avalanche method, debt-free life, loan repayment, high-interest car loans, mortgage repayment, strategic repayment, debt payoff strategies, investing vs. debt payoff, loan payoff methods, interest rates, small victories, analytical approach to financial decisions, financial personality, debt motivation, high-interest loans, loan prioritization, mortgage loans, car loans, investment vs. debt, debt repayment tips, debt payoff journey, financial goals, debt payoff plan, interest to investment, financial trajectory, and long-term financial planning. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to Nerd Wallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds.
0:08.7	I'm Sean Piles.
0:09.9	And I'm Elizabeth Ayola.
0:12.0	If you have a money question for the nerds, call or text us on the nerd hotline at 901 730 6373.
0:19.6	That's 901-730 nerd. Or you can email us at podcast at nerdwallet.com.
0:26.9	Follow us wherever you get your podcast. And if you like what you hear, please leave us a review and tell your friends.
0:32.0	We're back in answering your money questions to help you make smarter financial decisions.
0:36.2	This episode's question comes from
0:37.5	Alex who sent us a text message. Here it is. I have a question regarding loan payoff strategies.
0:43.4	I am currently on a snowball payoff strategy starting with my higher interest car loan at 6.9%.
0:49.2	But I also have loans at 3.9% and a mortgage at 2.8%. At what rate does it stop making sense to
0:56.2	prepay loans to become debt-free and prioritize investing more? Thank you, Alex. Well, to help
1:03.0	us answer Alex's question on this episode of the podcast, we're joined by Tiffany Curtis, a debt writer
1:09.1	at NerdWallet. Welcome back to smart money, Tiffany.
1:13.1	Thanks, Sean and Elizabeth. I'm happy to be here, and I hope I can help. Oh, I know you will.
1:17.7	All right, so let's dig into the topic, guys. Our listener mentioned that they're using the
1:22.3	debt snowball method to pay off their debt. Can you start by describing what this is for us, Tiffany?
1:29.1	Yes. So it's an approach to debt that focuses on paying off your smallest debt first. And once
1:35.0	that's paid off, you take the amount that you are putting on that one and you move it over to
1:39.2	the next largest balance. And then you keep that pattern going. So with every debt that you pay off, the amount of money
1:45.5	that you're putting towards your debt grows like a snowball rolling down the hill and slowly getting
1:50.5	bigger. Hence, the snowball method. Okay. So what would this look like in Alex's case? So in Alex's case,
	...

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