Pay Off High-Interest Debt Before Investing
There’s a hard truth in personal finance that most people don’t want to hear:
If you’re carrying high-interest debt, you shouldn’t be investing yet.
I know that sounds boring. It’s not exciting like buying index funds or talking about 10% annual market returns. But math doesn’t care about excitement.
If you’re paying 22% interest on credit cards, you are effectively earning a guaranteed 22% return by paying that debt off.
And that beats “hoping” for 8–10% in the market every single time.
Let’s break this down clearly and logically.
The Math: Why Paying Off Debt Is a Guaranteed Return
Let’s say you have:
$10,000 in credit card debt
22% interest rate
Minimum payment strategy
At 22%, that debt is costing you $2,200 per year in interest alone.
Now let’s compare two choices:
Option 1: Invest $10,000 in the Market
If the market returns 8%, you make $800 that year (before taxes).
But you’re still paying $2,200 in interest.
You’re net negative $1,400.
Option 2: Pay Off the Debt
If you pay off the $10,000 debt, you eliminate $2,200 in interest.
That is a guaranteed 22% return.
No volatility.
No risk.
No guessing.
No bear markets.
You “earned” $2,200 simply by eliminating a liability.
That’s not emotional advice — that’s math.
The Market Is Not Guaranteed
The stock market averages 8–10% long term.
But averages are misleading.
Some years:
+20%
+15%
+5%
Other years:
–10%
–20%
–30%
If you’re investing while carrying high-interest debt, you are:
Taking market risk
Paying guaranteed interest
Hoping your return beats your debt rate
That’s a risky strategy.
You don’t build wealth by playing offense before fixing defense.
High-Interest Debt Is Financial Quicksand
Credit cards charging 18%, 22%, even 28% are extremely common right now.
That kind of interest works against you the same way compound interest works for investors — except it compounds negatively.
High-interest debt:
Drains cash flow
Increases stress
Reduces flexibility
Prevents wealth-building
Makes emergencies worse
You can’t build a strong financial future on a weak foundation.
Before investing, you need to:
Stabilize
Eliminate toxic debt
Improve cash flow
Build a small emergency fund
Only then do you aggressively invest.
When It Might Make Sense to Invest First
Let’s be reasonable.
Not all debt is equal.
You don’t need to rush to pay off:
A 3% mortgage
A 2.5% car loan
A 0% promotional loan
Low-interest debt can coexist with investing.
But high-interest debt (generally above 8–10%) is a different story.
Anything above 15%?
That’s an emergency.
Credit card debt at 22% is not a “normal expense.” It’s a financial leak.
Plug the leak before trying to fill the bucket.
The Psychological Advantage
There’s another benefit people underestimate:
Peace of mind.
When you eliminate high-interest debt:
Your monthly expenses drop
Your stress decreases
Your flexibility increases
Your confidence improves
Investing is easier when you’re not fighting debt at the same time.
And investing works best when you can stay consistent — not when you’re stressed and pulling money out to cover payments.
The Cash Flow Multiplier Effect
Here’s something most people don’t calculate.
Let’s say you’re paying:
$400 per month toward credit cards
Once the debt is gone, that $400 becomes available.
Now you can invest:
$400 per month
Into index funds
Without interest draining you
Over 20 years at 8%, $400 per month becomes roughly $230,000+.
The key is that you’re investing clean money — not borrowing to invest.
This is how you build real wealth.
The Foundation-First Personal Finance Strategy
At JBS Mint, I always tell clients:
Wealth building is sequential.
You don’t skip steps.
Here’s a smart order of operations:
Build a small emergency fund ($1,000–$3,000)
Pay off high-interest debt
Build 3–6 months of emergency savings
Invest consistently in retirement accounts
Increase investing over time
Pay down moderate-interest debt strategically
Notice investing comes after eliminating high-interest debt.
Why?
Because financial strength is built from the bottom up.
The “But I’m Missing Out” Argument
People worry:
“What if the market goes up while I’m paying off debt?”
Maybe it will.
But here’s the better question:
What if the market drops 20% while you still owe 22% interest?
Now you’re:
Down in investments
Still paying interest
Feeling stressed
More likely to make emotional decisions
Financial success is less about maximizing upside and more about reducing risk.
Eliminating guaranteed losses is powerful.
A Guaranteed 22% Return Is Elite
Professional investors would love a guaranteed 22% return.
You have access to one right now — if you’re carrying high-interest debt.
Think about that.
There is almost no legal, safe investment that offers a guaranteed 22% return.
But paying off credit cards does.
You’re not “losing opportunity.”
You’re capturing certainty.
And certainty builds confidence.
Build Wealth the Smart Way
Investing is powerful.
The market is powerful.
Compound growth is powerful.
But none of those beat a guaranteed return from eliminating high-interest debt.
If you’re serious about building long-term wealth:
Stop trying to outrun 22% interest with 8% investments.
Fix the foundation first.
Then invest aggressively from a position of strength.
That’s how you win.
That’s how you build wealth.
That’s smart personal finance.