Should You Pay Off Debt or Invest? A Smart Framework for Professionals

If you’re a high income earner and/or first generation wealth builder, chances are you’re juggling student loans, saving for retirement, and possibly helping support your family all while trying to build the future you never had. One of the most common financial dilemmas our clients face at YGC Wealth is this:

Should I pay off my debt first, or should I start investing?

The honest answer? It depends.

Let’s explore how to make a values based informed decision you can feel confident about.

1. Start With the Math: What’s Your Debt Really Costing You?

To compare debt repayment with investing, look at your after tax interest rate. This tells you how expensive your debt is relative to what you could potentially earn in the market.

Type of Debt	Typical Interest Rate	Strategy
Credit cards	15% - 25%	Prioritize payoff ASAP
Personal loans	6% - 12%	Pay down aggressively
Student loans (federal)	3% - 7%	Consider split approach
Mortgage	3% - 6%	Often safe to invest alongside payments

2. Think Beyond the Numbers: What Feels Right for You?

Financial wellness isn’t just about return on investment (ROI), it’s about peace of mind. Some people sleep better knowing they’re debt free. Others value the freedom that comes with a growing investment portfolio.

Ask yourself:

• Does the weight of debt cause daily stress?

• Would you regret missing market growth by waiting to invest?

• Is your debt manageable, or is it holding you back emotionally or mentally?

Your emotional return on investment matters, especially if you’re carrying the responsibility of being the first in your family to build wealth.

3. The Balanced Approach: Build Wealth While Reducing Debt

You don’t have to choose one or the other. A dual strategy lets you make progress on both fronts especially if you have discretionary income.

Here’s how it might look in action:

• Emergency Fund First: Build at least 3 - 6 months of fixed living expenses.

• Employer Retirement Match: Always contribute enough to get the full match (it’s free money).

• Split Your Surplus: Use a 70/30, 50/50, or 60/40 rule between debt repayment and investing, based on your timeline and goals.

• Track Milestones: Celebrate paying off each loan or hitting investment targets, it builds confidence.

4. Consider Your Life Stage and Financial Goals

Your decision may change based on where you are in life:

• Early career with high interest debt? Pay down aggressively, then ramp up investing.

• Mid career with stable income and low interest student loans? Prioritize investing to leverage compound growth.

• Planning to buy a home, start a business, or have children soon? Focus on liquidity and flexibility while managing debt.

There’s no “one size fits all” answer but there is a plan that works for you.

5. First Generation Wealth Builders: Your Path Is Different and That’s Okay

If you're the first in your family to go to college, earn a high salary, or build wealth, you're likely navigating competing priorities:

• Supporting family

• Paying off student loans

• Saving for your own retirement

• Guilt about investing in yourself

You’re making decisions without a financial blueprint and that takes courage.

At YGC Wealth, we specialize in helping first generation professionals design financial plans that honor their goals and their values. We help you build confidence with a plan that balances debt, investing, and your unique life story.

Choose Clarity Over Perfection

Trying to “get it exactly right” can lead to decision paralysis. The real win is getting started with a strategy that reflects your values, income, and long term goals. Paying off debt and investing are both wealth building moves. The key is choosing a mix that gives you financial momentum and peace of mind.

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