{"id":9911,"date":"2019-02-26T16:28:04","date_gmt":"2019-02-27T00:28:04","guid":{"rendered":"http:\/\/www.wealthfront.com/blog\/?p=9911"},"modified":"2022-01-11T17:12:23","modified_gmt":"2022-01-12T01:12:23","slug":"should-you-pay-off-debt-or-invest-heres-the-real-answer","status":"publish","type":"post","link":"https:\/\/www.wealthfront.com/blog\/should-you-pay-off-debt-or-invest-heres-the-real-answer\/","title":{"rendered":"Should You Pay Off Debt Or Invest? Here\u2019s The Real Answer"},"content":{"rendered":"

Note: As of January 30, 2026, the Wealthfront Cash Account has a 3.30% APY. Read more about it here<\/a>\n.<\/span><\/i><\/p>\n

There\u2019s a reason why debt is such a sensitive and stressful topic for most people. Having debt can feel uncomfortable at best and often completely crushing, which is to say nothing of the chokehold it can have on your financial goals. It\u2019s so easy to feel like your \u201creal\u201d life can\u2019t start until you unburden yourself of the debt that\u2019s weighing you down \u2014 and the urgency to get in control of your debt<\/a> and purge it from your life as soon as possible can make it hard to even know where to start the untangling process.<\/p>\n

And it makes sense that we feel this way. Our instinctive aversion to the very idea of debt is a result of having internalized the messages about it that we\u2019ve been passively absorbing since we were kids. Most of us are taught that debt is something to feel shame about, and so we do, despite how common it is. Even though we grow to logically<\/em> know that debt isn\u2019t symptomatic of some moral failing, we still feel like it\u2019s a scarlet letter; a sign that we aren\u2019t yet our best selves. Debt happens, and it\u2019s not the end of the world, but that doesn\u2019t stop you from wanting it out of your life quickly.<\/p>\n

While that compulsion to get out of the red is entirely reasonable, the truth about what exactly you should do with your extra cash is a little more complicated. In certain situations, it\u2019s actually smarter to let your debt chill for the moment, opting instead to invest the extra cash.<\/p>\n

Enter Kara Brenholt, a chartered financial analyst (CFA) and one of Wealthfront\u2019s product managers, who sat with us to explain how to decide which option is your best bet to make your money do the absolute most for you right now.<\/p>\n

Since so few of us will ever find a literal sack of money on the sidewalk (unfair, frankly), here are a few steps you can<\/em> take:<\/p>\n

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  1. Make sure you have enough cash saved<\/a><\/li>\n
  2. Take down high-interest debts first<\/a><\/li>\n
  3. Factor in the emotional burden<\/a><\/li>\n<\/ol>\n

    Tending To Your Financial Baseline<\/h2>\n

    First things first: Before figuring out where to put any extra money, you really have to make sure your basics are covered.<\/p>\n

    Specifically, you should:<\/p>\n