Show 131 - Should teachers pay off debt or invest?
In this episode, I share 7 rules for thinking about paying off debt or investing for teachers.
10/7/20261 min read
There is a fierce debate ongoing about whether you should invest first or pay off debt first. The thing is, life is rarely that black and white. If you have debt, of course, you need to be paying it off. If you have a future (all of us), of course you need to be investing for it. So, it isn’t so much a matter of either or, but of how to balance the two. In today’s episode I walk you through exactly how I think about this balancing act and choosing which to prioritize.
Show Notes
The Teacher's Roadmap to Financial Confidence — a free five-question worksheet for teachers who want greater financial confidence
This workbook will help you understand where you are with your debt and your investments, check it out!
Student loan question? Talk to my friend David Gourley: https://www.k-12planning.com/student-loans-1
Recommended Books (Amazon Affiliate Links)
A Teacher's Net Worth Book
Key Ideas
The decision is often more emotional than mathematical
You shouldn't completely ignore either debt or investing
Retiring with debt can dramatically increase the amount you'll need in retirement
The 4% rule changes when you eliminate expenses
Turn your debt snowball into an investing snowball
Teachers pursuing student loan forgiveness may want to approach debt differently
Use automatic investing to keep building wealth
Financial freedom requires more than simply maximizing the numbers
You must determine the right balance between debt payoff and investing for your situation
Bonus Tip
Here is a bonus tip I didn't get to in the episode.
Another interesting factor is “How the market is doing.” While I’m not a fan of using emotions when investing in the stock market, I think this emotion is valid. If we don’t feel confident that the stock market will continue to grow, it can be hard to invest, which can cause delays and mathematically poor decisions like dollar cost averaging (I’ll have to talk about that another time). So if you are unsure about the market, pay off debt! That is a guaranteed return and it drastically reduces your interest payments with each extra dollar you contribute.