When the Math and the Mind Disagree
Few financial debates get people more worked up than this one: Should you invest or pay down debt?
On paper, the math seems simple. If your investments grow faster than your interest rate, invest. If not, pay down debt. But in real life, it’s never that clean.
As I said in the episode:
“I don’t care what the numbers say—if you have bad debt, like credit cards or high-interest loans, you pay it off. Period.”
That’s the easy part. High-interest consumer debt is a raging fire. You don’t negotiate with fire — you put it out.
The real discussion starts once that’s handled.
The Mortgage Dilemma
Mortgages are where people start to hesitate. You’re sitting on low-interest debt. You’ve got some extra cash. Do you put it into your mortgage or invest it?
I ran a simulation using my financial planning software with a client scenario: two identical people, one focused on paying down their mortgage, the other on investing the same amount.
The difference? By age 60, the investor’s net worth was about $200,000 higher than the one who focused on debt.
That’s not a guarantee. It’s an average. Market returns fluctuate, but over long periods, investing tends to win out.
“Both are great options,” I said during the episode, “but if you’re optimizing, the data leans toward investing.”
Why Emotion Still Wins
Here’s where logic meets real life.
“If you’re losing sleep because you still have a mortgage, it’s not worth it.”
Financial decisions aren’t made in spreadsheets—they’re made by humans.
Owning your home outright gives peace of mind. No interest. No lender. No payment due on the first of the month. For some, that’s priceless.
If that’s you, fine. Pay it off. Financial optimization isn’t the only goal in life, nor should it be.
The Advisor’s Dilemma
This is where good advisors earn their keep.
“Your job isn’t to make clients feel better,” I said. “It’s to be the voice of reason.”
Sometimes that means exploring multiple paths to make good, solid decisions.
Financial literacy and risk tolerance go hand in hand. If you can’t handle volatility, paying down debt might be safer. If you can stomach the ups and downs—and stick with it—investing will likely take you further.
A Better Way to Think About It
You don’t have to choose sides.
“You can go halfsies,” I said in the episode. “Half toward debt, half toward investing.”
The key is to avoid doing nothing. Parking money in savings while you “decide later” is the worst choice.
Think of investing as preparing for opportunity. It’s not just about retirement. It’s about being in a position to act when life hands you a good deal, whether that’s a business idea or a property downturn.
“People who look ‘lucky’ were just prepared,” I said. “They were in a position to take advantage of opportunity.”
That’s the power of structure.
Bottom Line
- If you’ve got high-interest debt — pay it off. No debate.
- If it’s low-interest and you can handle market risk — invest.
- If you’re unsure — split the difference.
- And if you can’t sleep at night — pick the path that lets you rest easy.
Numbers matter, but they aren’t everything.
As Sierra said during the episode:
“If you’re not happy, what’s the point?”