One common question I get is whether to put excess savings towards investing or towards paying down debt. For the most part, it makes sense to pay down debt unless the interest rate is very low (see charts below).

How low? Below 5.5%-7% is my recommendation depending on the investment account that would otherwise be funded. Most credit cards have interest rates that exceed 20% – so those drain your finances much faster than you can build your finances via investing.

The only exception to the above would be if your employer offers full or partial matching funds for a retirement account. In that case, you would first want to maximize your contributions to receive all matching funds since that would be free money. And choose the Roth option if you have a choice unless you are in the 32% tax bracket or higher.

I hope this will be helpful to some of you out there.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing: https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/.

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities

I wish you much investing success for 2025 (and beyond!).

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