- I’ve been told to pay off all my debt before investing, but I’m ignoring that advice.
- I don’t have high-interest debt, and my financial future is a priority, so I’m saving for retirement.
- Marginalized communities are already behind, so we should invest early to build our wealth.
- Read more stories from Personal Finance Insider.
The best thing about personal finance is that it is personal. There is a lot of talk in the personal finance space about waiting until you are debt-free to invest — that way you can start with a clean slate. But, for me, that advice would be detrimental to my financial wellness. Here’s why.
1. I do not have any high-interest debt
Following the traditional advice to delay investing or minimize investing for retirement until all my debts were paid off would have been a financial setback for me. I don’t have any high-interest debt, like personal loans or credit card debt, and I was lucky enough to make it through undergrad without racking up loads of debt thanks to grants and scholarships. Graduate school was not so forgiving.
I knew I wanted to work in healthcare administration, and having a Master’s in public health is a requirement for my intended career path. My program landed me with a hefty multiple-five figures of student loan debt. And while I am begrudgingly prepared to pay off that debt, the amount is so burdensome that it would take me at least 15 years to pay it all off making more than the minimum payments per month, according to my loan service provider’s calculations. In essence, that would mean that I would have to wait until my 40s to start investing for retirement.
My original plan was to tackle debt payoff and investing simultaneously, but, due to the pandemic, my student loans are currently at 0% interest. Additionally, even though I could use this opportunity to get a jump-start on paying down my student loans and making a serious dent in them thanks to no daily accrual of interest, I’m holding off on paying off my student loans entirely instead and putting all of that allocated money towards my retirement accounts. Why? Because while my student loans are at 0%, they are costing me 0% interest. The index funds that I am invested in are earning me over 10% in returns.
2. Delaying investing would decrease my viable time in the stock market
To be sure, the original advice isn’t bad, it’s just not for me. I am fervently pursuing financial independence/retire early (FIRE), so I rely heavily on positive compound interest that comes with investing as much as possible as early as possible. The more money I put in during my 20s and 30s, the earlier I can…
Read More: 3 Reasons I’m Ignoring the Advice to Delay Investing Until After Debt