Eliminate Debt Before Investing

Why I chose to eliminate debt before investing

Eliminating debt before investing made the most sense to me. Index funds, real estate, ETFs, stocks, bitcoin, day trading, F.I.R.E movement 🤯 So much talk about finances and investing, which is a good thing, but before jumping in, I found it important to first grasp the significant value in living a debt free life, wise application of knowledge, and patient strategy when it came to achieving long term wealth. For me, that meant eliminating debt before investing.

Reason #1 – Eliminating debt before investing to decrease Risk

Have you seen those info-graphics comparing low-interest debt to high-yielding investments/time equity of retirement? The idea being; why put additional funds towards low-interest rate debts, such as mortgages and student loans, when instead, I could make more money by investing those funds? The problem with these models is that they don’t account for risk. Meaning, investments may not perform as expected, or life happens putting me in a position where I am unable to repay the loans.

*Both lenders and life are unpredictable AF!*

People lose jobs, die, face significant illness/injury/burnout, divorce, get screwed over by banks, lose money in the market, try to keep up with the Joneses … In other words, shit happens! Having money tied up in risky investments that may lack liquidity (easily converted to cash) means I’m screwed and stuck repaying loans much longer than necessary.

*That’s compound interest not working in my favor!*

Eliminating that risk comes with a level of peace and a sense of freedom that by far outweighs any hypothetical earnings from investing. That isn’t to say that I am against the temporary use of debt, i.e., mortgage, as long as it comes with a clear and realistic repayment strategy and, of course, not taking on more than I can afford. 

Reason #2 – Eliminating debt before investing allowed me to focus on one thing at a time

Investing is a long-term game; there is no “get rich quick” regarding finances. It is a world with many options, its own jargon, fees, hassles, and unpredictability. I didn’t feel comfortable putting my hard-earned money into it without thorough knowledge. Everyone has a theory about what works, best options/strategies, and generic definitions of the latest fad in the finance world. All of which I had no desire to play with while hammering away at my debt.

I needed to know that whether I earned or lost money, it was the result of my own decisions after doing my homework, not because the media/influencer or financial advisor said it was the best thing to do. Once the debt was gone and I had a fully stocked emergency fund, I could then devote the proper attention to learning the ins and outs of investing.

*Which really isn’t as complicated as one may think*

Reason #3 – Eliminating debt first freed up capital to invest

To invest, I needed money. Money is what I did not have since it was tied up in a bunch of crap. That crap being stuff paid for with debt. I still can’t account for everything I purchased, but those lessons are a post for another day. 

*Anyway, back to the point that I was making*

I owed a lot of money to a lot of lenders. My focus was to free myself of those shackles (that I put on myself), thus freeing up the capital needed to invest in myself and future. A $450 monthly contribution towards retirement with nearly $2,000 going towards a car, student loans, credit cards, and various other debts per month was just too much going on at once— a headache (back to reason #2). By eliminating loans, those funds could now max out my investments while enjoying the things and activities I wanted to do.


I’m not here to convince anyone; to each her own, we all have our level of risk tolerance and theories/beliefs about wealth-building. I’m just a firm believer in the slow and steady approach. Investments are undoubtedly part of the wealth formula; however, there are a few stabilizers to put into place beforehand. In other words, getting rid of debt!

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