Invest in Your Debt Calculator
for Answering the Age Old Question:
Pay Off Debt, or Invest?

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Help you to see how paying off debt instead of investing can offer the safest, surest, and highest financial AND emotional returns.

This invest in your debt calculator will show you why paying off debt is the safest and best way to invest money. But before you start plugging in the numbers, let's first make sure you are fully aware of all of the factors that need to be considered.

Contrary to what most "financial experts" will tell you, when it comes to deciding whether to invest or pay off debt, it's not simply a matter of calculating the "financial" return on investment. Because in order to make the best decision, you must also take the emotional return on investment into consideration.

If you choose to invest your money you will open yourself up to all the fear, worry and anxiety that comes from the very real possibility that some world event (9/11, financial market meltdown, etc.) might cause the value of your investments to plummet. On the other hand, if you choose to pay down your debts you will actually experience the opposite -- less fear, less worry, less anxiety and more peace of mind.

So why isn't anyone trying to sell you on investing in your debt? Because ...

Nobody gets a commission or recurring account management fees for selling you on paying off your debts.

When you purchase a traditional investment, someone gets paid a commission for selling it to you. Worse yet, if you go with a full service broker, you get to pay recurring account management fees -- regardless of whether your investment makes or loses money. Now there's a major conflict of interest for you.

On the other side of the coin, when you pay down your bills, you don't have to pay any commissions or account management fees, and the returns on your investment are guaranteed!

So with that, let's use the invest in your debt calculator to crunch the numbers.

Calculate Invest in Your Debt Payoff
Calcy sign introducing Invest in Your Debt Calculator

Instructions: Enter the balance, interest rate and payment amount for your highest interest debt.

Next enter your tax bracket percentage, the amount you could invest each month, the rate of return you expect to earn from a traditional investment, and any associated investment fees, then click the "Calculate Debt Pay-Down Vs Investing" button.

Mouse over the blue question marks for a further explanation of each entry field. More in-depth explanations can be found in the glossary of terms located beneath the invest in your debt calculator.

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Highest Interest Rate Debt Information
Help Balance owed:
Help Interest rate:
Help Monthly payment:
Deciding Factors
Help Tax bracket:
Help Monthly investment amount:
Help Lump sum investment amount:
Help Traditional investment rate of return:
Help Upfront investment costs (optional):
Help Annual account management fees (optional):
Earnings from investing in debt:
Net earnings from traditional investment:
Please grade my work and help me improve:
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Invest in Your Debt Calculator Glossary of TermsCalcy magnifying glass

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Balance Owed: This is the amount you owe to your creditor. For revolving charge accounts, this figure can usually be found on the statement you receive each month.

Interest Rate: This is the fee lenders charge for renting their money. The actual dollar amount the lender is charging you depends on how often the fee is calculated (compounded). Interest on loans is usually calculated monthly (annual rate divided by 12 months, multiplied by the principal). Revolving charge accounts typically calculate the interest on a daily basis (annual rate divided by 365, multiplied by the average daily balance).

Monthly Payment: The amount you are required to pay your creditor each month. This can either be a fixed amount, or it can be an ever-changing minimum amount (grows as your balance increases, shrinks as your balance decreases).

Tax Bracket: The IRS puts you in a certain marginal tax bracket depending on your filing status and your household's annual income. At last check, the tax brackets were 10%, 15%, 25%, 28%, 33%, or 35%. I'll be adding a tax bracket calculator to the site in the near future to help you quickly determine your bracket. In the meantime, please visit the IRS website and download the latest tax guide.

Lump Sum Investment: This refers to making a larger, single, upfront investment purchase, versus making smaller, periodic purchases or deposits.

Return on Investment (ROI): This is the money you earn from your investments and savings accounts, and can either be expressed as a percentage or as a dollar amount. Again, just like an interest rate, your actual return on investment depends on how often it is calculated (daily, monthly, annually, etc.).

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