The Passive Income MD Podcast #262 Should You Pay Off Debt or Invest? A Physician’s Guide
May 5, 2025
Dr. Peter Kim dives into a pressing financial dilemma: should you pay off debt or invest? He weighs the pros and cons of both approaches and shares practical, real-life scenarios. With a straightforward framework, listeners can determine the right choice based on their financial goals. Plus, he introduces a handy cheat sheet to guide the decision-making process. Whether you seek freedom, cash flow, or peace of mind, this discussion equips you with the tools to confidently navigate your financial future.
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Debt Payoff as Guaranteed Return
- Paying off debt is like a guaranteed risk-free return equal to the loan's interest rate.
- Compounding investment returns require time, but debt payments are a guaranteed financial drag.
Prioritize High-Interest Debt
- Prioritize paying off high-interest debt such as credit cards with rates over 7% immediately.
- Also prioritize debt payoff if it causes significant anxiety or you highly value financial freedom.
Investing Beats Low-Interest Debt
- Investing typically yields higher potential returns around 7%-15% annually compared to low-interest debts.
- Time in the market accelerates compound growth, making early investing highly advantageous.