Free Debt vs Invest Calculator (US) – Pay Off Debt or Invest Extra Money?

Use free Debt vs Invest calculator for US market to compare paying down debt vs investing extra cash. Includes 401(k) match, Roth vs Traditional, and taxes.

What our Tool of Debt vs Invest does?

This Debt vs Invest Calculator (Tool) simulator compares two paths for your extra monthly cash: paying down debt faster versus investing while paying only the minimum. The results are based on the inputs you provide and simplified assumptions, and are intended for educational scenario testing only.

Debt vs Invest Calculator Simulator (US)

Compare two scenarios: (A) use extra money to pay debt faster, or (B) invest the extra while paying only the minimum. Educational simulation only—no financial advice.

Inputs

US-focused

Debt type preset

Tip: pick a preset to auto-fill a typical APR; you can still edit it.

Debt balance ($)

Debt APR (%)

Minimum monthly payment ($)

Extra money available per month ($)

Expected investment return (annual, %)

These buttons set the return input to common test values.

Time horizon (years)

Investment account type

Tax drag (only if taxable, % of return lost)

Tax drag is a simplified reduction in effective returns (not personalized tax advice).

Include state tax on taxable investing (simple %)

State tax rate (%)

Simplified: reduces effective return further for taxable accounts (not a full state tax model).

US Add-ons (Optional)

Model 401(k) employer match (Scenario B only)

Employer match rate (% of contribution)

Example: 50% means employer adds $0.50 per $1 you contribute (up to the cap below).

Monthly match cap ($ of your contribution eligible)

Example: if cap is $300/mo, match applies to the first $300 you contribute monthly.

Show 401(k) annual contribution limit warning (Scenario B; warning only)

Age (for catch-up)

We use simplified limits and show warnings if your modeled contributions exceed typical annual limits.

Annual 401(k) employee limit ($)

You can edit this number for the current year. Catch-up is added automatically if age 50+.

Model Roth vs Traditional (Scenario B only; tax-advantaged focus)

Roth vs Traditional

Simplified model for tax timing (not tax advice).

Current marginal tax rate (%)

Used to estimate tax savings if Traditional is selected.

Estimated retirement withdrawal tax rate (%)

Applied to Traditional account balance at the horizon (simplified).

Assumptions: fixed APR; monthly compounding; steady investment return; simplified taxable “tax drag” and optional state tax; simplified 401(k) match; simplified Roth/Traditional tax timing (Scenario B only). Limit warnings are informational only.

Results

Net Worth View

Scenario A: Pay extra toward debt

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Scenario B: Invest extra (pay minimum on debt)

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Net worth difference at horizon (B − A)

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Breakeven investment return (annual, %)

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Interpretation

Enter values and click Calculate.

Net Worth Over Time

Scenario A Scenario B

Net worth = (assets − remaining debt). Scenario A assumes no investing of the extra cash.

Disclaimer: InvestingLab.com provides educational simulations only and does not provide financial, tax, or legal advice. Consult qualified professionals for decisions.

Methodology & Data Sources

This Debt vs Invest Calculator is an educational simulation designed to help users explore financial trade-offs between paying down debt and investing excess cash. The calculator uses simplified assumptions such as fixed interest rates, steady investment returns, and illustrative tax treatment to demonstrate how different choices may affect long-term outcomes.

Concepts related to consumer debt and interest costs are informed by guidance from the Consumer Financial Protection Bureau (CFPB) , which explains how interest and repayment structures can materially impact household finances.

Retirement account assumptions, including 401(k) contribution concepts and general tax treatment, are based on publicly available information from the Internal Revenue Service (IRS) .

Investment return assumptions and risk considerations align with educational resources published by the U.S. Securities and Exchange Commission (SEC) , which highlights that investing involves risk and that outcomes are not guaranteed.

Information related to interest rates and household borrowing trends is broadly consistent with data and explanations provided by the Federal Reserve .

These sources are provided for general educational reference only. InvestingLab.com is not affiliated with any government agency and does not provide financial, tax, or legal advice.

For details on assumptions and limitations, see our How It Works and Disclaimer.

Frequently Asked Questions (FAQ)

Q1. Is Debt vs Invest calculator a financial advice?
No. This is an educational simulation to help you understand trade-offs.

Q2. Why is there a tax drag option?
Taxable investing can reduce effective returns depending on dividends and realized gains. Tax drag here is a simplified assumption, not personal tax guidance.

Q3. Why doesn’t this include market crashes or volatility?
Version 1 uses steady returns for clarity. You can stress-test by using the 3% and 5% buttons. We can add volatility scenarios in a later version of our tool.

Q4. Why does high-interest debt often “win”?
Because paying it off is similar to earning a risk-free return equal to the APR avoided.

Q5. Why does high-interest debt often “win”?
Because paying it off is similar to earning a risk-free return equal to the APR avoided.

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