You Don't Have to Choose Between Paying Off debt and Investing — Here's 7 Ways to do Both

"When I got my first big-girl job in LA in 2017, I had student debt from my master's and roughly $10–15k in credit card debt. Everyone told me to pay off debt before investing. But my employer offered a 401(k) match — which is literally free money — and I knew that waiting meant losing it forever. So I did both. Here's the exact framework I used."

1. Prioritize High-Interest Debt

High-interest debt, like credit cards, can quickly spiral out of control, making it harder to invest for the future. Tackling this debt first will free up money for saving and investing.

• Take Action: Use my LatinaPhD Abroad Budget Template to allocate funds efficiently and track your debt payoff progress.

• Pro Tip: Focus on debts with interest rates above 6-7% before increasing investment contributions.

2. Create a Debt Repayment Plan

A structured debt repayment plan helps you stay on track and motivated. Whether you choose the debt snowball (smallest balance first) or avalanche method (highest interest first), having a plan is key.

• Action Step: Set realistic monthly repayment goals and automate payments to stay consistent. Track your progress with the debt payment tracker in my LatinaPhD Abroad Budget Template for an easy way to stay organized and motivated.

3. Invest Small Amounts Consistently

Investing doesn’t require large sums of money. Even small, consistent contributions to index funds or retirement accounts can grow significantly over time.

• Get Started: Explore these top-rated investing books and beginner-friendly tools. You can also open a tax-advantaged Roth IRA with no fees and no minimums at Fidelity or Charles Schwab. Plus, check out my “6 Steps to Start Investing in the Stock Market for Beginners” for a step-by-step guide to getting started.

• Why It Matters: Compound interest rewards consistency, making even small investments powerful over time. Use the Investor.gov Compound Interest Calculator to see how your money can grow over time.

4. Use Balance Transfer Credit Cards Wisely

Balance transfer credit cards can help you pay down debt faster by reducing interest rates, but they should be used strategically.

• Smart Spending Tip: Consider credit cards with 0% APR balance transfer offers to consolidate debt.

• Affiliate Pick: Check out my recommended Travel Credit Cards to earn rewards while managing spending effectively.

5. Build an Emergency Fund

Before aggressively investing, ensure you have a financial safety net. An emergency fund prevents you from relying on credit cards during unexpected expenses.

• Helpful Tools: Check out my Amazon Storefront for savings planners and tools to help you build and maintain your fund. Also utilize my LatinaPhD Abroad Budget Template to allocate monthly savings towards your emergency fund!

• Goal: Aim for 3-6 months’ worth of expenses saved in a high-yield savings account.

6. Automate Savings and Investments

Automation removes the guesswork and ensures you consistently save and invest, even while paying off debt.

• Recommended Tools: Set up automatic transfers to your savings and investment accounts to stay consistent without extra effort.

• Affiliate Pick: Explore these High-Yield Savings Accounts to grow your emergency fund while keeping your money accessible.

7. Calculate Your Debt-Free Date

Use the free Investor.gov Payoff Calculator to visualize the exact month you'll be debt-free. Print it. Put it somewhere you see it daily. This single act is more motivating than any rewards trip.

• Helpful Tools: SoFi HYSA (emergency fund while paying debt) and Marcus HYSA

  • Chase Freedom Unlimited (cash-back card to use responsibly while building credit)

Final Thoughts

Managing debt while investing might sound like a financial juggling act, but trust me—it’s totally doable! With the right strategies, you can build wealth without feeling like you’re drowning in payments. Follow these seven steps to take control of your finances, invest for the future, and still enjoy life along the way. Let’s make financial freedom a reality—starting today with LatinaPhD Abroad!