Debt playbook
Paying off debt
Protect a cash buffer, then decide whether extra dollars should hit the loan or an investment account.
Paying off debt without a cash floor is how the same balance returns at a penalty APR after a car repair. Time a 3–6 month essentials target first. Then map months and interest on the current balance with extra principal. Then — and only then — compare that extra dollar to a modeled investment return at a horizon.
High-APR cards usually win as extra principal: payoff is a guaranteed return equal to the APR. Cheap installment debt is less obvious. The compare scores net worth (invested assets minus leftover debt), not a slogan. If the minimum does not cover interest, raise the payment; the model will not invent a payoff date.
Step 1
Keep a cash floor
Time to an emergency-fund target before you throw every extra dollar at the loan.
Step 2
Map the payoff
See months and interest with extra payments on the current balance.
Step 3
Extra payment vs invest
Same extra dollar each month: loan vs a modeled return. Use the higher net worth at your horizon.
Limits and guides
Other playbooks
- Tax season — Estimate federal tax, decide whether to itemize, then set withholding and retirement deferrals before year-end.
- Buying a house — Cap the price from income, then see the monthly payment, then check whether a refinance later would recoup costs.
- Max the match — Take the full employer match, fill HSA if you have an HDHP, then IRA, then taxable growth.