Maybe. A good way to think about debt repayment is to think of the interest rate on your debt as the amount of guaranteed return on your money should you make a payment on the principal.

Here’s an example. Let’s say you had $10,000 in credit card debt at an interest rate of 20% per year. 20% of $10,000 is $2,000 in interest each year. If you paid down that entire amount of credit card debt, you would be investing $10,000 to put $2,000 per year back into your pocket - a 20% return.

A 20% return is pretty good. In the long run, the stock market has returned about 7% after inflation, and bonds have returned about 2-3%. Your debt repayment is very attractive by comparison.

But not all debt is at such a high interest rate. Current mortgage rates are around 4% for a 30 year fixed mortgage. Applying our logic from above, paying down extra principal on your mortgage is equivalent to a 4% return on your money. That’s not bad, but it’s also not as much as you could expect to return by investing in the stock market, especially if you’re investing for the long-term in a tax-advantaged account.

We generally recommend paying down all debt with an interest rate of 6% or higher immediately. Once you’ve taken advantage of all of your tax-advantaged accounts, paying down debt at lower interest rates than 6% then becomes more a matter of preference. If you simply feel more comfortable being entirely debt-free, continue to chip away at low interest debt balances. If you’re more interested in maximizing your return across both debt and assets, then consider investing the money that could go to additional principal payments instead.