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Hey, it’s Jeffrey — back again!
My auto loan is at 6.3%. The stock market averages around 7%.
That's not a clear answer — that's a coin flip.
So instead of guessing, I had ChatGPT run four scenarios: pay it all off early, invest everything, split it 50/50, or pay off debt first then invest.
The difference between investing everything vs. paying off debt first? About $10k over four years.
Here's the prompt I used.
I'm deciding whether to pay off debt early or invest the extra money. Help me see the long-term trade-off.
My debt:
[Type, balance, interest rate, monthly payment, remaining term]
Extra money I could put toward either: [$/month]
Assumptions for investing: [expected return — or say "use 7% average"]
Please run these scenarios over the life of the loan:
1. Put all extra toward debt — how much interest do I save? When is it paid off?
2. Put all extra toward investing — how much could I have when the loan ends?
3. Split it 50/50 — what do both numbers look like?
4. Pay off debt first, then invest the full amount — what's the end result?
Show me the dollar difference between each scenario so I can see what I'm actually trading off.
What I found: If I input $1,000 as the “extra money,” the "all invest" approach wins by about $10k on paper. But paying off the loan first still gets me to $42k, and I spend most of those four years with no debt. Whether that peace of mind is worth $10k is a personal call. At least now I can see what I'm actually choosing between.
Keep going? Once you've run your scenario, try:
"What if my investment returns are only 5%? How does that change things?"
"What if I get a bonus? Should I put it toward debt or invest it?"
"Which approach leaves me in the best position if I lose my job?"
Reply and tell me what you're considering.
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One quick note: This newsletter is for educational purposes only and does not constitute financial advice. I'm not a financial advisor — just someone sharing ideas and tools I've found useful. Use what works for you, skip what doesn't, and always do your own research. Some links may be affiliate links or sponsored content for which I may receive compensation.