#262 Should You Pay Off Debt or Invest? A Physician’s Guide ft. Peter Kim, MD

Should I Pay Off Debt or Invest?

Dr. Peter Kim kicks off by tackling a common question from physicians: Should you pay off your debt first or start investing? It’s a tough call for high earners who often begin their careers with hefty student loans and other financial obligations. Peter explains that while there’s no one-size-fits-all answer, it’s important to make a decision based on clear thinking—not just emotion or pressure to catch up.

He highlights the tension between paying down debt and missing out on compound interest from early investments. The longer you wait to invest, the more you lose in long-term growth. But at the same time, debt is a guaranteed financial drain. Making the right choice early can shift your financial future in a big way.

Why You Might Pay Off Debt First

Paying off debt offers a guaranteed return—something rare in today’s markets. For instance, knocking out a 7% loan is like earning 7% risk-free. Peter also stresses the emotional side: being debt-free can bring peace of mind and reduce financial stress. Plus, once debt is gone, your monthly cash flow increases, giving you more room to invest later.

If your debt is high-interest—especially credit card debt over 20%—Peter says it’s a no-brainer to pay it off first. And if carrying debt keeps you up at night or causes anxiety, clearing it might be worth more than a potential return from investing.

Why You Might Invest First

On the flip side, investing early lets you take advantage of higher returns over time. Real estate and the stock market often yield 7–15% annually, far more than typical loan interest. Early investing also leverages the power of compounding—even small, consistent amounts can grow significantly.

Peter warns of “opportunity cost”—every dollar put toward low-interest debt is one less growing in the market. If you’ve refinanced student loans to a low rate or scored a mortgage under 3%, your money may be better used elsewhere.

How to Decide What’s Right for You

To make the best decision, Peter suggests asking three questions: (1) What does the math say? (2) What’s your risk tolerance? and (3) What are your goals? If your debt interest is higher than expected investment returns, paying off debt makes sense. But if your loans are low-interest and your investments could beat that, consider investing.

Your mindset matters too. If debt stresses you out—even at 2%—paying it off might give you peace of mind. Likewise, if your goals include early retirement or cash flow to go part-time, investing could help you get there faster.

Peter explains, “Financial freedom has a lot to do with what’s going on upstairs… in your mind.” The right answer isn’t just numbers—it’s what helps you sleep at night and move toward your ideal life.

Try a Hybrid Approach: Grab Our FREE PDF Cheat Sheet!

Peter’s favorite strategy? Do both. A hybrid approach lets you pay off high-interest debt while still investing. For example, split your extra income—half to debt, half to investments. It keeps you moving forward without ignoring either priority.

Most physicians in his community do this. They knock out toxic debt first (like credit cards), but keep building wealth on the side through regular investments. It’s about balance and steady progress.

Peter shares, “When I learned to pay [credit card debt] off every single month, it completely changed my life.” That shift gave him freedom to invest while staying stress-free.

His advice: don’t get stuck doing nothing—make a plan and take action.

He also shared our downloadable resource: Doctor’s 5-Minute Cheat Sheet: Pay Off Debt or Invest First—a fast, practical guide to help you decide with clarity. Use Peter’s proven hybrid formula, answer 5 key questions, and take your next financial step with confidence.