SmartHelping / Debt & Investment Planning / Excel
Pay Off Debt or Invest? Financial Model
Compare using available cash to pay off your loans now with investing that cash while repaying the loans over time. Model up to five loans and see how reinvesting freed loan payments changes the projected investment balance.
Immediate download after purchase. By purchasing, you agree to the Terms of Service.
Video walkthrough & spreadsheet preview
See how the repayment and investment scenarios compare.
Review the walkthrough and screenshots to follow the loan assumptions, investment contributions, and projected balances.
Two uses for the same available cash
Compare paying off the loans now with investing first.
The comparison starts with enough available cash to pay off the modeled loans after setting aside your chosen reserve.
Pay off the debt now
Use available cash to clear the loans and invest any cash left after the reserve and payoff. The monthly cash that would have gone toward debt service is then assumed to be available for investment contributions.
Invest now and repay over time
Invest the cash available after the reserve and keep making scheduled loan payments. As individual loans are paid off, their freed payments can be contributed to the investment.
Cash, loans & investment assumptions
Build the comparison around your current position.
Enter starting cash, the reserve you want to retain, the details of up to five loans, and an assumed investment return.
Starting cash & reserve
Define the cash available at the start and the amount kept in reserve. The remaining cash is used in the payoff-versus-investment comparison.
Up to five loans
Enter loan details, including remaining balances, remaining terms, and interest rates, to reflect the debts being compared.
Assumed annual investment return
Enter the annual rate of return used to project investment growth. The model compounds that return monthly; the rate input is not APY.
Monthly loan payments
The debt service associated with the loans determines the cash that can be redirected into investments when those payments are no longer required.
How the comparison treats monthly cash flow
Follow the money released by loan repayment.
The model compares the initial investment with the contributions that become available over time.
-
Set aside the reserve
Account for the cash reserve before comparing the immediate debt payoff with the initial investment.
-
Reinvest freed payments
Paying off all loans now frees the debt service for investment contributions. Under scheduled repayment, payments from individual loans become available as those loans finish.
-
Apply monthly compounding
Project investment growth using the assumed annual return with monthly compounding.
-
Compare projected investment balances
Review which scenario produces the higher investment amount once all modeled debt has been paid off, based on the inputs and contribution assumptions.
Contribution assumption: once all debt in the scheduled-repayment scenario is fully paid off, contributions based on the original debt-service amount stop in both scenarios.
Explore different assumptions
See how balances, repayment timing, and return assumptions interact.
Change the loan details or assumed investment return to compare the resulting projections. The model brings the initial cash allocation and the timing of future contributions into the same comparison.
Summary, annual comparison & visuals
Compare investment values alongside the debt still outstanding.
Review results at selected years and at the point when all modeled debt has been repaid.
Selected-year comparisons
Choose comparison years in the summary to review both investment balances, remaining debt, and the difference after accounting for that debt.
Investment value when debt-free
Compare the investment value under each strategy when the scheduled loans have been fully repaid.
Annual comparison detail
Review investment balances, annual contributions, remaining debt, and cash flow differences year by year.
Visual comparisons
Use the summary chart and visuals to review how the projected investment values compare over time.
Questions before you buy
A few useful details.
How many loans can I compare?
The model supports up to five loans, with details such as remaining balances, remaining terms, and interest rates.
Do I need enough cash to pay off all the loans?
Yes. The comparison assumes sufficient cash is available to pay off the modeled debt after accounting for your chosen cash reserve.
What is invested if I pay off the debt now?
Any cash remaining after the reserve and loan payoff becomes the initial investment. The cash that would otherwise have been needed for monthly debt service is then assumed to be available for investment contributions.
What happens when a loan is paid off under scheduled repayment?
The payment released by that loan can be redirected into the investment as the remaining loans continue to be repaid.
Does the investment return input use APY?
No. The model uses an annual rate of return with monthly compounding. That annual rate input is not APY.
Are the original loan payments reinvested indefinitely?
No. Contributions based on the original debt-service amount stop in both scenarios once all debt in the scheduled-repayment scenario is fully paid off.
How do I get the template?
The Excel template is available to download immediately after the $45 one-time purchase.
Compare debt payoff and investing
See how the two strategies change your projected investment balance.
Get the Pay Off Debt or Invest Financial Model. Have a question? Contact SmartHelping.
