Should You Sell Investments to Pay Off Debt? The Real Math

This question comes up constantly: "I've got $8,000 in a brokerage account and $8,000 in credit card debt. Do I just sell and wipe it out?" It feels reckless to sell assets. It also feels stupid to pay 24% interest while hoping a fund returns 10%. Both feelings are reasonable. The way out is to stop feeling and start subtracting.

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Brian walks through it on video.

Here's the framework I use, with real numbers.

The core comparison: guaranteed vs. hoped-for

Paying off a debt is a guaranteed, risk-free, tax-free return equal to the interest rate. If your card charges 24% APR, every dollar you throw at it earns you 24% — with certainty. There's no year where it disappoints you.

An investment return is a hope. A good hope, historically, but a hope. Over one stretch I tracked recently, the S&P 500 was up about 24% year to date and the Dow 30 was up about 15%. Those are great numbers. They are also not promised to repeat. Markets go up and markets go down.

So the first cut is simple:

• Debt above roughly 15% APR — almost always worth selling non-retirement investments to kill.
• Debt between 6% and 15% — depends on your cash cushion, job stability, and the tax cost of selling.
• Debt under 6% (many mortgages, some car loans) — usually not worth liquidating investments for.

Where cash actually sits in this

A lot of people aren't really choosing between "investments" and "debt." They're choosing between cash and debt. That's a much easier call.

Look at what parked cash earns. In a recent snapshot of national rates: average savings accounts around 0.45%, a three-month CD around 1.54%, a short Treasury around 4.73%. Meanwhile consumer prices had risen more than 20% over a handful of years. Cash sitting in a plain savings account is losing buying power every single month.

If that cash is sitting next to a 24% credit card, the math isn't close. You're earning under 1% on one side and paying 24% on the other. The only reason to keep it is that it's your emergency fund — and that reason is a good one.

Worked example: $10,000 in a brokerage, $10,000 on a card

Let's use clean numbers.

Option A: keep investing, pay $300/month

At 24% APR, $10,000 accrues roughly $200 in interest in the first month alone. Your $300 payment knocks about $100 off principal. At that pace you're looking at well over four years of payments and several thousand dollars in interest before the balance is gone — and that's assuming you never add a dollar to the card.

Meanwhile your $10,000 investment might grow. Or it might sit flat for two years. You don't know.

Option B: sell the investment, clear the card

You sell, you pay off the $10,000, and the interest clock stops instantly. That $300 a month is now yours. Put it straight back into the brokerage account every month and after four years you've contributed $14,400 of your own money — money that would otherwise have gone to interest and principal on the card.

The guaranteed 24% won. Not because investing is bad, but because 24% is an enormous hurdle that almost nothing clears reliably.

The version where it's closer

Change one number: the card is a 0% intro balance transfer for 18 months. Now selling the investment is far less obvious, because your debt cost is temporarily zero. The right move is to attack the balance aggressively before the promo ends — run it through the Balance Transfer Break-Even tool and check the full balance transfer math first.

Four things that change the answer

1. Is it a retirement account?

Selling inside a taxable brokerage is straightforward. Pulling money out of a retirement account is a different animal — there can be taxes and penalties involved, and that's a conversation for a tax professional, not a YouTube channel. As a general rule, I don't treat retirement accounts as a debt payoff source.

2. Do you still have an emergency fund?

Never sell every asset and drain every account to hit zero on a card. If the transmission goes out next month, you're right back on the card at 24%, except now you have nothing left to sell. Keep a cash cushion. If you're wondering how much, start with this breakdown, and protect what you keep from inflation using these ideas.

3. Is the asset down right now?

This matters more than people admit. Assets go up and they go down. Being forced to sell at the bottom is exactly the outcome the emergency fund exists to prevent. If your holding is deeply underwater and the debt is manageable, you may prefer to attack the debt with cash flow instead of locking in a loss.

4. Will the card go right back up?

Selling investments to pay off a card and then re-running the balance is the worst outcome available. You lose the asset and keep the debt. If spending is the real issue, fix that first — temporary expense cuts and a written plan come before any liquidation.

A middle path most people miss

You don't have to pick one extreme. A blended approach usually beats both:

1. Keep your emergency fund intact. Non-negotiable.
2. Sell enough to eliminate your highest-rate debt only. The 24% card, not the 4% car loan.
3. Redirect the freed-up payment straight back into investing. Automate it the same week the card hits zero, before lifestyle absorbs it.
4. Attack what's left with the avalanche method — highest rate first. Run it through the Debt Avalanche Calculator to see your real payoff date.
5. Keep the rest of your assets diversified so you're not all-in on one thing while your buying power erodes.

Don't ignore what happens to the money you don't invest

Here's the part people skip. Once the debt is gone, the danger flips. Now you're the person sitting on cash earning under 1% while prices climb. That's a slow leak, not a fast one, but it's still a leak. The reason to get out of debt fast is so you can own things that hold value instead of dollars that don't.

That's the whole logic: high-interest debt is the fastest destroyer of wealth, inflation is the slowest, and you deal with them in that order.

The bottom line

Sell investments to pay off debt when the interest rate on the debt is clearly higher than any return you can reasonably expect — and when doing it won't leave you without an emergency fund. For a 24% credit card, that's almost always yes. For a 4% mortgage, that's almost always no. For everything in between, write down the two numbers and compare them honestly.

Run your actual balance and APR through the credit card payoff calculator before you sell anything. Seeing the real interest cost on paper tends to make the decision for you. And if you want the full plan, the get out of debt course walks through it step by step.

No shame in the position you're in. Just run the math, pick the higher number, and keep moving.