When Paying Down Debt Shouldn’t Be Your Priority

By Erin Lowry | the balance

For three years, Erik Tozier attacked his debt. He paid off his student loans and an auto loan, and aggressively paid down his mortgage. After three years of this, he managed to wipe out $45,000 of debt.

Most would have considered this a triumph of financial responsibility. But Dozier has now started to re-evaluate his strategy. He wants to grow his wealth significantly at a young age, and he’s no longer convinced that paying down debt is the best way to go about that.

“Paying off debt will increase my wealth slowly, and really, if I don’t have assets, then I’m just getting back to zero, instead of playing offense and growing at the same time,” says Tozier, a statistician based in Minneapolis.

So he pivoted. He’s stopped aggressively paying off his mortgage, and he even took on new debt, financing some home improvement projects at 0 percent and getting a Home Equity Line of Credit to invest in both his business and taxable accounts. Tozier’s energy-efficiency focused home improvement upgrades have dropped his electric and heating bills by 50 percent while increasing the home’s value; he hopes to sell the house and come out of it debt free. He’s also been able to steadily grow his side hustle business to diversify his income streams.

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