Debts can be haunting.

There’s a popular saying in our village that goes like ‘if you are unable to wake up on time, have debts”.

Paying off debt, especially in this Kenyan economy, can feel like an uphill battle. You will end up sacrificing a lot of things to get by and the saddest of it all, you might still like you are not still doing anything at all especially when you are knee-deep in debt.

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So people who find themselves with extra cash normally end up facing a dilemma: Should I use the money to pay off—or at least, substantially pay down—that pile of debt or put the money to work in investments that will grow for the future then clear the debt with the compounded cash?

Slicing a piece of your investment to clear debts, in general, isn’t a wise financial move. However, it also depends with the loan you have.

The most important factors to consider are the interest rate you’re paying on your loans and the returns you expect to earn on your investments.

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The first thing you should do before selling off your investments is to try and clear all your liabilities. Everything depreciating that can be replaced should be your first go to solution. It’s pretty obvious.

Sell your, electronics, furniture and anything else that might help you clear the debt first.

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Very rarely should you sell your investments to pay off debt. The one exception here is if you have high-interest debt (like an outstanding credit card balance), but even then there are alternatives to consider before using your investments as repayment.

But if you really must touch your investments then the next thing you should look at is your investment’s returns and future growth.

Don’t dump investments that be mature in a few months, weeks or years into double, triple or quadruple the money you need to pay.

Take land for example. You owe a bank Ksh 1 million with an interest rate of 14% but the loan has weighed you down and you can’t pay.

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However, you own a plot that’s currently worth 300,000 but with a potential of ballooning to around 2 million in just a year or two. Dumping such an investment doesn’t make sense at all unless you are completely out of options.

Paying off debt, particularly if you have a lot of it, can be a smart move for that reason alone.

As with investing, psychology comes into play here, too. If you’re losing sleep over your debts, then you could be better off repaying them—even if you might get a better return on your money by investing.

Another rule that I encourage is to never start investing when deep in debt. Instead, clear the debts first.

Debt is like having a hole in the bottom of the can so the water leaks out faster than you can fill it up. By paying off your debt, you eliminate the drain on your finances.

So it makes perfect sense to focus on getting rid of the one that could drag you down – your high-interest debts.