At 27 With $12K In Debt, Should You Buy A Home Or Pay Debt Off First?

Wed, Sep 17, 2025, 11:16 AM 3 min read

Should you pay off debt or prioritize buying a house? A 27-year-old Canadian recently asked that question on Reddit (NYSE:RDDT) while detailing their situation.

The individual has 1,500 Canadian dollars ($1,084) in savings and CA$11,000 in credit card debt at 12% APR. The 27-year-old also has a CA$4,000 car loan at 7.99% APR and CA$1,500 in monthly expenses. The monthly take-home is CA$3,300 after taxes.

Redditors overwhelmingly told the 27-year-old Canadian to pay off the debt first.

"We are in the same boat, and I think we know the answer. Aggressively pay down the debt to avoid interest," one commenter said.

Don't Miss:

• 40% of Americans Want a Vacation Home — This Startup Found a Way to Make It Possible (and Profitable)

• They Sold Their Last Real Estate Company for Nearly $1B — Now They're Building the Future of U.S. Industrial Growth

The Canadian has two financial obligations, but the individual should prioritize credit card debt over the auto loan. The credit card has a much higher APR than the auto loan. A higher APR results in more interest accumulation, but paying off the balance rapidly minimizes how much interest accrues on the balance.

"You can’t start saving for a house right now," one commenter said. "12% outpaces average market growth, so it only makes sense to sit on that debt if you plan on investing your money pretty aggressively and feel confident you can make a better ROI than that 12%."

You can pay off debt faster by reducing expenses, but there's only so much you can do to keep your costs low. The Canadian earns CA$3,300 per month after paying taxes. It's possible to pay off the credit card eventually, but the 27-year-old can benefit greatly from picking up a side hustle.

Trending: ‘Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.30/share.

"Maybe start doing some gig jobs for extra side income," one commenter suggested.

The Canadian said they're already working on a side hustle and currently earn an extra CA$1,000 per month with freelancing. The income isn't guaranteed, but it is a good starting point and works with the Canadian's schedule.

You don't have to work on a side gig forever. Some people only work on side hustles until they have paid off their credit card debt, while others turn side gigs into full-time work.

See Also: Kevin O'Leary Says Real Estate's Been a Smart Bet for 200 Years — This Platform Lets Anyone Tap Into It

Once the Redditor pays off their credit card debt and auto loan, it will still take some time before they are ready to buy a house. A home is quite expensive, especially if you want to put 20% down.