Unless all three of those conditions are true, it’s nearly always a good idea to pay off your debts rather than try to manage through them. That holds true in all market conditions, but it especially holds true when the market is rocky. It’s tough enough to stay invested when the market is falling, and if you add rough debt pressures to the natural temptation to sell when the market is down, it gets that much tougher.
Add to it the risk of job losses and tough markets often going hand in hand , and getting out of most debt is really one of the best things you can do to keep yourself invested in 2022.
In addition, by not putting your nearer-term goals at risk due to the stock market’s whims, you can better psychologically handle the market’s ups and downs. Because your near term needs are covered by other methods, you can better build your stock investing around your longer term goals and focus on companies likely capable of being there for that long run. That helps you better stay in control of your fears in a down market, which can help you make more rational decisions.
Ultimately, a share of stock is nothing more than a partial ownership stake in a company. Companies generally exist only as long as they generate sufficient cash from their operations. If they don’t generate sustainable amounts of cash, then they last only until their financiers’ patience (and related debt covenants) wear out.
That might sound harsh, but from your perspective as an investor, it really should be both liberating and empowering. Because what it means is that you can estimate a reasonable value for any company’s stock based on projections of its ability to generate cash over time. Using a method called the Discounted Cash Flow model, you can typically get directionally useful valuation estimates using those cash flow projections and a reasonable risk assessment for investing.