Warren Buffett is probably the most famous investor in the US but his biggest piece of personal finance advice he wants to share with people has nothing to do with investing at all — it has to do with credit cards.
“I think people should avoid using credit cards as a piggy bank to be raided,” he shared during Berkshire Hathaway’s annual shareholder meeting this week.
He shared a story of a friend of his who came to him for advice when she came into some money that cemented why this is advice to live by.
“She said what should I do with it? And I said: What do you owe on your credit card?” Buffett recalled. “And she said, well I owe X. And I said, what you should do — I don’t know what interest rate she was paying but … it was something like 18%” is to get rid of that debt.
He continued: “I don’t know how to make 18%. If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off.”
Because paying it off is “gonna be way better than any investment idea that I’ve got,” he shared. “And that wasn’t what she wanted to hear.”
“It just doesn’t make sense — you can’t go through life on money at those rates and be better off,” Buffett said. “I encourage everybody … that the first thing they do … [is not] paying even 12% to anybody… pay that off.”
Write it on your arm. Say it to yourself every morning when you wake up. Do whatever it takes. There is absolutely no better use for any cash you come into then to pay off your credit card debt.
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Feature Image: Wikipedia