Kevin O’Leary: Don’t spend money on things like coffee if you’re paying off debt – ‘that’s the key’ to financial success

If you have debt, forget spending on things like fancy coffee drinks, says “Shark Tank” star Kevin O’Leary.

That’s because paying off debt is “key” to financial success, he says.

“If you have student loans, if you have debt, if you have things that you’re paying interest on, you have to pay those off first,” O’Leary says. 

“You have to pay [debt] off first before you spend $4 on a cup of coffee. Why would you ever do that?”

It’s important to pay off debt, because the interest you pay on borrowing money can be expensive. Take credit cards: The average credit card annual percentage rate (APR) is 15.78%, and rates can go even higher depending on the borrower’s credit. For instance, the Chase Freedom® offers a variable APR ranging from 14.99% to 23.74%, according to CNBC Select.

Debt can also be a major obstacle in reaching other financial goals, like saving for retirement or making important financial decisions, including buying a home, O’Leary says.

“You’ve got to get rid of those [expenses] first, then you have the luxury of spending money on whatever you want. But not until you’re out of debt!” O’Leary says. 

O’Leary often says spending on coffee, in particular, is “such a waste of money.” (“Coffee [can] cost you 18 cents to make at home if you want to. That’s where you should make it, and put it in some kind of a thermos and take it to work,” he says.)

But if it’s a luxury you want once you have the money, then “sure, you can buy coffee when you can afford it. Sure you can buy that extra thing you want or a new stereo or new jeans or new sneakers or whatever it is – all of that after you pay off your debt,” he says.

O’Leary says, personally, instead of spending his money on things like coffee, he prefers to invest extra cash.

“What I’ve learned to do, and what has really helped me in maintaining growth in my own personal investing is, anytime I pick up something I’m going to buy, I say to myself, ‘Do I really need this?’ Because if I don’t buy it, the money is going to be invested and make money every year for me while I’m sleeping,” O’Leary previously told CNBC Make It.

Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”

Check out: The best credit cards of 2020 could earn you over $1,000 in 5 years

Don’t miss:

Products You May Like

Articles You May Like

Trump to sign executive orders protecting preexisting conditions and seeking a way to prevent surprise medical bills
These two strategies may have helped Trump pay just $750 in federal taxes
Biden’s tax returns show he lost $100,000 in deductions due to SALT caps
Plight of the ‘Physical Worker’: Worn-Out Bodies and Little Savings
New home sales crush expectations, but the supply is running out

Leave a Reply

Your email address will not be published. Required fields are marked *