If you’re in debt, forget to spend on things like fancy coffee drinks, says “Shark Tank” star Kevin O’Leary.
It’s because pay off the debt is the “key” to financial success, he says.
“If you have student loans, if you have debt, if you have things that you are paying interest on, you have to pay them off first,” says O’Leary.
“You have to pay [debt] before spending $ 4 on a cup of coffee. Why would you ever do that? “
Paying off debt is important because the interest you pay on a loan can be expensive. Accept credit cards: the average annual rate as a percentage of credit cards (APR) is 15.78%, and rates may go even higher depending on the borrower’s credit. For example, the Freedom Hunt® offers a variable APR ranging from 14.99% to 23.74%, depending on CNBC Select.
Debt can also be a major obstacle to achieve other financial goals, like saving for retirement or making important financial decisions, including buying a home, says O’Leary.
“You have to get rid of these [expenses] first, then you have the luxury of spending the money on whatever you want. But not until you’re in debt! ”Says O’Leary.
O’Leary often says that coffee expenses, in particular, are “Such a waste of money.” (“Coffee [can] will cost you 18 cents to make it at home if you want. This is where you should do it, put it in some kind of thermos and take it to work, ”he says.)
But if it’s a luxury you want once you have the money, then “of course you can buy coffee when you can afford it. Of course you can buy that extra thing you want or something. new stereo or new jeans or new sneakers or whatever – all after you’ve paid off your debt, ”he says.
O’Leary says, personally, that instead of spending his money on things like coffee, he prefers invest the extra money.
“What I’ve learned to do, and what has really helped me keep growing my personal investment, is that every time I take something that I’m going to buy, I’m like, ‘Ai- 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 sleep “, O’Leary said previously CNBC do it.
Disclosure: CNBC owns the exclusive rights to the off-grid cable of “Shark Tank”.