Here is a talk by Warren Buffett on how to avoid debt. Buffett is one of the richest men in the world and is CEO of Berkshire Hathaway.
Buffett recommends that you not run up credit card debt because of the high interest rate. If you cannot afford it do not buy it. He gives this advice in the first five minutes of his talk, you need not listen to the whole hour. This single simple bit of advice is invaluable. Every competent financial advisor I’ve met or whose book I’ve read gives this advice.
If you have a sound education plan borrowing for education makes sense. If you want to own your own home in most cases you will need to borrow to buy it. Until you can build up financial reserves you may need to borrow money for your first couple vehicles. Barring some emergency, it is best not to borrow any money after that. By all means avoid credit cards debt unless you can pay it off in a month or two.
The person with savings has a buffer against the unexpected and can build some personal wealth. The person in credit card debt is in a perpetual financial hole they cannot climb out of.
The key to avoiding credit card debt is not to buy what you cannot pay cash for. If you do not have money for it right now you cannot afford it. Follow that rule and it will avoid years of heartache, worry and indebtedness.
Learn how to manage your money, eliminate debt and build wealth in my book, Your Financial Success.
Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.