Key Takeaways
- Buffett’s guiding rule is never risk what you truly need for something you don’t need.
- High interest consumer debt, especially credit card debt, is a near-certain savings killer and should be paid off before investing.
Warren Buffett thinks your biggest financial drag isn’t saving too little. Rather, it’s credit card debt quietly compounding at 18% or more.
“The idea of trying to borrow money at 18% [or more] and thinking you’re going to get ahead in life—it isn’t going to work,” he said when asked about high-interest debt in 2001.
According to Buffett, paying off high-interest debt will beat almost any investment idea he could offer you. Given that the average credit card interest rate in the U.S. is 21%, a…