Warren Buffett Says This Is the First Thing You Should Do With Your Stimulus Check
Grow Your Business, Not Your Inbox
As millions of Americans gradually see their stimulus payments roll in this month, one advice from Berkshire Hathaway CEO Warren Buffett is proving particularly timely.
At the company's annual shareholders meeting last year, Buffett shared an anecdote in which a friend had come across some unexpected cash and wanted advice on what to do with it, MoneyWise reports. The unidentified woman also apparently had credit card debt at 18% interest. Buffett's suggestion? Pay off the debt immediately.
"If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off," he said at the meeting. "You can’t go through life borrowing money at those rates and be better off."
In fact, paying off credit card debt should be the first priority for everyone, Buffett said. While acknowledging that many people were turning to credit cards to deal with pandemic-related financial struggles, the billionaire investor cautioned that some were treating their cards as "a piggy bank to be raided."
According to CNBC, about 51 million Americans increased their credit card debt during the current health crisis, even though an increasing number had less confidence that they could pay it off. Still, credit card balances notably fell amid a marked decrease in spending, data from the Federal Reserve Bank of New York shows.
And if credit card debt isn't an issue, then the next best way to use the stimulus payment might be to invest it. In a 2017 interview with CNBC, Buffett revealed that he took the money he could have used to purchase a vacation home and invested it in his own company. Since then, the business tycoon's net worth has ballooned to approximately $100 million.