Warren Buffett’s 7 Savvy Tips for Tackling Debt Faster
Written by
Jennifer Taylor
Edited by
Jasmine Browley
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Getting out of debt can feel daunting. Knowing how to manage money, budget and pay off debtors can be a challenge to juggle, but modeling your spending after Warren Buffett may help.
Throughout the years, the billionaire Berkshire Hathaway CEO has offered plenty of practical financial advice that can be applied to anyone. Here’s a look at seven tips he has shared that can help you pay down debt faster without ruining your quality of life.
Don’t Fall Into Lifestyle Creep
As your income increases, it’s easy to start living a more expensive lifestyle. That’s known as lifestyle creep. However, Buffett has been able to avoid this throughout his illustrious career.
For example, he still lives in the same house he bought in 1958 and he regularly ate at McDonald’s for years. With a multi-billion-dollar net worth, he can afford a mega mansion and daily breakfast at the fanciest restaurant in town, but he chooses to avoid these expenses.
Seek Out Sales on Quality Products
The phrase “buy nice or buy twice” is clearly familiar to Buffett. He firmly believes in buying quality products, instead of wasting your money on cheap items that won’t last.
However, he advises trying to find quality items you need when they’re discounted. Whether you wait for a sale or find a coupon, money saved on these products can be put toward paying down debt.
Pay Yourself First
A popular budgeting technique, Buffett believes in the “spend what is left after saving” approach. You may know this as “pay yourself first,” but they’re the same thing.
Waiting to save money until you see what’s left isn’t wise, because all too often there isn’t anything left. By prioritizing saving, you’re ensuring money is put aside each month.
Sweat the Small Stuff
Buffett doesn’t believe in extreme frugality that involves depriving yourself of anything but necessities. However, he does advise tracking your small expenses.
Purchases such as a daily latte, twice-weekly food delivery and multiple streaming subscriptions can add up fast. It’s fine to indulge to a point, but these costs can easily cause you to go overbudget without even realizing it.
Trim Your Budget
When working to pay off debt, finding as much extra money as possible to put toward paying down your balance is important. Buffett believes reducing your unnecessary expenses is one of the keys to financial prosperity, so give this a try.
You probably could look through your monthly expenditures and find at least a few non-essential items. Cutting even a few of these costs will give you more money to tackle debt.
This might even feel so good you’ll be inspired to keep going. Challenge yourself to see how much you can reduce your budget without sacrificing comfort or becoming frugal to the point of unhappiness.
Pay With Cash
It’s hard to rack up debt when you’re paying in cash. Even Buffett follows this rule.
He has said he has an American Express card, “But I pay cash 98% of the time.”
This can be both a great way to tackle debt and to remain debt free later on.
Strike a Balance
Spending too much won’t help you get out of debt, but forcing yourself to live so frugally that life becomes unenjoyable isn’t the answer either. Buffett believes in spending in moderation, as finding a balance is key to good financial health.
While he fully endorses putting more emphasis on long-term goals — e.g., paying down debt — he also realizes the importance of fulfilling short-term goals. Just make sure you’re selective with spending, so you don’t get sidetracked from tackling debt.
More From GOBankingRates
