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Warren Buffett is a simple man. The Nebraskan likes his Cherry Coke and sees his company Berkshire Hathaway as more of a diner than a high-end French restaurant. In his annual shareholder letter this year, he described his investment strategy as “serving hamburgers and Coke for 56 years.” In other words, they’ve prioritized “slower growth ‘value’ stocks,” as CNN wrote, over trendy market rollercoasters like GameStop.
It’s why people have looked to the investing icon for decades for financial advice (the fact that he’s recently dabbled in the $100 billion club alongside people like Jeff Bezos and Elon Musk doesn’t hurt, either), and plenty of people could use financial advice right about now.
If you’re about to get a stimulus check to the tune of $1,400, what should you do with it? Put it in one of those slow growth value stocks? Sock it away? Pay off your mortgage? As Doug Whiteman wrote at MoneyWise, “Buffett says whenever any extra money lands in your lap, your first move should be to pay off credit card debt.”
It looks like many Americans have been taking that advice, even if they didn’t get it directly from the Oracle of Omaha. According to a study from WalletHub reported by CNBC, Americans repaid about $83 billion in credit card debt during 2020, which they say is only the second time in 35 years people have owed less at the end of the year than the beginning. If you aren’t part of that trend but are receiving, or have already received, a federal stimulus check, it’s something to consider — especially if the other choice is splurging on a new spring wardrobe.
As MoneyWise explained, Buffett’s previous insistence on paying off credit card debt has to do with high interest. In an anecdote he told at the shareholders meeting last year, the CEO talked about a friend who came into some money while also having credit card debt at 18% interest.
“If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off,” Buffett said. “You can’t go through life borrowing money at those rates and be better off.”
If that is how you’ve been going through life, he thinks there’s a better way. And while his net worth has for now sunk below that $100 billion mark, we’d still say he knows what he’s talking about.
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The post How to Spend Your Stimulus Check, According to Warren Buffett appeared first on InsideHook.