Everyone learns some harsh lessons about money at some point in life. The same applies to Shark Tank judge Mark Cuban, who became a billionaire when he took Broadcast.com public with his partner Todd Wagner. Here are some of the lessons he learned!
Credit Card Debt Can Be Fast and Furious
During a recent interview, Cuban stated that one of the most important lessons he learned related to credit cards. Before he became a billionaire, Cuban was struggling financially and had several of his credit cards ripped up.
Furthermore, he states that credit card debt could add up quickly and that you will be owing a lot more than what you intend to pay in interest. So, if you do not intend to pay it back immediately, credit cards could prove less than desirable.
Mark Cuban said the following about the credit card debt he accumulated before his success as a businessman:
“The hardest lesson I learned was getting my credit cards ripped up. I would charge something and think I would be able to pay it off and then not be able to. I can’t tell you how many credit cards I had ripped up.”
Mark Cuban’s Credit Card Use Strategies
Americans who still want to use a credit card should use it wisely. According to Cuban, using a credit card frequently can do no harm, just as long as you repay your debt at the end of the month.
Debt Repayment Strategies
Mark Cuban also shared some of his views of debt management and debt repayment, which could prove useful for Americans who currently find themselves with a mountain of debt.
According to Cuban, the first method that could be used for debt repayment is the avalanche method. The avalanche method is used when a debtor pays back debt with the highest interest first. The second method that could be used for debt repayment – the snowball method – is where a debtor starts paying off his smallest debts.
Related: What is Credit Counseling?
High American Credit Card Debt!
Shark Tank judge Mark Cuban is not the only person in America who has been dealing with credit card debt. Americans currently have a collective credit card debt of $1.021 trillion. Needless to say, this is the highest total in credit card debt ever seen!
Research Indicates Snowball Repayment Method Most Effective
The snowball method is not only mentioned as an effective way to repay debt by Mark Cuban, because the method has also been researched for the Harvard Business Review. When comparing the snowball method to the avalanche method, the study showed that the snowball debt repayment method was most effective, more specifically because people remain engaged as they see their debt disappear.
As is the case with most things related to finance, it is all about common sense. If you want to avoid losing a large amount of money on credit card debt, then it might be time to reevaluate how you are using your credit card. Of course, you do not need any special training, because all you need to use is common sense to avoid the harsh lessons Mark Cuban learned.