For anyone young and independent, it’s fun having your own money and having the freedom to decide what you can to do with it. Although there’s nothing wrong with spending your hard-earned cash, sometimes important things get pushed to the backburner.
Finance expert and “Shark Tank” star Kevin O’Leary has advice for current and future homeowners when it comes to personal finances.
Pay off your mortgage, when you pay off your mortgage early, you won’t have to worry about making regular payments. Life can be unexpected, and you don’t know what will happen next. Your financial situation can dramatically change in a year so try settle all your mortgage payments. With your mortgage cleared, you can start to put that money elsewhere.
O’Leary says that mortgage and student loans are two of the most significant debts and should be cleared right away. The moment you get your first job, consider paying off your debts, so you can focus on saving for big purchases and avoid hefty interest fees down the road.
It’s also practical to pay off debt that has a higher interest rate which is mostly credit card debt. Mortgage and student loans are mostly larger in amount but are usually offered in extended payment terms. Because of this, it’s easy to become comfortable with making regular payments on your debts without a sense of urgency.
It’s also easy to overlook big life changes. What would happen if you suddenly lost your job or had a severe illness? How would you manage to pay for your loans? It’s a smart move to get rid of all debts while you still can so you won’t have to worry about what life throws at you. Paying off loans ahead of time can come from a place of privilege, but the stress of an extra shift or side-hustle is more manageable than debt stress.
Don’t incur any debt, O’Leary had made himself clear when he called debt evil. He advises against incurring debts and simply recommends never spending more than what you have. It’s practical advice and works for anyone whether you’re single or not. Always, always, always spend within your means.
He also emphasizes creating an emergency fund which has at least three months to a year’s expenses according to your situation. This is enough to get you by for at least a year in case something worse happens to you or your family. Also, you must also contribute enough to your 401k, something that you must never overlook no matter what your current financial situation may be.