Advice from a Billionaire

Wanted advice from the owner of the Dallas Mavericks about money management? Well, you clicked on the right article. Mark Cuban, one of the investors on Shark Tank and tech billionaire has three tips that can make you richer in 2018. Listening to the rich about money is a good, but take it with a grain of salt. If they reveal all of their secrets, others can copy it and that would mean less money for him. Obviously, no one will do that right? Yeah, so when a billionaire says ” This what you need to do!” think twice. If everyone did this, would everyone be rich? Probably not. I only mention this because most financial experts disagree with one of the Mark Cuban’s suggestions to become wealthier.  Financial experts encourage those with debt to use an online loan to improve credit score. Read the article below by CNBC about the best money tips by Mark Cuban and see if you find the suggestion that financial experts disagree with.

 

Mark Cuban: The 3 best tips to save more money in 2018

 

With a new year, you have a new opportunity to take charge of your money, your career and your future.

In the spirit of financial resolutions, star of ABC’s “Shark Tank” and billionaire technology entrepreneur Mark Cuban gives CNBC Make Itthree pieces of advice to see your bank account flourish in 2018.

1. Ditch the plastic

Step one in Cuban’s playbook: “Don’t use credit cards,” Cuban tells CNBC Make It. “If you use a credit card, you don’t want to be rich,” Cuban writes in a 2008 blog post.

It was a lesson he learned the hard way. “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,” he tells Money. “[T]he 18 percent or 20 percent or 30 percent you’re paying in credit card debt is going to cost you a lot more than you could ever earn anywhere else.” On average, credit cards charge 16.7 percent interest, according to Bankrate.com.

Fellow “Shark Tank” investor Robert Herjavec agrees. “When I was young, I would carry a balance on my credit card,” Herjavec tells CNBC Make It. “My advice — pay off your credit cards every month and therefore pay no interest. Credit card interest is probably the most expensive loan you could ever get.”

2. Watch your spending

“Be a smart shopper,” Cuban tells CNBC Make It. “You will quickly find that the greatest rate of return you will earn is on your own personal spending,” he writes on his blog. “Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water,” he writes. “Instead of going to McDonald’s, eat mac and cheese.”

Cuban also suggests things like buying two years’ worth of toothpastewhen it’s 50 percent off. “There’s an immediate return on your money,” he tells Vanity Fair. Cuban’s “Shark Tank” co-star Kevin O’Leary takes a similar tactic. He refuses to spend $2.50 on a cup of coffee. “Do I pay $2.50 for a coffee? Never, never, never do I do that,” O’Leary tells CNBC Make It. “That is such a waste of money for something that costs 20 cents. I never buy a frape-latte-blah-blah-blah-woof-woof-woof for $2.50.”

He makes coffee at home, and puts his savings to work in the stock market. “I drink coffee, one cup every morning,” he explains. “It costs about 18 cents to make it, and I invest the rest.”

3. Put your money to work

All that money you didn’t spend? “Once you have at least six months salary saved, put what you can in a low-cost SPX mutual fund every month,” Cuban tells CNBC Make It, in order to grow your wealth. That means investing in an index fund with low fees made up of companies in the S&P 500, which is comprised of the 500 biggest companies in the stock market.

This is also a well-known suggestion of Warren Buffett. “Consistently buy an S&P 500 low-cost index fund,” Buffett told CNBC’s “On The Money.” “I think it’s the thing that makes the most sense practically all of the time.”

thumbnail courtesy of cnbc.com

 

Did you find the questionable suggestion Mark Cuban made? It’s the credit card suggestion. Using a credit card wisely has only positives. If you have a problem returning a product bought with a credit card, the credit card company will fight for you. Why? It’s the credit card company money, not yours.  Often, credit cards have rewards. Cashback or points to buy items. Why wouldn’t you use a credit card? If you know you are not responsible with having access to thousands of dollars, then don’t get. However, if you know you will pay off your credit card in full every month, you should be fine.

I am surprised that Mark Cuban would tell people to spend less money. If anything, this could (In the smallest amount possible) could hurt his wealth. If fewer people are spending money on let’s say basketball tickets, he make’s less money. I thought he would say “Everyone should use credit cards! The rewards are great and it’s not your money, so feel free to spend it!”. Even though many responsible adults enjoy using their credit cards, his recommendation to not use them is noble.

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