If legendary investor Warren Buffett could give one piece of advice to young people, "it would be just to don't get in debt," he told a 14-year-old shareholder at the 2004 Berkshire Hathaway annual meeting.
"It's very tempting to spend more than you earn, it's very understandable," he said. "But it's not a good idea."
And if you're deep in the red, it may be a good idea to "never look at a credit card the rest of [your] life," Buffett added.
Billionaire entrepreneur Mark Cuban agrees that you should avoid debt if you can. The best investment anyone can make, he says, is "paying off your credit cards. Paying off whatever debt you have."
Cuban, who struggled to keep himself on the right side of his credit card debt in his 20s, learned the hard way that the money saved on interest by not having debt is better than any return you could get by investing your money, whether in the stock market or in real estate or elsewhere.
"Whatever interest rate you have — it might be a student loan with a 7 percent interest rate — if you pay off that loan, you're making 7 percent. That's your immediate return, which is a lot safer than trying to pick a stock or trying to pick real estate, or whatever it may be," he says.
If you have credit card debt, the interest rate may be much higher than that: The typical credit card charges about 15 percent, which can end up costing you a fortune if you continually miss payments or only pay the minimum on your balance each month.
Many people fall into that trap and, today, the average household with revolving credit card debt pays nearly $1,000 in interest every year.
There are two popular ways to tackle debt: the avalanche method and the snowball method. Using the first, you prioritize paying down the debts with the highest interest rates. Using the second, you focus on knocking out the smallest debts to get the momentum going. NerdWallet's debt guide can help you choose the strategy that's best for you.
Once you're debt-free, get in the habit of making payments in full so you never have to owe interest again.
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