American entrepreneur, investor, Shark Tank and owner of basketball team Dallas Mavericks sold his first startup CompuServe in 1990 for $6 million Nine years later he sold to Yahoo for $5.9 million Since Cuban has invested in dozens of other companies. And now his fortune is estimated at $4.2 billion. Inc.com collected 4 of the best entrepreneur advice on how to effectively manage personal finances.
1. Extinguish all debts
“The best investment you can make is to pay off credit cards and to pay off debts that you have,” said Cuban in an interview to MarketWatch.
For example, if you have a student loan with a rate of 7%, paying off the loan, you will immediately receive the 7%. This “instant income” will be much safer than investing in stocks or trying to buy property at any cost, says the entrepreneur.
Rates on credit cards, as a rule, much higher, so the faster you repay loans, the more benefits you get.
“To use a credit card is fine, if you redeem it in the end of the month, said Cuban in an interview with Money. Just admit that 18, 20 or 30% that you pay to the credit card debt will cost you much more than you could earn somewhere else.”
In the case of debts that cannot be repaid in a short period of time (such as a mortgage or student loan), Cuban offers the possibility of refinancing debt during periods of economic hardship and choose to lower interest rates.
2. Skopje money for at least six months
According to Cuban, “safety cushion” should include the means by which you will be able to live for at least six months.
“You should try to save money for six months and keep these funds available,” the entrepreneur said in an interview with Vanity Fair. In this case, you will not experience serious difficulties if you lose your job or decide to change something in your life.
Photo: a video frame YouTube/ESPN
3. To make risky investments possible, but they should be only 10% of the total
Cuban acknowledges that billionaires could make your condition including due to the fact that the assumed risks. However, it is advised to limit the amount of investment that you are about to send a risky venture, to 10%.
“If you are a real adventurer, you can allocate from their funds of 10% and invest it in bitcoins. But if you do this, it is better to keep in mind the idea that you seemed to have forever parted with the money” ― he said in an interview with Vanity Fair. The remaining 90% of the money that you are willing to invest, the entrepreneur is advised to put in the cheapest index Fund that I can find.
4. Do not pass by the shops discounts
“Savings of 15% on goods worth $1 thousand, which, as you know, you would spend the money, is the best return on your money than the 15% that you get by investing the same $1 thousand”, wrote the businessman in his blog.
Of course, this does not mean that you should fill your home only with cheap goods from bulk stores. However, the Parallels between reasonable consumption and investment will really help in some cases to choose a right strategy personal Finance management, says Cuban.