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It’s definitely a move worth making.

Key Point

• Financial success means different things to different people.
• You don’t want nagging debt to get in the way of your goals.

What does it mean to be financially successful? For some, it can mean owning a home outright. For others, it might mean reaching a certain level of savings. But no matter how we define financial success, shark tank‘s Kevin O’Leary says there is one thing that can lead you to it.

get out of debt

O’Leary argues that paying off debt is the key to financial success. That’s because the money you wasted on interest while in debt is money you can’t save or invest. So the faster you can get out of debt, the more likely you are to achieve your personal financial goals, no matter what it entails.

how to pay off debt

If you’re in debt, taking the right approach can help you pay off your debt quickly. First, evaluate different types of debt and see what interest each type charges you. You may owe money with a personal loan, mortgage, or credit card. If you’re paying 18% interest on your credit card, but you’re only paying 7% on your personal loan and 4% on your mortgage, you should stick to that when paying off your debt.

From there, you can find ways to make your most costly debts cheaper. Let’s assume your biggest liability is your credit card balance. You may be able to switch to a new card with an introductory interest rate of 0%. This way you will be freed from attracting more attention as you try to nudge your balance.

Another option is to take out a personal loan and use the proceeds to pay off your credit card debt. If you own a home, you can do the same with a home equity loan.

All of these options require exchanging one type of debt for another. And it may not seem worth it at first.

Not all debts are created equal

As O’Leary said, it’s true that paying off debt will help you reach your financial goals. But that doesn’t mean you should rush to pay off a long-term debt like a mortgage. Home loans usually have reasonable interest rates. If that’s your situation, there’s no need to stress about paying off your home ahead of schedule.

However, if you have any remaining credit card debt, we recommend paying it off as soon as possible. And once that’s done, work on short-term installment loans such as personal loans and mortgages.

Money spent on interest is money that cannot be spent on investments. Therefore, the sooner you can get out of debt, the more opportunities you have to build a lot of wealth.