Whether you are new to investing and figuring out your personal finances or have been sticking to a strict financial strategy for years, you have likely come across the names Dave Ramsey and Warren Buffett. The two are considered absolute gurus when it comes to any piece of financial advice you would search for from a money expert.
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Ramsey made his name helping people get out of debt. Buffett, known as the “Oracle of Omaha,” is considered one of the most successful investors of all time. The two financial experts have given a lifetime of advice through websites, interviews and other media.
GOBankingRates searched for advice from the two men on many common money moves people make in their lives. Here is what Buffett and Ramsey say about four key financial topics, including investing, debt, mortgages and retirement.
Ramsey is all about keeping things straightforward when it comes to investing. According to his company Ramsey Solutions, his main investing principle is, “Get out of debt and save up a fully funded emergency fund first.” He believes you should build an emergency fund of at least three to six months of expenses before you start investing — no exceptions.
Buffett’s investing strategy is also simple in concept, but perhaps a bit more complicated in practice. In addition to being widely quoted as saying the number one rule is “never lose money,” he also encourages investors to stick with what they know.
In a now-famous letter to Berkshire Hathaway Inc. shareholders, he said the goal of an investor should be to purchase “a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.” He added, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
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Both financial masterminds recommend avoiding debt or paying off debt as quickly as possible. Though this is easier said than done, Ramsey is well-known for his advice on how to get out of significant amounts of debt quickly. He advocates using the debt snowball method.
To become debt-free under this strategy, Ramsey says you need to first “list your debts from smallest to largest regardless of interest rate.” Then, “Make minimum payments on all your debts except the smallest.” Next, “Pay as much as possible on your smallest debt.” Finally, “Repeat until each debt is paid in full.”
