Getting Out of Debt, According to Financial Gurus

If you ask me to point out an obvious flaw in our financial system, here it is: (too) easy access to credit. Our whole culture is now geared towards the debt culture. It is amazing how common it is to have multiple loans to finance houses, cars, and other big-purchase items. It is even more amazing how socially acceptable it is to hold credit card debt. Because everyone is borrowing from the future, the prices of goods and services skyrocket. Get now, pay later? More like Get now, pay later + interest.

This shouldn’t be that big of a problem… if people were taught how to budget and stay out of debt. Unfortunately, budgeting is a skill that is seldom taught in school or at home. Parents assume schools will cover it, while schools assume parents will shoulder the responsibility. As a result, many young adults leave their schools and homes with poor financial management skills.

To fill this education gap, there are many financial gurus out there who can teach you how to budget your money and get out of debt. Here are their key messages.

How to Budget Your Money, the Dave Ramsay Way

One of the biggest names out there, Dave Ramsay advocates for the no-debt lifestyle through these 7 baby steps. Author of the hugely successful Total Money Makeover, his advice is simple, practical and timeless. He also likes to promote behavioral change by slamming debt culture.

Key messages from Dave Ramsay:

  • Prioritise emergency funds and savings to protect yourself against life’s unexpected expenses.
  • Tackle debt systematically through ‘debt snowball’
  • Set aside 15% for retirement income
  • Invest in your children’s education
  • Pay off your home
  • Enjoy your wealth and give back

How to Budget Your Money, the Suze Orman Way

If Dave Ramsay took the one-size-fit-all approach, Suze Orman segmented her audience into three main camps: those who want to get out of debt, those who want to get rich, and women. There are much more technical information on each budgeting and investing techniques for all three main target audiences through her books and Resource Centre.

Key messages from Suze Orman:

  • Women have a big role in managing the family finances
  • Small expenses add up to big expenses; cut where you can
  • Tackle debt with the highest interest first
  • Get an affordable home, but don’t stress so much on the mortgage
  • Have 8 months’ worth of emergency savings
  • Plan for retirement; wealth can be achieved through stocks

How to Budget Your Money, the Mr Money Moustache Way

Mr Money Moustache is the pseudonym (of course) of a financial freedom and early-retirement advocate. From relatable, normal-paying job, he saved aggressively and retired by the age of 30. Since then, he relates his experiences and life lessons via his blog to others, and advocates for the simple yet meaningful living.

Key messages from Mr Money Moustache:

  • Calculate your retirement age; the more % you can save from your salary, the earlier you can retire!
  • Spending less is the only way to achieve financial freedom
  • Focus on happiness, not demands of consumerism culture
  • Investing is personal, focus on what works
  • Ways to get rich in your 20s

How to Budget Your Money, the Farnoosh Torabi Way

Farnoosh Torabi shared how she overcame her mountain of debt on a small salary when she first started to enter the workforce in her early 20s, instantly making her the most relatable financial guru for young adults out of anyone on this list. Utilising clean visuals and sophisticated media in her website, the financial expert is best known for her personal finance show called Financially Fit on Yahoo! Finance.

Key messages from Farnoosh Torabi:

  • Emotional connections with money matter more than you think
  • Focus on setting good discipline and mindset; ask if you don’t know (and find out)
  • Budgeting: focus on the bigger items (housing, loans, etc) over smaller stuff
  • The best job security is working for yourself; and negotiate your pay
  • Avoid over complicating your investments; if you don’t understand it, don’t get it
  • Time is precious and finite; outsourcing frees it up
  • Address modern-day women challenges like a pro

Conclusion

The financial gurus above have very different styles and messages, some of them conflicting, even. How do you choose which are the best?

If you are new to budgeting, adopt the simple financial plan of Dave Ramsay (or other similar approaches). If you focus on self improvement, get inspired by Farnoosh Torabi. There are many other financial gurus out there, here are five more. Go on, pick their brains, and learn how to budget your money better today!

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