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Oprah And Debt Reduction: A Short Intro To the So-Called "Debt Diet"
from:In a series of broadcasts, Oprah Winfrey tackled the problem of debt in American by issuing a challenge to her viewers to make the commitment to get out of debt. Winfrey recruited the assistance of three well-known financial experts including Glinda Bridgforth, Jean Chatzky, and David Bach. With these specialists, she introduced a four-step plan to reduce debt with the final goal of eliminating it entirely. This may be the first time Oprah and debt reduction went hand-in-hand on a topic, and it probably won't be the last.
This latest strategy was a new step for Oprah and debt reduction as a whole. At this time, it may be helpful to go over the essential elements. During her broadcasts, Winfrey made a comparison between over-spending and over-eating in the United States. It was due the compulsive nature of both activities that Oprah christened her plan the "Debt Diet."
The following steps were laid out on Oprah and debt reduction programs she promoted:
Debt Diet Step 1: Determine how much debt you have. Calculate how much debt you have so you can begin paying it down. You might want to obtain a three-in-one credit report made up of all three credit bureaus to help you identify all current debts as well as old ones that may be lurking in the past unpaid.
Debt Diet Step 2: Keep a record of spending and locate extra funds to help pay down the debt. First, monitor every aspect of current expenditures no matter how insignificant the purchase may be. You want to have all of them written down so you can review them. Second, you want to examine the record to determine where the major spending areas are and find out if you can cut back or "trim the fat" as Oprah and debt reduction gurus said. This is the sacrificial part of the plan. If it is not absolutely necessary, you may have to cut it out until you have your debt under control. It is up to you to decide what areas this may include. Obviously, any extras are likely candidates.
Debt Diet Step 3: Dealing with credit cards effectively. At this point, you will need to find out how to lower your creditor's interest rates. There are two parts to this step. First, deal with the interest rate. High interest rates are the major cause of the unending debt. Your interest rates are affected by overall debt and any late payments that are made. Find out what you can do to get these lowered. Once the rate is lowered, you will have extra money that can be reconstituted into your budget to be used to lower debt to pay off the cards faster.
Debt Diet Step 4: Stop spending. Finally, to make your efforts meaningful, you will have to adopt a new spending philosophy that incorporates a clear savings plan as well. This is the real commitment and it is long-term. The tool to make this successful is a weekly and monthly budget. Every expense is organized for quick reference.
With these steps, you have a viable plan to lose the weight of your debt—and keep it off. Oprah and debt reduction: what a pair.
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