Oprah’s Debt Diet, Part 3

To conclude my series on Oprah’s Debt Diet, I will be writing about parts 4 & 5 today. To read about the first 3 parts, check out these previous posts: Oprah’s Debt Diet, Part 1 and Oprah’s Debt Diet, Part 2.

In part 4, the families went through ways to find money.

The Widlund’s went through their daughters’ closets and found that:

• Victoria had 20 pairs of jeans (having spent $60-80 per pair) and 25 bras (at $20-30 per bra). This did not include what was on the floor or in the laundry.
• Gracie had 77 t-shirts (at $15-20 per shirt).

The family donated 8 large bags full of clothes to Goodwill, in which 30% of the clothes still had price tags. The girls also realized that they needed to decrease the amount of clothing they had because their closets were too small for it all. They also bought new stuff because they couldn’t find what they already had.

They also went to the grocery store with a list and a set amount they could spend, and compared brands to get the best deals. They were able to stick to the list and only spent $1 over their limit.

The Bradley’s, who never cooked at home, were given new appliances and dishes in return for promising to cook at home every night. Jean Chatzky also took the mother shopping at the grocery store. When they grabbed a cart, the mother said it was the first time she’s ever used a cart other than when her daughter wanted to ride in one. They were able to save money by cutting back on eating out, and by not buying pre-packaged foods. Jean also had the mother go for a walk every time she had the urge to go shopping, saying she should aim for 10,000 steps a day (she gave her a step-counter). Jean said you need to replace bad habits with good habits, but that research shows that you need to do something 21 times to make it a habit.

The Eggleston’s (earn $95,000, owe $43,000) worked with David Bach on their credit cards. They hadn’t realized how high their interest rates had increased due to late payments, or how much in fees they pay each month due to late fees, over-limit fees, and annual fees. David recommends paying off your smallest amount card first so that you have less cards to deal with faster. He also had them call the credit card companies to see if they would lower their interest rates or get rid of fees. He says to ask to “speak with the supervisor” (sometimes numerous times) in hopes of finding someone who will help you. He also says not to close any accounts because then you lose your negotiating ability with them. He also says to pay more than the minimum.

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In part 5, Jean Chatzky went over the “ideal” breakdown of how you should allocate your money each month (spending plan) based off your take-home pay (Step #5). Here’s the breakdown:

• 35% Housing (Mortgage/Rent, Repairs, Utilities, etc)
• 15% Transportation (Loan, Gas, Maintenance, Insurance, etc)
• 25% Other (Eating Out, Vacation, Clothing, Entertainment, etc)
• 15% Debt (Student Loans, Personal Loans, Credit Cards, etc)
• 10% Saving

For step #6, you should find ways to increase your income.

The Eggleston’s are selling on ebay, coaching, increasing lawn service jobs (and increasing fee), painting houses, and teaching summer school.

The Bradley’s are tutoring, increasing hours at current job, substitute teaching, and DJing.

The Widlund’s are cutting hair, selling real estate, and installing satellites. The daughters are now in charge of their own financing and are working extra shifts at job and increasing their babysitting jobs.

Step #7 is to prioritize your debt and raise your credit score.

Step #8 is to understand why you spend and start saving.