According to the Oprah Winfrey Show, 70 percent of Americans are living paycheck to paycheck. That’s why the talk show host is calling on Americans to go on a debt diet. This summer she’s devoting one show a week to the Great American Debt Diet. The plan is to follow three average American families with huge amounts of debt. They are families like the Bradley’s. Despite their income of $102,000 a year, they’re still struggling to make ends meet. With a $300,000 car and two new cars, the Bradley’s are spending way too much and are currently sitting with $170,000 in debt. Lisa told the Oprah show of their home, “Steve even told me we couldn’t afford it, but I wanted it.” The family spends $100 a day on take-out food and rarely cooks meals at home.
Over the next several weeks you’ll be able to tune in to watch the Bradley’s progress, along with two other families in similar situations. But you don’t have to just watch, you can work on getting out of debt as well. Here are some simple steps you can tackle in phase one of the debt diet. Try doing on task a week.
1. Find out how much debt you really have. We like to ignore this fact, but getting started means figuring out how much debt their really is. Use this free printable chart to track it all.
2. Find out how much you’re really spending. Often spending money can be done mindlessly. Little purchases add up throughout the day. Find out exactly what you’re spending. Use this free printable chart to track your spending and find ways to save.
3. Pay down your credit cards. According to financial expert Jean Chatzky, paying $5 a day to an $8,000 credit card bill versus paying $10 a day adds 27 years to your payoff date. After completing step two you should be able to identify ways to come up with an extra $5 to $10 a day to put towards credit card debt. You’ll also want to take some time to try to negotiate lower interest rates.
4. Stop spending. Old habits are hard to break. Stop spending by keeping your credit cards at home, paying with cash and working with an accountability partner. This step may not be easy, but it’s the only way to make the debt diet work.
Tags: Debt Diet, personal finance, debt, credit card debt, Finance
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These are all great tips, but the most important item is missing. The number one key to dealing with debt problems is to get on a budget. You need to do all of these other things, but if you don’t learn how to plan your spending each month, you will keep falling back into old habits. Before the month begins you need to figure out how much money you are going to make and then plan out what you will spend each check on over the course of the month. Then stick to the plan!