Oprah’s Debt Diet: A Do It Yourself Debt Management Plan

by Guest Blogger on 2009-11-0916

Do you want to get rid of your debt? Then here’s a do-it-yourself debt management plan you could try!

We all want to keep an eye on our waistlines, but why not watch our “wastelines” too? Eating better and eating less can go hand in hand with spending less and getting your finances in order. I am, in fact, doing both. I started on an improved diet a few weeks ago and just the other day discovered Oprah’s “debt diet,” even though it has been in existence since 2006. They fit nicely together. In both areas, I am trying to be more frugal and am aiming to make better choices.

In the eating arena, I am eating healthier food in smaller portions — more fruits and vegetables, fish, nuts, and treating myself to desserts sparingly. I think about my new food choices before I buy anything at the grocery store. In the money arena, I want to make a budget and stick to it, buy only what I need, and use cash whenever possible. Less splurges at the grocery store will definitely help with the food bill, and this behavior should positively affect other financial areas of my life as well.

So what is Oprah’s debt diet? Oprah gathered together three finance gurus — Jean Chatzky, David Bach, and Glinda Bridgforth — to share debt elimination tips, to suggest ways people can increase their incomes and decrease their debt, and to help several families solve their financial dilemmas.

Oprah's Debt Diet

DIY Debt Management Plan: Oprah’s Debt Diet

The Debt Diet itself consists of the following eight steps, along with some specific advice per step. I think these are great guidelines you can employ on your own, to manage your own finances:

Step One: Find out how much debt you really have, and what it is costing you.

  • Write down all the information you have on your existing debt, as a starting point.
  • Monitor your credit score and report. Some suggestions: Get your FICO score from a credit agency like Equifax. If you’re after free non-FICO scores, you may visit CreditKarma.com or Quizzle.com, where the scores they offer are proprietary. For free credit reports, check out the site AnnualCreditReport.com.
  • Prioritize your bill payments. Start with paying for your necessities first (which you need to survive!), followed next by paying your taxes or any other government specific obligations. After taking care of these matters, you can finally address everything else.

Step Two: Track your spending and find extra money to pay down debt. David Bach coined this activity the “Latte Factor”: so how much do you spend on your latte (or any other goody you regularly buy) per year? How much are you willing to give up in order to free up money for your other needs?

Step Three: Know how to use credit cards to your advantage.

  • Pay more than the minimum. With an extra several dollars appropriated to your credit card bill on a regular basis, you’ll be out of debt sooner rather than later.
  • Lower your interest rates. Here’s something to try: figure out if your credit card issuers are willing to negotiate with you on the interest rates that you are paying. If you’re a good customer, you may have some leverage. If they’re unwilling to work with you, tell them that you’ll take your business elsewhere.
  • Determine the right type of card for your needs. It also pays to have some familiarity with the different types of credit cards that are available, so it’s always good to know what type of card is most suitable for your needs. For instance, despite the tighter credit environment, balance transfer cards, and 0% interest credit cards still exist, which are effective for debt reduction if you have the discipline to pay off your balance before any teaser rates expire. Other things to note: if you’re considering getting a new card and you expect to carry a balance, then take a look at low interest rate cards. But it you always pay your balance in full then you should shop around for the best credit cards with rewards.
  • Understand how credit cards “work” and what kind of tricks card companies have up their sleeve. Before signing up for a new card account, check the card’s interest rate, late fee, teaser offer and annual fee.
  • Analyze and decide which credit card bills you should be paying first. There are many strategies to do this: you can pay off your most expensive, highest interest rate debt first or perhaps you may prefer to handle your smallest balance first. Oprah suggests using David Bach’s DOLP (or Dead on Last Payment) method.

Step Four: Stop spending. No explanation needed for this one.

Step Five: Create a monthly spending plan. Creating one such plan every month will help you account for both your regular, planned expenses, as well as your unexpected expenses.

Step Six: Find out ways to grow your income and take steps to achieve this. For example, you can sell items you no longer need by holding a yard sale — but I’d rather go a step further by selling them through eBay. I would then open an eBay store and try to turn this opportunity into a permanent online venture. Other ideas for increasing income include getting a part-time job or freelancing.

Step Seven: Prioritize your debts and improve your credit score. Prioritizing your debt will help you pay it off faster. You should also take steps to raise your credit rating so that you can better negotiate your interest rates.

Step Eight: Do your best to understand yourself and your own spending behaviors. Evaluate the reasons why you spend; this will take a bit of self-reflection. Also, learn how to save and work to build up your savings. You can always start by learning how to invest small amounts of money. Eventually, plan to increase your savings over time.

What I’ve provided is just an outline of what’s in the Debt Diet. For more details, you can visit Oprah.com, where you will find the Debt Diet, along with a lot of other personal finance topics.

Remember, in both eating and spending — less is more!

Contributing Writer: BEM

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 16 comments… read them below or add one }

John DeFlumeri Jr November 10, 2009 at 6:13 am

All good financial advice. Has Oprah commented on your eating style, may she’ll try it!

John DeFlumeri Jr

Ashley November 10, 2009 at 9:38 am

I love Oprah! Those are all good tips but nothing new. I think most people know what they should do to manage their finances and get out of debt. The issue people have is with how to implement those things without it feeling too cumbersome or like too much work. That’s why services like Mint.com and online bill pay through you local bank are so awesome. Automation is key!

Silicon Valley Blogger November 10, 2009 at 10:07 am

You mention that people know what they need to do, they just don’t do it. Well, then this type of financial program would work very well for those people who commit to participating in it. It’s a personal finance boot camp that’s designed to get you to take action on your finances. Too bad that the registration / attendance for this particular course was limited, but hopefully, there will be more of this sort of event that is offered in the future.

Business Ideas November 10, 2009 at 10:52 am

First I’m actually hearing about this! I suppose we are all in some type of debt, might help.



Kevin@OutOfYourRut November 10, 2009 at 1:32 pm

I have to agree with Ashley, most people do know what to do, it’s the execution where things fall apart. As the post suggests, Stop Spending! So simple, so powerful, yet so hard to do!

Just a thought on the diet topic though… think how much money ( and calories) could be saved just by cutting eating out to the bone? Restaurant food is way overpriced in comparison to what you can make at home, and packs in more calories than we like to think. Chefs know that while people talk a good game on healthy eating, it’s the unhealthy nature of what they’re serving up that brings people in.

In the city I live in, 47% of the average food budget is spent on eating out. There has to be some savings to be found in that!

Live for Improvement November 10, 2009 at 2:08 pm

With any diet it all comes back to dedication and will power.
These steps are a great way to improve your financial well being. And I’m not just saying that because Oprah’s endorsement can turn lead into gold.
-Dan Malone-

Emil Croskey November 10, 2009 at 4:30 pm

Well I’m glad I found this because it has some good information I can use. I’m not sure how much debt Oprah is in though.

Lawrence November 10, 2009 at 7:49 pm

Good info here. One comment, if you are a good customer, credit card companies will work with you if you are assertive. After 3 calls in 2 days they finally reduced my interest rate.

Andrew Johnson November 12, 2009 at 8:05 am

As part of new employee orientation at GreenPath Debt Solutions, we watched the entire Oprah Debt Diet special. At first I thought it would be just another Oprah show, but the experts and families were very intriguing.

Jean Chatzky, David Bach, and Glinda Bridgforth provided some great insight and tips on how to get your finances in order (and it’s so much more than just the $$$, it’s the emotional/psychological ways that credit works its way into the very fabric of our lives).
I truly did learn a lot from the series. I think in this economy, it should be required viewing by all groups, singles, families, young, seniors, etc.

Stacey November 20, 2009 at 2:43 am

Here in the UK, there’s quite a lot of press about debt management and so on. But what we lack is a big daytime or prime time show covering the issues. In having Oprah bring the issues to light and offer advice and so on, it made highlighted the problem on a level where it became accessible to consumers.

I wish they would do something similar in the UK!

Graham February 23, 2010 at 2:47 am

Hi fantastic tips from Oprah. If you follow these you will reduce your debt quickly. The big thing is not to be tempted by new loans or credit cards. What I suggest is trying to get your debt on to your lowest rated card and cutting the rest up.

To keep your spending frugal its a great idea to work out what money you need for shopping and all the other incidentals and then drawing it in cash at the beginning of the month. You can then only use these funds for that month. This makes you very conscious of what you are spending where a bank card you can splash around without thinking.

Queenie June 2, 2010 at 12:22 pm

Come on now, what does Oprah know about debt?!?

good article though…

Kyle A.W.Salgado June 30, 2010 at 3:46 pm

My name is Kyle I’m 24 years old I live in Springfield mass 01104 and I’m going into this overwhelming break down, about 4 years ago I was shot in the head. Leaving me jobless and I was forced to collect ssi/ssdi. I don’t make very much but I try to do the best with what I got; about 2 years ago I was in my first car to car collision I freaked an I ran I didn’t know what I was doing before leaving the scene I slowly passed the person to see if he was all right he looked ok he was flailing his arms so I left. Now he is suing me for 10,000 or more.

I don’t know how to get myself out of this debt, not only do I owe this but I owe two other phone companies that I was once with, my current cell phone, my rent, and the loans I’ve borrowed from other people. What do I do? I don’t make enough money to cover it all and I’m on a waiting game, waiting for school to start to see if I can do something I’ve always wanted to do. Can you help me Oprah? With a lots of sugar and loving.

Yours truly,
Kyle Ant.Will.Salgado

Crazy Moe June 30, 2010 at 3:58 pm

To Kyle: sorry dude you are f***d. Get a better job or several jobs. Even if you have to work 24/7. That’s life and we’re all toiling in it.

In Debt Solutions July 15, 2010 at 1:59 am

I read with interest your above posts and all 15 comments. Unfortunately, it’s the same in the United Kingdom. Most people don’t think far enough ahead and just spend, spend, spend on their credit cards and worry about the bills later!

As for dieting? Have you seen the overweight people walking down the street lately?

J. Anthony April 7, 2011 at 10:25 am

A lot of Orpah’s plan seems like common knowledge. I want some unique ways!

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