Oprah’s Debt Diet TV Show Series – How to get out of Debt and Save for Retirement

Oprah’s Debt Diet TV Show Series – How to get out of Debt and Save for Retirement

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On the Oprah TV show yesterday, she had a vast amount of information about planning to get out of debt and focusing on retirement. She had last year’s guest on the show to tell how they managed on Oprah's Debt Diet. Oprah also had members of the audience work out their finances backstage while the show was being taped to find a strategy to help these folks save money.

The audience members selected was Lindsay, 25, and Matt, 27, who are expecting their first baby. The young couple makes around $97,000 per year and has $6,000 in credit card debt and $65,000 in student loans. The second couple is Kathy and Steve who are both 51 years old. They have 4 adult children, with 2 of them living at home. They have a yearly income of $100,000 and have $34,000 in credit card debt. The third audience member selected was Diana, 23, who is single and makes $50,000 per year and has $6,000 in credit card debt along with a $37,000 student loan.

Oprah had the Jean Catzky, the author of “Make Money, Not Excuses: Wake Up, Take Charge, and Overcome Your Financial Fears Forever” explain how to handle your money, especially us women. Catzky has also consulted with as a financial advisor for the families that have been on Oprah’s Debt Diet shows in the past.

A middle aged woman tells Oprah and her audience about how she was foolish to trust her husband with the finances. It is an easy trap to fall into. She was previous living as a single mom with her children and worked so hard to make it. She met her second husband that would take care of all the bills. She was married for 13 years. She admits that she didn’t open the credit card bills when they would arrive, and would just give it to her husband to take care of.

The sad part was the finances were spiraling into huge debts and when the husband surprised her with a divorce, she found out she was in debt and she had no money. She has relied on her family to help her get through things financially. She had to sell her house and move out to avoid foreclosure. She realizes now that she shouldn’t have been letting her spouse control the finances.

Catzky recommends that you have your own savings account in your own name. Make sure to participate in paying the bills, so that you know what your financial situation is and to always work toward building a savings for your future retirement.

Catzky says that women have typical excuses why they are not responsible for their finances. She says that women should have more money than they do.

Top 6 reasons Catzky says women use as excuses are:
1. They are not good with money.
2. You only live once.
3. They are afraid to invest money because they fear losing it.
4. I don’t have the time to plan my finances.
5. They are too old and it would be too late to turn it around.
6. My husband takes care of all the finances.

Catzky suggests everyone plan for a retirement. If you look up on the internet and search for an online savings calculator you will be able to help set up your financial plan. It will help determine the amount of money that you need to save each month in order to have your financial retirement goals met. It will give you an idea if you will need to make more money and how much more.

The divorced lady that was left for broke said that she needed $2,000 to cover basic living essentials. Catzky also said that she needs to be able to save enough money for retirement and also be able to cover taxes. Instead of $2,000, the monthly income should be $3,800 a month. If she saves for the next 20 years, she will be able to retire with $600,000 in savings to help her in her retirement years.

Another tip that Catzky tells us that we should do is to maximize your income. That means that you need to set income goals. If you know where you want to go financially you can make adjustments to your life to increase your income. She suggests that you could ask for a raise. You could raise your rates if you are self-employed. She also suggests working an extra hour each week to add to your income.

One of the most important lessons to avoid financial ruin is to always spend less than you make. Catzky warns that bad spending habits can put us into debt quickly. If you are shopping for anything, whether it is a $3 item or a $300 item, she asks you to always pause before you buy it. Ask yourself why you are buying this, is it really necessary? Take time to think about a purchase before you take the plunge. She also suggests that you pay your bills in time, use your debit card for shopping and to comparison price shop for the best deal in town. Be leery of finding happiness in buying things. If you find yourself shopping at the mall often and purchasing things that aren’t needed you might be setting yourself to get into debt.

If you feel that you are spending more than you are making, but you don’t know where your money is going, Catzky suggests taking a notepad with you everywhere and logging every penny that you spent. You often will find areas that you spend a lot of money in unexpected places.

Catzky also says that you need to have a constant savings and investment plan in action. It should be an automatic monthly occurrence. You can take the money from your checking and put it into a high interest paying money market savings account that pays 4 – 5 percent, or a 401K retirement savings account.

Once you start to achieve a savings for your retirement, you should also make sure that you have proper insurance coverage, including health and life insurance policies. Having insurance with adequate coverage can help offset a major unexpected event.

You can start your own financial self-help group with your friends. A group of young ladies called the Smart Cookies have been meeting weekly to help each other get out of debt and save money.

When the Smart Cookies meet they discuss ways to save money and to encourage each one to attain their financial goals. They have made extra cash by walking the dogs. They also share magazines and clothes. They don’t buy expensive fashions anymore. One of the ladies was spending $600 a month on clothing. Another one saved money by living without a car for a savings of $700 a month. Another one saved $50 extra dollars a month by parking on the street instead of paying for a parking structure. Overall the group has saved $15,000. They have paid off $15,000 in debt, and they have an overall increased income of $45,000 for all six in the group.

The last part of the Oprah Winfrey show was to check in with the families that originally participated in the Debt Diet last year. Two of the couples were successful with turning around their financial situation while the third couple ended up further in debt.

The Bradley’s came back even stronger since the debt diet program. They had marital problems where they fought often about finances when we first met them last year. But now, they are getting along great, they said that they do not fight very often at all, and never about financial problems. They have both worked together to make the changes needed to get out of debt. When they started they had an income of $102,000 per year and were $170,000 in debt. In just one year they have paid off $50,000 of their debt.

They were successful because they not only made more money. The wife worked 2 full time jobs, and the husband worked overtime quite often. They also changed their spending habits and started saving money. If the wife wants to buy something, she will call and ask her husband first before buying it. If they continue doing what they are doing they will have $1.7 million dollars for retirement.

Dan and Sally are both school teachers that participated in the Debt Diet. They earned $92,000 yearly income last year and were $115,000 in debt. One year later the couple has paid off $26,000 of their debt. They admitted that before they were compulsive spenders. They had 12 credit cards that they had maxed out. One of the first things they did on the debt diet was to get lower interest rates and credit card fees just by calling on the telephone. They had a debt board with a plan that shows which card to pay off next. This debt board was seen every day as a reminder where they were on paying off their debt.

Dan and Sally both increased their income by $19,000 with extra summer school teaching, coaching, and increasing rates for their lawn care business. They learned that it takes a plan to get out of debt and there is no quick way out, and it takes a lot of work to get out of debt. They feel a great burden has been lifted, and the reward of getting out of debt is worth the changes.

The Widlunds unfortunately ended up further in debt. They added $37,000 to their previous debt of $81,000. Their monthly income a year ago was $80,000, which they have increased this by $15,000. They weren’t committed and at some point they stopped talking with the financial counselor for getting advice.

They refinanced their home and cashed out the equity to pay off their debts. This extra equity that they cashed out allowed them to spend it and created more debt for them. While refinancing your debt can be a way to simplify the situation, you have to be extremely careful not to get yourself further into debt. The reason they continued to go into debt was that they did not change their spending habits.

At the end of the show Oprah had the selected audience member’s financial plans set and they shared what changes they could do to have financial independence. The first couple the husband will downgrade his car and sell his Playstation. The extra money not spent on the car payments would equal $923,000 at the time of retirement.

The 51 year old couple reduced their credit card interest rate from 29 percent down to a much lower 5.9 percent interest rate. They are no longer going to paying for their adult sons expenses which add up to around $700 per month. They estimate that these changes will add up to $450,000 retirement savings.

The single women will be refinancing her student loan to save $66 per month off the monthly payment. She is going to cancel her gym membership that she never uses. She is going to get a roommate to save $300 per month off her rent. This adds up to $409 per month that she can put towards a retirement savings account. If she does this change for the rest of her working years they estimate she will have $920,000 saved when she retires.

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