How to become Debt Free – Oprah’s Debt Diet says Planning and Action Needed

July 17th, 2006

Pile of Money

America may have really been changed by Oprah’s Debt Diet Series that she had on air. She has been airing repeats this summer if you have missed the first run. The reality is that we have not spent enough time working on our finances and we are not being responsible with spending.

Don’t get caught up in needing to spend money on new things. Try to find new ways to spend your time doing inexpensive or free things to do. If you like to shop, and you shop often, you will spend money. One way to avoid spending money is to not go shopping as often. Set aside a certain amount of money for the shopping trip so that you will not over spend. You might find that you could go to your local library instead of the bookstore. You could have an outdoor barbeque at home instead of dining at a restaurant. You might want to rent a video to watch at home instead of going to the movie theater.

Check over your utility bills and see if you can trim down your bill. You may have cell phone service that could be changed over to a pre-paid cell phone that could save you a bundle. You don’t need to have a cell phone; however having one for emergencies can be helpful. Check into your regular phone line too. Shop around for the best long distance package. If you have extra features like caller ID or call waiting, you may be able to get a less expensive package.

If you can change your electric consumption habits use slightly less each month, it could add up to some savings. Even if you change your thermostat just a couple of degrees it can add up to big savings. Closing your curtains during the heat or in the cold can help insulate windows to further save more money. Changing out light bulbs for fluorescent low-energy bulbs can save money too.

Shop around for automobile and home owner’s insurance to make sure you are still getting a good rate. Even with the discounts for being a long time customer, you could still be paying more than you need too. Don’t over insure your home, most home insurance policies will sometimes depreciate the value of your home or will pay off your loan first whichever is cheaper.

Make sure to save your money before buying something. Getting into the habit of saving your money to buy something will help you break out of the credit card IOU’s habit. The more you get away from the IOU’s the more you will have a chance of getting debt free. Consider paying cash for everything.

If you own a home you might want to consider consolidating your credit card debt into a second home-equity mortgage loan. This can help make your interest rates lower; it can also lower your overall monthly minimum payments. Check with your taxman to see if the interest that you paid on the 2^nd mortgage is deductible. You might actually get a break on your taxes with the extra interest you paid with the debt consolidation with a home equity loan. Personal credit card debt interest paid is not deductible on your taxes.

Be willing to go without sometimes. Know that little sacrifices will add up to saving money. It can be the difference of making it and paying off the debt in a timely manner. Also remind yourself that once the debt is gone you will have more income available to you as you are not paying all that money in interest each month. Become motivated about getting rid of the debt, but also keep the motivation going.

Take notes and continually figure your budget. The more that you can write down your expenses the more you have an understanding where your money is going. It will help you set up a concrete plan on how to pay off your debts. You need to know where your money is being spent and how stop spending money. Every family has different areas that could be improved on. This could mean not eating out at restaurants, not buying new clothes, or skipping the movie theater. We have grown accustomed to these habits, which may need to be broken in order to succeed financially.

Once you see that your financial situation is going on the right track you will happy with the changes and sacrifices that you have made. Oprah named her show “The Debt Diet” for a reason; it isn’t easy to get out of debt, just light it isn’t easy to lose weight. We know it is good for us but we don’t like it one bit, but once we accomplish our goals we reap all the benefits.