Oprahs Debt Diet

Oprahs Debt Diet What It Is and How You Can Benefit from It

In February 2006, Oprah Winfrey challenged her television viewers and all other Americans to get out of debt. If you are currently suffering from debt than you know that it is difficult to overcome. That is why Oprah and a number of financial experts developed the Oprah Debt Diet.

Oprah’s Debt Diet includes a step-by-step guide on overcoming debt. It is important to note that getting out of debt will not happen over night. That is why Oprah’s step-by-step guide is important because it helps debt ridden individuals change their daily habits over time. If you are currently searching for a way out of debt you are encouraged to read on and learn a few of the steps in Oprah’s Debt Diet.

Step # 1 - Determine Exactly How Much Debt You Have

This first step is extremely important because it is impossible to get completely out of debt if you are unaware of all of your debt. The easiest way to determine how much debt you owe is by collecting all of your current and overdue bills or by requesting a copy of your credit report. Your credit report can easily be obtained from one of the three main credit bureaus, Experian, TransUnion, and Equifax.

Step #2 - Eliminate Unnecessary Expenses

Like many other Americans, it is likely that you grab a soda or coffee while at work. Those items are expensive and they quickly add up. Did you know that simply by eliminating unnecessary purchases you could get out of debt a lot quicker than you may have originally thought? Tracking all of your purchases for one week is a great way to know what items you can live without purchasing.

Step #3 - Learn About the Credit Cards You Have

Many Americans are falling victim to late fees, annual fees, and high interest rates without even knowing it. The best way to prevent credit card debt is by knowing how your credit card works. It is also important to know that minimum payments may sound great, but in reality they are a financial death trap because they only keep you in debt longer. If you successfully follow step 2, you could use your extra money to make more than the minimum payments each month.

Step #4 - Learn to Cut Back on Your Spending Habits

Step 2 mentioned eliminating unnecessary purchases. Eliminating unnecessary purchases is a great way to get out of debt, but it can be difficult to do. Individuals who are unable to control their spending habits are encouraged to not carry credit or debit cards with them. If a credit card is used, it is important to make the payments on time and pay as much of it as you can. It is also important not to obtain new credit cards during this time or accept offers of increased spending limits.

Step # 5 - Develop a Monthly Spending Plan

A monthly spending plan, also commonly referred to as budget, is a great way to allocate money to necessary expenses. A monthly budget is the best because it can include holidays, birthdays, and other special events that only occur during certain months. Your budget should include all housing costs and expenses, transportation expenses, other miscellaneous expenses, and the debt that you owe.

Step #6 - Develop Ways to Increase Your Income

When developing a budget, there are many Americans who realize that they do not make enough money to pay for all of their expenses and debt. If you are one of those individuals then you may want to consider finding ways to obtain extra income. Extra income does not necessarily mean having to get a second job. It can also mean altering your lifestyle. The Debt Diet recommends going without a vehicle if possible and relocating if your current home expenses are too high.

Step #7 - Develop a Customized Plan to Get Rid of Your Debt

A customized plan can be developed simply by prioritizing your debt. This means that you will examine all of your debt and determine which debt you need to pay off first. The date of the debt, how much it is, and what can happen if you don’t pay it should be examined when deciding what or who to payoff first.

Step #8 - Determine Why You Spend Money and Try to Change It

Many unnecessary purchases are made when individuals are feeling angry or depressed. It is also possible that you are an impulse buyer or that you may have a shopping addiction. Whatever the reason for your unnecessary purchases, there are ways to change it. Sometimes this process may require professional help, but other times it can simply be cured with other activities.

Oprah’s Debt Diet worked for the guests on her show and there is no reason why it cannot work for you. As previously mentioned, getting out of debt is difficult and it will not happen over night. If you sway away from any of the above mentioned steps do not give up. Try as many times as it may take. Once you make the steps of the Oprah Debt Diet a part of your daily routine you will be on your way to being debt free.

Shelly Lowery is a successful writer with an interest in celebrities like Oprah Winfrey.

This entry was posted on Saturday, April 29th, 2006 and is filed under Debt Consolidation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.