I am NOT a regular viewer of the Oprah Winfrey Show, but I happened to catch a show she was doing on money management, and thought it was interesting. Apparantly this was part of a series she features every Friday called "The Debt Diet." She spotlights various people with varying amounts of debt, and then talks with financial "experts" as to what these people might do to get out of debt. You can probably go Oprah's website and get more information, but here are the notes I took:
The Steps of the Debt Diet
1. Calculate how much debt you have
2. Keep track of everything you spend
3. Learn the credit card game
4. Stop spending
5. Create a monthly spending plan
6. Grow your income
7. Prioritize debts
8. Raise your credit score
9. Plan your spending--Saving is the key to the future.
Notes to #2. A Chicago DJ carries a small notebook with him and religiously writes down everything he spends. He shares money-saving ideas on air. When he heard about Oprah's debt diet, he encouraged radio listeners to catch Oprah's program.
There are reasons to keep track of every penny your spend. One reason is to take responsibility for your actions. There it is in black and white. You cannot change behavior if you deny it's happening or are simply unaware. If you keep a record and review it, you become aware. The radio guy was appalled at how much snacks were costing him. At the end of a week, daily sodas and chips added up to a lot. He chose to take snacks and bottled water from home and was pleased at how much money he saved doing that.
Notes to #3:
The credit card company that LOVES you is the one that doesn't have your business. If the interest rate on your credit card is high, call and ask the company to lower the rate. If they are charging you fees, ask them to drop the fees. If the company does not respond in your favor, get on the phone and find a company that will, or open the mail offering you a credit card. Transfer the balance to a card that does NOT charge you a balance transfer fee or any other kind of fee. They want your business and are willing to make those offers. You MUST, however, read and follow the rules in the fine print. One late payment (not just to the credit card company--it could be the local utility company)will have serious consequences--like a MAJOR and IMMEDIATE increase in interest rate on the card.
Notes to #5:
HOW MUCH SHOULD I BE SPENDING?
SAVING: 10% of your take-home pay. PAY YOURSELF FIRST. Put this money in a 401K or a special account--NOT in your checking account where you can easily access it.
HOUSING: 35% of your take-home pay. This includes your mortgage payment, insurance, taxes, repairs, cost of maintaining your home
TRANSPORTATION: 15% of your take-home pay. This includes car payments, gas, insurance, service/maintainence for your car, parking, if you drive, or train, cab fare, bus pass, etc. if you don't.
If you want to buy a car, you can do the math and figure out if the monthly car payments plus insurance, cost of gasoline, etc. will be within the 15% suggested by the experts. If if's higher, experts would recommend a less expensive car.
OTHER: 25% This is "your life" or what you may spend on eating out, entertainment, vacations, hobbies, etc.
DEBT: 15% of your take-home pay.
It wasn't clear to me where things like groceries, utilities, etc. fit into this break-down. Is that part of housing and/or part of "your life"?
Notes to #6. Grow your income. People with debt to pay down went out and looked for ways to increase their income. They took on part-time jobs like yard work, tutoring, child care, etc. They had to be aggressive, and ask. One guy who did yard work raised prices to cover the increased cost of gasoline. The experts told people to INVEST one half of what they added to their income.
One woman living in New York, earning $45k annually decided she was tired of seeing so much money going through her hands. For a year she gave up spending for anything except the absolute bare necessities. She and her significant other (also earning an income--but not violating the bare necessities rule) stopped eating out, stopped going out to movies, or concerts, stopped buying books, etc. They found that they stopped arguing about money, they had more time to spend with each other, they could borrow movies from the library, they could enjoy many places in the community at no cost, they had time for walking, they got more excercise--a long list of positive benefits, and at the end of one year they had saved $13,000.
Notes to #7 Prioritize your debt. Some things you go into debt for--like a house or a car--can be lost for failure to make payments. So "protect" those investments by making those payments.
The bumblebees have returned to the balcony. Despite the fresh coat of paint, they still insist on drilling perfectly cylindrical holes into the underside of the beams (you can see 4 such holes in this picture). The bees are also a bit messy about their work--note the brownish stuff splattered on the uprights under the two holes on the left. What they do with these holes is a mystery to me. I had hoped our critter problems would go away after we got the vinyl siding, but the balcony is still vulnerable. At least the squirrels are leaving us alone!
Finally on a happier note--the bottlebrush buckeye is alive!! I had gotten a small plant last summer from my friend, Tony Marcellino, Sr., and it survived the transplanting, a hot summer where all the leaves fell off prematurely, and the winter. I feared it was dead, but there is a lot of new growth and vigor. Tony passed away last fall from complications due to lupus. I am glad to have this remembrance of him. This picture was taken serveral weeks ago when the new leaves were in the process of unfolding.
Here is a picture of Tony last Spring by the large bottlebrush buckeye in front of his house. It is in full bloom with many "bottlebrushes".
Here is a close-up of a bottlebrush bloom:
