Debt Diet by Oprah Winfrey – Debt Management for a Rookie
The famous Debt Diet Program
The Debt Diet is a debt management program that was first described in The Oprah Winfrey Show (17th of February, 2006) and later popularized by the following series. Three professional finance managers were invited to the show to try to make up an easy step-by-step debt management plan that will easily be understood by an ordinary person trying to get rid of his/her debt problems.
Oprah Winfrey referred to The American Debt Diet as a collection of educational, solid purchasing and budgeting recommendations intended for consumers willing to free themselves from debt with or without resorting to professional help.
There are 4 main types of debt diet – a given debtor may choose a perfect one for himself/herself according to the amount of money he/she is currently due and the size of his/her income. The greater is the difference between these two – the more intensive should be the person’s debt diet. Basically, this simple debt management plan considers the debt to be a cycle comprising 4 different stages – each corresponding with a separate type of a debt diet. The very first thing that a debtor has to do when taking on the American Debt Diet is understanding what stage he/she is currently at – and picking up an appropriate program. This article lists these 4 stages of a debt cycle – and gives recommendations on how to handle each of them.
Stage 1: You don’t have any debt at all. The very best stage of a debt cycle – the stage when you don’t owe anything to anyone. However, at this stage you might also want to be aware of your credit score movements. You might be surprised to hear that but the absence of debt actually produces a negative impact on a person’s credit history due to the lack of records about his/her payoffs.
Stage 2: You are in debt, which you manage to pay off steadily according to the previously fixed schedule. The number of consumers going through this stage of the debt cycle is the biggest of all. However, the great majority of these people do not have too much funds left over for themselves after they make their monthly payments – basically due to the high-interest credit card debts that most of them owe. And the creditors only keep on stimulating such people into getting stuck into such debts deeper and deeper – simply because it is very profitable for them.
This stage is treacherous due to the fact that it can easily flow into Stage 3: The Debt Trap without the debtor even noticing it. If you think you will be able to keep on with this stage without running the risks of overspending on your credit, stick to the “DIY” debt management. However, if you feel you’re getting closer and closer to the edge of the debt catastrophe, you might want to resort to the help of a professional debt management practitioner until it is too late.
Stage 3: The Debt Trap. You are in debt, and you notice that your take-home monthly wages are barely enough to make the minimum payments on your credit. Basically, that’s the stage at which all creditor companies want you to be exactly – you’re still managing to pay them everything you can, they are getting the best out of their interest rates and everything – but you are already on the verge of bankruptcy…
In general, that’s the stage of the debt cycle when you are already strongly advised to get yourself a professional debt management consultant. Sure, you still have pretty high chances to be able to cut your expenses and try to get out of the debt on your own – but the recommendations of an experienced debt relief service provider will definitely be useful for you to define your financial situation correctly and pick up the best (and, which is the most important, a realistic) way of paying off everything that you owe without getting into the worst condition that a delinquent debt can lead to – Stage 4: Oncoming Bankruptcy.
Stage 4: Oncoming Bankruptcy. You are in debt – and you understand that you can’t manage to make the minimum monthly payments any longer. There’s a huge number of events that can easily push you into the Stage 4 of the debt cycle, the most wide-spread of which are: divorce, medical condition that your insurance is not able to handle, sack, etc. So is filing for bankruptcy the only way out?
No! Debt management services offer a huge amount of non-bankruptcy debt relief opportunities that you are able to resort to if you want. Don’t waste your time and seek for professional assistance – that’s one of the cases when being fast often proves to be a truly vital quality of a debtor.
Sure, the American Debt Diet is not much more than a fool’s guide to debt management. However, it may turn out to be extremely useful for everyone willing to keep track of their debts – and manage them successfully either on their own or with the help of professionals.
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