Managing Debt

Jean Chatzky’s Debt Diet: A Behind the Scenes Look

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Jean Chatzky’s first debt diet was the result of a personal emergency. She was just out of college, writing for a women’s magazine, living in New York.

Her rent wasn’t even especially high, Chatzky says. But New York is a famously expensive city. All of a sudden, she racked up credit card debt equal to half her annual income.

“I wasn’t even opening my bills,” Chatzky says. “I put my head in the sand.”

Today Chatzky is the Today Show’s financial editor, telling millions of people how to reduce their debt and take control of their family finances. But when she faced her own debt crisis, she did it alone. She got a second job, cut her spending, and gutted it out.

“I didn’t really know the steps at that point,” she says.

A New Way

This experience early on eventually inspired Chatzky to help create a system of steps other people can follow to get out of debt. It’s called the Debt Diet. The system takes advice from “Pay it Down!”, Chatzky’s bestselling book, and combines it with behavioral and psychological research into how people decide to make and maintain healthy decisions in their lives.

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Chatzky believes, and many would agree, that getting into debt is easy. Getting out is hard. Doing it successfully often depends on how motivated each person is to live debt-free.

“In fact, we’re wired to make mistakes with our money,” she says. “We’re wired to prioritize today instead of tomorrow, we’re wired to take on too much risk. So a big part of the Debt Diet is enabling people to understand why we get in our own way.”

Rooted In Research, but Controversy Remains

The Debt Diet’s system for how to change our debt habits comes from the transtheoretical model of behavior modification, first developed by Dr. James Prochaska, director of the Cancer Prevention Research Center at the University of Rhode Island. It combines elements of different psychological models to focus on the most effective methods of changing our behavior.

The model breaks the change process into five steps:

  1. Precontemplation. The individual has no plans to make a change, and may not even be aware that a problem exists.
  2. Contemplation. The person knows there’s a problem, and plans to start addressing it sometime in the next six months.
  3. Preparation. Taking small steps to get ready to make a change.
  4. Action. The individual works hard to change.
  5. Maintenance. Now that the change is made, putting systems and habits in place to make sure the individual doesn’t regress.

Prochaska’s system prompts people to figure out where they are now in this process. To help people move forward, it places a lot of emphasis on helping people become aware of their own thoughts and emotions toward the problems they’re having. For people who want to stop smoking, for example, maybe they’re not entirely conscious of their own concern that giving up cigarettes might cause them to gain weight.

For people who want to reduce their debt, maybe they don’t realize how attached they are to buying a new car every two years. The program starts by asking questions to help people become more conscious of these attachments, and then challenges them to move in a healthier direction.

“In the contemplation step there is self-reevaluation,” says Sara Johnson, senior vice president of research and product development at Pro-Change Systems, a company that worked with Chatzky to create the Debt Diet. “Do you see yourself as a person who can make responsible financial choices? Or do you see yourself as being out of control?”

Controversy Remains (cont.)»

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