Managing Debt

The Debt Diet Challenge Week #1: Vacation Brain

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Background: If you didn’t read the Credit.com introduction to The Debt Diet and the selection of our five participants, here’s what you need to know to catch up.  The Debt Diet is an online behavioral change program to help users get out of debt by putting aside $10 a day.  It was developed by Pro-Change Behavior Systems and Jean Chatzky, author of the best-selling Pay It Down and a coach on The Debt Diet series on the Oprah show.

Jean Chatzky read the applications solicited by Credit.com and chose 5 participants.  She got them started on The Debt Diet and is now speaking to them once a week, answering their questions and helping them to get off to a good start.  For their part, our participants are doing The Debt Diet exercises which include tracking their spending, negotiating monthly bills (using The Debt Diet scripts) and trying to modify their heavy-spending ways.  You can find The Debt Diet ($49.95) at jeanchatzky.com. The participants will blog regularly on Credit.com about their experiences with The Debt Diet.

Our five Debt Diet participants have been on the program now for about a week and a half.  I spoke to them about a week and a half ago to introduce them to the program and give them their log-in credentials.  At that time, I also asked them to send me a rough cash flow statement so that I could see what’s coming in each month and where it’s going and to start tracking their spending—explicitly.

A week after that (last Thursday in most cases), I checked in.  Here’s a look at the high (and low) lights.  (For the record—I’m not going to update you on every story every week, only on the things I thought were most interesting.)

[Related article: Jean Chatzky's Debt Diet: A Behind the Scenes Look]

Vacation Brain. Three out of five of the participants started our conversation with some version of this excuse.  “I didn’t do all that well this week because it was a vacation weekend.”  To that, I say—I get it.  But what I told them, and what you have to realize, is that there’s always something standing in your way, enticing you to spend.  That’s why the key to succeeding on any get-out-of-debt plan builds in some small amount of fun money (otherwise, like any diet, you’ll abandon it 1,2,3), as well as a mechanism for getting the money out of your spending (checking) account and into (savings) where you won’t spend it.  This is also why relying on the cash in your wallet is a helpful tool for some Debt Dieters; when it’s gone it’s gone.  You also have to look down the road and see what’s coming: Is it the 4th of July and how much will that likely cost?  Or is it your quarterly homeowners insurance premium?  Neither will trip you up if you plan for them.

A Spouse On The Same Page. Melissa and her husband had a breakthrough in week one.  As she entered this program, the two of them weren’t really working together to solve their six-figure debt crisis.  This week Melissa tackled it head on:  “I made my husband sit with me and printed out for him a total tally of all the debts we have, all our bills.  This time it finally registered with him,” she says.  In fact, he figured out that by the time their young daughter is out of daycare, if they can become debt free, they’d have an additional $4000 a month in disposable income.  That’s the sort of money that can build a solid future.  Importantly, one of The Debt Diet exercises led them to talk about the obstacles standing in their way.  For Melissa, it’s the fact that she feels she works so hard—at home and out of the house—she deserves a vacation, she deserves to treat herself.  For her husband, it’s not seeing the numbers decreasing fast enough.  “It’s good to have those things register in our minds,” she said. “That was such a turning point!”

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Counting the Money Before it’s Hatched »

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