Friday, February 24, 2006

Oprah and the "Debt Diet"

As most money-blog readers probably know, Oprah has started up a weekly (Fridays) series called "Debt Diet." Even if you haven't heard of it, you can probably imagine what the gist is, right?

I missed the series' premiere last week, and look forward to watching part two this evening. (My local ABC affiliate re-airs Oprah's show after Nightline.)

I bring this up only because if you visit Oprah's site, you can get up to speed with what's happening on the show. Suffice to say that the three families getting "help" here are in real bad need of it. Seriously. I ain't lyin'.

You can also watch several minutes of video from Oprah's "After the Show" show, where she's talking to Jean Chatzky, Glinda Bridgforth, and David Bach. There's a decent amount of fluff ... until Oprah takes a question from the audience.

The audience member, a man, stands up and tells everyone that he and his wife have ~$150k in student-loan debt burdening them. He asks Oprah and her stage full of experts, "Where does that put us?"

Jean Chatzky's answer made me absolutely cringe. Enjoy:

After the Show: Debt Diet

It's the fourth video down, near the heading, "Ask the Experts." (The three other videos are worth watching, too, if you have a few minutes.)

You know, I used to think the way Jean Chatzky thinks. But no more.

Student loan debt isn't "good" debt. It's debt used for (usually) a "good" purpose. But it is still debt, and if you're already living paycheck to paycheck, there's nothing "cheap" about it. To sugarcoat this is to perform a huge disservice to anyone that bothers to listen.

So far in this series, most of what I've gathered from Oprah's experts (and it's all been from Oprah's website) has been, in my opinion, to a level not much better than average. Then again, it's hard to tell much from such a heavily-edited version.

But that won't keep me from watching the train wreck.


— Posted by Michael @ 7:35 PM


Jean Chatzky from the Today show and Money & Lesiure magazine is working with the first family, Jean caved in to the family she is working with by allowing the mother to basically spend whatever she wants every week on her hair! Supposedly, black women have a thing for thier hair (Oprah agreed). They had a big fight right in the salon and in the end Jean told her "I give up on the hair" Hmmmm. I think in the first show they said she was spending close to $150 a month on her hair!

Also, she allowed the mother of the household $20 a DAY for blow money! that's $600 a month!!!!!! I guess Jean thinks since this women is used to making ATM withdrawls of $1,500 at a time to go shopping she can't go cold turkey with her or she won't have a chance at all.

At the end of the week the mom had over spent significantly on her budget of $140 while her husband had only spent $43 and had $97 left over.

The shopaholic did say she hadn't bought anything for herself since they had started her plan, but she was buying things for her kids. She also said she went to a department store and tried several outfits on but didn't buy a thing.

All in all, this lady isn't trying very hard, maybe she will slowing come around after she sees some results. But I think they have real issues in their marriage. The wife is very overbearing as the husband just sits there quite. I can see her telling him when to jump and how high! DR would have had them in marriage counseling I think.

To start the show they took over 12 hours just to sort through all of her old bills that she hadn't even opened yet. Amazing!

The second family is advised by Glinda Bridgforth from CNN and Essence magazine. The first thing she did was get online and check their credit score (I think it was 541) and she said the median average is 723 if my memory serves me correctly. Then she said we will track this and watch as it slowly goes up over time. Okay, if there goal here is to get these people out of debt and stay out of debt why does she want them to have the ability to borrow lost and lost of money some day?

Anyways, she had them cut up their DEBIT cards because they had incurred so many over draft fees. They were using it like a CC and not even paying attention if there was money in the account or not! She put them on a cash only envelope system and told them each time they took money out of the envelope they had to write on the outside of it how much they spent and on what. Good plan, except the husband and wife were devising ways to cheat her system and the cameras caught the husband buying beer and not recording it on the envelope.

When they questioned him he said "sometimes you gotta do what ya gotta do"
They said in the studio they don't finght anymore and it is going really good, but I don't know if I believe them. The mom refused to sell any of her teenage daughters clothes and the dad said well she told me she only wears 4 pair of the 350 pairs of jeans that she has!!!!!!!!!!I don't kow if that was an exageration or not but this kid is way spoiled so It wouldn't suprise me.

Issues to be covered yet are how are these families going to deal with Murphy (although the second family had a small crisis when their daughters car got towed and so they borrowed the $80 from their other daughter to get it back) and the other issue as I mentioned briefly above is their relationships. These tow coouples treat eachother horrible and Dave Ramsey knows how it plays a part of this and I think would have addressed this by now where these people are just money gurus. It's about LIFE and Money. Sound familiar?


wow, I lowe Oprah and her great ideas...


yes. . . I have some reservations about the shotgun approach to these shows (and the lack of severity geared toward the families). For one, the woman who had to spend all that money on hair stylists = a total spoiled brat, and the fact that nobody really called her on it (or her the problems in their marriage) is pretty damning. What's more, I think that family was making something like $100k annually, only to spend $150k. Considering how unwilling the mother was to make change (and the sad fact that she was passing down her mentality that "personal self-worth comes from material possessions" to her young daughter), it was awful that nobody called her on her irresponsible behavior. I know so many people like the families seen on the show (something I'll give some credit to the show for. . . i.e., getting fairly true to reality families), but I'm starting to feel like these people don't deserve the help they're getting. Of course, they *really* need this help (and we, as a society, pay when theses family "go under"), but I'm starting to get impatient with ignorant americans living beyond their means, and then resisting sensible spending habits like a two year old throwing a tantrum would. Ugh. . . yet another reason that I try to avoid watching TV (just gets me riled). I guess I'm glad Oprah's doing this, though. . . her show is influential enough that even getting her audience to think about their finances could be a vast improvement.


I've been in the credit business for over 20 years and have seen a growing trend with student loan debt. It's GROWING! I routinely see $30K in student loans, often much more than that. What is disturbing to me is that so many of these people with this student loan debt are working in jobs that do not require a college degree, and aren't earning the income that you'd expect.

I have a daughter who is a junior in college and another in high school. It is my goal to get them out of school without any student loan debt. So far, so good, but it's a struggle with room and board. The tuition, fees and books for a state university isn't too bad, it's the other costs that kill you.


Had to add my 2-cents to the discussion. Since my comments were too voluminous for Oprah's message board yesterday, I had to split them into 2. Here's what I said (sorry for the length, Michael!):

"We all know what good Oprah has accomplished throughout her 51 years, by utilizing her many gifts, esp. her visibility, power, and financial resources. Thus, I was excited to hear her next "project" was tackling America's debt problem! (I'm a CPA, have completed a Financial Planning Certificate program, and will (eventually!) sit for the CFP exam to receive certification. Thus, I'm (almost) a financial planning expert.)
I've watched both episodes now, and it's coming off like Reality TV to me (and that's not good!!)I expected more from Oprah and these financial advisors. Perhaps by the third show, things will turn around...Oprah, I've been a loyal fan for your whole WLS career--I'll keep the faith a bit longer. In the meantime, this is what could be included in your series to score some points with me: 1) Obviously these families have shopaholic tendencies...why wasn't counseling part of your 1st show? There are obviously addictions involved and some psychological reason they are undermining their financial future. Some can be attributed to financial ignorance...but c'mon! Let's get to the root cause of their disastrous lifestyles. 2) Can you please help these men find some backbone? (Yes, I do mean Men, since it seems the women have caused the majority of the destruction.) For the Bradleys to eat THREE meals out a day is beyond comprehension! What disgusted me the most, as an avid environmentalist, was that Mrs.Bradley was too lazy to do dishes ("I don't like doing dishes" is what I believe she said)and used plastic SOLO tableware on the rare occasion they did eat at home. So much for teaching your children any kind of work ethic! Hello, can you say "chore?" If she hates doing the dishes, then her son and daughter could be assigned that task as part of helping the family unit. Regardless, there's a lot of things people don't like doing...that's why it's called "work" and why you're not living in a European palace and being called "Your Majesty!"
The Widlunds' daughters are spoiled rotten...God help the mothers who will have these girls as daughter-in-laws someday...They remind me of the family who wanted to teach their children to be financially responsible: the dad (not the son--he was busy sleeping to noon) cleaned the pool, the daughter wore the mom's Cartier watch, etc....Put 'em to work and keep them off the streets!! They're old enough to be buying their own clothes. From 13 on, I bought most of mine w/babysitting, and then, waitressing money.
3) Jean should have had the Bradleys sell 1-2 MORE cars to alleviate their cash flow/debt load problems. Why couldn't a reliable used car be purchased instead?
4) Jean should NOT have given in on the hair issue w/ Mrs. Bradley. Yeah, yeah, yeah...we all like to look nice, but Mrs. Bradley is not committed to doing ANYTHING and EVERYTHING to take ownership of her actions and to secure her family's future. If she were, there wouldn't be another piano in the house. She should go to her children's school, her church, a neighbor, etc. to obtain the USE of a piano. My grandparents were poor, never had a house, lived check to check, etc. Their children learned keyboarding from a cardboard "model" of a keyboard. So where's there's a will, there's a way. Their clothes were sewn by my great-grandmother and they lived their whole lives without the "modern" conveniences. That's called being able to distinguish a NEED from a WANT! A great book that teaches this and so much more is "Your Money or Your Life" by Joe Dominguez. Get it from your library, since I think it is now out of print. To me, NEEDS are love, food, some level of clothing, and shelter. Everything else is a want. Perhaps the families need to be reminded of this fact.
5) Have they been counseled re: the possibility of selling their homes? They all appear to be in over their heads...the time to let go of pride is now if they truly want to improve their situation.
6) Are the basics of financial planning, (i.e. balancing a check register, being a smart shopper, monitoring credit and net worth, etc.) going to be taught so they can be responsible going forward?
7) When are we going to see measurable progress in their financial situations? The evidence I'd like to see is their Net Worth Statements before the professionals stepped in, and then periodic Net Worth Statements at the 3-, 6-, 12-, 18-month marks.

Oprah, next time you find families enduring financial hardship, please avoid signing on the drama queens. It may score points with the Jerry Springer fans out there, but you're turning off the rest of us!"


Some great comments on this. Thanks to everyone!

I've now watched Part 2 of the "Debt Diet" twice. For the most part, I'd say Chatzky has done okay. She gave in too easily on the hair issue, though, and is not going as tough on some other things as I'd like. Or if she is, they've edited it out of what's been aired. Given her views on student loans, though, as evidenced by the Oprah video above, I suspect she's simply not playing hardball.

I am most curious to see how David Bach handles his allotted family. There are WAY too many things that he and I disagree on, and I just wonder what advice he'll dish out on camera, as opposed to in his books.


I agree with the hair issue. It seems pretty outlandish to me, and I would think to most outside observers. I think the problem here is that there is a cultural divide, and it has been made into a, "you just don't understand" when in fact, it is simply another area of overspending, and lack of willingness to compromise and sacrifice.

I with this was a weekly ongoing TV show.


Also, with regard to David Back, he'll probably just tell them to go buy a house. It'll solve their problems.

Sorry, but I have lost respect for that guy. I thought The Automatic Millionaire, and Finish Rich were good (although they were the same book), but the column that he wrote for Yahoo Finance was terrible. His latest "crusade" to get everyone to buy a home seems rather irresponsible.

In the article, he give a scenario where a renter pays $1500, but if he bought the place that he is renting for $200k, his mortgage payments would be roughly the same. Please tell me where you could rent for $1500 and buy that place for $200k.

Then he talks about the joy that is leverage and how it can boost your total return on your house. He makes not even one mention of the downside of leverage if prices fall.

Sorry, didn't mean to get off topic.



Oh, you're gonna get me started on David Bach -- the guy who tells folks that if they make $50k per year, they can likely afford a $1209/month mortgage payment.

(Our household income is $60k+, and there's NO WAY we could handle a mortgage payment like that.)

I'll be writing about THAT topic soon.


Dear Michael and LAMoneyGuy:

I can try to relay a personal msg/or questions to David Bach for you, since you love him so much. Should I pack tomatoes, too? He's coming to our fair city to plug his Automatic Millionaire Homeowner book and I signed up for this FREE seminar (otherwise I wouldn't have done it--I get his new book for free, too...Guess he has to give them away if he's relying on folks like you to support him!!)

Seriously, I agree that his books have been a bit weak lately. But let's face facts: to become financially secure you need to spend less than you make and savings must be a habit. God bless him for making millions off these 2 nuggets of truth!

In a little over a month, I'll provide an update!

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]