Dr Oz: One-Week Reality Check
Dr Oz was talking to a woman named Leah who was $13,600 in credit card debt. They were joined by financial expert Ric Edelman, who had a plan for conquering stress and credit card debt. First, Ric wants you to ignore budgeting, which may come as a surprise. Ric explained that budgeting is a complete waste of time because people have a hard time sticking to it, plus unexpected things come up. He said there’s a much better approach, which he calls the “one-week reality check.”
All you have to do is continue doing exactly what you’re doing, except track it for a week and then tally it up to discover where your money really is going. When people track their expenses, they’re shocked when they see where their money is actually going. He said by doing that, it hits you in the face and common sense makes you realize you need to stop the bad habits.
Dr Oz: Focus On Credit Card With Highest Interest
The next big step is to tackle the debt by focusing on one credit card at a time. Ric explained that the average American has six credit cards that have different balances, interest rates, and payments required. It’s easier to focus on just one at one time.
Dr Oz took five of Leah’s credit cards and displayed the money owed on them, and their interest rate. Ric explained that the one you should pay first isn’t actually the one with the lowest balance, because you should instead go by the interest rate. Leah had a card with 29% interest that was causing the most damage. He said first, Leah should focus on making the minimum payment on every card because you don’t want to be late on a payment. Then, take all the extra cash and throw it all at the card with the highest interest rate.
Dr Oz: Freeze Your Credit Card
Ric said if the credit card is causing a lot of stress and damage because of high interest rates, you can take it out of your wallet, put it in a jar of water, and shove it into the freezer to freeze it. That way it would take a lot of trouble to use that card.
Dr Oz: Double Your Payments
Ric then shared that you want to recognize that the longer it takes you to pay off your debt, the more money you’re going to be paying off because of interest. Ric explained that on a card with a $2,000 balance and an interest rate of 17%, if you make the minimum monthly payment, it will take you 21 years to pay it off. If you double the payment every month, you’ll get rid of the card in just two years.
Leah said she was willing to work with Ric to conquer her stress and credit card debt, so that one day she could take her eight-year-old daughter to Disney.