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

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.)»

Rooted In Research, but Controversy Remains (cont.)

There is some disagreement among psychologists as to whether the transtheoretical model actually works. Some research suggests that dividing behavior change into staged periods is random and ineffective. Other studies find that it neglects to include things like punishment and reward, which are known to influence human behavior. Still others find that the transtheoretical model is simply less effective than other models.

“The model has been little more than a security blanket for researchers and clinicians,” Robert West of the Brook House University College of London wrote in Addiction, the journal of the Society for the Study of Addiction. “A better model of behaviour change is clearly needed.”

Defenders of the transtheoretical model, including Johnson, say that the model’s critics are considering studies that generally failed to implement the model correctly. The method works best when people receive messages that are specifically tailored to where they are in the process, according to research by Seth M. Noar of the University of Kentucky.

[Related article: Get Out of Minimum Payment Hell]

“Most often, the problem is that people are not tailoring the program to variables that make a difference,” Johsnon says. “I can’t change the fact that you’re a man. But I can change the extent to which you’re noticing stories in the media about staycations and how even celebrities are cutting costs.”

From Smoking to Debt

In 1997, Prochaska founded Pro-Change Systems, a private company that develops different products based on the transtheoretical model. The company’s early efforts focused on a course to help people stop smoking, says Johnson, before branching out to offer other health-related classes.

Now Pro-Change is developing a series of classes on personal finance issues, Johnson says. The Debt Diet is among the first.

“It takes the best research on how to help you stop smoking and lose weight and manage stress, and couples them with advice for getting out of debt,” Chatzky says.

The Debt Diet was featured on the Oprah Winfrey show in 2006. Chatzky and two other personal finance writers teamed up with three families who were deep in debt. Together they went through the Debt Diet system. The process lasted several months.

Two families managed to escape debt, or make their debt manageable. One family found it just couldn’t make the changes needed. While the system seems to work for most people, it’s common that some families aren’t able to stick with it, Chatzky says. Usually it has to do with motivation.

“They weren’t committed, and for that reason I think they didn’t succeed,” says Chatzky.

A New Debt Diet Challenge

Now Chatzky and Credit.com are joining together for the Debt Diet Challenge. Chatzky will work with five families who are deep in debt and provide them free access to the program (the Debt Diet normally costs $49.95/year). Chatzky will also personally counsel them on changes they can make to realize their current financial situation and take positive steps to improve it.

Click here to learn how to apply to be a participant in The Debt Diet™ Challenge.

Credit.com will feature regular blog posts written by challenge participants that document their progress, their struggles as well as the overall efficacy of the Debt Diet program. Readers will be able to interact with both the participants and Chatzky through Credit.com’s comments section, as well as Facebook and Twitter.  We invite you to share stories about your own struggles with debt and techniques you’ve found to help dig yourself out.

“It’s like sticking to a diet or continuing to go to a gym,” Chatzky says. “When you kick-start that part of your willpower into gear, it’s a learned skill. And I think we can help people learn how to do that.”

Image courtesy of JeanChatzky.com