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• Ms. Chatzky's official site
• Excerpt from Pay It Down

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Tavis: We continue our 'Road to Wealth' series tonight with "Money" magazine's Jean Chatzky. The best-selling author and 'Today' show contributor is out with her latest book, 'Pay It Down: From Debt to Wealth on $10 a Day.' She joins us tonight from New York. Jean, nice to see you.

Jean Chatzky: It's nice to see you. Happy holidays.

Tavis: Happy holidays to you. For some reason, I just don't believe that my creditors are gonna buy the notion that I can give them $10 a day, and they should be happy.

Chatzky: You know what? $10 a day can make you happy, and that's far more important than making your creditors happy. And the way it works is that that $10 has to add up. You gotta do it every single day. The average family in this country right now is carrying $8,000 in high-rate credit card debt. By socking away just $10 a day, you could get rid of that credit card debt in less than 3 years. And then, if you continue to save the money, if you allow it to grow, 10 years down the road, you're gonna have a nice, fat emergency cushion to launch you on the way to retirement. 25 years down the road, you'll have 1/4 million dollars and not too far beyond that, you'll cross that million-dollar line.

Tavis: I'm glad you're here to talk about this, because apparently somebody in America hasn't gotten the memo that we are more in debt now than ever before. And during this season of the year, clearly, for those who have the memo, they aren't paying attention to it, because everybody's after our money right about now.

Chatzky: And we are happy to spend it right about now. There are surveys showing up in my e-mail box every single day, and most of them show that Americans are anticipated to spend about $700 each this holiday season. They are gonna take months and months if not years and years to pay off that debt if they don't start thinking about what they can really afford to spend this holiday season and then let that guide how much they put on their credit cards.

Tavis: Why do you think we fall for this every year?

Chatzky: Because it's tempting, it's festive, it's fun to go to the stores. We shop for all sorts of reasons besides the fact that we need things or even that we want things. We shop because we're bored or we're tired or we're depressed or we need a little pick-me-up. We shop because we just had a big fight with our husband and we want to show him he can't control us. We shop because we feel obligated to go out and buy things for all these different people at the holidays, but there are ways around it, and the book actually has hundreds of different ways to cut the spending that you're tempted to do.

Tavis: Let me talk about some of those ways. I can't get to all 100, I suspect, but--

Chatzky: We'll do the best we can.

Tavis: We'll do the best we can. First of all you say, 'Create a budget.'

Chatzky: Right. You need to know going into this holiday season how much you can afford to spend. And my benchmark is if you can't pay it off by February, don't spend it. So, figure out comfortably what you can afford to pay off by February, make that your budget, and then go about divvying that amount up between all the people that you are hoping to buy for and all the additional expenses that you have. People forget they're gonna spend money on things like cards. They're gonna spend money on wrapping paper. They're gonna go to 3 different dinner parties, and their mother told them never to come empty-handed, so they're gonna buy 3 bottles of wine. All of those things have to go into your broad budget.

Tavis: Now, I appreciate that you want me to be out of debt by February, particularly as an African American. I'd like to be debt-free by Black History Month, when we get to February, but I'm sure that's not why you chose February.

Chatzky: No. You know what? I don't think it's possible, necessarily, to pay off your whole holiday season in December. I think that that might be overreaching for some people. But you also don't want to be paying it off next summer when you're trying to plan your vacation. February is kind of a midpoint. It allows you to have a couple of months to carry the interest, but nothing that's gonna drag you down through the rest of the year.

Tavis: You say, 'Put together a gift list.'

Chatzky: Right. Again, who are you planning on buying for? Add up all the names of the people on your list. Try to figure out if you can be creative. Are there any people that you could buy gifts for in combination with other people? Is there any way to get around buying for every member of your family with a grab bag that everybody agrees to that has a preset spending limit? That helps everybody.

Tavis: Well, if I took this next bit of advice, I'd be buying, like, 1½ gifts. You suggest using cash only.

Chatzky: For some people, the credit card habit is so destructive. They get that plastic in their hands. They just can't help themselves. They know who they are, and if you're one of those people, leave the plastic at home. Use cash. Use a debit card if you have it so that you're only spending money you've already earned, not somebody else's money that you're borrowing.

Tavis: You hinted at this earlier, but you say, 'Don't forget the small stuff.'

Chatzky: Right. Again, the holidays are not just about the things inside the boxes. It's about the paper that wraps the boxes and the gifts, and if you're one of those people that sends out beautiful cards with pictures of your children, you know they can cost upwards of $100 just to do that. You gotta bank on postage for sending all those gifts. By all means, get to the post office early, because sending things by overnight mail is a sure budget-killer.

Tavis: You know what's funny about this? As I listen to your wonderful answers to these questions, Jean, it occurs to me that, with all due respect to my family, who I love dearly--I have 9 brothers and sisters and so many nieces and nephews that I've lost count. But if Uncle Tavis goes home completely empty-handed, it's gonna cause some drama in my household during the holidays, and yet I have to balance that out with not spending more than I have.

Chatzky: Well, that's why I think it's a good idea to gather all those 9 brothers and sisters on a conference call and talk about, 'Hey, what can we do? Is there a way to exchange names out of a hat? Maybe I'll buy for one other family, and you buy for one other family, or we'll all chip in and get something big for Mom and Dad so that we don't have to come with 9 different big presents for them.' There are ways to save money and save face at the same time as long as you agree on them beforehand.

Tavis: My family may go for that, but as long as I pay for the conference call.

Chatzky: Well, there you go. You know what? That's cheap these days. That's all right. You foot that bill.

Tavis: All right. So, let's talk about end-of-the-year donations. You have a wonderful piece in here that I want to talk about, about how to go about doing that. And one of the things you say is to don't undervalue your things.

Chatzky: Many people give away old clothes, old cars, all sorts of things, when it comes holiday time. It's the time of year we feel like giving. But if you're giving away used merchandise, it's really important that you not undervalue your items. Most people do, and they miss out on a big fat tax deduction come the end of the year or through April. So, there is a great book called 'It's Deductible.' It's also a computer software program. It's a web site called itsdeductible.com or 'cash for your used clothing.' You can go on there. You can go to the Salvation Army's web site, and what they'll give you is the fair market value of all of these items that you might be giving away, whether they are old skis or an old suit, depending on the condition that they're in and the size of the item and the price that you originally purchased it for. And you can use that on your tax forms when you're taking the deduction. And if you're unsure or you don't like the particular resources that I've suggested, you can always go to a site like eBay and actually shop for the item to see what somebody else is paying for it, and that is essentially the fair market value.

Tavis: You also say, right quick, give donations as gifts, although I'm not sure that my brothers Scooter and Doobie are goin' for that either, Jean.

Chatzky: They may not be, but the point of giving donations as gifts is, you know when you get a card that says 'A gift has been made in your name by so-and-so'? It never says a gift of how much has been made by your name. So, if you're trying to keep within a budget, give gifts to charity. It'll make you feel good. Your friends will never know if you gave $5.00 or $50. They'll still get the card in the mail with the little recognition, and everybody'll feel fine.

Tavis: And in 30 seconds, if you could give one piece of advice that we absolutely cannot forget this season, it would be?

Chatzky: It would be, use the Internet. We are so much--we're on the Internet all the time anyway. Use the Internet as a great tool to do some research on what you can afford before you actually go to the stores.

Tavis: Some great advice by Jean Chatzky of the 'Today' show and Money magazine and the author of 'Pay It Down.'

We move now to a great singing sensation. She's done a new CD now of all standards, all classics. If you think you appreciate the work and the voice of Chaka Khan, wait till you hear her on this new CD. Up next, a conversation and a performance by Chaka Khan. Stay with us.