Should You Consolidate Your Debt?

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Hi all,

Each week, for the next 8 weeks, I will be answering questions from viewers of NBC’s TODAY Show on Check out my first Q&A on the topic of debt consolidation. Get my advice on consolidating debt from multiple credit cards and then learn the mistakes many people make when doing it.

Live Rich,

David Bach



4 thoughts on “Should You Consolidate Your Debt?

  1. Great advice! I appreciate your honesty in giving out advise. Question though; would DOLP help her in this case?

  2. Hi David
    I live in Ireland, so some of the technical details of your book “start late finish rich” (2005 edition), such as the pensions systems 401(k) etc do not apply. It is almost unknown for employers to contribute towards a pension. Pension contributions are set against your gross income, as in the USA – the percentage you can put aside is linked to your age – the older you are, the higher percentage of your gross pay can be set aside for pension.

    I applaud your concept of paying down debt and setting aside money for the future simultaneously. That makes a lot of sense, but it is hard for people to grasp the concept.

    However for Irish readers (and European readers in general) there is an easy and cheaper way of handling heavy credit card debt. Almost every town and city has a community bank called a credit union where the interest rate for loans is max 7.9% (8.5% apr). All credit unions as a matter of policy insist that members pay some money into savings at the same time as repaying their debts.

    The other issue is that it has been a very long time – certainly at least 30 years – since anyone could dream of getting anything like a 10% return which you use so frequently, especially in the first half of your book, especially if you were saving for retirement, where security is a big issue.

    Inflation plus 2% is a much more realistic figure. Inflation in Ireland and the Eurozone has not exceeded 2% since the mid 1980s.

    Real estate prices have bombed in Ireland since about 2008 when a property bubble burst, and an awful lot of people are now in negative equity with their mortgages.

    You give an example of a guy who bought an apartment in New York for $125,000 and sold it a few years later for $365,000. That would not have been unusual in Ireland (say) 5 years ago, but the exact reverse is the case today where apartments in Dublin are changing hands for 40% of their 2006 prices or (in most cases) remaining unsold with no sign of buyers.