Tom doesn't need to refinance with a debt consolidation loan; he needs to stop buying what he can't afford!
QUESTION: Tom owes $290,000 and his house is worth $345,000. He wants to refinance with a debt consolidation loan. Dave tells him why he doesn’t like the idea.
ANSWER: When you do a debt CONsolidation, you just move the debt from one place to another. Debt isn’t the problem here; it’s the symptom of buying what you can’t afford. 88 percent of the time people do debt consolidation, they don’t change the behavior and go right back into debt. The only time I recommend debt consolidation is when you’re facing bankruptcy. You need to get on a budget and get in attack mode, not do this loan.