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Podcast 93: Debt Free for Life, David Bach

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Today’s guest on the Consumerism Commentary Podcast is David Bach, author of Debt Free For Life: The Finish Rich Plan for Financial Freedom, the latest in the Finish Rich series of books and online tools. David, Flexo and Bryan discuss financial changes in the last year, the national trend toward paying down debt, the Done of Last Payment (DOLP) program and Equifax DebtWise™.

Listen to the podcast or read the transcript for a description of DebtWise™. The service carries a monthly fee of $14.95.

Consumerism Commentary Podcast #93
Debt Free for Life, David Bach: S04E15 / 116

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Table of contents

[00:00] Introduction from Bryan J Busch
[00:38] Interview with David Bach
[00:56] Success stories from 2010
[02:23] Good debt vs. bad debt
[03:45] Which debts are worthwhile risks?
[05:54] The new crisis of student loan debt
[06:31] Subsidizing school and exorbitant tuition
[09:20] Buying an expensive home just to get the tax deduction
[10:54] Searching for blame and deciding to take action
[15:14] DOLP and personal stories
[18:57] Equifax DebtWise™
[24:03] Reducing credit card interest rates
[26:20] Bankruptcy options and pitfalls
[29:16] Credit counseling options
[32:32] Looking ahead to 2011
[34:18] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

Theme music by Mindcube.

Full transcript

Bryan J Busch: Welcome to the Consumerism Commentary podcast for Sunday, January 30. I am Bryan J Busch. Today, Flexo and I speak with David Bach, author of Debt Free for Life: The Finish Rich Plan for Financial Freedom.


Bryan: Welcome to the Consumerism Commentary Podcast. I am Bryan J Busch. Our guest today is David Bach, author of the best-selling Finish Rich series of books with the latest being Debt Free for Life: The Finish Rich Plan for Financial Freedom, released this January. David welcome to the show.

David Bach: Thank you. It’s great to be back with you guys.

Bryan: Yeah. So last time you were on the show a year ago, you talked about starting over and a year can make a big difference in someone’s finances, not to mention daily life. Have you seen success from people getting their financials on track last year, increasing savings, paying off debt, investing more?

David: Yeah, we really have. In fact it’s been amazing. I think the biggest change that I’ve seen with my business in the last 12 months is the opportunity to hear from my readers so much faster because of Facebook.

We’ve got 14,000 people now on our Facebook community. And so, between email and Facebook every single day now we get success stories. And they’re coming in — I think today alone we’ve had six success stories. It’s just been incredible.

And the big thing I said last year was that a recession is a terrible thing to waste, and that there would be opportunities to make money in this recovery. And if you look at everything I wrote in Start Over, Finish Rich, it’s all come true.

Last year we had one of the best years we’ve seen in the stock market in 20 years. And so a lot of people who have followed my advice have made money in the stock market, people are making money again in real estate, and most importantly people have really been paying their debts down. And that’s what’s excited me the most, to seeing people paying their debt down.

Bryan: Oh yeah, me too. And what’s that Facebook address?


Bryan: Great, thanks. So let’s talk about debt for a second. Some financial advisors have argued that some debt is actually good, like student loans because you’re investing in your future and a higher salary, or a mortgage because it’s a loan for an asset that generally appreciates and you can even get a tax deduction on mortgage interest. How have your opinions about good debt and bad debt changed in the past year?

David: I think my opinion has changed in the same way that millions of Americans’ opinions have changed since the recession. I grew up in the financial investment world. I started going to investment classes at the age of seven because my dad was teaching them, and I spent nine years doing retirement planning in Morgan Stanley.

And I bought in to this idea that that there was good debt and bad debt. And I have to tell you the recession changed my opinion, because what I’ve seen first-hand through other people’s eyes as I go around the country, everybody is just struggling so much right now. What I’ve seen is that if you can’t afford to pay your debt back, all debt is bad debt.

And whether it’ss mortgage debt, or student loan debt, or credit card debt, if you can’t pay your debt back it’s all bad debt, and we basically borrowed too much money in this country. So I am on a simple mission to empower Americans right now to pay their debt down faster and to really think before they borrow again, because I think we simply borrow too much money in this country.

Bryan: So David, is this a result of the current state of the economy? Do you think that when stocks and asset values are flying high again, if they do, will some debt be once again considered a worthwhile risk?

David: I had a grandmother who hugely influenced me. Her name is Rose Bach, and she was in many ways the money mentor of our family. And my grandmother was a great depression era child.

And if you look at my grandmother’s values, they were if you don’t have cash you can’t afford to buy it, like so many people from her generation. And when you borrow money your goal was to pay it down as fast as possible.

And I remember she used to tell me the stories about people would have mortgage-burning parties in their backyards and they’d have everybody over and they’d celebrate being debt-free.

Bryan: That’s fun.

David: I know, right? And I think that those values stuck around with that generation, but they didn’t get passed to our generation. In the last 20 years it’s become so easy to borrow money that we basically have been raised to borrow money, to use other people’s money to build wealth.

And I think what we have just found out through this recession, which is the longest recession since the Great Depression, is that there is a price to pay for the money we borrow. And we have sold our freedom away, and we are ruining our lives.

It’s not just financially. We’re hurting marriages, we’re hurting families, we’re hurting ourselves physically because of the stress of debt. I believe that people right now who are going through this movement of paying down debt — and we’re seeing millions of people desire to pay their debt down right now, the number one financial goal in America is debt reduction — I think that this is going to stick around for a long, long time.

I know personally I’m on a mission to pay my mortgages off in the next five years. And I don’t know that I’m going to all of a sudden want to re-up and go buy another bigger home and have another mortgage again. I want to get my mortgages paid off. And I want to be like my clients who have retired in their early 50s and simply had no debt. That’s my mission. I think this is the mission of a lot of Americans right now.

Bryan: That sounds sensible. I can personally identify with the actual physical stress that comes from worrying about debt.

David: Well, and I’ll tell you, I’ll just say another thing that we’re seeing — and you guys have such a great website; you’re doing such a great work — the big thing that it’s coming down the pipeline right now is college debt, is student loan debt.

Everybody talks about credit card debt when in fact now we have more student loans than credit card debt. So this is the biggest stress that’s being put on college graduates right now, as they are coming out of school and they can’t get jobs that will cover the minimum payments on their student loans.

So that’s why I wrote Debt Free for Life, is to sit down with America, take them by the hands and show a way out from under all this debt so that you can free yourself.

Flexo: A college education right now is basically what is necessary when anyone needs to find a middle class job these days. So if debt is controlling the college education right now, what are the other options for people who want to survive in the middle class, if they don’t want to go into debt for a college education?

David: Well let me answer that question in a couple of ways. First of all the reason college education has tripled in price in the last 15-20 years, in some places it’s quadrupled in price, is because it’s really easy to borrow money.

So the government has subsidized the cost of college education. It made it possible for anybody to borrow money at a low rate, and then the schools have been able to basically raise their prices because the government, which is in essence taxpayers’ dollars, is paying for people to go to school.

There’s no reason for college today to cost $40,000, $50,000, or $60,000 a year. The reason it costs that much is that the government has been subsidizing it with loans.

Flexo: And so if the government stops subsidizing it, what would happen at that point?

David: First of all what’s going to happen ultimately in the next five years is you’re going to have enormous defaults on student loans. And the one thing that you can’t do with student loans is go bankrupt and get away from that.

So they already figured out a way to protect that. Credit cards you can go bankrupt you can get away from, student loans you can never get away from that.

What people are going to start doing that are going to look at this intelligently, is they’re going to start really asking themselves, “IIs it worth it for me to go to a school that costs $40,000 a year versus one that costs $10,000 or $15,000?”

In other words if I have to borrow $200,000 to go to this school or borrow $15,000 to go to this other school, am I really going to get my money’s worth out of this other education? And I think, there are a lot of conversations taking place now across America about what is the value of an education.

If you go to school today with $200,000 in student loans and you get a job paying $50,000 a year, you still can’t make the minimum payments. So I think what’s going to happen and we are on the forefront of this conversation is that people are going start really thinking through in a better way, how much they can afford to borrow to go to school.

And they’re going to need to think about it way far in advance and really start evaluating whether or not the value of the education is worth borrowing the kind of money that people have been borrowing to get that education.

I’m not against education but there’s a study that came up two days ago, I don’t have the numbers in front of me but it was like 56 percent of people polled had learned nothing in four years in college. It was just an extraordinarily negative article about the value of education right now.

Flexo: We did feature that study on Consumerism Commentary a few days ago as well.

David: Didn’t you find that amazing? Much like homes, the reason people borrow so much money to buy homes is that the government subsidizes it with tax deductions. We’ve convinced Americans that you should keep a mortgage so that you can get a tax deduction — which is absurd. I mean I just had this conversation with somebody yesterday, they said, “If I pay my home off, I’m not going to have a tax deduction.”

I said, “Yeah, but you know what, if you pay off your home earlier,” — and I ran the numbers for this person — “If you pay your home off earlier you’re going to save $547,000.” I said, “Now if that money — you want to just spend an extra half a million dollars to have your home — so you get a tax deduction? You can just give money to charity.”

He said, “I never thought about it that way.”

It’s changing the dialogue in America about why do we have debt and how hard do we want to work for this debt. And do we want to work for the rest of our lives? And I’m assuming you guys are young guys, most of the people I am talking these days on blogs are younger people who are writing and listening to blogs.

I think that there’s a real awakening like I don’t want to work until I’m in my 60s or 70s just to pay loans off. I really like to be free. And I know your site has got some really smart people that are really asking themselves what’s the best way for me to be financially free?

I think the best way is debt reduction. I think the only investment that I can tell anybody who is listening right now that’s guaranteed is paying down your debt. Government bonds, I mean yes, they’re safety and security but there’s also risk in government bonds, and there’s risk in the stock market. The one place that has no risk is debt reduction.

Flexo: And I think people seem to be searching for blame when it comes to all the debt that we have in this country. And they’re looking either at the media for subconsciously programming us to buy more than we can afford, or people making uninformed mistakes handling their own money, like the issue you brought up about someone believing that mortgage interest would be such a great benefit that they should take on debt in order just to have the tax credit for that.

How can people get past these forces?

David: Well, people love to place blame. I mean that’s always what we do first. First we get angry and then we look for someone to blame and then we complain.

But what intelligent people do is they go out and they get an education, take action and fix their situation.

So I’ve got seven million books out, we hear from people every single day, and people come at me every day with their success stories and I always ask a really simple question, whatever the success is. I just had somebody the other day in the green room at the Today Show tell me they had paid off $72,000 of debt. And I said, I always ask the same question, “What was the catalyst that made you decide to take action?”

And usually the catalyst is different for every person, but it always comes down to making a decision. They got some education, in this case, it might have been my books, and they made a decision whatever that was. “You know, I’m done, I want to pay myself first, I want to buy a home, I want to be debt-free,” and they made a decision and they acted on it.

And I think the only thing that you can act on is your own life. In other words, I always tell people, we got a huge problem with the government deficit right now, huge, huge problem. The biggest thing that we have to worry about in this country right now is our deficit. It’s a bigger issue than terrorism, most people would argue. Yet there’s nothing we can do about it. Truly.

The only thing that we really have control is our own family’s debt and our own family’s economy. And so when people go to cocktail parties and they talk about our deficit, the Tea Party, the Republican Party, the Democratic Party. You know what, just stop for a second and focus on your own situation. Let’s fix our own backyard. Fix your family’s finances because I can tell you what, all this talking about whose party’s to blame and what president’s to blame, it’s just hot air. It’s not going anywhere. Focus on your family’s finances — that you can fix.

Flexo: Well, how do you begin acting on it, moving from talking to acting?

David: I think on the issue of debt, it’s actually very simple. And what I tell people is it’s a lot like losing weight. In the new year, the new goal for everyone usually is to lose weight and it’s to fix finances. In most cases, it’s to lose weight and get out of debt. I don’t usually fall in this category but I happen to be somebody who this year, in the New Year, wanted to lose some weight. I put on some weight during the holidays.

So what did is I got on the scale and I had to look at how much I weighed. And I knew I was overweight because my pants were getting tight but the specific thing I had to do was to look down on the scale, see exactly what I weighed, and know what weight I wanted to get to. Right, I mean really simple.

When it comes to debt, it’s the exact same thing. How much debt do you really have? And when do you want to be debt-free? How much debt you have and how much debt you need to reduce? What order do you pay your debt down? And what that comes down to, is you have to step on a debt scale and most people don’t have a debt scale. Most people don’t really know what they owe.

In fact, every time I’m brought in to do makeover shows — I’ve done shows with Oprah, NBC, all the different networks. When I’m brought in to do a makeover on somebody who’s in debt, every single time I’ve been brought in to do a makeover, the amount of debt that people actually have versus what they told the producers they have, is not even close.

I did an Oprah show and the people were supposed to have $45,000 in debt and when we got into their house, we found out that $91,000 in debt. And you go, “How is that possible?” How it’s possible is people really don’t know because they may have five to ten credit cards. Today people have five, six, seven student loans. I mean it’s very common for the average family to have now ten, fifteen, twenty different loans out there.

So I think you start with how much you need. In Debt Free for Life I mention the concept that’s been in my talk for years, called DOLP. It stands for Done On Last Payment. And it’s a tool, it’s a worksheet that you write out all your debts, and then I give you a way in which you calculate the order in which you to pay your debt off. What’s amazing is that now because I’ve used this tool with people for over a decade, we get these success stories from people where they’ve got their DOLP worksheets going back years.

In fact, I just did a podcast with AOL WalletPop, and we had a woman on there, she paid off over $70,000 worth of debt and she had used DOLP worksheet since 2005. She had friends that she was doing this with at work, almost like a reading group. She called it her DOLP group. Every week they get together and they go over their DOLP forms and they see whether or not they’re making progress. I think that’s where you start, it starts with getting on a debt scale and tracking how much debt you have.

Flexo: Does DOLP order the various debts by interest rate and then pay off the highest interest rate loan or is there a different order that you have for that?

David: No, it doesn’t in fact. And that’s again, most people think that you pay the highest interest rate off first. It seems obvious. But it’s not how DOLP works. The goal of DOLP is to reduce the amount of people you owe money to as fast as possible, to simplify your life.

And so what happens in almost every case is that it ends up being the smallest debt that you have. You end up making minimum payments on every debt and then applying extra money to small debt first. But it’s actually the calculation where you’re dividing the minimum payment by the amount of debt you have and figuring out how many payments will it take before you’re debt-free.

There’s a bunch of reasons for this. The biggest reason is, what I’ve seen, psychologically, is that people really love to see themselves making progress. When they see themselves making progress, they get excited and they get more motivated.

And so if a person’s got ten credit cards, as an example, and the use DOLP, often they’d pay off three or four credit cards within less than six months or maybe less than a year, depends. Like we had somebody who had 13 credit cards and had half the credit cards paid off in six months. The fact that they can see themselves having less credit cards, made them so excited that they just couldn’t wait to check off the next debt.

Then there is also the financial aspect. You have less opportunity to be late on your credit cards, so you have less chance for late fees. It will raise your credit score faster because you’re actually getting cards paid off, and people like to see the progress. It’s very black and white for them.

I always listen to my readers, because they tell me what is working and not working. When we originally put DOLP in a book, we did The Automatic Millionaire. People asked me, they said, “It’s too hard to write in your book. Could you have a PDF of it?” So we had a PDF.

Then people said, “Is there anyway I can just do this online?” So we created a free version of DOLP online. If your listeners go to, they can use the online tool, it’s free, to do it themselves.

We did all that, and people said, “The problem with this, David, is I got to go do the work myself. Like, every month when I pay the debt down, I got to go back and recalculate the numbers. I wish there was a way to automatically see all my debt every day, and have it automatically updated.”

I didn’t know a way to do that, and then, in this last year, we created this tool called with Equifax that now does exactly what DOLP did, only now is completely automated because it pulls up your credit file.

Bryan: That’s fantastic.

Flexo: It’s a great idea, from what I understand, it can pull all your information right from your credit report like you said, so that you are always up to date, and it can find your payments, and it will know exactly what order you need to do everything in, unlike the free calculators that you can find online where you just have to plug in the information yourself. Are there any other advantages to using DebtWise over a free calculator that you can find somewhere?

David: Yeah. So, let me go back to the very beginning of this, because there are other great websites, like is an example of a free website that was bought by Quicken, and well over a million people use You go into and you want to calculate your debt, or you wanted to do what DebtWise does, you got to get your credit cards, your bank accounts, your mortgage… You actually have to go in and have all those accounts scraped and brought over to

Now, we’ve sat down with people and gone through the process of doing this. It takes hours. Also, you have to trust that the security is safe. In other words, every bank and every credit card that is sending your data over, most of it’s been scraped through Yodlee, but you got to trust that all of this is safe and secure, and quite frankly, it’s not easy to do.

So what we see is that people will usually will not put in two, three, four, five, six hours to do this work. With DebtWise, what happens, because it is pulled off your credit file, once Equifax — Equifax is one of the three major credit bureaus. So if you want to get your credit file from Equifax, and people do this every year, all they need to know is that you are really who you say you are.

So, the same process that you would go through to get your credit file or your credit score from Equifax, is the same process you go through to sign for DebtWise. Once Equifax knows that you are who you say you are, you go into DebtWise, and in seconds, all your debt is now on a screen shot. And it shows how much you owe and what order you should pay it down in. So whereas with my DOLP system you had to do the math yourself, this does it for you. It says here’s your first debt, here’s your second debt, here’s your third debt, here’s your fourth debt.

It’s amazing! And then there’s a tool in there that’s called your Debt Freedom Day calculator. And I think this is one that a lot of people who aren’t struggling in debt are really loving this tool. I’m having people use this tool and they don’t even have credit card debt. And they say, “Wow, I didn’t even realize the way I’m paying my debt down is going to take me 28 years to be debt free.”

It shows you it’s going to cost this much money, but then you can run calculations to see, what if I add $500 more to this debt? How much will I save and how many more years until I will be free from debt? So, that’s a really powerful tool, and then it goes back to the fact that every month, you don’t have to do any updates, because once your banks, and anyone who you borrowed money from reports back to the credit bureaus, it’s automatically repopulated and updated.

So, it’s a true — for the first time ever — it’s your debt dashboard. People talk about everything being in a cloud right now, and that’s really what this is. It’s like a comprehensive money management debt reduction tool. And you can access it from anywhere. I’ve just never been so excited about anything in my life! You know, it was hard for me to convince Equifax to do what we’re doing, and the fact that, when people buy Debt Free for Life, they’re getting a 30 day free trial. The cost of this product is $14.95 a month which is really nothing. It’s like 50 cents a day.

Equifax has never given anything away for free, unlike Experian or TransUnion, who always say “free score,” or whatever they say. This was really a big leap for them to do this with me. I just really believe that look, the product is going to speak for itself. When people go in and try this for thirty days, if they think it is anything close to how good I think it is, then they are going to keep using it. And if they don’t think it’s anything close, if they don’t think it’s revolutionary and a help, then they won’t keep using it.

So, I think it’s going to be a chance for people to decide for themselves. I had a friend yesterday that went in, looked at the tool, looked at his mortgage debt, and sent me an email, and said, “I can’t believe that with one change I’m going to save $541,000!”

Flexo: Wow!

David: And that change was that he realized if he just added $800 more to his mortgage, a month, which he could afford to do, that that one change was going to save him over half a million dollars, so he made that change. Now, I don’t know if he’ll stay using DebtWise, but that one change, it’s that one action step that he did not understand prior to going on DebtWise, that one action step is going to save him a half a million dollars.

Bryan: Yes, certainly worth $14.95. At least once. Speaking of credit, rates on cards are higher than they’ve been in years, and issuers seem to be less flexible when you ask for a lower rate. It used to be possible to get rates knocked down to 10 percent or even around five percent. What can borrowers do now while they’re paying off their balances?

David: This is the biggest question I get. And there’s a lot of things people can do right now. It’s interesting. This is why I think every year, people go why do you put a book out every year. And I think because part of it, the world changes every year.

You know, credit card offers today are completely different than 12 months ago. What is happening right now, if you shop for a new credit card, is that all of a sudden the credit card companies are now really again looking for customers. They weren’t looking for them a year ago.

They sent out a billion applications more last quarter than the year before. So there are offers right now for zero percent transfer, zero cost to transfer, and I’m seeing offers now where there is zero percent interest up to 18 months, provided you’re not late on a card. So if you’ve got good credit, and I see this all the time where people actually do have good credit, but the credit card companies raise the rates to 29.99 percent because they want to get the rates up as fast as possible before the Credit Card Act was issued this year.

Those people should just switch to a new credit card. And what’s really frustrating is that a lot of times, I’ve worked with people where their rate is 29.99 percent, and that same credit card company is offering, right now, 35,000 frequent flyer points and 10 percent to a new customer. When you call the credit card company up, and you say, “But guys, you’re offering 35,000 frequent flyer points and 10 percent to a new customer. Why can’t you lower my rate?” and they say, “Well, we just can’t, because that’s for new customers.”

Every single time I’ve done this conversation with somebody, or I’ve had somebody do this, they’re still able to knock five to 10 percent off the card.

So part of it is you have to ask. In Debt Free for Life, we have the scripts that you can use on what to say, who to talk to. And people need to know that there are programs out there that the credit card companies offer that they don’t publicize that will lower your rates back to below five percent. There’s two plans, debt management plans and forebearance plans. Millions of people are in these plans. If you’re desperate and you really need help, then you need to look at those types of plans.

Flexo: You mentioned earlier that student loans can’t be erased even with bankruptcy. Are there any debts that can be erased, and what do people need to know about that?

David: You know, credit card debt is an example of debt you can walk away from in bankruptcy, provided the court allows you to do that. Bankruptcy is a process that requires you to go to court, requires you to go to debt counseling first, then go to court. There are two primary types of bankruptcy, chapter seven and chapter 13. The first thing I want to tell people is this with bankruptcy. We had 1.5 million people go bankrupt last year. It’s harder to go bankrupt than it was a few years ago, but a lot of people are now going this route.

For some people, it can be the right way to go. I’m not a proponent of going bankrupt, and yet the same standpoint, you know, for some people it gives them the chance to start over. It may allow you to keep your home. It could allow you to keep your retirement account. And I think the biggest thing with bankruptcy, is that people need to actually know their rights sooner rather than later. Because when I went out and did Debt Free For Life and I really researched and interviewed bankruptcy attorneys, the number one thing people said to me, was, “You know what, David, the single biggest problem with bankruptcy is that by the time people go bankrupt, they waited too long.”

And what I mean by that, is that they actually cashed out their IRA or their 401(K) plan to pay off credit card debts, or they sold their home to pay off debts that they could have walked away from in bankruptcy. And there are gurus out there, and I won’t say who these gurus are, but they’re some others that I compete with, where I’ve watched them say, “You should sell your home and pay off your credit cards.” And I’m thinking to myself, “Really? Because what am I going to do then? I’d have to live on the street.”

I’d rather keep my home and go through the bankruptcy process and walk away from my credit cards and not lose my home. Now that’s a legal right you have. With that being said, I don’t like people borrowing money and being irresponsible. And I hate people that go out there and borrow a bunch of money with the intention of going bankrupt, which people do do. There are people that go out today, and they’ll run up a quarter million dollars of credit card debt, knowing pure well they’re going to go bankrupt.

Now, what’s happening is that bankruptcy courts are now, they’re not stupid, and they’re looking at people and they can tell that they’ve done this, and they don’t have to vacate that debt. So you know, if you’re somebody that thinks you’re going to get away now with pulling a fast one on American Express. American Express will show up in the bankruptcy court and say you know what, this guy ran up, all of a sudden in the last six months, excessive amounts of debt. Not normal spending. And we think that he’s just doing it to buck the system. And you could lose. And then you’re not going to get rid of that debt in bankruptcy.

You need to know your rights and know when the right time to go bankrupt is. And people do recover from bankruptcy. And that’s another important thing to say, is that, bankruptcy is not the end of the world. People do recover from bankruptcy, but it’s not your first route.

Flexo: So you mention that credit counseling is an important part of this. Who do you go to for credit counseling, and are these the companies that you see on TV advertising as debt settlement companies, or is that something different?

David: Well, that’s something different. I think this whole space about debt is such a — how do I say this correctly — it’s such a slimy space. It’s a hard thing when I put this book out, because obviously at this point a lot of people really trust me, and so it allows me to break through the noise and the clutter. But when you see all the banner ads out there: “President Obama has a relief package for you. You can cut your credit card debt by $10,000. Call us now.” I don’t know how these companies actually get away with this, and there are a lot of these companies that run these infomercials, and they run ads on the radioa and they say, “We can cut your debt in half in less than ten minutes, and we can negotiate your debt down by 50 cents on the dollar.” And it’s just not true. It’s just fundamentally not true.

We’re finally cracking down on these debt settlement companies, and on these companies that are doing things illegally. Most of these companies have been charging $500 to $1,000 per person before you can ever start working with them. They are taking people who are in debt, collecting their money. They’re not paying the credit card companies for six months, and they’re telling people, well, you know what? That’s the only way we can negotiate your debt down.

People have been destroyed in some cases by this. Their credit reports have been destroyed. Their ability to refinance has been destroyed. It’s just really sad. In many cases the people who deserve the help the most are the ones that are getting taken the most advantage of.

So, a simple question is, “Are you for profit or non-profit?” If someone’s trying to give you debt counseling, are you for profit or non-profit? I would work with a non-profit company. I would work with a non-profit credit counselor. If I was going to hire someone, I’d work with a non-profit credit counselor, and I would want the company to be under the membership of the NFCC or ACA. Those are the two large membership organizations that the major non-profit credit agencies work under. It doesn’t guarantee that these companies are safe. You have to do your own due diligence.

In Debt Free for Life, I spent hundreds of hours interviewing non-profit credit counseling agencies and researching this industry so that I could give you all the best tips on how to find a legitimate non-profit credit counseling agency. What I can tell you from doing my research is that they are out there. There are some phenomenal non-profit credit counseling agencies. I don’t recommend any one specifically because I don’t want the legalities of it, but I’ve found them.

I have a story in Debt Free for Life of a friend of mine who had $100,000 in credit card debt, and he found one of these non-profit credit counseling agencies. He got himself out of $100,000 in credit card debt in less than four years. They helped him do exactly what they say they can do. That’s the route that I would go.

Bryan: If we say that 2010 was the year for starting over, what do you see ahead for 2011?

David: The biggest thing in 2011 is there’s a movement in America to get out of debt. And so, the numbers in 2010 showed Americans paying down their debt, paying down credit card debt, paying down mortgage debt. We’re going to continue to see this. I think what we’re going to see this year is, there’s a phrase right now being used called, we’re living through a debt reduction economy. I think that that’s going to continue.

Deleveraging of the average American consumer is going to continue. I believe the economy is looking continuously better. Everyone is bullish on the stock market this year which makes me nervous. The last two years nobody was, and we had a phenomenal two years. But I think this year will continue to be a good year in the stock market. I’m not nearly as optimistic this year as I was last year because the deals were last year.

The market and the economy are improving. Business is having enormous amounts of cash. Consumers are deleveraging. They’re paying down debt. Things look better. Things look the best they’ve looked since 2007. I’m really optimistic.

It’s interesting. I’m in New York City, and my office is downtown in Tribeca. I was walking to the office today, and I thought, it’s so busy again. Everybody is walking to and from work, and the restaurants are packed, and the coffee shops are packed. And that is a sign of an economy that is picking up.

I can tell you a year and a half ago, two years ago it was dead down here. You could tell that people were not working in New York. People are back to work, and that means that people will be spending money again.

Bryan: That’s great to hear.

David: Yeah, it is good to hear.

Bryan: Well, thanks again for being our guest today, David.

David: Yeah, you guys, it’s been my pleasure. I enjoy doing this with you, and I appreciate it. I think you guys are doing really good work. Again, if people want to come visit us, come on over. is our website, and our book is Debt Free for Life. There’s a promotion on our website where if they buy the book right now, we’ve got a special giveaway of $500 worth of downloads, including a couple of my past books and audios and a few videos.

All that’s at and is the automatic debt reduction center that I was talking to you guys about earlier.

Bryan: That was David Bach, author of Debt Free for Life: The Finish Rich Plan for Financial Freedom, available now in stores. And we have a coupon for a free trial of DebtWise at You can find out more about David Bach’s book at You can also see David on NBC’s Today Show on a weekly segment called “Money 911” on Wednesdays, not to mention the burgeoning Facebook community that he started at

Thanks for joining us for the Consumerism Commentary Podcast.

Updated April 20, 2017 and originally published January 30, 2011.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 6 comments… read them below or add one }

avatar 1 Anonymous

Wow having the transcript is awesome. Sometimes I read your site at work and I can’t play sound. This helps a lot!

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avatar 2 eric

Woops just realized you’ve been doing the transcription for a week already. Can’t believe I missed it!

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avatar 3 Luke Landes

This is the first transcript that was ready by the time the podcast was published.

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avatar 4 skylog

great work this week. i appreciate the approach david bach takes, and the message he is trying to drive home. one has to look inside, take any blame that is there, determine where you are and what you need to do….and do it!

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avatar 5 TakeitEZ

Thanks for this new feature (transcript), Flexo. It is really a convenient way to breeze through a podcast when you are not able to listen to it.

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avatar 6 4hendricks

I loved this podcast. I have read all of David Bach’s books, and follow most of his advice, I can even get my husband on board! Thanks

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