Consolidation loan: Best way to pare debt?

>>> author of "money 911" and david bach author of "debt free for life" and sharon epperson . this is an e-mail from a viewer in alaska, ryan writes "my mother-in-law keeps asking for money. it's a small amount, usually about $50 a month, always pays us back when she says she will but it's been going on for about a year now and it happens each month. would it be rude to say no and stop sending her the money?"

>> it's a little dodgy. i wouldn't say no. what's happening here is a sign of a much potentially larger problem, and so what you got to do is use this opening that your mother-in-law is giving to you figure out what's going on here, why is she unable to pay her bills on a monthly basis, where is she getting stuck? can you help out and i would be really careful. she said mother-in-law.

>> yes.

>> if the child, if ryan 's spouse is actually being asked by the mother for the money every month, ryan 's spouse should have that conversation.

>> yes.

>> so be really careful.

>> also if you can afford the $50 a month, think about ul of athe times our parents gave us money .

>> absolutely. i think, too, if they're already being asked it means something is going going on.

>> your point is so good, i completely agree with you.

>> you want to know now.

>> no one wants to have the conversation, it's always important to have it with the family when you can.

>> good point, okay. our next question coming via skype, we have melanie here in new york, good morning, melanie . what's your question?

>> good morning.

>> hi. and your question, melanie ?

>> yes, we are considering taking out a consolidation loan at the rate of 7.99% to pay down our credit card debt . at the rate we're paying right now, minimum or mainly minimum, it would take us years to pay off these credit card debts . my husband has a chance to take out the consolidation loan but i feel it's the right solution at this time. we recently took a big cut in pay at work. i'm wondering what is the right thing to do.

>> david, what do you think?

>> melanie i have to go along with your husband on this and here is why. if you've got credit card debt , it's unsecured debt , meaning they can't come after you and actually take anything away. if you pull money out of your house and do a consolidation loan , usually called a home equity loan , if do you that, you've now taken an unsecured debt and secure advertiitized it with your home. people pull money out of their homes, pay off their credit cards and gotten back in debt. what i'd much rather see do you is the following, see if you can get one of your credit card companies to actually take all the debt over on to one card and lower the interest rate . what is happening is the credit card companies are being aggressive looking for new customers. they're offering 0% financing for up to a year, and even getting 50,000 frequent flyer points and sometimes a free plane ticket. if go you go on it bankrate.com or creditcard.com, all of the websites you see different credit card offers you may be able to consolidate the debt on to one credit card with the lower interest rate . call the credit card companies up and see if they'll lower the interest rate without making a move.

>> good luck, melanie . we go to the phone lines, samantha from indiana, she's got a question about her retirement account . hi, samantha.

>> hi, i am a 26-year-old teacher with a teacher's retirement fund, a 401(k) and a roth 403 ] b ]. the financial guy at school is trying to convince me to change from roth to regular. i prefer to pay the taxes and know that i won't have to worry about that in the future. am i making a mistake?

>> sharon, what do you think?

>> i don't think you're making a mistake at all. i applaud her for saving for retirement this early and so in many different ways, you're hedging your bet and diversifying your retirement savings. whey think you need to do though is look at the fact this roth account that you have is allowing you not to have tax deductions now, but take the money out tax free after age 59 1/2, and that's a great thing because you're going to have three decades of growth there, likely you will be in a higher tax bracket when you retire, when you take that money out tax free. that's a great deal and you also get the tax deductions from the 401(k) that you currently have, so you got the best of both worlds .

>> quickly one more call in question, dina living in florida. good morning, dina.

>> good morning.

>> and your question?

>> caller: yes, my husband and i both work and i'd like to calculate our tax deductions from our tax checks to equal little or no refund. we don't want a huge refund but i don't want a bundle of taxes either.

>> go to irs.gov and use their withholding calculator which helps you figure it out. you're totally right, you don't want to give uncle sam a big interest free loan throughout the year. you want the money in your own pocket.

>> dena thank you so much. guys, thank you, jean, david, sharon, thanks so much. for those of you on the east coast mr. bach is not only back but hanging around, he'll answer some more questions during a live web chat for the next hour or so. just head to