More suggestions to help you dig out of debt

'Tis the season to worry about debt.

The post-holiday letdown has given way to the January jolt many of us feel when credit-card bills show us how much we spent on Christmas.

But lucky for us, local financial experts stand ready to help.

Paul N. Winter, principal of Five Seasons Financial Planning in Holladay, sent me an e-mail recently to follow up on advice I passed along to a reader named Don in a previous column.

Don was hoping to consolidate his considerable debt from several credit cards with interest rates of about 9 percent to a single card at a rate below 4 percent. The experts I called at the time said he might be able to find such a low-rate card, but he should be careful, because the low rate might be a temporary teaser that would convert to a much higher rate later.

Paul agrees and says Don also could hurt his credit score by opening new accounts and closing down old ones.

As an alternative, Paul says, people in situations like Don's can consider other sources of funds to pay down higher-rate credit cards. For example, Paul said in his e-mail:

• "Many 401(k) plans have loan provisions. It could be preferable to pay yourself interest on a periodic basis rather than 9 percent to credit card companies. Employees must be disciplined in paying back these loans; if not, borrowers can be subject to tax penalties and simultaneously jeopardize their retirement savings."

• "Use the equity in your home. Ideally, you'd want to be in a position to refinance your first mortgage at lower rates and to simultaneously increase the balance outstanding. However, it also could make sense to take out a home equity loan (preferably) or home equity line of credit."

• "It also may make sense to sell investments in taxable accounts to repay credit-card debt at 9 percent. It may be difficult in this environment for an investment portfolio to generate 9 percent returns after tax going forward, so repaying credit-card debt might be a good use of those funds."

Paul stressed that people need to do their homework before trying such solutions, but these are good suggestions. And even if they don't fit for Don, they might work for some of us.

Along the same lines, I recently received an e-mail from Mike Peterson, vice president of the American Credit Foundation in Midvale. He also is urging people to act now to get out of the "debt trap."