Ask the Pro

Last year's debt binge is this year's stress headache. TIP SHEET's Linda Stern asked Sherry how borrowers can get out from under.

What is the best strategy for paying down debt in a hurry?
Start with your credit-card bills. Make a chart listing the interest rate (annual percentage rate, or APR), annual fee, balance, credit limit and minimum payments on all the cards. Total the balances. Analyze your repayment time by using an online calculator at or Put the lion's share of your resources to paying down your highest-interest card first, then moving on to the card with the next highest APR. Even $10 more per month can make a difference.

What about transferring balances to home-equity lines or low-interest credit cards?
I don't recommend exchanging unsecured debt (credit cards) for secured (mortgage or home equity). If you stop paying your mortgage or home-equity lines, you could lose your home. If you have good credit, consolidating your debts on a zero-interest or low-interest credit card might save money.

Should troubled borrowers contact creditors themselves?
This is a tough question to answer. Borrowers facing default can contact the creditor and ask to work out a modified payment plan that reduces their payments to a more manageable level. However, it can be difficult to get a firm commitment on a work-out plan, and in calling, you may be signaling to the creditor that you are in trouble, which may result in higher interest rates or reduced credit limits.

At what point should they seek credit counseling?
When you are in debt, speaking with a nonprofit credit-counseling agency affiliated with the National Foundation for Credit Counseling ( is never a bad idea. These agencies offer budgeting and money-management services without the necessity of enrolling in a debt-management plan. Learn all the details before you commit to a formal debt-management plan. These programs are not for everyone, and it may feel as if you're no longer in control of your own finances.

Any other strategies you ' d recommend?
Debt problems are often income problems, so moonlighting or selling assets can help you pay off your debts faster. Consider a part-time or weekend job, renting out an extra room or selling your car and buying a lower-cost used vehicle.

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