6. Get a home equity loan

6. Get a home equity loan Do you own your own home and have equity that's accumulated through the years as you've paid off the mortgage? If so, now's the time to consider a home equity loan (HEL) line of credit for the maximum amount possible.

A HEL gives you two ways to save. First, by using the loan proceeds to pay down your debt, you trade something like an 18% loan for a 6%-7% loan. Second, if you itemize deductions on your income tax returns, HEL interest is a deductible item under most circumstances. In a 25% marginal tax bracket, the 6% loan really has an effective rate of 4.5%, and that's probably the cheapest interest rate you'll see on personal indebtedness.

The danger here is falling into a common trap. Many get an HEL, pay off existing debt, and then ring up the charges on the credit cards all over again. Now they have the HEL to repay on top of the credit cards. The hole just got much deeper. Fools use the HEL to pay off the credit cards, and then keep them paid off until the HEL is repaid.