Dos and don'ts for dealing with financial distress

DO contact your lender immediately if you can't pay your mortgage.

You might be able to restructure your loan or get your lender to agree to accept a lesser amount to pay it off.

DON'T borrow against your 401(k).

You'll probably need to repay the loan within five years or it will count as a withdrawal. If you leave your job before then, you'll owe federal and state income taxes on the outstanding loan, plus a 10 percent penalty if you're younger than 59½. But there are exceptions, especially for those 55 and older. See IRS publication 575.

DO take advantage of your employer contribution to your 401(k).

Put away at least as much as you need to get the maximum matching amount.

DON'T take a refund anticipation loan.

They are short-term loans that you pay back with your tax refund. Your tax preparer might conveniently offer this service, but interest rates can run into the triple digits on an annualized basis. Filing your taxes online and having the refund direct-deposited can get cash to you almost as fast.

DO consider raising your insurance deductibles.

That will reduce your premiums. Home-insurance policies, for instance, typically carry a $250 deductible. If you're willing to bear more risk, you can save upward of 15 percent per year in premiums with a $500 deductible. Or save 25 to 30 percent with a $1,000 deductible.

DON'T take cash advances.

Credit-card advances can come with up-front charges of 2 to 4 percent and have a higher interest rate than regular card purchases. Payday loans, which are cash advances on your wages, can cost you $15 to $30 for every $100 you borrow.

DO cut what you can from your budget.

You can save a lot on groceries by taking advantage of sales and buying less-expensive store brands. Look at your other monthly expenses to see what you can trim, such as premium cable service or pricey coffee drinks. Carpool or take public transportation, if possible, to save on fuel costs.

DON'T sign up for a car loan with a term longer than four years.

The longer the loan, the greater the likelihood that you'll owe more than the car is worth if you trade it in early.

DO consider generic drugs over brand-name remedies.

Consumer Reports has assessed prescription drugs that work best. Check out www.BestBuyDrugs.org.