Pay Dirt: Take control of your finances

That's my No. 1 piece of financial advice in this economy. Examine your spending. Pay down your debt, however slowly. Set realistic financial goals. Take calculated risks.

Come to think of it, I would have recommended the same in 2006 -- when some days I felt everyone but me was spending lavishly and leveraging themselves to the hilt.

When home values and stocks were on the rise and unemployment was low, customers didn't have time to shore up their personal balance sheets between trips to the mall. Banks were focused on refinancing mortgages and opening home-equity lines of credit. Some financial planners -- shudder to think -- were advising clients to cash out home equity to invest in the stock market.

Now that the housing bubble, the credit-card bubble, the stock-market bubble (did I miss any bubbles?) all have popped, some banks are focusing more on helping customers pick up the pieces.

Getting out from under

Thrivent Financial Bank, for example, recently trained all of its employees to be so-called "debt guides" for the bank's Debt Savvy program. The concept, tested in February 2008 and begun bankwide this year, is to analyze whether customers are in the right loans for their current situations.

Debt Savvy, which is free and available to the public, begins with a quiz. Thrivent's debt guides analyze the responses and make personalized recommendations. Guides explain how stretching out a loan to get the lowest payment will result in more money paid over time. They steer people with little willpower away from lines of credit toward loans with set terms.

"We help [customers] get on a plan for their financial success in order to buy [insurance and investments] through Thrivent in the future," she said. Harvey's top idea for employed folks without emergency savings: Open up a line of credit just in case. "It's always easier to borrow money when you don't need it. When you're unemployed, there's not a loan out there for you," she said.

Wells Fargo's Debt Pay Down Solution, begun in December, is a program with a three-pronged strategy. First, customers consolidate debt through a personal loan. Then they look for ways to spend less using the online tool, My Spending Report with Budget Watch. If the online tool finds extra cash lying around, the customer is urged to apply it to the loan's principal.

Back to classic strategies

Many locally based banks and credit unions don't have any new debt-related programs for customers, but instead are sharing classic debt repayment strategies with much more frequency. At U.S. Bancorp, for example, Twin Cities regional market manager Christine Hobrough said bankers are spending more time discussing ways to "chisel away" at debt. For instance, a popular method is to pay more than the minimum due, if possible, on the highest-interest debt first. When that's paid off, the payment is rolled into the next debt until all debts are repaid.

Another strategy is to pay off the smallest balance first, no matter the interest rate, because checking one debt off the list can motivate someone to stick with it.

There is one place where getting out of debt is in vogue in every economic cycle. I'm talking about the financial counseling agencies whose business is to show clients the way out of hock. The good counselors out there -- at Lutheran Social Service, Family Means, and Financial Rehabilitation Inc., to name a few -- aren't pushing pricey debt management plans. They're pushing realistic budgets.