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Got any cash in a tax-free savings account? Then you have a lifeline if your mortgage payments rise to unmanageable levels.

A top objective for households struggling to keep up with inflation and rising mortgage costs is to avoid racking up additional debt to cover expenses. One way to do this is to tap into savings that might today earn 1 to 3 per cent at most.

TFSAs can hold pretty much any type of investment or savings vehicle. Many people profitably use these accounts to invest in stocks, but others have high rate savings account TFSAs. We now see the benefit of having savings on hand for challenging times like these. Inflation is running at 7.6 per cent, and the cost of the variable-rate mortgages so many home buyer chose in recent years has risen steadily.

The Bank of Canada is expected to increase its trend-setting overnight rate on Wednesday for the fifth time this year, and further rate hikes are possible. But high rates cannot hold indefinitely. In 12 to 18 months, we could very likely see rates and inflation both heading back to more normal levels.

Households struggling with high mortgage costs and inflation need an action plan to make it through without incurring new debit via lines of credit, loans and, worst of all, credit cards. TFSAs holding cash are an ideal asset to use. Selling stocks or funds in a TFSA may also make sense.

Tap the TFSA in the near term and re-contribute the money in future years, when you’re back on solid ground again. Try not to drain your TFSA, though. Leave something for the potential financial emergencies that could emerge if all doesn’t go according to plan in the economy.

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Rob’s personal finance reading list

An inflation side effect for seniors: Loneliness

Rising costs are increasing social isolation and loneliness for seniors who have to cut back on recreational costs as a result of inflation. A 74-year-old woman quoted here has decided to go back to work.

Her restaurant spending? $1,000 per week

A story about a U.S. tech professional who spends US$1,000 on restaurant meals each week – and about $36 on groceries – has gone viral. Of course it has. What do we like to do more than judge other people’s spending?

The retirement risk zone

Financial planner and blogger Robb Engen uses the term retirement risk zone to describe the period where you draw on your personal retirement savings in order to delay the start of Canada Pension Plan retirement benefits to age 70. Taking CPP at 70 instead of the standard age of 65 or earlier offers substantially higher monthly payouts. But, as Mr. Engen points out, people feel anxiety about using their savings to get by until higher CPP payouts kick in. He offers some thoughts to ease this anxiety.

After the storm

Tips on what to do if your home is damaged in a storm, including a list of disasters that would typically be covered – and not covered.

Ask Rob

Q: When you talk about GICs, are you saying to look at moving funds from your mutual funds, your RRSPs or your stocks into GICs?

A: No. Look at GICs to augment or replace bonds in your investments, or as a place for secure savings. All investors should figure out and stick to a suitable mix of stocks and fixed income, which can include bonds and/or GICs.

Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

Of interest to renters, including students going back to school: a review of tenant insurance offerings from a variety of providers.

The Money-Free Zone

The Imperial by The Delines is a sad song about reconciling with the past and I like it more every time I listen to it. Also try The Oil Rigs at Night.

From the Twitterverse

A financial adviser explains why he does not like the new Tax-Free First Home Savings Account created by the federal government to help young adults afford a home down payment.

In case you missed these Globe and Mail personal finance-related stories

More Rob Carrick and money coverage

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