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Someone I know in the financial services industry marvels at how many indebted people have cash sitting in savings accounts paying next to nothing in interest. To him, it’s a no-brainer to tap into savings earning 1 or 2 per cent at best to repay debts that might range from 4.5 to 5 per cent for a home equity line of credit to 20 per cent for a credit card.

In a Q&A I did recently with financial planner Shannon Lee Simmons, I asked about this. Ms. Simmons is the author of a new book called Living Debt-Free: The No-Shame, No-Blame Guide to Getting Rid of Your Debt. The book is about finding workable solutions to high debt loads and it avoids extreme solutions that may sound effective, but aren’t practical in real life.

Here’s our exchange on using savings to pay debt:

Q: What about indebted people who have money stashed in savings accounts or in tax-free savings accounts and registered retirement savings plans. Should they cash in some or all of this money in to pay down debt?

A: I agree, to a point. I always leave an emergency account intact and I would never liquidate someone’s registered retirement savings plan right away.

Ms. Simmons makes a solid argument for maintaining the emergency fund: If you don’t have money to cover unexpected expenses, you may have to borrow to cover those costs. In other words, your debt problem just gets worse.

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Rob’s personal finance reading list…

How to optimize the PC Optimum program

A super-thorough look at how the PC Optimum customer-reward program works and how to maximize the value of your points.

Falling stocks are good news for dividend investors

A lower stock price means a higher dividend yield if you’re putting new money into a stock. Worth nothing because bond and GIC yields have fallen lately.

In defence of mortgage stress tests

Stress tests check to see whether people applying for a mortgage can afford their payments if they have to renew at higher rates. These tests have been attacked by many in the housing and lending sector because they make it harder to first-time buyers to get into the market. In a series of tweets, the head of the Canada Mortgage and Housing Corp. explained why the stress tests are necessary. I’m sold.

How to unshrink a sweater

Ever accidentally ruin a wool sweater by adding it to a dryer load? Shrunken sweaters can be saved – here’s how.

Today’s financial tool/app

The RewardsCanada website has freshened the look of its reward-credit-card rankings for the first time since they were launched 15 years ago. This definitive resource is much easier to use.

Ask Rob

Q: A couple of readers asked recently about condo maintenance fees, specifically about how older condos seem to have higher fees. Is this an argument in favour of buying newer condos?

A: Check out a column I wrote based on a conversation with an experienced condo lawyer, Denise Lash. She discourages any generalizations about older condos offering more fee risk because of maintenance or upkeep issues resulting from simple wear and tear.

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.

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

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  • Ten ways to reduce taxes in 2019
  • Self-directed investing: A beginner’s guide to getting started as a DIY investor (for Globe Unlimited subscribers)

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