The Financial Crisis and You

Given her low tolerance for risk and her very high fear of inflation, he urged her to consider Treasury Inflation Protected Securities (TIPS).

DiPiero agreed but said her approach was too conservative. "Staying 100 percent in the fixed account is not going to keep up with inflation," he said. "There's no diversification."

She should not go for the extreme of buying gold, but she should rebalance her portfolio so she has at least 20 percent in equities, the advisers said. You can't beat inflation without having some exposure to the stock market, they said.

Bring in a Tenant?

Kaniz Zafrin, 42, and her husband bought a home in Manassas in 2005 for more than $600,000. It is now worth about half that. Zafrin has a five-year, adjustable-rate, interest-only mortgage.

Combined, the couple make less than $100,000 a year. Their monthly mortgage is about $3,000. They have been making their payments on time, but with rising costs for their two children, rising gas prices, rising food prices, rising everything, they have had to make sacrifices. Gone are after-school activities, such as soccer, that the kids enjoyed, because the fees went up.

In two years, they will have to refinance their home and have no idea whether they will be able to because it has depreciated so much. Her neighbors vanished recently because they couldn't keep up with their payments anymore, Zafrin said.

To make matters worse, she works as a consultant at a travel agency, and business hasn't been all that great, so she worries about her job security.

"I am living paycheck to paycheck," she said. "In this situation, what are my options, what am I supposed to do?"

Should they refinance now or wait until 2010? Can they refinance at all if their house has lost its value? Zafrin said she fears losing her home.

"Unfortunately, if a home's value has fallen below the mortgage amount, the ability to re-finance is very unlikely. However, under some circumstances, lenders do work with troubled borrowers," Beatty said.

Beatty and other advisers said Zafrin should not wait until 2010 to deal with it.

"She should start to evaluate her options right now," said DiPiero. "What is a fixed-rate mortgage at now, what is refinancing looking like right now? She hasn't looked. She should start looking."

In the meantime, continue making the mortgage payments on time, the advisers said. The moment you think you might fall behind, contact your lender. Some of them have been willing to modify loans, but it's not an easy process. Once you've defaulted on a mortgage, it becomes more difficult to negotiate a workout.

Seek help from a nonprofit housing counseling agency or an attorney. Organizations such as NACA, the Neighborhood Assistance Corp. of America, have been able to persuade lenders to modify mortgages.

Beatty proposed one option to help with cash flow: "Consider a renter of a room or the basement to help with the mortgage . . . This is definitely a sacrifice but a real possibility."