Q: My husband is bugging me to refinance the house to get a lower interest rate and to pull out some cash for a few things we need.

Our washing machine is sort of on its last legs, my car is getting old, and we want to join some friends on a vacation to China. I’ve been reading the news about all of the problems with the economy and I’m not sure this is a good idea. What do you think?

A: This is an excellent time to refinance. Rates are very low and if you can afford slightly higher payments you could get even better rates with a 15 year mortgage. What I would be very careful about is taking out cash.

Because there are so many unknowns in the economy, this doesn’t seem like a great time to buy “toys” and gadgets. You can get along with an older car, with a washer that is still working but not the latest model, and maybe take a vacation closer to home.

According to recent statistics and studies, the Puget Sound region, and Vashon in particular, have escaped the extreme downturn in the real estate market we are seeing elsewhere. However, no one can predict the future. This would be a good time to pay down debt, not incur more.

It’s always tempting to use the equity in your home to purchase things you think you need. This is what I have seen as a problem in the few foreclosures we’ve experienced on Vashon. These were not folks who had sub-prime loans; they were folks who simply kept borrowing more and more on their home until they had borrowed more than the house was worth.

A job change, divorce, family illness, or any number of things can change your life quickly. Some of those folks had to sell their house to deal with their life changes and lost money. Many also lost their credit rating. I think I’ll agree with the experts that this is a good time to stick to a modest financial plan and save.