Assuming you have a credit card, you should pay off all debts worse than credit card debt, and all credit card debt, saving no money. If your car breaks down, c

Assuming you have a credit card, you should pay off all debts worse than credit card debt, and all credit card debt, saving no money. If your car breaks down, charge it. It's only if you have a source of debt that's more pleasant than credit card debt, and which you can't easily get back in case of a car-breakdown-forcing-credit-card-use that you'd want to save some debt to keep cash around for emergencies. And even then you'd want to look at the extra interest you're paying compared with the risk of emergency and the difference between the interest rates of that debt and your credit card, and a lot of the time it'll be like (IF i have a car breakdown, which is 5% likely, then I'll end up paying 5% higher interest on the repair money for a few months ... this is NOT worth failing to repay some debt immediately which will cost in interest a lot more than the expected loss of that incident)