It really depends on the type of debt. Don't pay down your mortgage by $10k. It will probably do nothing to lower your monthly payments. Do reduce high-interest

It really depends on the type of debt. Don't pay down your mortgage by $10k. It will probably do nothing to lower your monthly payments. Do reduce high-interest credit card debt if possible. If you don't have high interest debt, save the money in cash or cash equivalents. High yield savings accounts are paying 2.5%. Also, do everything you can to increase your liquidity and access to liquidity. Maybe open a home equity line of credit, but don't dare spend from it! In a recession, liquidity is king. During the Great Recession, Leman Bros. went under due to illiquidity more than anything else. Whereas Warren Buffet made a killing because he could come up with cash when hardly anybody else could or would. The same principle applies to economic entities of any size.