Despite the bad news in the business section, many of us are still doing okay financially. It’s hard to tell if things are going to stay that way, so a lot of people are looking at ways to ensure that — if something does happen to them — they’ll still be okay. There are two pieces of advice in particular that seem to be going around: first, keep as much liquid cash as you can, or second, pay off as much debt as you can. The two tactics are mutually exclusive and it can be hard to decide whether these pieces of advice can really help you.

Your Mortgage

The liquidity argument pops up just about every time someone mentions a mortgage. In most situations, if you can pay your mortgage down ahead of time, it’s a good idea to do so. You cut the interest you’ll pay in the long run and you build a little extra equity. But in tough times, some people think that wisdom doesn’t hold true. The argument is that it’s better to keep those extra payments as cash and put them into savings — if something happens, you can’t just pull money back out of your mortgage, after all.

It’s a tough decision to make. Owing less money seems like a good idea, but if the future seems even a little bit shaky cash can be important. It would be nice to pay off the mortgage ahead of time, but for now, I’d make building up an emergency fund a higher priority. And as for all those suggestions to open HELOC and other lines of credit to have cash available ‘just in case,’ I think that may be one of the worst pieces of personal finance advice I’ve ever heard. Taking on debt on the off chance that you’ll have trouble paying a bill or two is just poor financial planning.

Your Credit Card

Liquidity is much less of an issue with a credit card. After all, if you can pay down your balance, you’ll have more credit available if you need it. I don’t like the idea of using a credit card as an emergency fund. Honestly, though, I can picture a lot of situations where it would be necessary. Depending on the interest rate on your balance, paying more than your required monthly payment can be a good bet: if you can improve your credit even a little bit, you may be able to get your credit card company to lower your interest rate. Paying down your balance can be worth the risk of not having a lot of cash on hand.

Looking Ahead

Right now, I’d recommend making an effort to eliminate consumer debt and build an emergency fund over paying off your mortgage early. Both approaches will put you on more steady financial ground if there are problems down the line, and provide a few more options for handling future expenses you might not be able to take care of otherwise. Paying more on your mortgage just doesn’t offer the same sort of security net.