On your radio interview there is something which I generally don’t disagree with but there are some details which are critical.

You said people should get out of debt. Agreed. And that they should prefer credit card debt over auto or house. Here, it depends. If the house isn’t underwater and the payments are smaller than current rents, leave it. If you have an expensive caddie, swap it for an older car.

And I would just say RAISE CASH. Liquid. Something you could write a check on in 24 hours.

Someone with $22000 cash in the bank and $20000 of debt is far better off than someone with $2000 of cash in the bank and no debts. One could survive a layoff, the other could not. The first thing anyone should have is 6 months of expenses in cash. They really should have 9 months to give an emergency cushion or even 12 months maybe more. If you pay off your car and then have an accident? If the credit card you didn’t pay off changes terms? More liquidity, more options. It isn’t just debt as such – any business will tell you that cash flow is critical in a way profit and loss is not. The crisis a year ago was one affecting liquidity and ready cash. The loss to bankruptcy occurs more slowly. The difference between a heart-attack and cancer. Debt is a cancer, but a low reserve fund is asking for a heart attack. Credit lines are being closed (like the recent Citi letters) so you might not be able to get it (even with a good FICO) when you need it, so it is best to leave things in place.

If you are liquid, you can always choose what to pay down and how much and when. If you aren’t, you won’t have any choice. So I would just modify the advice from getting out of debt to get liquid.