<prompt> Human: Hi personalfinance,Using a throwaway account here. My mom got laid off today from the company she worked at for 7 years. She was kind of expecting it but not so soon. Ill skip the unimportant details. They were planning to take a trip to Costa Rica in May and they will need another 2500 to finance the trip. Heres the lowdown We are in Canada:She got a 33k severance package, after taxes, that will be 20k.What they have so far: RRSP: 20k Emergency Fund Pension Plan: 20k Cannot touch until retirement 10,000 liquid emergency fundDebt: New Furnace AC: 5000 10 Line of Credit: 58,000, Split Into: 28,000 5 30,000 4 Mortgage: 97,000 2.25 AND 97,000 3.25 09 Car1: 12,000 0 09 Car2: 13,000 0.9Income: Salary Extra: 4,000 From other parent Welfare: 1600 From laid off parentTotal Income: 5600Monthly Costs: 5600 Food, Gas, Utilities, Car Payments, Insurance, Mortgage, etc...Therefore, we are covering ALL monthly costs with the income currently made without the laid off parents income.We are looking for some suggestions on what to do with the severance package.Car1 costs 450monthCar2 costs 245monthFurnace costs 101monthIf we pay off Car1 completely, we can move the insurance to one-way and PERHAPS save about 100month on car insurance. That goes on top of the 450month wed be saving. Thats option 1.Option 2, we pay towards the principal for the Line of Credit.I would love to hear your suggestions.EDIT: Those interest rates are APR guys! Sorry!Also, these are all numbers from a familys incomeexpenses. Mother Father.  <response>: Often, advice will tell you not to pay off debt during an emergency, which this may well be. Conserve cash until employment is regained. At that point, apply all non-emergency funds towards prior debts, continuing as you would have if you had paid. 