<prompt> Human: Received a check from my grandfathers estate for 12,280. Currently owe: Car loan - 6580 23.8 interest No doubt this must be paid no matter what. Credit card 1: 730 20 interest. Limit 750. Credit card 2: 1700 20 interest. Limit 2000. Credit card 3: 3500 20 interest. Limit 4000. These cards are my wifes and we now have an agreement that they will only ever be used for emergency because now she understands how bad interest rates suck. Air conditioning in wifes car needs repair: 308. Its Florida. Personal loan from father in law for summer semester: 628. School amount due August 1st for fall semester: 950 So I know without a doubt that the car loan has to go. Its my biggest expense at 280 per month and somehow over the last 3 years Ive paid almost 10k on it yet its gone down by like 4k. My wife and I both desire to get rid of the credit card debt but we also want a small cushion of savings. I make approximately 1000 per month but have been offered a promotion in about a month that will be full time and a little better pay. Probably 1300 a month after. 1. How do we balance the need for a savings cushion with the need to eliminate those credit cards? Is it better to spend it all on the debt and have no savings? 2. Is it true that maintaining some debt keeps your credit score higher? If so, exactly what is ideal on 3 credit cards. 3. How do I balance the fact that Ill probably have to pay some sort of tax on this money right? with the fact that I want to get the most use out of it.  <response>: Pay them in order of interest rate: highest first. There is no other criteria.1. Yes, it is a BILLION times better to spend it all on debt and have no savings. You can always charge an emergency on your cards if needed but paying 20 for the privilege of having an emergency fund is insane.2. Nope.3. Beneficiaries never pay federal taxes on inheritances. Estates pay taxes to the IRS. Some states have inheritance taxes, but Florida doesnt. 