(MONEY Magazine) – Q. Is it better to use spare cash to build up an emergency fund or put that money toward paying down a home-equity line of credit and then use the HELOC as an emergency fund? --Jonathan Darab, West Bloomfield, Mich.

A. It can't hurt to put a small portion of your free cash into an emergency fund if it gets you in the habit of saving. But you'll end up with more money in your pocket if you pay down the HELOC first, says Dallas financial planner Matt Paladini. Do the math: The best you can expect to earn in a money-market fund is about 5%, while you're probably paying 8.25% to 10.25% on the line of credit. True, you can deduct the interest on up to $100,000 in HELOC debt. But the deduction still won't lower your effective interest rate enough to make the money fund the better deal. Once you're debt-free, you can start building your emergency fund in earnest (and yes, the HELOC can serve that purpose in the meantime). Just keep your hands off it unless you face a real crisis--emergency trips to the Bahamas don't count.