Botkin says to avoid choice in the matter all together.

"Do what the government does with taxes and deduct your emergency cash savings from your paycheck automatically before you get it," he says. You can accomplish this today by simply changing your paycheck direct deposit deductions to funnel 5 to 10 percent of every paycheck into a savings account for emergencies.

To get the most from your fund, you'll want find the best savings account interest rates available, but Botkin says the most important thing is to simply park your emergency cash in any FDIC-insured savings, checking or money market account that offers immediate access when you need it.

3. Plan an attack on debt

If you are ready to get rid of credit card debt, spend an hour collecting your credit card statements today and create what Botkin calls, "The Matrix of Debt," a simple chart that lays out your debt repayment plan:
  • List your creditors from smallest to largest total amount of debt.
  • Next to each, list the total amount due, the interest rate, the minimum payment and the duration to satisfy each debt.
  • Start paying more toward the smallest debt first by applying any savings (found by tracking your expenses, above) plus the minimum payment every month until satisfied. Keep paying minimums on all other debts.
  • Once a debt is paid off, apply that monthly savings amount -- which should be larger in the absence of the minimum payment from the first debt -- to the next smallest debt's minimum payment.

This approach is designed to shrink the number of monthly minimum payments you need to make and reap the psychological benefits of reducing the number of debts you face. While it takes commitment and a butcher-knife approach to cutting expenses to free up the money necessary to pay debt, when used properly, it can yield progress in a hurry. Also be sure to set up due date payment alerts so you never suffer setbacks from late fees.

4. Make a commitment to your retirement

Botkin says that saving for retirement becomes important once you have an emergency cash cushion and credit card debt is satisfied. That's because credit card interest rates are typically between 12 and 20 percent while retirement investment vehicles earn just a fraction of that.