Confused and Angry

I have a friend who i want to cut out but i am unsure on how to do that.... I have always Webeen scared of her temper but we were doing good until i got annoyed at some of her habits and she verbally abused me and my fear of triggering her grew deeper and i was always walking on eggshells. Despite this, i forgave her because i still wanted to be friends but i i regret that now.... She and my bestfriend had a fight and part of this is because my bestfriend could not stand her treatment of others and the things this friend has been saying behind my back. The things she has been saying are untrue and i was generally unaffected until i found out that she has been degrading my econimic status when we shop together and has been telling her family and others that i am hooked on drugs which i am not. She has been backstabbing me way before i got annoyed at her. This made me extremely angry and i started ignoring her unless its necessary. I want her out of my life but i am scared that she could do something as bad as the verbal abuse again. Should i continue to keep my distance or not?