You should have about 1000 for an emergency fund, then radically focus on paying off your debts. Side jobs, garage sells, tighten your budget etc. The sooner you are debtfree, the sooner you can build wealth.

Read books like The Wealthy Barber, Financial Peace and The Millionaire Next Door. Having a plan for your income will change your financial fututre.

There is much more value in having a good credit standing than having money in a savings account!

Credit card debt is expensive. Get rid of the debt first and you'll have more money to put into your savings account, or investment account. If you can afford it, pay more than the minimum amount due.

There are ways to do both and I think your best bet would be to try and do both. You should not completely neglect your savings if you do not have to. Eventhough most usually do neglect their savings. A debt roll down program can help you pay off your credit cards quicker. This is not something that will affect your credit. You also will not have to neglect paying one card just to pay another.

You should pay the credit cards off first because you are probably paying a high interest rate on those +10% but probably earning between only 1% & 3% at the most on your savings account.

You will save a ton of money in the long run by paying the credit cards first.

You should make sure that you pay off your debts as soon as possible as most everyone has mentioned. You should then begin to build your wealth through a 401K program. If you don't, your debt can add up quickly and defeat the purpose of you saving money. Best of luck and I hope this advice helps.

Pay debts now. Do not wait.

Would you borrow money at the interest rate that you have on your credit cards to put in a savings account?

That is what you are doing. You are borrowing money at 15% from Visa, let's say, to earn less than 1% interest in a savings account from Bank of America.

Pay your balances.

Most personal financial pundits recommend that you do both. But only to a predetermined savings amount. That amount is typically a minimum of 3 months worth of living expenses.

This is an emergency fund. Once established it will help prevent future debt if a crisis arises. Without it you may be forced to incur more debt if an emergency occurs.

Trying to figure out how much money should go toward savings and how much towards debt repayment each month is a fine balancing act. Once you reach the 3 month goal you then increase your debt repayment amount.

Personally, I see this as long term advice best to be used if it is going to take more than 12 months to pay off those CC’s. If you can pay that debt in less than 12 months then do that first.

Debts usually have far higher interest rates than savings, so it would actually cost you money in accruing debt if you paid into savings instead of debt.

2c.

You'll be better off if you pay your debt first. The interest rates can't go much lower from here, and they might soon start rising.

Pay your debts.

Save then.

Otherwise, you are borrowing to invest at the rate of interest that you have on your debts.

Borrowing to invest? Always bad.

You should pay the debts with the higher interest rates, than the lower ones can be paid. Because this will make you save some amount of money that will be saved by the interest that would not be now paid on high interest debts. By this you will save and pay the debts..............hope this will help.

Pay off your debts! Having debt can ruin your credit and having debt while saving doesn't make sense because most loans have an interest rate. Generally this interest rate is higher than the inflation rate in the economy. When you are saving you want to find a rate that can beat the inflation rate. When you begin saving with debt you are not only trying to beat inflation, but also your interest rate on your debt.

In short, I would focus on paying off your debt first. Then focus on saving.

This is an excellent question and there has already been a lot of good feedback. Having worked with consumers from all walks of life for many years, I firmly believe in a little of both. I would be curious as to what types of debt you have and their corresponding interest rates. But in general, I suggest paying down debt, focusing extra money on the highest interest account(s) because that is bleeding you of money, along with saving. You cannot neglect saving. It is a bit of a balancing act as mentioned in a previous reply. Having something saved (a minimum of $500 in an emergency fund, although 3 - 6 months is recommended) is crucial because if you have an emergency and do not have money available, you will resort to using some sort of credit and thus building more debt.

I hope this helps. I would like to hear how you are doing, and if you have any follow-up questions.

Kathy Jo