With a limited income, is better to save first or ...

United Communications recommends that you have a savings of some sort to fall back on during difficult times.  Paying off your debt can save you thousands in interest fees, though, dependant upon your interest rate, and card balance, so any extra funds you can apply towards your principal each month could assist you tremendously in the long term.

You may be eligible for your creditor's hardship program, which in some circumstances reduces your interest rate to make your payment more effective towards the principal balance.  Of course, if you are experiencing difficulty maintaining your unsecured debt payments and don't wish to file bankruptcy, a debt settlement program may be able to assist you.  If you are current with your creditors, we would most definately recommend you take the first step, and contact your creditors to see if they are willing to assist you so that you can perhaps accumulate a savings while paying down your creditors, or at least make your payments apply more towards your principal balance.

Personally, I think its better to save first because you never ever ever want to leave yourself flat. We all make monetary mistakes and pay dearly for them but you still have to live too. Save some money, even if its change at first because over time it adds up. Then when you get to $200, $300, $400 after a few months it makes you feel great inside and thats whats important really!

I agree that everyone needs a "nest egg" of sorts, and of course if you are able to save money than kudos!  Just make sure that if you are not applying the extra funds towards your debt, you are actually saving it.  Most people have a difficult time actually saving, and a rainy day later could ruin your financial situation if you begin falling behind with your creditors too.  Adhere to a strict budget, and try not to indulge in unnecessary spending.  You'll be glad you did later!

You actually can do both! Once you know how much you have available to either save or pay down debt, split it between the two. Contact your creditors to try to negotiate the best interest rates, cut back as much as possible on spending (hard to do these days, I know), and then start a plan to pay down your debt and save at the same time. It will seem slow, but, you will see progress. A great place to save is ingdirect.com. They have some great accounts with good interest rates and no fees. And, you can set it up on automatic deposits, which is the best way to save. Good Luck to you!  Janna

Baby steps.... 1- save 1,000 dollar emergency fund, 2- pay off all debt except for the house (smallest to largest debts), 3- save 3-6 mths of living expenses... see www.daveramsey.com for the details.  This is a lifechanging plan to live with no debt eventually.