The truth of the matter is that you will probably need to do a bit of both. 

Why You Need to Pay Off Debt

First, if the most significant part of your debt is to a credit card company, then the interest you are being charged is very likely costing you an enormous chunk of income. Indeed, some credit card companies are now charging up to 30% interest on the remaining balance. This means that if you pay only the minimum amount due every month, it becomes next to impossible to pay off your credit card debt entirely, ever.

Second, even if the debt you have is not costing you an inordinate amount of interest, by not paying it off, you could be negatively affecting your credit score. This, in turn, could significantly reduce your chances of ever getting an important loan such as you’d want for a car or a mortgage, should you ever need one.

Why You Need to Save 

Many reasons compel people to save money: retirement, trips, or becoming financially independent, for example. But when income is low, these things are pretty much put on the back burner, and with reason. When money is tight, sometimes all we can manage to do is provide for our basic needs.

However, it is still important to set a bit of money aside, at least for an emergency fund. This way, you will have something to fall back on other than creditors, should something unfortunate and unexpected happen. 

How to Do Both

With a few tweaks in the way your household’s budget is handled, you can work on paying off your debt and setting a bit of money aside at the same time. Here are a few examples of what you can do:

Look for ways to reduce your spending. For example, when it comes to grocery shopping, you can save a lot of money by buying only the things you absolutely need, by taking advantage of sales and by clipping coupons. 

Negotiate for better prices. Utility companies and various service providers such as those for telephone, cable and insurance, for instance, often set rates that can be negotiated. 

Downsize whenever possible. For example, if you have two vehicles, is there any way you could get by with only one? And what about your home? Would it be feasible for you to move into a smaller, less expensive house or apartment?

These are just a few ideas to help you get the ball rolling when it comes to figuring out where you can cut expenses. The idea here is for you to use the money you will have saved in these areas and start turning your financial situation around by paying off your debts and also saving up at the same time.

Of course, this is not an easy feat. But by setting your mind to it, and with a lot of patience, you will get there.