Save or Pay Down Debt?
Get rid of high-interest debt before you start setting aside cash.
By Cameron Huddleston

Should you be putting money in savings or investments at the same time you're paying off a loan?That's one of the most frequently asked questions we get at Kiplinger, and the answer isn't always obvious. Even if you have run up a balance on a high-rate credit card, you may hear a nagging voice in your head urging you to keep plowing money into savings for retirement, college for the kids or a new home.The simplistic solution -- to invest if you can earn a higher interest rate than you're paying on your loans -- can be downright dangerous. That became clear when, in the late '90s, a wave of questionable advice suggested that homeowners actually create more debt to invest in the booming stock market -- by pulling out some equity via a cash-out refinancing or home-equity loan. Then came the bear market.
The best answer lies in separating good debt from bad debt. It's almost always a good idea to get rid of credit card and other high-interest loans before you start setting aside cash. However, you probably don't want to accelerate mortgage or student loans at the expense of saving for retirement.

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http://money.aol.com/kiplingers/credit/canvas3/_a/save-or-pay-down-debt/20060408141409990001

read the very 1st post on the Cashflow club blog for more info on credit cards, debt and the anatomy of a credit score.
http://cashflowtexas.blogspot.com/2006/08/1st-game-success-thanks-to-dave.html#links