<prompt> Human: Ok, heres my background:Wife and I have incomes of 37549 and 25920 total of 63k, before tax. We have total credit debt of about 5000 right now. Weve been paying it down and all accounts are current and not in collection. We have student debt that is also paid on time. Total of about 35000. We just got a nice gift from our parents of about 4000. We really would like to move into our first house. We arent wanting anything incredible, just a 3 bedroom home. In our market, most of these houses that are relatively new go for around 150k-280k. A 4000 gift certainly isnt huge, but my question is do we save it for a downpayment or do we reduce our credit debt immediately? My credit score is 750, while my wife had some problems in the past and has a score in the midlow 600s. We dont have dramatic income, and right now we have practically no savings as weve been hitting our debt. Thoughts? Advice? Its a long story, but Id love to hear anything.  <response>: What are the rates on your debts?I would keep the 4k as an emergency fund if you dont currently have one. You should have 3-6 months of expenses in this fund.I would really try to save 20 down payment for a home to avoid PMI, in your case 30k - 56k before purchasing a house. You will also have closing costs on top of that, as well as require a larger emergency fund for owning a home. 