When creating characters, you are given some free ranks in your career and specialization. Do you need to pick the free ranks first before spending XP on ranks? Or can you spend some experience on a level 1 rank and then use the free rank on the more expensive (Rank 2)?

I'm away from my book but I believe the step of spending XP is one of the last steps, meaning that it comes after you've chosen your free ranks.

Clever, though

I mean the limit of only training to 2 ranks at character creation keeps this from getting out of hand. I'll check the rules again and see if there is any clarification.

I don't remember if the rulebook said anything specifically about it, but I had my players distribute career and specialization skill ranks before spending XP. It seemed like the most logical (and least munchkin) way to do things.

There IS a pretty specific character creation order listed in the character creation section of the book. I don't have my book with me, but the steps are listed and numbered.

Munchkin... love that term!

I don't remember if the rulebook said anything specifically about it, but I had my players distribute career and specialization skill ranks before spending XP.

You're doing it right. It's not like White Wolf games where some things (e.g. spending bonus points) can occur at any time during chargen (and lead to easier optimization). There is a clear order for Edge chargen and spending XP is pretty much the last thing you can do that directly affects baseline character stats (versus say picking up gear).

CRB. p. 34. "Generation Steps". It lists the order of generation. The text says in the first sentence "To create a character, each player follows these steps". Steps 4, 5, and 6, are Career, Specialization, Spend XP, respectively.

That's pretty clear. Clever though trying to do the end run and use the free point for the more expensive second rank.

Makes sense to do it in order. In the big picture, it is irrelevant. You are going to accumulate more XP and get to where you want anyway.