Question

Manny wants to find ways to reduce his current debt. The table below shows Manny’s monthly income, expenses and net income.


Monthly Budget
Amount
Income
Wages
$3,000.00
Expenses
Rent
$1,200.00

Utilities
$269.34

Entertainment
$220.00

Food/Clothes
$368.00

Cell Phone
$89.42

Credit Card #1
$94.62

Credit Card #2
$36.18

Car Insurance
$80.00

Car Payment
$300.00

Gym Membership
$25.00
Net Income

$317.44


After evaluating Manny’s monthly budget, which of the following would be the best option to reduce his debt?
a.
Manny could spend less on entertainment each month and put the money towards a new cell phone.
b.
Manny could pay the minimum monthly payments on his credit cards and put the money towards his car payment.
c.
Manny could spend less on food and clothes and put the money towards his credit card payment.
d.
Manny could cut his utlility costs and put the money towards buying a new house.

Answer 1

c.

Spending less on food/clothes and applying the savings to credit card payments reduces high‑interest debt directly. That lowers overall interest costs and speeds up payoff — a better debt‑reduction move than buying new items or only making minimum payments.