Question 9 • [PERFIN] Personal Finance, Sem 2 (26-27)
Manny wants to find ways to reduce his current debt. The table below shows Manny’s monthly income, expenses and net income. Monthly BudgetAmountIncomeWages$3,000.00ExpensesRent$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$25.00Net Income $317.44 After evaluating Manny’s monthly budget, which of the following would be the best option to reduce his debt?
Answer
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.
Explanation
To reduce debt, Manny should lower a flexible expense and use the savings to pay more toward an existing debt. Spending less on food and clothes and applying that money to his credit card payment directly reduces what he owes. The other choices use savings for a new phone or house, or focus on the car payment rather than increasing payments toward the credit card debt.
AI-written and checked against the verified answer.