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.

Based on the information given, Manny can reduce his current debt by: C. Manny could spend less on food and clothes and put the money towards his credit card payment.

What is a credit card?

A credit card refers to a small rectangular-shaped plastic card that is issued by a financial institution (banks) to its customers, which allows them to purchase goods and services on credit, especially based on the agreement that the amount of money taken would be paid later with an agreed upon interest rate.

How to calculate monthly payment.

Mathematically, the monthly payment for a credit card is given by this formula:

[tex]M=P(\frac{r}{1-(1+r)^{-nt}} )[/tex]

Where:

P is the principal.

r is the interest rate.

M is the monthly payment.

t is the time.

n is the number of times it's compounded.

In this scenario, Manny can reduce his current debt by spending less amount of money on both food and clothes while putting the money towards his credit card payment.

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