Which financial strategy can help in managing debt effectively?

Prioritizing high-interest debts for repayment is a highly effective financial strategy for managing debt. This approach allows individuals to focus on paying off debts that accumulate the most interest over time, which can significantly reduce the total amount paid in interest charges. By concentrating efforts on these high-interest debts, a person can accelerate their debt repayment journey and free up future cash flow more quickly.

Additionally, paying off high-interest debts first can create a positive feedback loop, where the reduction in monthly obligations contributes to improved financial stability. This strategy is often referred to as the snowball or avalanche method, depending on whether one prioritizes the smallest debts or the debts with the highest interest rate. Focusing on high-interest debts helps in minimizing the impact of compounding interest, which can otherwise hinder an individual's progress in becoming debt-free.