During a financial planning review, your client, Maria, expresses concern about her high-interest credit card debt and a personal loan. She wants to start saving for a down payment on a home. What initial advice regarding her debt management would be most suitable?

Question: During a financial planning review, your client, Maria, expresses concern about her high-interest credit card debt and a personal loan. She wants to start saving for a down payment on a home. What initial advice regarding her debt management would be most suitable?

Answer options:

• Advise her to prioritize accumulating the down payment funds before addressing any debt. ✅ Suggest paying off the highest interest rate debts first to reduce overall interest costs.
• Recommend consolidating all debts into a single, longer-term mortgage.
• Encourage her to take out another loan to pay off the existing high-interest debts.

Correct answer: Suggest paying off the highest interest rate debts first to reduce overall interest costs.

Explanation: The 'debt snowball' or 'debt avalanche' methods are common strategies, but paying off the highest interest rate debts first (debt avalanche) is mathematically most efficient for reducing overall interest paid and accelerating debt repayment, freeing up cash flow for other goals like saving.