What consumer action can assist in reducing debt?

Starting a debt snowball is an effective consumer action for reducing debt because it focuses on paying off debts in a strategic manner that can build momentum and motivation. The debt snowball method involves listing all debts from smallest to largest, regardless of interest rate, and concentrating on paying off the smallest debt first while making minimum payments on larger debts. Once the smallest debt is paid off, attention shifts to the next smallest, and this process continues.

This approach not only reduces the number of debts more quickly, providing psychological benefits from small wins, but also helps individuals develop a habit of consistently making payments and staying disciplined in their financial journey. By prioritizing debts in this manner, consumers can see tangible results sooner, which can encourage them to stick with their debt reduction plan.

Other choices, such as relying on credit cards, closing bank accounts, or investing in a new car, do not contribute positively to reducing debt. In fact, relying on credit cards can often increase debt levels, closing bank accounts can lead to more financial instability, and investing in a new car typically requires significant financing, which can further complicate debt situations.