What strategy is recommended for managing large debts effectively?

Combining or refinancing debts is a recommended strategy for managing large debts effectively because it can lead to lower interest rates, decreased monthly payments, and simplified payment processes. When individuals refinance, they often consolidate multiple debts into a single loan with a more favorable interest rate. This can make it easier to manage repayments and can reduce the total cost of the debt over time.

Refinancing can also potentially improve cash flow, allowing individuals to allocate funds to other financial goals or necessities. Additionally, reducing the interest rate can result in significant savings, ultimately helping the borrower pay off the principal amount faster.

In contrast, relying on minimum payments only can prolong the repayment period and increase the total amount paid due to compounding interest. Eliminating all savings is not advisable as it leaves individuals vulnerable to financial emergencies. Likewise, committing to cash only can restrict financial flexibility and may not address the underlying debt effectively.