finances can be complicated, but they don't have to be.

I break down financial topics that may seem complex and overwhelming so you can start taking action on your financial goals.

I'm Ari Talby, and it all starts here on Personal Finance Redefined. Welcome to another episode of personal finance

redefined. Today's topic is where do you start with your finances? When it comes to thinking about

your finances, where do you begin? So there's three steps when it comes down to figuring out where to start

with your finances so that you can

start to take control of your financial future. That first step is to pay down debt. So whether it's

credit card debt, student loans, auto loans, medical debt, whatever it is, that's where you want to

start. So mathematically, you'll usually pay off your debt more quickly and with less interest by going down

this route. This is the debt avalanche method. So you pay off your debt with the highest interest

rate first while paying the minimum on your other accounts. This way you can get the high interest

rate out of the way and not let that compound as well. Because we know compounding is a great thing,

which it is. There's a reason

that Albert Einstein said it's the eighth wonder of the world and it can make your money grow and

do a lot of great things for you, but it can also work the other way. So let's not let it do that.

So once you do go ahead and pay off that first loan or the card, you apply its minimum monthly payment

and any extra payments to the loan or card

with the next highest interest rate and so on. So if you had a credit card interest rate of 8%,

you want to pay that one down before you would pay down one with 6%. Get the high interest rate

out of the way first. Let's not let the bad compounding occur there. So when you have debt, you're no longer working just for you or your family. You're working for the people you owe money to. And believe it or not, the average American carries $34,000 in consumer debt. So that's going to be step one, is pay down that debt. Step two is going to be that emergency fund.

So it's fun and sexy to talk about investing, and it's even wild is that when people hear

the word investing, the first thought is like, millionaire, what do I need to invest to become

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