If you’re looking to get debt free, you don’t need to find a lump sum payment, windfall or lottery win - you just need to manage your existing debt better and in effect, make payments on it that do indeed go towards clearing the debt itself as opposed to just paying back interest. This is a common mistake that people make and I’ll explain the reasoning behind it below.
Dealing with debt is all about good management. Take credit cards for example, if you have 3 or 4 credit cards that are maxed out at say £7,000 each (the limits don’t matter too much for the example). On this debt, each month, you’ll be paying the minimum amount of around £150 each, so around £600 total - quite a significant amount I’m sure you’ll agree. Now, from this £600, you may be under the illusion that the majority of that is going off the total debt you owe - wrong, it’s just paying the interest. So in effect, you could be paying the £600 a month for the rest of your life and still have the same amount of debt you started with.
So, how do we get around this situation? The simple answer is to consolidate. You can take out a consolidation loan, in this example for £28,000 and pay back the total amount over 6, 7 or 8 years. Now, if you did this, not only would you be paying LESS each month than the £600 you do currently, but the money you pay each month off the loan itself will be going towards the debt as opposed to just paying the interest.
So, using this example, you can pay less each month and get debt free much much quicker. Making the minimum payment on your credit cards does not clear the debt. Remember that and manage your debts more effectively.