The FASTEST Way To Pay Off Debt

Normally we prefer to focus on ways to get rich but before you can begin doing this you need to pay off your bad debt first. Quite frankly, becoming wealthy for most people is nothing more than a dream because statistically speaking they’re more likely to be struggling with debt.

Let’s kick-off by first looking at some of the terrifying UK debt statistics to put the debt problem into perspective: The average total debt per UK household in October 2021 was £63,000. Total unsecured debt per UK adult was just over £3,700 and the average credit card debt per household was almost £2,100.

People in the UK have personal debt at almost £1.75 trillion, up £60 billion from the year before, which is an extra £1,136 per UK adult over the year. The problem of personal debt is only getting worse.

Beyond the numbers, the biggest debt problem of all is the changing attitudes to debt; it has wrongly become acceptable! Past generations would shy away from debt, instead choosing to save first, and then buy. Today that’s been flipped on its head and it’s far too common to spend first and work out a way to pay for it later. In a nutshell debt has been normalised.

If other people want to be burdened by debt that’s their choice, but we want you to make the decision now that enough is enough. In this post, we’re going to lay out a 7-step plan that you should follow to pay off your harmful debts as fast as possible. Now, let’s check it out…

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Step #1 – Understand Your Debt

First off, you need to take stock of exactly how much you owe, who you owe it to, how much interest you’re being charged, and what the minimum payment is.

Literally draw up a table, so you can tally up the total amount owed and what the total minimum monthly payment is. You should be aiming to pay more than the very minimum or otherwise you could be paying off debt until what seems like the end of time, but we’ll calculate what you can afford to pay in a moment.

Step #2 – Draw Up A Monthly Budget

You absolutely need to understand what money you earn and what exactly you spend. Start with the obvious monthly costs that stay the same month-in, month-out. The bulk of your monthly spending is likely to be fixed (or consistent) such as the rent, energy, broadband, food, petrol or bus, and so on.

Then you need identify irregular or non-monthly expenses such as Christmas, holidays, clothes, and so on, and calculate an equivalent monthly figure for all of those, which you put aside each month into a separate account and can spend when the time comes.

It is these irregular or non-monthly expenses that cause most people to blow their budgets which is what forces them to go into debt in the first place. But irregular expenses shouldn’t come as a surprise; Christmas was on the 25th of December last year, and it will be on the 25th of December this year too.

For the time being, plug in your minimum debt payments into your budget, which should give you something like this:


Income: £2,500

Fixed Bills: £1,400

Irregular Expenses (Monthly Average): £400

Minimum Debt Repayment: £400

Other Spending £200

Surplus: £100


Bear in mind we’ve heavily summarised this for simplicity. In this example, we’ve got a surplus of £100, which should also be directed to clearing off that debt.

Step #3 – Cut Out The Fat

If you’re in debt, it’s highly likely that you won’t have a surplus in your budget and will in fact have a deficit. This needs to be corrected pronto! Even those with a surplus should follow this next step to speed up your debt repayments.

You need to cut out the fat, or in other words, cut unnecessary spending. You need to go full on ninja and slash everything you don’t need.

Go through your budget with a fine-tooth comb and identify which of your spendings are necessary and which are not. Holidays, eating out, coffees at Starbucks, nights out, expensive tv subscriptions are a thing of the past. Even the stuff you identified as something you need should be scaled back if you can.

We all need a roof over our heads, but if your debt’s really bad, might you move somewhere cheaper? Can you do the food shop in Aldi instead of Waitrose? Can you catch a bus instead of driving the car?

This might sound counterintuitive, but you may want to continue with one very low-cost entertainment expense such as Netflix or your PlayStation Plus subscription. People tend to spend a lot more when they’re bored so these can entertain you for next to nothing and help to prevent you spending more elsewhere. With some of the “free” PlayStation games I’ve literally clocked up hundreds of hours of gametime – and now it’s conformed… I’m a saddo.

By this point you should have a calculated plan to pay down the debt. If the maths isn’t working out, then you need to go back and be tougher with your cuts. If that’s not possible, there are still solutions to be found in the next steps.

Step #4 – Reduce The Interest Rate

It goes without saying that you want to pay as little interest as possible on your debt as slashing the interest rate will help you pay down the debt much quicker. Assuming lenders are still willing to lend to you, it might be a good idea to transfer whatever debts you can to a 0% credit card or cards.

There is a usually a small fee of around 2% from the new credit card provider but you could lock in 0% interest for maybe 2 years depending on what cards are available to you. The transfer fee is much cheaper than the 19% APR on a typical credit card. lists all the best offers and, in many cases, they can check your eligibility before applying to prevent any damage to your credit rating.

Another option you might want to consider is a debt consolidation loan. A debt consolidation loan is a type of loan that’s used to combine all your existing debts into one pot, so your debts become much easier to manage. The rates vary significantly between providers and on your personal circumstances. Technically, a debt consolidation loan is simply a personal loan, so you’re free to do whatever you want with the cash once received from the lender, but you’d be mad if you didn’t repay your existing debts.

Another option you may have is to shift the debts to your mortgage if you have adequate equity and can pass the mortgage provider’s affordability requirements. To do this you can borrow more on your mortgage and use the cash released to pay down the other (more expensive) debt. Mortgages tend to be extremely low cost – at time of filming rates are around 2% – and are also long-term, so provide you an opportunity to not have to take drastic lifestyle changes.

However, remember that because a mortgage is a secured debt, if you fail to make your mortgage payments you will be in danger of losing your home, so this last option should be considered very carefully.

Step #5 – Pay Off The Debt

There are a few different strategies you can use to pay down debts and they tend to cause disagreements within the finance community about which method is best.

On YouTube a lot of the content is dominated by American channels, and we don’t know if it’s different over there – we see no reason why it would be – but either way this next point doesn’t seem to get mentioned. Here in the UK, the first debts you should clear are your ‘priority debts’.

Priority debts mean that if you don’t pay, you could lose your home, have your energy supply cut off, lose essential goods or go to prison. They include things like: rent and mortgage, gas and electricity, council tax, and court fines. It’s important that you still make the minimum payments on your other debts whilst you clear these.

Once your ‘priority debts’ are sorted you need to tackle your other debts. The two strategies are the debt avalanche method and the debt snowball method. Both methods require you to make minimum payments on all but one of your debts.

The mathematically best way to clear the debt is the debt avalanche method, whereby you pay as much as you can on the one with the highest interest rate. The theory is that by concentrating on the one with the nastiest interest rate you pay your total debt down quicker by avoiding additional interest.

The debt snowball method ignores the maths and tells you to you pay down the smallest debt first and work your way up from smallest to largest, regardless of the interest rate. Advocates of this strategy argue that there is a psychological benefit to clearing the quantity of creditors you owe, and we think they have a point.

So, which is best? Well, that depends on you. Personally, we would always tackle the most expensive debt first if the interest rates varied significantly. Say you have one credit card charging 40% and a loan charging 10%. The credit card is going to be spiralling out of control if it’s not dealt with urgently, whereas the loan’s interest is far more reasonable.

Another contentious point is whether you should have an emergency fund if you’re in debt. Critics of debt such as Dave Ramsey over in the US argue that you need a $1,000 starter emergency fund before tackling the debt. This would be about £700 here in the UK. Some people would even argue that you need more than this as £700 won’t save you from many disasters.

Many people might struggle emotionally with this but as long as you have access to a credit card that isn’t already maxed out, then this kind of is your emergency fund in case something substantial comes up whilst you’re clearing your other debts. It doesn’t make financial sense to be paying say 20% on a credit card if you have some cash sitting there. If an emergency arises you can pay the 20% then and only then.

Step #6 – Make More Money

Cutting back and budgeting can only go so far. No matter how many times you have sliced and diced your budget, if the maths still doesn’t work, you need to grow your income instead. In fact, even if you’re not in debt you should be thinking about how to grow your income so you can move on to further financial goals like investing and retiring early.

Can you work extra hours? Dave Ramsey would be telling you to get a 2nd and 3rd job. If your debt is particularly bad this might be something to consider. But we prefer exhausting other avenues first such as getting better paid work for the hours you currently spend working.

Speak to your boss and see if there are opportunities for a promotion or added responsibilities. This might not be achieved overnight but let the world know your intentions. Alternatively, it’s quite often the case that it’s easier to promote yourself by simply switching employer.

Or, if you want more control you should think about setting up a side hustle to bring home some extra bacon. Somebody I know restores antique furniture and sells that on Etsy. Someone else used to buy women’s shoes from car boots and resell on eBay, and someone else did wedding photography. It could literally be anything.

Our favourite side hustle we like to promote is matched betting because you can do it with no skills, and you can quite easily make hundreds of pounds or more a month tax free (the amount you make is heavily determined by how much time you put in) – enough perhaps to allow you to start saving more for your future.

Matched betting is a betting technique that covers all outcomes of a bet, which unlocks very lucrative bookies’ free offers, which is how you make the money. Whilst it involves using gambling sites, because you have covered every outcome you can’t lose as long as you follow the instructions precisely. Visit our Matched Betting page for more info and videos. There you’ll also find discounted offers for the required software.

Step #7 – Get Help

If after all this, you still can’t stop drowning in debt then it’s time to get help., which has replaced the Money Advice Service, has a list of free debt advice services, which we’ll link to below. From what we’ve heard on the grapevine is particularly good, so please do check them out if you need help.

What other tips can you give to help those trying to get out of debt? Join the conversation in the comments below.

Written by Andy


Featured image credit: SB Arts Media/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

5 Ways To Invest In The Stock Market Using Leverage In The UK

Using debt to invest really does divide opinion. Personally, we think using other people’s money is a great tool at your deposal to grow your own wealth at a far faster pace than what otherwise would be possible.

In previous videos we’ve talked about some of the more easily understood ways you can use leverage to invest, such as extracting mortgage equity. In today’s post we will of course be briefly looking at this but we’re also going to introduce you to a few different ways to invest using leverage in the UK that I don’t think we’ve covered much before.

How to invest in the stock market using leverage in the UK! Let’s check it out…

If you’re looking to get a boost to your investments head over to the Money Unshackled Offers page where platforms like Freetrade, Trading 212, Stake and others are giving away free stocks and welcome bonuses when you sign up.

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Investing Is A Marathon – Not A Sprint

One of the biggest problems with investing is that for the average person who is able to make contributions of just a few hundred pounds each month, it takes a really long time for their investments to grow to a size where their assets can financially support their lifestyle.

In fact, for a typical person saving for retirement it might take 30-40 years from when they start contributing to when their investment pot becomes big enough to retire on. Waiting 40 years to become financially free is not acceptable to us. What about you?

So, why does it take so long? There are 3 things that dictate how much investments grow by: the amount invested, the time invested, and of course the investment returns.

Most of our amazing readers will be investing as much as they can, and they want financial freedom as soon as possible.  That leaves us with one choice. We must increase our rate of return and therein lies the problem.

All the evidence shows that most people cannot beat the market, so picking the next 100 bagger stock is unlikely. Most people are more likely to pick a stinker.

Therefore, we primarily invest in index funds and ETFs that aim to track the market instead. We would expect this to return around 8% per year, or 5% after inflation. The answer to our problem is that we need to supercharge that index return, and leverage is a very useful tool that might just help us do this.

What Is Leverage?

To quote Investopedia, “Leverage is the use of debt (borrowed capital) in order to undertake an investment or project. The result is to multiply the potential returns from a project. At the same time, leverage will also multiply the potential downside risk in case the investment does not pan out.”

That means if you invested say £1,000 of your own hard-earned money and earned 8%, you would make profit of £80. But had you invested £3,000 – with £2k coming from leverage, and only £1k of your own money, that 8% return would turn into 24%.

You’ve earned £240 profit on your investment of just £1,000. Amazing!

In practice using leverage would incur some small amount of interest payable to the lender, which would reduce that return ever so slightly, but you get the point!


We can’t stress this enough – don’t use leverage unless you have lots of investing knowledge.

Even then, start slowly. We all have a tendency to be overconfident in our investing abilities. Lots of people can be great investors but when leverage is thrown into the mix, they start breaking their own rules and end up investing very poorly.

Remember, that all the benefits of leverage we just mentioned also work the opposite way. So, if we relook at that previous example of a 3x leveraged instrument, had the market fallen by 8% instead of risen, you would lose £240, which is a 24% loss.

The stock market is very volatile and can fall by more than 50% as it did between 2007 and 2009. If you were using the amount of leverage in our example you would have lost all of your own money.

5 Way To Invest In The Stock Market With Leverage

#1 – Leveraged ETFs

The popularity of Leveraged ETF’s has really ballooned in recent years. We now regularly see some in the top traded tables of UK platforms. In Q1 2021 the WisdomTree FTSE 100 3x Daily ETP (3UKL) was the 6th most popular buy on the Interactive Investor platform.

Leveraged ETFs are collective investment funds where lots of investor’s money is pooled together into one investment. They have been developed for short-term trading and therefore are said not to be suitable for long-term investors. They’re designed to multiply the short-term performance of an index or commodity. If we take the WisdomTree FTSE 100 3x Daily ETP as an example – this one is meant to provide three times the daily performance of the FTSE 100.

For example, if the FTSE 100 rises by 1% over a day, then the ETP will rise by 3%, excluding fees. However, if the FTSE 100 falls by 1% over a day, then the ETP will fall by 3%, excluding fees.

At first glance, leveraged ETFs look great. We know that in the long-term stock market indexes should go up, but when you delve a little deeper into leveraged ETFs, the numbers paint a very different picture.

What this financial instrument is not designed to do is to track the performance of the FTSE 100 over an extended period of time. That’s because leveraged ETFs reset daily to maintain the same leverage ratio – in this case 3x daily.

Hargreaves Lansdown had an interesting article on the subject and demonstrated the impact on returns for investors who hold leveraged ETFs for any longer than one day.

Fig.1: Example of a 3x leveraged ETF underperforming

On day one the normal ETF returns 10%, so the leveraged ETF returns 30%. Then the normal ETF drops by 10% the next day, so the leveraged ETF drops by 30%. As the days go on the leveraged ETF completely strays away from the benchmark index. In this example, the leveraged ETF has lost 17% but the normal ETF has barely moved.

If you’re trying to take advantage of short-term market movements these might be worth it.

#2 – Extract Equity From Your Mortgage

In the short-term the stock market is just as likely to be down as it is up, so short-term debt is very dangerous for use as leverage. Conversely, mortgages are one of the best ways to leverage stocks-based investments because a mortgage is a long-term source of debt. Your investments have 20, 30, or even 40 years to recover from any temporary setback. It’s very unlikely for the stock market to be down for such a long time.

How can you buy stocks with a mortgage, which are in fact loans intended for property purchases? Well, once you’ve paid down some of the outstanding mortgage on your home, or the property has gone up in value, you will be able to renegotiate your mortgage terms and extract equity in the form of extra mortgage debt.

This can then be used to buy and hold stocks, or preferably index funds, over the long-term.

A while back we calculated the optimal LTV at around 85%. Say your property was valued at £200k and your equity was worth £100k, you could take out £70k of additional long-term mortgage debt, which would leave £30k in equity and put you back on an 85% LTV.

You can now invest that £70k as you see fit (just don’t tell the bank). In effect you are using a mortgage to invest in the stock market. Just because society tells you to pay down your mortgage quickly, why should you? Better, we think, to grow your wealth with investments, and use the investment gains to pay off the mortgage later.

Another key benefit of using mortgages as your leverage source is that mortgages tend to be for a fixed term, so even if the stock market crashed (as long as you are meeting the monthly mortgage payments) the loan cannot be called in.

This is unlike most short-term debt offered on stock trading platforms, which could call in debts just when you’re at your lowest point.

#3 – Margin Loans

Margin loans are a form of secured lending offered by stockbroking platforms. The stockbroker uses the stocks & shares in the portfolio as security. The main drawback compared to a mortgage is that they are callable.

This means that if the value of the portfolio falls below a certain level, the broker will eventually sell some of your positions. They do this because the value of your collateral may have dropped to a level where the lender hasn’t got enough cover to protect them from you not repaying the loan.

Before selling your positions, the stockbroker should first serve you a margin call, which is essentially a demand for you to deposit more money. The problem is you are probably using margin because you don’t have the money or deliberately stretched yourself. If you did have the cash set aside to cover you for a margin call, there’s probably little point in paying to access the margin in the first place.

In the UK none of the major investing platforms offer margin accounts. In this respect, the UK is very different from the USA – where most reputable stockbrokers would offer margin.

Interactive Brokers seems to be the leading broker offering margin loans in the UK and are offering margin rates in GBP of around 1.5%. If you guys want us to review this service, let us know down in the comments. We’ll jump right on it if there’s enough demand.

Degiro is another broker that offers margin loans in the UK but the only others we’re aware of are private banks, which require hundreds of thousands or even millions of pounds to access.

#4 – Spread Betting / CFDs

Spread Betting and CFDs are similar, and both are definitely not for beginners. The main difference between the two is that Spread Betting is tax-free. Spread betting is illegal in many countries, so we are very fortunate in the UK as it’s legal here.

If you are an experienced investor, don’t let the term ‘betting’ put you off. It’s only considered betting because you are technically placing a ‘bet’ with a broker that the market will move one way or another, but it can be done in such a way that it’s very similar to normal investing if you understand it. You don’t actually own the underlying investment!

We have a big video planned on Spread Betting, where we’ll show you how we’re making big returns, so make sure you subscribe so you don’t miss it when we release it.

With Spread Betting you place a bet per point. Say you bet £10 per point on the S&P 500. If the S&P 500 moved from 4000 to 4200 you would have made £2,000 profit (200 points x £10).

Most spread betting firms will allow you to deposit just 5% (20 x leverage) of the overall exposure on indexes like the S&P 500, so in this example you could have made a 100% return on just a 5% gain in the index value.

Although this scenario is possible, we would encourage you to limit the amount of leverage you use at the beginning because if the financial instrument swings the wrong way you’ll lose a lot of money, very fast.

Spread Betting and CFDs get a bad rep because too many people try it without understanding how leverage works, and so naturally lose a boat load of cash. We’ll be going into a lot of detail in the soon to be released Spread Betting video, including what we’re investing in and what strategies we’re using, so keep an eye out for that.

#5 – 0% Credit Cards

0% credit cards can be used for a small amount of leverage, and they have a medium-term time horizon of around 2 years. I have used 0% purchase credit cards to spend on my normal day-to-day expenditure. But rather than paying down the full balance each month I would invest it instead. However, you must always make the minimum payment, or the credit card company will remove the 0% offer.

At the end of the 0% term, you can pay down the debt or use a 0% balance transfer credit card to move the debt to another card. We consider 0% credit cards to be a small, short-term advance, rather than a permanent leverage tool.

Should You Use Leverage?

If you have to ask this question, it’s probably best not to use leverage. It’s a high-risk strategy and should only be done by those who understand the risks and those who have the knowledge. Having said this, you learn to drive by driving, you learn to swim by swimming, and you learn to leverage… you get the point.

Where do you stand on using leverage to invest in the stock market? Join the conversation in the comments below.

Written by Andy

Featured image credit:  Andrey_Popov/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday: