Becoming debt free is a dream many people have nowadays, when even dogs and cats would take a loan if they could. It surely feels good to enjoy a life standard that you can’t yet afford (or you may never ever afford), but sometimes the price to pay is simply too high. This has become obvious during the latest financial and economic crisis, with so many families affected by the impossibility of paying their debts any further, and with bankruptcy becoming more and more the word of the day. There were more suicide attempts than ever, from heads of families who found themselves overwhelmed by the responsibility of taking care of their wives and children, so they preferred to voluntarily put an end to that by killing themselves.

I’ve decided to write this article because I was also affected by the crisis and I’ve made a decision to get out of debt completely in no longer than a couple of years or so. This is my mini guide which is already starting to show results:

1. Expensive credit should be repaid first

Usually, credit cards come with the highest interest rates, so you should try to repay all debt as fast as you can. It’s also very important, once you’ve made it, not to be tempted to use your credit card a lot again. You know how much money you can afford to spend each week, so be nice to yourself and when the amount is over, don’t spend anymore on things that aren’t vital. If you think a new iPod or the newest Gucci bag are vital, then think again. Millions of people can survive without. I’ve managed to reimburse my credit card debt completely by not buying the following “must-have” items: an Asus EEE PC netbook, a pair of Hush Puppies shoes, a new car (the current one being in perfect shape and less than 4 years old), a new lens for my photo camera, a special bag for the same photo camera, a new couch, new carpets, a flat screen TV set. Before, I would have just bought all these and probably many others, without even blinking. It’s just that easy to give the shop assistant this little piece of plastic and to sign a receipt in order to take home whatever you find attractive in that shop. I had to put an end to that. It’s true that I’ve suffered a couple of times, and that I still have those shoes in mind, but I feel so good that I’m not paying any more interest for the credit card debt, that it was worth the effort and the sacrifice.

2. Unsecured debt comes next after credit card debt, in term of interest rates

However, you shouldn’t use your credit card to repay unsecured debt. Try just not to take such additional loans that would make your financial burden even heavier. It's true that any of us would easily be tempted by getting a big amount of cash to solve our current issues, but a brief glimpse into the future shows that we're wrong to think like that. I'm not considering here life or death situations like surgery or similar things, as those are exceptions when all rules and guides should be forgotten.

3. Make a choice between earning more or spending less

It’s a pure math problem: total income minus total spending should give a positive result. If it doesn’t, you have two ways of reversing this: increase the amount of money that enters your family accounts or decrease the amount of money that flows out of your accounts. Personally, I believe it’s easier to focus on making more money rather than cutting from vital things. Again, re-evaluate what’s vital for you and see how much you can compromise on that.

4. Mortgage is also part of your spending

This is probably too big to manage getting rid of in a matter of several years, but with proper finance management you can integrate it into your budget without needing to use credit cards or unsecured loans to be able to pay your mortgage installments.

5. Money doesn’t bring happiness

OK, so you’ve raised your living standards with the help of credit, but are you happier? I bet you still have your frustrations and discontents, your worries and your fears, so at the end of the day, what’s the use of all those goods you’ve surrounded yourself with? Shakespeare must have known that, as he put these words into the mouth of one of his characters, Hamlet, Prince of Denmark:

I could be locked in a nutshell and I would still feel like a king of a borderless reign, if only I hadn’t these bad dreams.

This is a quote from my memory, but the main idea is that happiness is not inside things money can buy, but rather in the way you see the world. Becoming debt free will let you see the sunny side of the world.