People often ask me for advice regarding their finances. Where should I invest? What should I do about this stock or that? What’s the best thing I can do with my money? How can I afford a house? I would like to answer the following question in this post: What is the absolute best thing you can do for yourself financially?

The answer is simple: get out of debt, and get out of debt now. You see, when the economy starts to lull a bit or slows down some, the government always figures that the best thing to do in order to stimulate growth again is to spend money. This is absolutely true. When consumers are spending their money, the economy grows. One problem- what about when consumers are spending money they don’t have? Now we have a problem.

When Bill Clinton left the White House, we actually had savings. The government was not spending more than it was making, and financially things were pretty sound. Well, George Bush and co. managed to not only spend all of that, in order to feed their insatiable appetite for more spending, they have been borrowing money from other countries with a surplus. Countries like China, saudi Arabia, Venezuela- yep, all those guys have been giving us money for a few years now. We are in a massive, massive debt right now. Should we continue on this course, ultra inflation will kick in and gas will become hundreds of dollars per gallon. The dollar will become worthless. That is because in order to cover spending expenses, when other countries stop lending to us we will just print more money. Unfortunately for the average American, we can’t just print more money to get ourselves out of debt.

So what is to be done? First, the government has to realize that they have to get out of debt. Stop spending like mad on anything and everything. That will stabilize the credit markets. next, we all need to rip up our credit cards and stop spending into cyclical debt. Pay off your credit cards. Pay off your student loans. Pay off that car. Pay off your house. Some of these things will take longer than others, but we have to get out of debt individually and as a whole or our economy will literally crumble. Once out of debt, don’t spend money you don’t have. Stop rolling up the tab on the credit card at the mall on a bunch of stuff you don’t need. Spending on credit contributed to this disaster.

Do everything you can right now to get out of debt. Nothing will help you more in the long run. Once out of debt, take the money you were using to pay off debts and pay it to your savings account in a bank. That’s the best thing you can do for yourself in the long run. Trust me, this thing will pass us by eventually. It may be two years, it may be ten years, but I can tell you this: no matter how long it is, it’s going to feel like forever if you are in debt. So do yourself a favor and get out of debt. George Bush I hope you are reading, because this especially applies to you and the Federal government.