It's been about 10 years now that my grandparents have been gone. In retirement, they lived outside of Emery Mills, a small town in rural Maine, in a tiny cottage that had been their summer getaway for many years. They both worked hard during their prime years, and saved carefully. After they retired, they sold the house in town and moved permanently to their little cottage on Muddy Lane. (Yes, it was a dirt road. I still remember how to get there—even the sound of the gravel grinding under my car's tires, and the sound of the wind whispering through the pine forest.)

My grandparents were very active, and enjoyed life, but they lived within their means. They saved prudently, and had a little something left over to give to their children. That's the way it really should be. "A good man leaves an inheritance to his children's children" (Proverbs 13:22).

But that's not the way most of us live in the 21st century. About 18 months ago I woke up to my own personal debt disaster and have been digging out ever since. I kick myself when I look back on 20 years of missed opportunity. I've studied and thought long and hard about this, and want to encourage everyone to escape debt slavery and become an investor—living sensibly and living well, rather than getting the dessert first and then discovering the hard truth about the price later.

This past summer I heard an astonishing fact on National Public Radio. They reported that the average household owed, on their short-term credit arrangements, 97 percent of a year's disposable income. That means that the typical American household owes very nearly a whole year's after-tax income. And it's getting worse every year.

The same news report also said that the average savings rate was a negative 0.2 percent. That is, even accounting for the folks who do save, the average household is saving nothing and spending above their income on an ongoing basis. The bankruptcy rate is at an all-time high, and going higher. In the midst of the greatest economic times in 30 years, more and more Americans found their finances wrecked beyond repair.

Taking a look

As a first step, we need to take a look at where our money is going each month. How much of it is interest? What kind of lifestyle could our families enjoy if we had that money to spend? If we owe the typical one-year's take home pay, then the interest burden we are carrying can easily be more than we now have left after our basic expenses.

That discretionary income is what drives the fun part of our lifestyle. When interest crowds out our discretionary income we feel poor. Life becomes a dreary grind of working and paying bills. It's maddening to have a good job, but not be able to enjoy it. We can lose the benefit of the most productive years of our lives if our livelihood is being siphoned off to line investors' pockets. The stress, anger and frustration can destroy our health and tear our families apart. We can feel like a slave and not a free person. "The rich rules over the poor, and the borrower is servant to the lender" (Proverbs 22:7).

Taking control

A key to turning our financial life around is to become a saver—an investor. Instead of paying interest, we want to be earning it. First, and foremost, that entails living within our means—and not just barely within, but far enough below our current lifestyle to really start putting away savings.

Today the typical American household is not quite paying their interest obligations, and paying no principal on their short-term debts. Consider this example. If you borrowed $10,000 at 12 percent, and you just barely pay the interest for 25 years, you will have paid $30,000 in interest, and you'd still owe the $10,000. If you had invested the same money at the same rate of return, you would have $40,000 at the end of the 25 years, plus use of the $30,000 you didn't have to spend on interest. Even if you didn't save money, if you hadn't borrowed the $10,000, you would have had $30,000 more to spend during that 25 years.

Living on borrowed money is a quick way to a lower standard of living. Having more now comes at the terrible price of carrying the insidious burden of interest payments. Those who are currently carrying a huge debt load are already painfully aware of this fact.

Cash

I know through hard experience that the answer is to cut even more deeply into our lifestyle to free up income to pay down our debt. If there's nothing left to cut, we may need to consider bankruptcy. Professional counsel is important in this situation. There are alternatives—a credit counselor may be able to arrange a lower interest rate. (Any lender with an ounce of sense will accept a lower profit rather than suffer a total loss due to a bankruptcy.)

The sooner we free our finances of the ball and chain of debt, the sooner we can really enjoy the fruits of our labors. Draconian cuts in our standard of living can be a hard thing to sell to our families. Counselors suggest that we be open and honest. Be sure that everyone understands what is expected of them, and why we are stepping back temporarily from our accustomed lifestyle—we will be able to live better in the long run. Someday, our grandchildren will be proud of us!

I'd like to recommend Managing Your Finances, a useful resource with sound, biblical information on this important subject. It's provided free of charge as a public service by the United Church of God.