Many of your grandparents, or maybe great grandparents, didn't have mortgages.  They didn't have car loans, either.   They also didn't have credit cards or department store charge cards.

They saved up and paid for things.  They cashed their paychecks, put a portion into savings, then budgeted the rest for what they intended to spend on food, shelter, clothing, and transportation.  If the event of an emergency, they dipped into their savings, took care of the emergency, then tightened their belts and built back their savings.  A simple strategy with great results.

So what happened?  Why do 70% of Americans live from paycheck to paycheck these days?  The answer is just as simple.  Some very effective marketers have led us to believe that the lifestyles we lead are everything and that keeping up with the Jones' is the most important thing.  They've created products, large and small, and marketed them aggressively to all ages.

At the same time, there's never been more credit available to purchase things we can't really afford.  Credit has been marketed as a necessity, so much so that it sells itself.  Get denied for a credit card and you want it even more.  We absolutely must have the right to pay for the privilege of borrowing someone else's money.

We've gone from our great grandparents seeing debt as a sign of shame to our generation seeing it as an absolute necessity.  What are the results of this paradigm shift?  According to the Federal Reserve, there was $2.5 trillion of consumer debt in 2009.  That's $8100 for every adult and every child living in the United States of America.

With all of our credit card, car loan, and student loan debt (BTW, that $2.5 trillion does not include mortgage debt!) how can we save, retire, educate our children, and give?

There is only one way.

The debt must go and we have to start harnessing the power of our incomes to build wealth, give, and enjoy all that life has to offer.  Getting rid of our debts is simple, yet painful.  There are no gimmicks here.  Debt consolidation loans are not the answer and bankruptcy is an experience no one should have to go through.  The answer is one simple phrase, coined by nationally syndicated radio host and New York Times Best-Selling author Dave Ramsey, "Live like no one else so, later on, you can live like no one else."

Dave's teachings are based on the successful completion of a series of "Baby Steps".  These are incremental milestones that help you see your progress, build momentum, and prepare for the unexpected.  Start with "Baby Step One" saving $1000 as quickly as possible.  This is the beginning of your Emergency Fund.  With your Emergency Fund in place, you have created "Murphy Repellent" or, in other words, you have the ability to survive minor financial emergencies as you progress through the 2nd "Baby Step", the "Debt Snowball".

You create the "Debt Snowball" by taking all debts, except for your mortgage, and ranking them smallest to largest.  Pay the minimum payment on all of these debts except for the smallest one.  You will pay this smallest debt off as quickly as possible.  Once this smallest debt is eliminated, take the minimum payment from it and apply that to the next smallest debt, along with it's minimum monthly payment.  As the snowball rolls downhill, it picks up more snow, gains more momentum and gets bigger and bigger.  Once it reaches the bottom, or your largest debt, it gets knocked out quickly and you're debt free, except for your mortgage.

The third "Baby Step" is to complete your Emergency Fund by saving three to six months of expenses.  With no debt, except your mortgage, and 3-6 months of expenses in savings you are now able to weather more than minor financial crises' and you're truly able to harness the power of your income to build wealth, give and enjoy life.

Now that you have some breathing room, it just might be time to take a look at what you do for a living.  Do you have a job that brings home a paycheck or a career you're truly passionate about.  Does your vocation make you happy or does it just make you money?  Do you work in the same field you studied in college?  Did you take this job in order to support your family, even though it doesn't support you?  With your debts paid off, it may be time to align your passion with your career.  Who knows, you might find that a career you're passionate about proves to be just as lucrative, if not more, than that job you used to have.

This is a simplified version of Dave Ramsey's fundamental teachings.  To learn more, visit Dave Ramsey's popular website…MyTotalMoneyMakeover.com.  By the way, I receive no financial compensation if you visit the site and purchase any of Dave's products.  Dave's teachings and my hard work and discipline are getting me out of debt.  If you're ready for a change and ready to work hard, I know they'll work in your life too.