Thanks, but no thanks, America. Your consumer spending has kept the economy growing at a healthy clip, but now you’ve gone too far. The United States’ already pathetically low savings rate has hit 0% in June 2005, putting us on track for a year with savings below 1% (yup, that includes retirement savings such as 401(k)s). That’s the lowest since the Great Depression.

“Now wait just one FOMC meeting,” you say. “That figure doesn’t include capital gains from equities like real estate and stocks!” Right you are, but America’s irresponsible use of this equity is setting us up for disaster. People are taking out home equity loans to tap into the rising values of their houses. That’s not a horrible idea if you’re using it to make reasonable improvements to your home or some other purchase with a decent return on investment. But cars and other luxuries? Idiocy. Even worse are those who are buying their homes using interest-only loans or 105% loans because it’s all they can afford. If the house value drops in this arguably bubblicious market, you’re screwed. When interest rates go up (and they will go up), you’re screwed.

Don’t set yourself up to be screwed. You need emergency money on hand for disasters that come up. You’ll do the economy no good if you’re unable to pay your bills and file for bankruptcy (which, by the way, is harder to do now thanks to Congress). I wouldn’t be opposed to getting a home equity line of credit (HELOC) that you don’t use except in an emergency. A HELOC is like a credit card, so you’re not required to take out money like you would with a home equity loan.

And for the love of… whoever, start saving for retirement. You are a moron if your company provides a 401(k) match and you’re not participating in it. I can’t think of many things more idiotic. Young people are the worst as only 37% of those eligible for 401(k) plans take advantage of it. Unbelievable. You’d do well to start an IRA as well. I like the Roth variety as it allows tax-free withdrawals (that will be larger than the original taxed contributed amount), but there are resources out there to help you choose between the traditional and Roth IRAs. I can’t stress enough that you HAVE to start early. The earlier you start the less you have to put in later in life. If tough times prevent you from being able to contribute when you’re in your 40s, you’ll be OK because you’ve let that compounding give you a head start.

Compounding brings me to my last point, which is not to fear the stock market. I really think Democrats do a disservice when they carelessly talk about how dangerous it is for individuals to invest their Social Security money in the stock market. Mind you, I agree with them when it comes to deferring guaranteed money into personal accounts, but without clarification it sounds like they’re dismissing stocks as being too risky for retirement. WRONG! Speculation is one thing. Investment is another. The more you learn about investment and the more you learn about markets in general, the more you’ll understand why the stock market is nothing like gambling. An S&P 500 index fund is the safest bet (and outperforms the vast majority of managed funds in the long run), but if you’re willing to do the research, individual stocks can’t be beaten for return (and it’s fun).

Do America a favor. Do yourself a favor. Do your family a favor! Don’t set yourself up for disaster. Bad times will come, and you need to be prepared. I’m not trying to be alarmist here, I simply know that almost everyone encounters some financially trying situation in their lives. Plus, American economic dominance won’t last forever. Standards of living could stagnate or even retract as the global economy moves towards equilibrium. Make sure you’re living as far below your means as you can stand. You might miss out on that sexy new iPod, but you’ll thank yourself later.