An Oct. 7 article by Associated Press writer Jeannine Aversa opened with the following sentence: "Americans, anxious about the economy's direction and a possible war with Iraq, increased their borrowing in August by the smallest amount in eight months."

Let that sink in. We are supposedly worried about our finances, so instead of decreasing our borrowing, or even holding the line, we increased our borrowing -- though by not as much as we did last month. Boy, we're really battening down the hatches, aren't we?

The Federal Reserve announced Monday that consumer credit rose $4.2 billion (seasonally adjusted) in August, which would translate into a 2.9% annual rate. Revolving credit, such as credit cards, accounted for most of the increase, with a $3.9 billion jump in borrowing. July saw revolving credit increase by $6.3 billion. That brings the total amount of consumer debt in America to $1.73 trillion.

Folks, this is not the way to put your finances on war footing. If you're really worried about the economy (and who isn't?), then here are the steps you should take:

  1. Reduce high-interest consumer debt. (Recall that reduce is the opposite of increase.) Visit the Fool's new Credit Center for tips.

  2. Build a stash of cash. Nothing is more reassuring than knowing you have money on hand in case of emergencies. We provide direction in our Short-Term Savings Center.

  3. Start your Christmas shopping now. You'll spread out the expense and have more opportunities to find sales. (In case you're wondering, we could use a trampoline at Fool HQ.)

  4. Continue saving for your goals. If you can afford it (and you should do your best to do so), continue saving for retirement, college, or whatever your priorities may be. Socking away a few hundred dollars (or even just $100) a month will add up big time over the years.