Pardon us while we let out a giant "Whooopeeee!" A recent story in The Wall Street Journal contains the following golden sentence: "After running up giant credit-card balances and going deeper into hock for the past decade, there are signs that American consumers are starting to curtail their credit-card borrowing and pay down some debts."

We are particularly happy to hear that, because such actions are a cornerstone of our Foolish investing philosophy. It's right there, in Step 2 of The 13 Steps to Investing Foolishly: "Your personal finances need to be in squeaky clean order before you ever think of placing that exciting first stock trade."

Getting your financial house in order involves three things:

  1. Erasing credit card debt
  2. Setting up (and sticking to) a regular savings plan
  3. Accumulating an emergency cash stash

According to the Journal story, outstanding credit card debt fell a sharp $8.4 billion in December, the largest monthly decline since record keeping began in 1968. Meanwhile, the savings rate has risen significantly -- consumers stashed away 4.3% of their income in the fourth quarter of last year. The prior-year savings rate was less than 1%.

One final, important, optimistic note. Americans are being smarter with cash they've received from refinancing their homes. Loan giant Freddie Mac(NYSE: FRE) says that in the second quarter of 2000, only 8% of refinanced money was used to lower the existing balance and 81% was extracted. But by the fourth quarter of last year, those percentages had shifted quite dramatically to 23% and 41%, respectively.

Good job, America... keep it up! If you need more help, be sure to visit our Credit Center, where you'll discover some long-hidden secrets of the lending industry and learn how to get out of debt and manage a credit card properly.