To truly be "literal" one must consider the genre and respond accordingly. If poetic, then realize that poetry is not always completely prescriptive, but rather, often, descriptive. If historical narrative, then realize that an event is being detailed, but we should look for the "bigger picture" in the event, and not the details of the event to guide us, i.e., why was the event shared and what can we learn from the episode. If evangelistic tract, then we can understand that the underlying reason for the text is to share the gospel. If apocalyptic in nature, then we ought to realize that the text is speaking of some prophetic event, and may not be strictly seen in a "do it now" literalism. If allegorical, then realize that a bigger point is being made. If hyperbole, understand that some exaggeration is attempted to make a point -- we ought to figure out what is the point, not what is the exaggeration. If the literature is a parable, then we can know that it is a divine illustration of a point, but that the details are made up in order to create a teaching moment.
Understanding what we read and knowing when it is descriptive or prescriptive, plus knowing to whom the passage is spoken, for what reason, by whom, and what the main point was to the one hearing it for the first time all help us to draw inferences and prescriptions from the text that apply to our own situations, needs, and yes, God's direction for all people in all times and at all places.