So long, credit cards!

[Dee]

Well it was a little bit painful but this morning I made the final decision to cut up both my credit cards *sniff sniff* and get to work on paying them off. It won't help the world economy but in the long run it might help my own!

Why this slump will be 'long and deep'

A global recession may be near, but the global bear market has already arrived, and my, what teeth it has.

After yet another Monday horror show – the fourth in a row in which the Dow Jones industrial average dropped at least 300 points – every one of the world's major equity markets has shed at least one-quarter of its value so far in 2008.

In Europe, stocks are down by a third. Holland's main index has plunged nearly 40 per cent. Ditto for Hong Kong's. You don't even want to know about mainland China and India.

On the bright side, when it's this bad, how much worse could it get?

Much, much worse, says one of the few investors who has prospered in the meltdown.

“Stock markets are not down 50 per cent in Canada or the United States from their highs. They've got a long ways to go down before that happens,” says Prem Watsa, chairman of Fairfax Financial Holdings.

Uh-oh.

“We think there's a significant recession coming, long and deep. It's going to spread all across [the world] … It's very difficult to not be caught by it.”

Yikes. But surely there are reasons for hope.

The world's central banks have moved to Defcon 1. There's talk of a co-ordinated cut in interest rates. And don't forget about that $700-billion (U.S.) bailout for bankers.

“It will be difficult for the Fed to do too much now,” with the key lending rate already down to 2 per cent,” Mr. Watsa says.

“This $700-billion all sounds good. But they [the central bankers] have no ammo.”

Considering the source, this is worrisome news. A lot of people will claim they saw the credit fiasco coming, but Mr. Watsa is one of the few who can prove it.

(more (http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20081006.wdecloet1007/business/Business/Business/&id=RTGAM_20081006_wdecloet1007) if you can stand it) :(

[hoops]

i can't stand it, but i'm glad you got rid of your credit cards. Igot rid of mine 5 years ago and just paid them off, i feel like a huge weight has been lifted..good luck
peace
hoops

[Amy in Vermont]

I finally got my debts paid off a couple of years ago. I now have 1 cradit card with a $500 limit, and another that is credit/debit on my checking account, so it basically has a low limit as well. The only debt I carry now is my mortgage. If I can't pay for something right away, I can't afford it. If I really really want it, I save up for it and pay cash.

This is the result of lessons learned the hard way, at great financial and personal cost, but a lesson learned well.

[Beth]

We have had a Disney Visa card for about 5 years. We have always looked at credit cards as "smart" money in the sense that we get to use someone else's money for thirty days, earn whatever "bonus" goes with use of the card, and pay it off in full every month. There is no annual fee. In our case, we have "earned" about six hundred "Disney Dollars" which we will use toward Disney World tickets to take the kids there once in their childhood. (We may actually piggyback onto a work conference so the travel and hotel are free for us in Dec, but this is a surprise, so don't tell the kids....) For big purchases, like a water heater, etc., we negotiate with the service provider to split the amount of the bill, interest free, over two or three months on the card. That way, we have interest free installments still earning the bonus points. We keep a log in the office of every purchase so there are no surprises and we can regulate use of the card to keep on budget. So far, for us, it has worked really well. Theoretically, a cash-only approach makes a lot of sense, but it doesn't feel as safe to me, so, I don't think I'm ready to give up having one credit card.