Isn't it funny how the answer to every financial problem seems to be another bail-out?

Like the credit card example you raised, its trading one problem for another.

Reducing debt should be a priority and I think you are right that people don't need more credit but rather more adjusting. Unfortunately I think the process of adjusting to living within ones means will be very painful for Americans as a group.
Even if GM goes bankrupt and all the jobs get lost things will find the way to balance themselves; the question is always how long it will take for them to do so.

I still believe it is just time to bite the bullet.

We as a country have to learn how to live within our means again. Only then can we regain the footing that has made the US such a successful country. The debt that was taken on in the past has to be repaid at some point in time. The time is now.

Won't having that credit card "closed" for inactivity damage your credit score? Your credit card is part of your credit history, and by losing that history, your score loses points.

Tsk, tsk.

Thank you for this. I tend to think of it as: No, buying more big screen teevees on credit cards is NOT the way out of this mess. Not spending quite so much more than we earn is now a bad thing?

The other day, heard a story on the radio w/power companies whining because consumers had cut back on their usage. It's bad for their balance sheets, apparently. Conserving electricity is now a bad thing?

I can't speak much to auto loans. But tuition: Its totally out of control, and often completely disproportionate to the value of the education the student obtains. But I am a heretic, and do not think that education for education's sake should be debt financed, or directly subsidized.

I also recently had a CC account closed by a creditor for inactivity. And I don't, and won't, miss it.

Amy, from what I've heard, the circumstances preceding closing CC accounts vary widely.

In the case of mine, it was issued by WAMU about a year and a half ago with a several-month 0% purchase teaser rate, and I used it for exactly one (big) purchase right when I got the card, which I paid off well before the rate went up. It was closed by WAMU within the last two weeks.

Hope this helps.

The credit crisis is a little different from personal debt. What's happened is that the big money is afraid to lend to big enterprises. I think, at some level, they are more cautious about money, and quicker to stop loaning it out. If there's even the remotest chance of losing money, they want to hoard the cash.

Regular people, on the other hand, often put themselves at risk of losing money on their so-called business investments. Paulson thought that giving money to the banks, so their risk would be offset by the free cash, would get them lending again. Clearly it hasn't. They're hoarding it until the investment climate is more favorable.

Someone forgot to inform them -- they are the investment climate, and they're causing a global freeze.

If the banks don't get into gear and start taking some risks to save the global economy... well, they don't deserve the help. Let them "chill out" and rot. I think they should give up on the banks, and lend the money to other sectors of the economy that will actually use it. That's the whole point anyway - to re-prime the pump of commerce.

just get out of your credit card debt. How? Well start by never using them unless it is an emergency. Next- pay off as much as you can every month.

ok, I have to agree on #1 with you. It is really sad that education is not meant for the masses in the USA.

2.- We also have to pay health insurance. But it is just a normal bill per month. We just put it in the budget. I personally pay the equivalent of about 150 USD per month. I don't put it on credit.

3.- If you are young and can't afford a house then don't buy one. The mortgage only makes sense if in real terms it saves you
rent money and by real terms I real mean doing the math on the cost of the mortgage and the closing charges, etc. vs the price of the rent. The kids will grow just as fine in a rented apartment as in a house.

4.- "wish to buy" can include too many things you don't need. And getting "mocked" for owing a "simple" car as a need for credit to buy something more sofisticated doesn't sound to me like a strong argument.

I stay ut of businesses because I was just talking about individuals but I still find it bad planning when a farmer that grows stuff year after year fails to just set aside a portion of last years income for next year seeds.

1) We're in this mess because we (individuals and the country as a whole) have been living way beyond our means. We consume too much and don't produce enough. This has been largely caused by the gov't itself (Fed, Fannie, Freddie, etc.) by making too much money too easily available (read: too much credit, too cheaply available). The chickens are now coming home to roost.

2) I'm afraid the fix is for the country to endure lots of pain and get off the credit merry-go-round, including the government. If you havn't noticed among all the talk about credit cards (individual debt), our gov't is the biggest debtor in the world. Individuals are going bankrupt but our gov't has been bankrupt for a long time now. Trying to fix this mess by creating MORE cheap credit will, at best, only push the problems further into the future when they will become even more severe. Individuals, companies and banks are rapidly "deleveraging" (read: reducing debt). Our gov't is still going in the opposite direction.

3) people talk about the "Global Crisis" but we seldom hear about the fact that we (the U.S.) are the cause.

4) A personal note: I've had an average-paying job all my working life (I'm now 65 and still working). My wife also worked for most of our married life. We bought our first house (after living in apartments for a couple of years) with 30% down payment and a 6% mortgage. We put 6 kids through private (read: expensive) secondary school without credit. We never bought a car using credit until just a month ago, and the reason we did that was that it would have been silly not to take their money for 3 years for free (0% interest) while our money sits in CDs earning money. We simply never had a new car. Never bought a car we couldn't afford.

We use credit cards a) for convenience and b) to get the cash back they give us. We never carry a balance and so never pay any interest. We realize we're not their favorite customers and the day they start charging us fees for not carrying a balance will be the day we dump the cards.

5) I'm sorry. As I re-read this post it really sounds like I'm crowing. My only intention is to try to point out what kind of excesses our gov't and many of our citizens have indulged in and what a different approach looks like. People like Dave Ramsey and other financial advice gurus recommend this kind of approach (Dave even recommends buying a house for cash!!).

I don't think you realize how much available credit has been cut from the general public in the past 18 monhts, about $1-trillion of un-used balances, with another $2 trillion to go. If you have an 800 Fico Score, you wouldn't be aware of this, but the average american, has a Fico score under 720, and they have all had thier available limits cut back. An average guy with only a $3,000 to $5,000 balance available, has had his line cut anywehre from 30%, to just a hair over whatever the outstanding balance is right now. That little game causes lots of over-limit events, which causes fines that result in 35% to 50% interest returns to the credit card lender, and stretch truth-in-lending laws to the limits.

Bottom line, look out Christmas, that card debt is what the average american has been using to buy X-mas gifts for the past 15 years, and this year....they don't have it. Retialers are in for a shocker of a lifetime, that nobody is really admitting to.