Keeping credit intact during an economic meltdown

[Jarrodpd]

With all the news about the stock market being in sharp decline, im now slightly worried about keeping my credit intact. I was only 13 during the 2008 collapse, so im new to this. I have read on here several times that during that period credit lines were reduced by lenders or closed all together, I understand I cant completly control my limits but what is some advice to ride out this period with as little damage as possible.

[Anonymous]

I would remain calm at the moment. At this point, this is simply a correction that has been coming for some time. The underlying US economy has generally positive indicators so I think this won't be anything like 2008.
The 2008 crisis was deeply rooted in the financial industry, mainly with the housing/mortgage disaster. The same lenders who issued credit cards were the ones being destroyed at the time. All banks are in much stronger positions at this point and consumer finances are generally better.
Remain calm, this is not a crash, it's a long overdue correction!

[Atonswife]

Honestly, I think the easiest answer would simply be to live within your means. Don't charge more than you can afford. This should be common practice not just when there's danger of economic downturn. I was one who got caught up in the 2008 collapse, hence the reason I am in rebuilding mode now. I didn't practice responsible credit usage back then and have been paying dearly for it over the last few years. Now, I pretty much use my credit cards they way I would use a debit card. Only spend what I have in the bank to easily pay back in full. I plan for big purchases. Also, I have built up a nice savings for any emergency that may arise so I'm not forced to turn to credit in said emergency.
I guess the bottom line to surviving an economic downturn would be basic preparation that should be practiced anyway and basic common sense.

[Anonymous]

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@Anonymous wrote:
I would remain calm at the moment. At this point, this is simply a correction that has been coming for some time. The underlying US economy has generally positive indicators so I think this won't be anything like 2008.
The 2008 crisis was deeply rooted in the financial industry, mainly with the housing/mortgage disaster. The same lenders who issued credit cards were the ones being destroyed at the time. All banks are in much stronger positions at this point and consumer finances are generally better.
Remain calm, this is not a crash, it's a long overdue correction!

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What YupYup said.  This is nothing like the 2008 Credit Crisis.  Actually it's a good opportunity to pump some additional money into investments.  I invested a bit today and will stratigically invest more in the next few days/weeks.  Money is made when the markets are low.

[takeshi74]

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@Jarrodpd wrote:

I understand I cant completly control my limits but what is some advice to ride out this period with as little damage as possible.

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All the usual advice would still apply.  You still want the strongest credit profile possible.

[youdontkillmoney]

Wareen Buffet once said when the waves at the beaches recede (recession) we will see who is naked beneath the waves. I.e. who is borrowing and can't keep up to maintain their lifestyle. You should only be worried if your job is at risk and you cannot pay the debt minimums and/or the expenses go up for some reason.

In my instance, the best way not to worry is to have a financial profile like mine at the moment, stable job, no debt, and although invested in the stock market, no margin account, all 100% my cash, so I have no pressure to see to pay for margin calls.

I just sit and wait. no pressure/stress. In fact my only problem is finding more cash to buy buy buy inthis market, but when you're out, you're out.

[Thomas_Thumb]

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@Atonswife wrote:
Honestly, I think the easiest answer would simply be to live within your means. Don't charge more than you can afford. This should be common practice not just when there's danger of economic downturn. I was one who got caught up in the 2008 collapse, hence the reason I am in rebuilding mode now. I didn't practice responsible credit usage back then and have been paying dearly for it over the last few years. Now, I pretty much use my credit cards they way I would use a debit card. Only spend what I have in the bank to easily pay back in full. I plan for big purchases. Also, I have built up a nice savings for any emergency that may arise so I'm not forced to turn to credit in said emergency.

I guess the bottom line to surviving an economic downturn would be basic preparation that should be practiced anyway and basic common sense.

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Right on!  Keeping debt to income ratio reasonably low (under 20%), building up a 6 month "emergency fund" cash reserve and living within ones means (always PIF CCs) is huge for getting through hard times - including prolonged job loss. Permanent damage results when tax advantaged retirement funds are tapped. Avoid this at all costs.

It is times like these where money managers churn the market - selling short and buying back at a low price after creating panic. Unfortunately, the bottom may still be a ways off. Don't get caught up in histeria - paper losses are only realized losses when you bail out.

[Jarrodpd]

I would like to thank everyone for their feedback. So it sounds like I'm pretty much on track for where I need to be, only things I need to address is my balance on my chase card(0% interest till August next year) and put more cash into liquid savings along with IRA and stocks so I can load up when they are cheap to purchase.

[Anonymous]

As others have said, this is not an economic meltdown. The US economy is fundamentally strong and stronger than almost every other nation on Earth (maybe even the strongest).

This is a stock market correction. The markets have been going up for six years, so what goes up must eventually fall back down. I think now is a good time to begin moving your investments into safe stocks (banks, Apple, tech stocks, things like that). 

One thing I want to reiterate is that this is not a financial crisis like in 2008. Banks and credit companies are financially secure. This is big money investors and hedge funds cashing in on profits they've been reaping for years.