But for those of us with credit cards, this is a very good reminder of how carefully we should be using our credit. There's a right and a wrong way to go about it.

If it hasn't been a priority before or even if it has, do your best to get your debts paid down. This will give you more flexibility and make you look better if you need credit for something later. Falling home prices can mean good deals when things get a bit better, and if you can continue to manage your credit well, you may be in a good position to take advantage.

The short term impact for many has been that they have to cut spending because they don't even have access to more credit so they can spend more. Many people have relied for years on credit to keep up lifestyles they couldn't maintain any other way. It becomes important to spend only on essential items.

This is a time to learn about good spending habits, ones you should keep for a lifetime regardless of the economy. There are right and wrong reasons to use credit.

Good reasons include buying a house. Even if home prices drop significantly, most people would not be able to save enough to buy a home out of their savings. It would take an impractical number of years for most. Doesn't mean you can't, but most won't have that kind of control.

Emergencies are another good reason to use credit. Sometimes there's just no other way you can get through the situation.

And of course, you should use a little credit just to keep your credit score healthy. Using your credit card and paying it off monthly will help to show that you mean to have good credit.

The bad reasons are of course more fun.

There are the lifestyle reasons, such as keeping up on the latest technology. You NEED that big screen plasma or LCD television, right? The new cell phone even though the old one works? The treadmill you'll use only as a place to hang your clothes?

Buying something fun isn't necessarily a bad thing, but particularly now with the credit situation so poor, it's best to not do so unless you can actually afford what you're buying. A little extra thought can cut out quite a number of purchases.

Depending on who you ask, this may be an economic hiccup or it could be a much deeper downturn. There's no way to know which it is yet, but it's better to plan for the worse situation and be surprised by the better, than to assume the best and get slammed by the worst.