The Benefits of a Recession or Down Market

In times of recession most people are fearful and uneasy. They are worried about their jobs, mortgage, bills, etc. We are currently experiencing a slowed economy which has created an economic crisis. The Chinese character for crisis is composed by combining two different characters; one represents fear and the other represents opportunity. While the current state of our economy creates fear it is also important to look at the opportunity that it presents.

Refinance Your Home
During a slowing economy it is standard practice for the Federal Reserve to make interest rates extremely low in the attempt to ward off or get out of a recession. This is a great time to refinance your home and lock in at a lower rate.

Declining Real Estate Prices
The law of supply and demand is at work. A surplus of homes and land for sale will result in falling prices which creates a buyer’s market. Because fewer people are looking to buy versus individuals trying to sell, fewer people benefit so prices fall rather than increase. If you are a first time home buyer, someone who is “buying up” or an investor this is a great time to buy.

Time to Streamline Finances
Prior to most recessions is “the boom”, a period in which the economy flourishes, when this happens individuals and businesses often lard up the muscle with fat. Money is spent foolishly and budgets do not dictate how money is spent. A recession forces both individuals and businesses to diet…to trim down and get back into shape. They look at ways in which they can better spend their money and how to maximize the value of every dollar spent. A shift occurs and money isn’t spent as freely as it is during times of rapid growth.

The Rebate Check
Starting in June most Americans will receive a check or direct deposit from the IRS, possibly for $300, maybe $600, or perhaps $1,200 or somewhere in between. The check is an advancement on 2009 returns so the money isn’t exactly free…consider it more like an advancement from the government or a “no-interest” loan.

Undervalued Stocks and Bonds
Simply put; buy low, sell high. In a bull market short-term investors ride the rising tide…in a bear market it is the long-term investor that prevails. This is a great time to buy stocks because many are undervalued due to the current economic state of the nation. The market will eventually bounce back and those that have invested and bought low will reap the financial rewards when they sell high.

Lower Credit-Card Rates
Individuals with good credit rating are now in a position to ask for favors from their lenders. It is common that during a recession credit-card companies see a greater amount of delinquent payments, and as such it becomes important they keep their good, paying customers. As such, if you have good credit you can request to have your interest rates lowered and annual fees waived.

Vacation
Vacation get-a-ways and resorts suffer in times of recession and as such they tend to offer great deals and packages…take advantage of this great opportunity!

Become an Economist
That’s right…put your minor in Economics to use and woo your friends with your understanding of the economy!