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Silver linings of a down economy
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With all of the negative news about the economy these days, it s easy to get bogged down in the recession blues. But the news isn t all bad. First of all, if you retired a few years ago, you successfully escaped one of the worst labor markets in history. And, if you re nearing your retirement, your employer may be offering attractive early retirement packages. [caption id="attachment_3152" align="alignright" width="280" caption="(file photo)"][/caption] Splurge for less Tulane University economist Michael Bernstein says the economy is beginning to show some signs of recovery, but he says it may be several more months before companies resume hiring and consumers start spending at normal levels. The upshot, he says, is that retailers are being forced to drop prices as they grapple with waning customer demand. What you re going to see is, if not price reductions, certainly price stabilization in discretionary spending areas, things like travel, entertainment, and other nonessential spending, Bernstein says. Restaurants, tourist trade, non-business hotels these are areas where providers know they are at the greatest risk. This could be the perfect time to book that trip to the Mediterranean or treat yourself to dinner at a five-star restaurant. Discounted upgrades There are also many bargains to be had on big-ticket purchases. Even if you couldn t take advantage of the federal government s Cash for Clunkers program, many distressed auto dealers are still offering great deals, especially as they try to unload 2009 inventory in the fourth quarter. Buying a newer, fuel-efficient car at a reduced price now could save you money for years to come. Laura Rossman, a Maryland-based insurance and retirement services professional, says now is also the right time to look for deals on appliances. If you haven t replaced your refrigerator or washing machine in years, buying new energy-efficient models at a discount today could significantly increase your home s value when you decide to sell. Investment steals and deals If you have money to invest, you can pick up many stocks for a fraction of what you would have paid a few years ago, according to San Francisco financial planner Kevin Gahagan. Shares of General Electric, for example, were trading around $14 last month, less than half of what they cost two years ago. I am going to take the bet that GE is going to recover because all of the fundamental economics of the company are sound, Gahagan says. Retirees should also take this opportunity to evaluate their estate planning strategies, Gahagan says. For example, he says this could be a good year to make gifts to your children and grandchildren because you may be able to avoid triggering gift taxes while real estate and other assets are at lower valuations. And, Gahagan adds, the federal government is lifting income restrictions on Roth IRA conversions for 2010. If you ve been considering converting a traditional IRA to a Roth account, this may be the time to discuss it with you financial adviser. firstname.lastname@example.org
This recession has taught us all some good lessons about pinching pennies. But there is another side to the proverbial coin: You get what you pay for. Sometimes cutting corners can cost you in the long run especially when it comes to your financial security and emotional well-being during...