An economic boom is a jackpot for everyone, but as business markets mature, supply begins to exceed demand, companies expand too quickly, and individuals become greedy, both individuals and businesses are stretched too thin. At this point the slightlest market irregularity can throw the economy into a downward spiral overnight and everyone is left wondering what happened. Here’s 8 tips for making the most of a down economy:
1. Invest Your Money – Now is the time to throw your savings account into the stock market. Consistently performing companies like Apple and Microsoft are significantly undervalued. Once the market makes it’s cyclical burnout prices will return to pre-crash levels. Quick and safe gains can easily be made by investing in any company that will survive.
2. Expand Your Network - Spend time meeting new people, start Twittering, attending local business meetups, and growing your contacts. During tough times people are more open to meeting new people, collaborating, and sharing ideas.
3. Help Others - Do favors for those who are hurting, especially those in your immediate network. When they are back on their feet they’ll remember and lend you a favor when you need it most.
4. Learn - As businesses are downsizing and employees are taking forced vacation, more free time than ever is available. Don’t waste it and instead increase your value by taking classes at a local college, apply to MBA programs, read instructional books, or even consider completing the Personal MBA.
5. Expand Your Business - During recessions companies are liquidating assets for pennies on the dollar hoping to live another day. An example is Sirius Satellite Radio which was forced into a very high interest rate loan to stay afloat. Look to acquire office equipment, divisions of a business, whole businesses, and even top performing employees all at significant discounts as businesses aggressively downsize.
6. Take a Vacation – Your opportunity cost is at its smallest during a recession, and your time is least valuable. Take the time to explore and take those trips you’ve always been holding off, and look for deals as tourist destinations are offering substantial discounts off regular rates as they seek to remain at operating capacity.
7. Look for Ways to Earn Extra Cash – Desperate times call for desperate measures. Dust off your old toys or unwanted possessions and list them on CraigsList or eBay, donate plasma to the Red Cross for $20-30 per visit, list your freelance services on CraigsList, participate in scientific experiments at local universities or research labs, donate sperm for $30-200 per vial, or donate an egg for $5000+, or sign-up as a mystery shopper. There are plenty of ways to pad your pocket and compensate for that reduced bonus, cut hours, or lost job.
8. Create an Emergency Fund – Avoid using a credit card for those rainy days and hopefully you have an emergency fund already in place. If not, put aside a set percentage of your paycheck to prepare for the drop in income.
The last two recessions averaged eight months and while they certainly aren’t fun, knowing how to navigate the choppy waters can make for a bearable, or even successful recession. While others might be hurting, this is an opportunity to succeed for those who are prepared.
{ 5 comments… read them below or add one }
Great article, but I still have to disagree with everyone screaming “Invest in the Market”. The market is still on a downward trend, and won’t hit rock-bottom until the stimulus money kicks in (which probably won’t be until the 4th-5th round of stimulus payments hit the market).
For those looking to invest, there are some great international opportunities out there, as well as alternative business ventures here in the states. There are certain industries that are considered recession-proof (liquor/wine being one of them). Investing into a vineyard, alcohol distribution company, or even a local bar may not be such a bad idea for those that are morally at-ease with that particular industry.
Another recommendation I have for people experiencing the strife of the recession is Look Within. Learn more about yourself- who you are, what you want to be, etc. It may not make much sense, but when was the last time you thought about your goals and ambitions as a child/teen/young adult? Earn some good karma points by volunteering at your local church or soup kitchen. Help others that may not be able to help themselves, and you’ll be a changed person by the time the sun comes out again.
This blog post could not come at a better time. However, I would be careful with #1, no investment is safe right now especially in the equity markets. The learning one is good and I should go work on that. Time to dust off all the books I have that I havn’t read.
Quiet honestly, it’s hard to agree with any of suggestion.
Degree doesn’t solve any problems.
Pavel,
Thanks for commenting and for the additions! I do agree that when the market is at it’s lowest point investing any extra cash into a safe stock should generate a nice return as the economy strengthens and returns to full-force. My article didn’t note specifically when the economy would be bottoming out. I’m not a financial analyst and don’t want to give out specific financial advice to my readers.
Brad,
Any reasons why you disagree with the rest of my tips?
Getting an MBA or other masters degree during a recession is a great idea because those who are unemployed will have a difficult time finding a long-term job. It takes two years to complete an MBA which allows a student to graduate into a much healthier job market and can easily earn an extra $15-50K annually because of their advanced degree.