Personal Finance Preparing for a Recession

History tells us that the 1930’s, the era known as the Great Depression, brought the United States some of the greatest economic hardship that it had ever seen. Unemployment reached double digits, many were unable to pay their mortgages and feed their families, and the budget deficit reached over 20% of the nation’s gross domestic product. Times were bad, but they weren’t bad for everyone.

Some budding entrepreneurs decided that they were going to make the best of a bad situation, and capitalize on the down economy. They were able to create new businesses with greatly reduced operating expenses. They were able to grab big, big bargains. They were able to see needs in the nation’s economy, meet those needs and help people, and make a profit in the process.

Many have argued the current economic struggles the world is facing are the most challenging since the Great Depression. Millions of jobs have been lost, consumer prices are increasing, and our nation is facing an expected budget deficit of $1.7 trillion for 2009. Despite all of these issues, there are new opportunities being created every single day. We as individuals can’t singlehandedly fix the global economy, we can only make sure that we have our own economic lives in order, and we can go a long way to do that by seizing some of the opportunities that the recession has created for us.

Here are five ways that you can economically benefit from the recession:

Buy Mutual Fund and Stock Shares at a Discount – As of February 26, 2009, the stock market is sitting at approximately 7,100 points. This is literally half of what it was at its peak. Some see this as devastating news to their portfolios, while others see this as a temporary opportunity to buy stock shares and mutual fund shares at deeply discounted prices. If a stock was worth $20.00 a year ago, and you invested $100, you would have five shares. If the stock was now worth $10.00, you would be able to buy 10 shares of stock. By buying at or near the bottom, you will likely most of the money you had lost back, and get significant profit from the investments that you purchased when the market was near the bottom.

Get Deeply Discounted Real Estate – In many parts of the country, the real estate market is facing a depression. New homes are in such abundant supply that they are simply no longer being built. People are sitting in homes that they can’t afford and wanting to sell, buy buyers are few and far between. This is causing real estate prices to drop and is allowing real estate investors to buy properties at deeply discounted prices. If you are currently a renter, you should also be aware that there’s an $8,000 refundable tax credit if you’re a first time home buyer between now and December of 2009.

Receive Big, Big Bargains on Consumer Products – When people face economic hardship, the first items to go are luxuries, such as motorcycles, expensive electronics, boats, jewelry, DVD collections and the like. Retail stores that sell large consumer items, such as furniture, are also hurting because they aren’t getting nearly as much business as they would during a growing economy. If you’re doing well financially, this will create an opportunity for you to get some big, big bargains.

Provide Freelance Services – During a down economy, the use of freelance services such as copywriting, website development, marketing skills, and other technical skills actually increases. Companies don’t want to hire full-time employees, so they often turn to independent contractors and freelancers to get the job done for them. There might be a ton of freelance work out there in your field that you can do to earn a lot of extra income.

Offer Financial Planning Services – When the economy slows down, families take a hard look at their economic situation and start to trim the fat. However, they don’t often know the technical steps that they need to take to get themselves in better shape. If you’re savvy with personal finance, consider offering financial planning services to families that you know for a reasonable fee. Help them get their insurances, debt and investments in order to help them prepare for the future.

These are just a few of many ideas that will help you thrive during a down economy. You could start a number of businesses that will have much lower operating expenses because you can get a deal on retail space, employee salaries and office furniture, start some sort of online business, or profit in a way that no one else has even thought of yet.