Wednesday, February 24, 2021

Benefits of a Recession

Would you believe that there are benefits to a recession? Yes there are and by knowing what they are, you can take advantage of them.

First, when the economy is in recession, you will soon get a fat check from the Internal Revenue Service or IRS amounting to $300 or $1,200. Why does the government issue it? This is the government's way to help the economy. If you have not received yours yet, you will probably get it next year.

As a result of the recession, majority of the bonds and stocks are undervalued. This means you can buy these at reasonable prices. Just make sure you do some research first because you only want to buy those that have a good return when the economy recovers. You should also look into buying some property given that their value is also low.

Since you are a consumer, you will also get tax breaks. What happens here is that you don't have to pay that much income tax this year as a direct result of a deduction for private mortgage insurance which happens to be an extension of the sales tax write-off and also a boost in the alternative minimum tax exemption amount.

Aside from the Internal Revenue Service, the Federal Reserve also does its share to help the economy by slashing interest rates. This means you can borrow money at a lower rate as long as you have good credit ratings.

For those who are employed, a recession increases your retirement account limits. This can be done by using your rebate check to turbocharge your retirement savings and investing this in a Roth or Traditional IRA. There are some people who have decided to invest it in both.

If ever your gross income is $100,000 and below, you can now roll over your 401(k) directly into a Roth IRA without having your funds go through a Rollover Traditional IRA first. But if your income is above $100,000, you will have to wait until 2010 when that income limit disappears so that you too can invest this into your retirement account.

The environment also gets benefits from a recession. How? By making people make reductions in their expenses. For instance, car owners will trade their SUV's for smaller vehicles and people are less likely to travel for vacation. As a result, it will reduce the number of carbon gases that are released into the atmosphere.

This will also help boost online businesses since people will order items instead of driving over to the mall and make the roads less congested so there will be fewer traffic jams.

For those who want a career boost, this is the best time to go back to school since no one is hiring. Take a course that will enable you to switch to a better career or get an MBA. The current recession is not expected to go away this year or even the first half of 2009 so weigh your educational options.

Indeed, there are benefits to a recession but most of us don't see it because of how the media depicts it as a very bad thing. Now that you know that it is not entirely true, you just have to make the most of it until things do improve.