Recession Spending: 4 Things to Buy Before the Economy Picks Up
When economists talk about deflation, they are referring to an economic period when prices fall. While everyday consumers may not mind deflation so much (as long as income deflation doesn't come along with it), the economy requires a certain amount of modest inflation for growth.
When the economy is bad, it's tough to think about spending money, but here are four items you should consider buying during a recession:
1. Home
If you are in a position to buy, perhaps you should consider purchasing a home. If you aren't ready to buy, this could be a good time to refinance. Even if you are concerned about loan-to-value ratio, the government's foreclosure-prevention program allows for that—and you don't even have to be in danger of foreclosure.
2. Car
We bought a car recently. The prices can't be beat. Whether buying new or used, the incentives available and the interest rates being offered are amazing. My parents are thinking of buying a car soon, too. They had planned on waiting until next year, but once the economy starts to recovery, prices and interest rates will rise. These deals won't be around forever.
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3. Furniture
Furniture is one of those things that has a rather large markup. When the economy is struggling, salesmen are willing to make less commission just to get the sale. Instead of a 75% to 100% markup on furniture, things are reduced to a 20% or 30% markup. My brother, a furniture salesman, is now selling things at cost +10% in order to get what he can. If you want a new living room set or a new bed, now is the time to buy.
4. Stocks
When it comes to recession spending, consider stocks. Stocks are on sale, and you can find several good bargains. Indeed, there are great recession stock possibilities, as well as those that can help you prepare for what many consider is coming: inflation as the economy improves. It is also a very good time to buy dividend paying stocks. And, for the those who are more interested in solid long-term returns, index funds are a great deal.
Recession spending: Final advice
Of course, if you aren't planning on buying any of these things in the next year or two, it may not make sense to rush out and buy. Buying for the sake of buying is rarely a good idea. But if you were planning on making some of these purchases anyway, in the relatively near future, it is probably worth it to move up your timetable if you can.
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