The Upside to the Down Economy

July 1, 2008 — -- There is no question the economy is struggling. Prices at the pump are way up, and stock prices are down. Every morning we wake to headlines of job cuts and declining corporate profits. But, believe it or not, there is definitely a real opportunity to turn all of these lemons into lemonade.

The college loan market has been miserable, but today there is finally some good news for current students and graduates. You can now consolidate your Stafford Loan — need-based federal student loans — at a rate of 3.625 percent. This is a huge discount from where rates are currently, between 6.625 and 8.125 percent. This is great news for more than 5.5 million students and graduates who are eligible. For these students, they are looking at a savings of more than $2,500 over the life of their loans. You have until June 30, 2009, to take advantage of these low rates.

Why do the lemons in the real estate market mean real lemonade for buyers?

If there is a silver lining in the otherwise dark cloud looming over the real estate market, it is that now is one of the best times in years to buy a home in almost 30 years. Single family home prices were down almost 8 percent in the first quarter — the biggest drop in one year since 1982. In many parts of the country, home prices are down as much as 30 percent. And, according to the U.S. Census Bureau, almost 3 million vacant homes — a record number — are for sale. This means big deals are lurking out there for prospective home buyers. Capitalize on this down market by negotiating and seeking out the best deal possible.

It is a complete and total buyer's market for consumers right now. In fact, the average new vehicle is selling at its lowest price in seven years. Overall car sales are down more than 8 percent compared with last year, which has prompted automakers to put out all the stops to clear their lots. Auto manufacturers are heavily advertising their "employee pricing" discounts to everyone and 72-hour special fire-sales, where dealerships stay open for 72 hours in one week to encourage customers to buy. I do not expect this trend to continue — GM has already announced it will raise prices on 2009 models by 3.5 percent. So, if you thinking about purchasing a car, now is the time to do it.

Further proof: Microsoft opened its doors during a recession in the late 1970s and went public just a year before the stock market crash of 1987. According to Bankrate.com, more than half of the 30 companies that make up the Dow Jones Industrial Average began during an economic downturn.