This recession has put a little fear into all of us, and in real terms, it has also impacted just about all of us in some way or another. In the last few months, my wife lost her job, my employer has worked in significant cost cutting measures (thankfully not headcounts), and well, we’re all just a little bit more stressed out these days.
Yet, there is a silver lining amidst the cries of ‘Financial Armageddon’. Has there been a better time financially to be a twenty something? Sure, it is tougher to get and keep a job, raises aren’t frequently being doled out, and if you recently started investing in the market, the thought of never investing in it again has probably crossed your mind at least once. With the right attitude, however, now is a great time to set yourself up for future financial success. Here are 5 ways in which you can benefit from this economic climate.
1. We’ve Been Inspired (or forced) to Tighten our Belts
Even if you’re coming out well ahead and have cut frivolous spending, there may still be expenses to eliminate. I recently eliminated $300 in monthly expenses at a time when I didn’t think there was any fat left to trim. The great thing is that I don’t miss what I gave up one bit. Very few twenty-somethings have had the liberty to not at least take a second glance at glutinous monthly expenses, and in the long run, that is a good thing for them and for the financial health of the nation.
Want to take a closer look at your budget? Here are instructions on how to utilize a personal budget spreadsheet that I created. Cutting your fixed monthly expenses may not make you ‘jump for joy’ at the moment you do it, but it can lead to security and financial success over time.
2. Home Buying Opportunities Abound
There are four great reasons why it’s a lot better time to buy a home now than it was a year ago.
- Pricing: Home prices have dropped more than 18% from their May, 2006 peak and are currently at 2004 levels, and still dropping. The credit market, unemployment figures, and foreclosures have really pushed prices down to more realistic levels for first time home buyers.
- Rates: Mortgage rates are still near historic lows, and aren’t much above historical levels of inflation. This can have a significant impact on the total amounts of interest that you will have to pay over the life of the loan, and can really lower your monthly budget costs in the short-term.
- Selection: With less competition from other buyers, it’s much easier to find a really nice home that you won’t have to wage battle in a price war for with another potential buyer.
3. A Sense of Community has been Restored
Bartering (exchange of goods and services) has recently taken off. How can trading 20,000 baseball cards for 8 hours worth of landscaping worker hours not be a good thing for the community? Craigslist has led the charge for a resurgence in the online barter economy and it’s once ‘cool’ again for neighbors to pull together economically through exchanging goods, vegetables, fruits, and services.
Whether you’re unemployed or gainfully employed, networking is more important than ever. There is a lot of responsibility that comes along with building a solid network of friends and co-workers, and this will ultimately benefit anyone who embraces it. When you’re networking in a helpful way, you are positively impacting your community.
Additionally, mass transit and moving back to cities has become popular again. There were more mass transitors in 2008 than any of the past 50 years. This is great for the environment, your finances, and for the community.
4. Stocks have Recently Visited 1997 Levels
Before the latest rally, stocks returned to levels not seen since 1997. Imagine being 34 years old and having socked away 12 years worth of savings into a 401K since the age of 22, only to see all of your earnings (and much of your contributions) completely evaporate. Sure, stocks may slide further, but how often do you get to jump in the De Lorian and go back in time to be on better than equal footing with someone who has been investing for the last 12 years?
5. New Laws and Restrictions on Credit Lending
You have to have a solid credit score (typically well over 700) in order to get a mortgage these days. And the options that are out there are nowhere near as dangerous as they recently were. Basically, it’s much harder to get taken advantage of by predatory lending, and that’s a good thing for anyone looking to get off on the right track financially. Sure, you’re going to have to build a good credit history – but nobody is entitled to credit that they can’t pay back, so go out and improve improve your credit score the right way.
Recession Opportunity Discussion:
- What other financial advantages do you see for twenty-somethings these days?
- If you are a twenty something, have you taken advantage of any of these circumstances or others during this recession?