As stocks plummet again on Wall Street for the 2^nd straight day among fears that a recession may be closer then originally perceived, I thought it might be interesting to take a contrarian look at what the effect of a recession may have on the average consumer.  Some of you may not know that a recession is actually determined “after the fact” by the National Bureau of Economic Research which means that if we are in a recession, we probably won’t know about it for another couple of months. In simplest terms, a recession is defined as a decline in business activity. This is often defined as two consecutive quarters with a real fall in gross national production.

Last week’s Labor Department report, which showed that the U.S. economy lost jobs in January for the first time in more than four years, was the first major indicator that things might not be rosy with the US economy.  Add that bleak news with today’s release from the Institute of Supply Management that the service sector of the United States (which accounts for about 2/3 of our economy) actually contracted in January for the first time in four and half years and a troubling trend does seem to be developing.

So what does this means for the average consumer?  Well surprisingly, a recession can benefit the average consumer in many ways.  Take a look at these five ways you can benefit from a US economic slowdown:

Cheap Stocks:  Bell weather stocks like Coke (KO), Phillip Morris (MO), McDonalds (MCD) and Proctor & Gamble (PG).  No matter how bad things get, consumers always find the money for their cokes, cigarettes, hamburgers and toothpaste.  All are great recessionary buys for even the novice stock picker.

Homes:  My wife and I just noticed that the homes in our neighborhood have actually fallen back to the level where we originally purchased ours back in January of 2002.  Obviously if you’re trying to sale this is incredibly disappointing news, but for you buyers out there, there has never been a better time to buy a new home or add a 2^nd home for investment purposes.

Mortgage Rates:  Arising out of the incredible drop in home prices, which has precipitated the multiple recent cuts in the Prime rate by the FED, mortgage rates are again nearing history lows.  As of this post, 30-yr. fixed-rate mortgage can be had for as low as 5.42%, a noticeable rollback not seen since June of 2004. (more…)

While there are lots of programs out there to help you with your budget, there are very few designed with the specific needs of women in mind.  Here are some money-saving tips that we have found to be helpful in saving money in a woman’s world.

Hair Cuts:  While that $50 haircut looks great and makes you feel like a $1000 bucks, the credit card receipt puts a damper on things.  Try changing every other cut from your regular salon to a simple hair cut studio and save yourself up to $30 per cut.  This could amount to an extra $120 a year in your pocket.

Manicures/Pedicures:  While they feel great and look great they don’t last forever.  Buy yourself a cheap pumice stone and keep it in the shower for weekly exfoliation.  Purchase yourself a nice clear coat polish and recover your manicure the second week to help keep it from chipping.  This will make the polish last longer reducing your visits to the salon, saving you anywhere from $30 to $50 a year.

Hair Shampoo’s/Conditioners:  High priced products smell great but regularly result in feelings of guilt upon their purchase.  Make that high-price shampoo last longer by purchasing a lower priced product at your local retail store and use it every other wash to stretch out the bottles of higher priced products.  There are also many great products in your cupboard that are little known but just as effective: beer makes a great shampoo and the barley and hops will soften your hair, olive oil or mayonnaise make very effective moisturizing conditioners, and eggs work well for conditioner on oily hair.  Rinse well to remove the smell.

Investments:  Due to the male dominated society that most of us grew up, family investment tips were usually passed from father to son and the daughters may not have been taught the same ideas.  Learning to pay yourself first and make decisions about your investments are strategies that need to be learned and practiced.  Check out investment magazines or websites for saving tips and ideas.

Debt management:  If you have already bought too many bottles of that great smelling shampoo, or had a few too many manicures put on your credit cards, consider consulting a debt management company to get back on track.  Most companies will help you learn how to lower your current credit card interest rates which will assist you in paying off that debt years faster while giving you tips to help you in the future.

Managing your money does not have to be complicated.  Decide what is most important to you and cut out the little unnecessary items that you spend money on.  Creating a budget that suits your needs while still allowing you some splurges will help you keep on track.  Money isn’t everything in life, but not managing it can cause unneeded stress and worries, making it seem like a bigger problem than it is.  Save wisely, spend wisely and you will live better.

Everyone likes money, at least a little bit, and finding ways to make more of it with little effort seems to be the American way.  While buying that weekly lotto ticket could be your chance to win a quick $10 million, saving that $52 a year in a CD or high interest savings account could help you more in the long run.  While I still look for the end of the rainbow after it rains, I can’t help but see the bills and receipts that are piling up daily by my computer at home.  Earning money slowly isn’t as exciting as winning big at the casino, but it’s a more practical way to ensure my financial security in the future.

Invest in these 10 ways to stretch your dollar in 2008 and watch your financial fortunes soar:

1. CD’s: Putting your savings into a CD will get you a higher interest rate on your dollar.  Certificate of Deposits will range from 6 months to more than 5 years depending on what your needs are and the rate you would like on your dollar.
2. Money Market Accounts:  Similar to a savings account, with some stipulations, these accounts usually offer you a higher interest rate on your money and no time limits.  Interest is usually paid monthly and money can be withdrawn at any time.
3. High Interest Savings Accounts:  Like Money Market accounts the high interest savings account will offer you more interest, but may have some limitations.  The interest is still paid monthly and money can be withdrawn at any time.
4. Awards Credit Cards:  Many cards today offer awards to their holders from cash back to airline miles to train travel.  Determine what program works best for your lifestyle and use it to your advantage.
5. Refinance Your Home:  Most loan companies are offering lower interest rates with no refinance fees.   If you have had your loan a number of years and paid down some of the principal, then it may be time to refinance.  Refinancing may reduce your interest rate and therefore reduce your monthly payment.
6. Pay off old Loans:  If you currently have multiple loans that you are paying on then it may be time to tighten your belt and pay off the smallest loans quicker.  While you may be paying low interest on college loans or personal loans, it’s still interest which is essentially money going out of your pocket with nothing in return.  Try paying additional money on the monthly installments to reduce this debt quicker and freeing up future money for better investments. (more…)

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Whew!  Christmas is over, things went off without a hitch, the kids are happy with their presents and there you sit with a pile of receipts and credit card bills that could sink the Titanic.  Ok, maybe it would only sink the S. S. Mino, but it certainly feels like the Titanic.  Don’t let your mounting debt paralyze your finanical mindset as you plan for 2008.  Time to put together a plan of attack and work that plan.  Here are a few tips to help you overcome your initial anxiety as you start planning the family budget for the months ahead.  You can can do it, you just need a plan.  Follow the 5 tips below and save your family from repeat servings of Ramen noodles in the coming months.

1. Take stock:  Now that Christmas is over, there will still be birthdays, showers, or special events coming up that you will need gifts for.  This is the time for re-gifting.  That great candle you got from Aunt Lucy or that bath set you got from Cousin Steve could be the next gift you give to a friend.  Re-gifting of nice, unopened gifts is a common practice and allows you to skip the hassle of returning.  Take all the gifts you will not use and place in a box marked “gifts” in your closet and pull them out as needed.  This will save you shopping time when such unexpected events comes up and will also save you money to use for necessities and bills.

2.  Cut up Store Rewards Cards:  That department store card you signed up for only to get the extra 10% off your purchase; will only keep you shopping there if you keep it in your wallet.  If there are no additional discounts with these store rewards cards you should cut them up now so you are not tempted to use them again in the future.  This will also help you to manage your cash flow and keep track of how much you owe on your main credit cards.  Having too many store rewards credit cards can lower your credit score and make getting additional credit in the future more difficult.  Cut them up now before they become a problem.

3.  Manage Current Credit Cards:  If you haven’t bought into the computer money management programs, then now may be the time.  There are many great programs out there that will allow you to set up separate accounts for each banking or credit account you have.  I recommend Quicken Personal Finance or Money from Microsoft.  Once you have set up all your accounts you should set up a schedule to enter your receipts into the program to help you keep track of what you have spent, what days the bills are due, and how much you owe on each bill.  This will help you take a look at your spending habits and manage your money better.  (more…)

Setting a budget is a time honored tradition, it’s like making a New Year’s resolution, in that the hardest part is sticking to it.  Everyone wants to get out of debt, but it’s not as easy as we all think.  There is no quick fix, no magic pill, and no hidden treasure chest in the back yard.  Take a look at your current spending habits to see where you can make changes to help you stick to your budget.  To make your budget a reality, set yourself limits that you know you can stick to and then come up with creative ideas on how to keep yourself in line.  Here are some suggestions:

1. Low-Cost Items:  Take a look at the low-cost items that you routinely use and see where you can save.  Maybe the toothbrush you buy at Target for $3.50 can be purchased at the dollar store for only $1.00.  Try replacing your daily latte with a cup of regular coffee mixed with hot cocoa, or opt 2 days a week to drink the free coffee at the office instead of going to the local latte shop.  Check out your liquid soap, it cost usually 3 times what a bar of soap costs and is used up quicker due to the packaging.  Using these simple ideas for the low cost items that you routinely purchase can save you $10 to $15 dollars a week which will add up to $520 to $780 a year.

2. Eating out:  Restaurants are a great way to treat yourself, but the dollars will add up quickly.  Eating out once a week at $12 dollars a lunch adds up to $624 a year.  If you eat out more than once a week you will double or triple that amount.  If you cannot give up eating out, then order a meal that can at least be divided and saved for a second lunch to feel like you are eating out twice a week. While out, try ordering water, rather than a costly beverage to keep your check lower.

3. Discount shopping:  While everyone loves designer labels and dressing well with today’s fashion, there are many ways to make your money last longer.  There are many discount stores that carry designer labels at a much reduced cost.  Most of these stores even do additional markdowns after the clothes have been on the racks for some time.  Purchasing out of season is also a great way to get discounted brand name clothes at reduced prices.  Buy a great sweater in May could save you up to 50% off the original price, put it in the closet until next fall and it will be just like new. (more…)