The "Perfect Economic Storm" is Coming. Are you ready?

The signs are all around us. It seems like every day we hear more news telling us about the hard economic times we have ahead of us. As The Nation magazine & CBS News correctly report, "The skies are darkening, and ominous new considerations are intruding on the politics of 2008. The softening economy, accumulating foreclosures for homeowners, more multibillion-dollar write-offs by major banks, the swooning dollar and stock market, oil prices approaching $100 a barrel - the list goes on, inviting a trendy cliché: the "perfect storm" stalking American prosperity."

It's all happening at once.

We have a: Softening economy
Home foreclosures
Bank write-offs and failures
Falling dollar
Falling stock-market
Skyrocketing oil prices

Yes, we have tough times ahead of us. Recently, the Associated Press quoted Bill Gross, Chief Investment Officer of PIMCO, the world's biggest bond fund, as saying "We haven't faced a downturn like this since the Depression." The Depression? Is he serious? This is the CIO of the largest bond fund in the world. He must have some idea of what he is talking about.
If you saw how Bear Stearns, one of the largest Investment Banks in the US, basically went bankrupt and was sold for pennies on the dollar, you know how serious this crisis is.

Okay, What do we Do?
When people find out that a major storm is coming their way, what do they normally do? They usually stock up on basic resources and "batten down the hatches" at home. That's exactly what you should do first to prepare for the "perfect economic storm". Before you do anything else, you should:

Stock up on basic resources (by saving as much money as possible), and
Batten down the hatches (by securing your current financial assets and resources as much as possible).
Here are some tips to help you prepare for the Big Storm.

Save Money Now
Save money as if you were hoarding water, groceries and duct tape before a big hurricane. The average savings rate in the United States is actually negative, meaning that most of us borrow more than we make, but those who prosper in the tough economic times ahead will be the savers.

This is easily accomplished now with direct-deposit for paychecks and automatic debiting of specified percentages of your paycheck into savings and investment accounts. (Consult your banking institution if you need assistance with this).

If you can, set yourself up to save 20% or more of your income, even if this means that you have to tighten your belt a bit. This will allow you to build a nice financial cushion if you don't have one already. And even if you already have a financial cushion, who knows how long the lean times will be? Save as much as you possibly can.

Lower Your Debt Burden
The worst thing that can happen during difficult economic times is that something can happen to your income and you can no longer make the payments on your debt (mortgage, credit cards, etc.). Remember, history has shown us that large numbers of layoffs are common during a recession (and even more during a strong depression), so working to get yourself out of debt can be one of the best preventative measures you could take.

Put Your Money Somewhere Safe
Make sure that wherever you decide to keep your money is safe and secure. We are already seeing bank failures (e.g., NetBank and Bear Stearns), so make sure that your bank is properly solvent and insured.

During the Great Depression, many banks closed their doors and did not allow people to take out their funds. Why was that? Well, it's a little known fact that the banks do not actually have all of your money. For every dollar you deposit, the banks are allowed to lend out ten dollars using a legal practice known as fractional reserve banking. If you or I did this, it would be called fraud, but the banks are actually legally allowed to do this.

This means that if even 10 - 20% of the people who held bank accounts actually wanted their money, the banks would have to close, for fear of revealing that they just don't have the money. It happened during the Great Depression, and the same dynamics are at play today. If there was a serious run on the banks, and most people wanted their money, the banks would have to close down.

But remember, all banks aren't the same. Some are safer than others.

Invest in Gold or Silver
If you are interested in protecting your money against inflation and currency risk, you might want to investigate investing in gold or silver. In periods of high inflation, when the US Dollar has lost value, hard assets like gold and silver actually tend to increase in value. Having some actual gold and silver coins on hand at home (in a safe) may be a secure way to make sure that you and your family are able to buy groceries and necessities even in the case of hyperinflation and runs on the banks.

Cultivate Additional Streams of Income
We never know what's going to happen during tough economic times. But we can prepare ourselves for any eventuality. No matter how great you may be at your job, if your company runs into hard times, it may be forced to make some tough decisions and lay off employees. If you have additional streams of income, you never have to fear. Don't let your only source of income be your job. It makes you too dependent on outside events.

In the days of Network Marketing and e-Commerce, there are lots of ways to create additional streams of income. It's up to you, your imagination, and your desire.The Economic Storm is real. I suggest doing a lot of research and talking to experts to find out what is right for you and your particular financial situation.

Deciding whether to sell your home during a real estate recession is difficult to decide. While there are some pros of waiting out a recession, there are some cons that prevent this too. A potential seller has to asses the entire situation that is in front of you. There is no easy way of making the right decision until you consider what you are up against. If you are not in a rush to sell your home, waiting out a real estate recession is a good idea. This will allow the market to get back on track. Even though some people must move right away, there are many others who have the ability to stick it out in their current home for the time being. What group do you fit into? Another reason to wait out a real estate recession is that you may be able to sell your home for more once the market gets back to normal. This is not a guarantee, but in most cases when a recession clears up it is going to work to the seller’s advantage.

The main drawback of waiting for real estate recession to clear is that you do not know how long recession could last. In other words, you may think that a recession will last for a few months, but even after a year the market in your area may struggle. If you are willing to wait and wait and wait, there is no reason to get worried about a real estate recession. But if you are only willing to hold off for a month or so, you would probably be better off going ahead with the selling process immediately. Before you decide one way or the next, you may want to see what the industry professionals are saying. They may be able to give you a better idea of how long the real estate recession is going to last.

There are several ways that a recession can affect seller. If you find yourself in this situation, you will want to know what you are up against. The challenges that stand in your way are sure to change the way that you look at selling your home. And of course, when you know what these challenges are you will be in a better position to succeed.

Maximizing Profit During A Recession
Here are three ways that a real estate recession can affect you when selling your home.

1. During a recession buyers are more so inclined to get a big discount. This means that you may need to lower your asking price by a few thousand dollars in order to attract buyers. Is this something that you are willing to do? If so, go ahead and drop your price. But if you are unsure, you can wait around and hope that you buck the trend.

2. A recession will slow down the real estate market altogether. This leads to fewer people looking to buy homes. For this reason, you should not expect nearly as much traffic coming through your home. While there are exceptions to this rule, almost every recession will slow things down to a crawl; at least when compared to normal market conditions.

3. Due to the two reasons above, a seller may find that a real estate recession brings a lot of stress. In other words, you may feel bogged down when buyers are throwing low ball offers at you, or you cannot get any action at all. You must be prepared to deal with this type of stress if you plan to move forward with selling your home during a real estate recession.

Believe it or not, some people never have to deal with the three issues above. They simply put their home on the market, and even if there is a recession, they make a sale right away. This is not normal, but you never know what is going to happen. If you feel that now is the time to sell your home, do not worry about where the market stands. Instead, worry about the details that will give you the best chance to make a sale. Overall, you need to decide if waiting for the market to improve is in your best interest. Once you weigh your options, you will know whether or not you should sell now or wait until the real estate recession passes by.

during a recession can make a stressful time.You have to work hard to sell your home and also you have to face lot of pressure from the market too. But with all of that in mind, you can maximize your profits during a recession if you put your mind to it. How can you get the most out of your home even when the rest of the market is in bad shape? The best way to do this is to stick to your price. Nobody can compel you to lower your price. As you have probably heard before, all homes have a buyer. As long as your home is priced reasonably you should be able to keep it on the market until you get what it is worth.

Another way to maximize your profits during a real estate recession is to make sure that your home is the best available option in the area. Remember, a recession may scare people from buying. When this happens, it leaves the market wide open for you to get looks from the most potential buyers. But if your home does not stand out above the rest of the crowd, it may slip into the cracks. Consider making some changes to both the interior and exterior of your home in order to give buyers an incentive to visit. And of course, when you have updates to offer you will be able to command a higher price.

Many of us have selling options to consider when the real estate market is in a recession. This may not seem to be a good thing on the surface, but it can definitely be helpful. It is better to have options rather than stuck in a position where you cannot get away. The question is: what selling options do you have if the real estate market is in a recession.

First off, if you know that there is a recession you may decide to never put your home on the market. For many this is the best thing to do because they never have to deal with challenging a recession head on. But of course, letting the market conditions dictate when you make a sale can also be a hard situation to deal with. There are some sellers who need to get rid of their home now, instead of waiting until the recession comes to an end. If you have decided to jump into the market despite the recession, keep in mind that you are going to be up against some testy circumstances. Most notably, buyers are going to be picky about the price they pay. During a recession real estate prices often times get driven down three to five percent. If you are willing to negotiate this hit, you should still be in a position to make a sale.

Of course, if you find that the real estate recession is too much for you to deal with you can always decide to take your home off the market. There is no rule that says you have to leave your home for sale. You may have signed a contract with a real estate agent, but that would be the only thing holding you back from taking your home off the market and waiting until another time to move forward.

Selling options are varied during a real estate recession. You should make sure that you do what is best for you and your home. Not what the recession is pushing you into. But even then, remember that these market conditions may change your way of thinking. If you try to ignore the recession altogether it could end up harming you more in the end. You can maximize your profits during a real estate recession. There are going to be a lot of negatives going against you, but it is possible to outdo them and get what your home is worth. There is no conceivable reason to give in, and lose money when you know what your home is worth