Recession Tactic Number One - Go to Cash By Jack Spence At Isnare.com Ezine Articles

Over the past few decades I’ve witnessed both full out recessions and what economists have called “mini recessions”. One thing that I’ve learned from what I’ve seen is that when the economy goes bad I want to have cash.

So that my number one priority during bad times is to find ways to get cash into my bank account. There are three important reasons why like to have cash when times get tough.

The number one reason that I like to have cash in my bank account during hard times is for the security that it provides me and my family. During these times we have increased exposure to a number of things that could affect our economic well-being. We could see our work situation change as companies look to try to cut costs, they may start laying off employees are cutting back on their hours. Even if we are not laid off or have our hours cut, we will always have the threat over our heads. As a result having a cash cushion puts me in a better position to absorb these types of shocks - both financially and psychologically.

The other reason I like to have cash to pay down my debts-especially credit card debts. When we first take on these types of debts we understand that down the road we will have to pay interest in exchange for the convenience of buying the things that we want now. However, during tough times when we look at the hundreds of dollars in interest that we are paying, it’s harder to remember the reasons we took on that debt in the first place.

So psychologically, paying out this money for “nothing” becomes quite onerous. And financially diverting funds to paying off the interest (especially the high interest levels usually associated with credit card debt) represents a huge drain on us. By eliminating debt, or even a portion of our outstanding debt, helps drop the amount of interest that we pay out on the monthly basis. This leaves more money to pay for real items like housing, food and transportation. And having a cash cushion ensures that we are able to pay our bills as they come due month-to-month. This obviously makes it easier to survive these tough times.

Finally, during a recession the prices of investment-grade products tend to go down. Things like stocks, real estate, and other hard assets like art see price decreases. This represents a real opportunity to build wealth. The lower prices of these items represents a lower risk involved in owning them because the long-term outlook for these assets would be to rise in value. So if I had cash sitting in a bank account, I can easily take advantage of these bargains and add to my asset base.

Whether or not we are officially in a recession, most of us would agree that we are officially facing hard times. In my opinion, the best way to endure and indeed take advantage of hard times is by having cash available to us. As a result, my strategy is to find and accumulate cash wherever I can.

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