Do These 8 Things to Profit From the Improving Economy
By Tim Lemke
After several years of sluggish growth, it appears that the economy is getting better. Unemployment has dropped. The stock market has been setting record highs. But are you poised to take full advantage of the rebound? (See also: 8 Ways Rising Interest Rates Can Help Your Wallet)
Here are eight ways to position yourself for the best result once the economy kicks into high gear.
1. Pay Off Debt
If the economy is getting better and you find yourself earning more, getting rid of debt should be your first priority. The last thing you want is to miss out on an economic boom because you're handcuffed by loans and credit card bills, so pay that stuff off. And do it fast, because a good economy often comes with higher interest rates. So if you have debt, it's best to rid yourself of it before it gets pricier to pay down later.
2. Spend Less
The flipside of higher interest rates is that you'll be making more on any money you have in your bank account. So there's an incentive to save now. What's more, you may be earning more in general during strong economic times, so you have the double whammy of stashing more money into those saving and retirement accounts, plus a higher return.
3. Pump Those Retirement Accounts
There's never a truly bad time to begin investing, especially if you have a long savings window. So get started now, before stock prices get too out of hand. Consider upping your 401(k) contribution. And if you have an IRA, you have until April 15 to make contributions that count toward 2014's tax bill.
4. Lock In Whatever Prices You Can
A good economy often comes with some inflation. So it might make sense to explore ways to secure long-term price stability on items or services you use frequently. Locking in a price on a cable or mobile phone bill might make sense, and you may even be able to lock in prices on electricity and other utilities.
5. Build Up Your Emergency Fund
If you are fortunate enough to have some extra money come your way, consider using it to build up your savings to protect yourself. Opinions vary on how much liquid cash you should have socked away, but at least three months of salary is a good rule of thumb.
6. Consider Buying That House
If interest rates do go up, mortgages could get pricier. So it may be wise to try and purchase a home now while rates are still historically low. If you've been on the fence about when to buy, now may be the time.
7. Ask for That Raise
When the economy was slow, employers were loath to give out pay raises. "Times are tough, we've got to tighten belts," was the common response. Now, with things improving, it's harder for your boss to make the argument that you're not worth a bump in pay. If your organization has done well financially and you feel you've played a role in that, go ahead and ask for that increase.
8. Update Your Resume and LinkedIn Profile
If things are getting better, employers may starting looking for new hires. Take advantage of the situation by updating your online presence and doing what's necessary to look good to recruiters. If you stopped working during the downturn, maybe its time to get back into the workforce. If you hate your job, maybe now is when you find a better one. And if you like your job, it never hurts to build up your network and see what else is out there.
Are you ready for a better economy? How do you plan to profit from it?