The Economic Silver Lining


Cash is King
Merchants are sick and tired of paying banks the 2-3% interchange fee every time a customer swipes. Especially, as business owners face steeper operating expenses and an overall slowdown in sales. To encourage shoppers to use cash instead of credit cards, some shopkeepers may give a small discount for using cash. This won't necessarily work at Wal-mart (STOCK QUOTE: WMT) and Costco (STOCK QUOTE: COST), but try this savings technique at local mom-and-pop stores, the neighborhood pizzeria, the tailor and nail salons.

Lower Prices This Holiday Shopping Season
Forecasters are predicting the worst holiday season for retailers since the '91 recession. That's the bad news. The silver lining for consumers is earlier and steeper sales from a wide range of retailers. Luxury outfitters may succumb the most to pressure to lower prices, which will likely mean unprecedented deals at Saks (STOCK QUOTE: SFAE), Tiffany (STOCK QUOTE: TIF) and Neiman Marcus.

Fearing Foreclosure? There's Help
The last thing banks want is another foreclosed house in their name. As soon as a homeowner begins worrying about his monthly mortgage payments, he needs to call hid lender and discuss alternatives. Banks are more than willing to negotiate and work with borrowers to help them keep their homes. Borrowers may need to refinance or restructure the loan, or perhaps go into forbearance.  Help is out there. Homeowners just need to be proactive.

Stocks are "Cheap"
Long-term investors enticed by the dramatic drop-off in stocks this year may want to start looking within "recession-proof" sectors, companies that offer goods and services people will need in good time and bad: health care, education, consumer staples. Also, identify stocks that have more cash than debt, or preferably no debt at all. Keep in mind that since it's becoming more challenging for companies to secure debt financing from banks, you may want to steer clear of businesses that need a lot of loans to expand.

"Free Money" Still Exists
You may feel like completely abandoning your 401(k) with the S&P down nearly 20% this year. That's never a good idea, especially if your employer is offering a fixed match. On average companies offer to add 50 cents for every dollar you contribute up to the first 6% of your pay, according to the 401k Council of America. Why turn down free money?

Savings Rates are Creeping Higher
The bad news is banks are desperate for your cash reserves. The silver lining is financial institutions, from brick and mortar to online banks, are offering competitive interest rates on short-term certificates of deposit to liquid money market and savings accounts. The most important thing to do is shop around. Visit to compare rates by zip code.

Catch more of Farnoosh’s advice on Real Simple. Real Life. on TLC, Friday nights at 8 p.m.



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