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by Jennie S. Bev

On Thursday morning, House Speaker Nancy Pelosi confirmed that a financial stimulus package of tax rebates and child credits has been agreed upon between the White House and congressional leaders. This is great news for middle-class Americans. It is timely, targeted and temporary. Above all, Pelosi said this package unites the country in a strong bipartisan way.

It sounds excellent, but what would it really mean to an average American, other than getting $600 per person or $1,200 per couple and $300 per child in tax rebates? On the macro level, it would assist in moving money along, because such “windfall” money is usually spent immediately.

This would help boost the U.S. economy. But if we spend it, what good would it be for us, the taxpayers, in the long run?

The key in surviving an economy downturn, be it recession or something else, is to be an educated and informed spender. Getting an extra $600 in the pocket might sound like a godsend, yet it should be approached in a manner that would bring prosperity to us.

Under the classic 80/20 Pareto Theory, there are always 20 percent of the members of a society who are likely to keep themselves afloat in any weather, while the other 80 percent are likely to do the opposite. Knowing this, it would be wise to think and act like the 20 percent, as they have the knack to find overlooked opportunities that are likely to move upward in a downward economy. They also know what to do on rainy days.

Who are they? These people are strong contrarians, who are likely to be investors and entrepreneurs. And most of them are wealthy and wise in terms of financial handling.

While it might sound a bit naïve to invest $600 in the stock market or the money market, it can be used to invest in one’s self. Yup, kill that urge to buy a new laptop, a Louis Vuitton handbag or a flat-screen TV. Instead, find training classes or workshops on skills that can be immediately used to earn extra earnings.

For instance, if you have a knack with cameras, take a short course in professional photography. You can immediately use the skills to help couples who are getting married. Weddings, after all, will always occur in a good and a bad economy. The only difference is how lavishly people are willing to spend for their parties.

Offer your services for half the price of a seasoned photographer. Give a satisfaction guarantee. And be courageous enough to start your own small weekend business. The good thing about starting your own business is the tax write-off items. Anything related to your new business can be categorized as a business expense.

Another wise use of that windfall from President Bush and Congress is investing in any environmentally-friendly item. Consider using it for a down payment of “energy saving” electronics, or even a hybrid car. The future payoff will be tremendous, especially as the price of oil has not shown any signs of decreasing.

In short, surviving a downturn economy takes more than spending less and saving more. It requires making more and exploring a realm that many people have not considered: investing in education, starting a side business and being environmentally friendly.

We should be fine. []

Tracy Press, January 24, 2008

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