Smart Moves You Can Make to Beat Recession (If you are some of the lucky few who's still earning)

Imagine you just woke up from a six-month coma. You're informed that while you were out for the count a new virus spread across the world, claiming more than 500,000 lives and infecting nearly 12 million people worldwide.

That, in turn, caused a nasty recession and the highest unemployment rates in Australia since the Great Depression.

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As if that weren't enough, the killing of an African American man by a Minneapolis police officer, captured on video, sparked global protests in more than 60 countries, with demonstrators demanding racial justice and an end to police violence.

After a moment to collect your breath, you're then told that the Australian stock market has soared by about 20 percent over the past three months, retail sales surged a record 17.7 percent in May and employers added 200,000 jobs to their payrolls in June as businesses nationwide began to reopen.

Pretty weird, right?

It's a mixed-bag picture that we are all waking up to daily. The country is still in the midst of a devastating economic downturn and, with cases on the rise in Victoria and NSW, it's not like COVID-19 has gone anywhere. But as financial conditions improve in some sectors, there are also, undeniably, pockets of opportunity popping up—at least for the three quarters of Australians who still have jobs and can afford to take advantage of them.

If you're among the fortunate ones, here are four smart moves to consider making now.

1. Renovate On the Cheap

As the news of a growing second wave of coronavirus cases spread, mortgage rates hit another all-time in early July, with 30-year fixed-rate loans dropping 2.9 percent. That might make this seem like an ideal time to shop for a new house but it's not; home sales tend to drop dramatically during pandemics, says certified financial planner Brian Lockhart. In fact, in a recent study, about three-quarters of respondents expressed concern about buying a house this year, worried about their ability to safely tour prospective homes, sell their current residence and make mortgage payments.

What it could be an ideal time for instead, taking on a renovation project to make your home more attractive to potential buyers when the market finally normalizes and a lot nicer to live while you're still in it.

If your home has gone up in value, you can take advantage of today's historically low mortgage rates and raise funds to renovate inexpensively with a cash-out refinancing of your current loan.

2. Slash Your Credit Card Interest

In fact, after the Reserve Bank slashed its benchmark rate to 0.5% earlier this year in response to the pandemic, most borrowing rates are low these days. One notable exception: Rates on credit cards remain stubbornly high, at 19% on average for accounts that charge interest. That's a full three percentage points above where rates were in 2015.

Erasing that high-rate debt can immediately improve your bottom line. The average credit card user has a balance greater than $6,000 which can result in hundreds of dollars in interest charges a year.

Before searching on a personal loan aggregator online for the best deals, check with your local credit union. These institutions often offer lower rates than banks and other lenders.

3. Nab a Deal on a New Car

Shoppers, understandably, haven't been inclined to look for new wheels lately. Inquiries for auto loans among the most creditworthy borrowers dropped by half in April, and sales have continued to sputter, and are expected to be down for the rest of the year.

4. Grow Your Retirement Savings

Personal finance adviser told folks not to abandon stocks in their Superannuation just because these investments fell into one of the swiftest bear markets in history when the pandemic hit. Most savers, but not all, heeded the call.

According to sources, of the 7 percent of people who made changes to their investments from February to May during the worst of the carnage, nearly one in five sold stocks.

The exodus was even steeper among older savers: Of the 7.4 percent of investors age 65 and older who made changes, nearly a third cashed out some of their stocks, thereby turning what had been losses on paper into the real thing at a period of their lives when they have less time available to make up the difference.

Those savers, young and older, missed out on one of the most dramatic rebounds in market history, the moral of the story: You can't let big news events derail your plans.

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