PersonalFinance: Be thankful for silver linings

WASHINGTON (Reuters) - In the last four months, the retail price of a gallon of gasoline has fallen from $4.05 to under $2, according to the Energy Department. Consider it a gift from the financial crisis of 2008.

There are others. Goods and services are on sale, and the stock market's downfall provides some smart tax-savings and investment opportunities. Just on time for Thanksgiving, there are some financial developments to appreciate -- and capitalize on. Here's how:

-- You can restructure your own debt. Credit card issuers are hiking fees and raising interest rates, but mortgages and home equity lines of credit remain well-priced. If you're still sweating out a variable rate mortgage, you can refinance to a lower fixed-rate loan. If you have too much credit card debt and own a home that is worth more than you owe on it, you can move that debt to a home equity line of credit. Check your mailbox for new zero percent interest rate credit card deals; they are still out there. You can shift balances around to lower your rates, and then concentrate on making monthly payments that are as large as possible to whittle balances before rates climb.

-- You can borrow cheap. If you need cash to buy a car, set up a business, go to college or buy a house, expect it to be available soon. The Federal Reserve's new plan puts $200 billion in the hands of lenders who will use it to float new loans to consumers.

-- You can take another look at your Roth IRA. If you converted money from a traditional IRA or 401(k) in the beginning of the year, you probably will owe a lot in taxes on that move -- all tax-deferred funds that you moved over are subject to income taxes. And there's a good chance that the account is worth less now than it was then, so you're looking at the double pain of losing money and paying taxes on it. Here's how to grab a do-over: You have until your income taxes are due (probably April 15, 2009), to "recharacterize" that conversion, says Hal Terr, an accountant with the Princeton, New Jersey, firm of WithumSmith+Brown. Put the money back in a tax-deferred account until next year. You can reconvert it to a Roth later and pay fewer taxes.

-- You can position yourself for the stock market of the future. Perhaps the boom isn't coming tomorrow, or next Tuesday, or even by March or April. But come it will, says Robert J. Froehlich, chief investment strategist of DWS Investments. He points out that sooner or later, the money sitting in money market funds and consumers' pockets (thanks to those lower gas prices) will find its way into the stock market. Today's prices will look good then. Solid, smart companies are being beaten down along with the troubled ones.

-- You can tuck some inflation bonds into your retirement account. Treasury-inflation-protected bonds (TIPS) sound like a crazy thing to buy now: most people are more worried about deflation than inflation. That fear has cut the price of inflation bonds -- which guarantee that their yields will rise and fall with the Consumer Price Index. Now they are yielding more than regular Treasuries. Recently, 10-year TIPS yielded 3.37 percent while 10-year Treasuries were yielding 3.06. Should inflation over the next 10 years be at any level over zero, those bonds would pay off. And many observers think the trillions that the Feds are throwing at the nation's economic woes will inevitably result in some inflation once the economy recovers. Because of tax issues, the best way to buy these bonds is via a mutual fund, such as the Vanguard Inflation Protected Securities Fund, within a tax-deferred (or tax-free) retirement fund.

-- You can save on your taxes. If you have any investments, chances are they've lost money this year. If they are worth less now than they were when you bought them, sell them, and take a tax loss. This can offset any gains you have and reduce your taxable income by as much as $3,000 this year. You can carry unused losses over for subsequent years tax returns. This doesn't work with investments in tax-favored retirement accounts.

-- You can concentrate on the reason for the season, instead of the stuff. With everyone cutting back on spending, it's a nice excuse for homemade gifts, spending time together and simple pursuits. Skipping the mall is relaxing, too. And with the latest version of consumer competition looking more like "who can save more" than "who has more," it's win-win for anyone who is budget minded.

(edited by Gunna Dickson)