Finding silver lining in a tough economy |

Finding silver lining in a tough economy

Danielle Howard

BASALT – The panic that accompanied last year’s economic meltdown has eased, but many people are finally acknowledging they need to make drastic changes now that it’s clear the recovery will be slow and bumpy.

That’s according to Danielle Howard, a Basalt-based financial planner. She said a surprising number of Roaring Fork Valley residents assumed they could ride out the economic storm without changing their fiscal habits at home, their business, or both. The upper valley has had a false sense of bravado about the local economy – believing once-conventional wisdom that national recessions don’t hit as hard or linger as long in the valley. This recession deflated those myths.

“There’s some tough choices that need to be made,” said Howard, a 17-year financial planner who owns Howard Financial Services. (She said her job is more accurately described as a life planner.)

She said she believes the life-transforming changes that many people must make can be positive rather than punitive steps that will serve them well once the recession is a distant memory. For example, she urges people to live more modestly and start saving intentionally, with a plan and goals, rather than “out of fear” like some households started after the recession hit. By making changes, people can relearn how refreshing it is to live “unburdened by the debt monster,” Howard said.

She is also hopeful that people will use the tough times to redefine how they measure success. Maybe the large house, nice cars and various status symbols won’t be as important.

While job losses finally leveled out this week nationally, tough times remain in the Roaring Fork Valley. Architectural firms employ a fraction of the workers they did three years ago. Many construction workers who managed to remain busy don’t have anything lined up beyond their current jobs.

Tourism likewise is cloaked in uncertainty. The Aspen Skiing Co. says a lot of work will be needed just to match last winter, when its busy season was down nearly 7.5 percent. Each of the local governments has laid off workers in anticipation of reduced revenues in 2010.

Given the circumstances, many households are dealing with reduced incomes.

The key to making it through these tough times is being proactive rather than reactionary, according to Howard. Or, as she put it, people can be the thermostat rather than the thermometer.

A vital first step is to take a thorough look at your personal fiscal reality. Make a detailed list of assets and liabilities. “A lot of people don’t even know what they have,” she said. Go beyond the fiscal spreadsheet. Assess your talents, abilities and ambitions. If you’re good at working with kids, for example, maybe a redefined goal could be contributing time to a nonprofit group that works with youth.

Howard said too many people are depending on national economic news to help chart their course. She thinks it is folly. “The best economic indicator you have is your checkbook,” she said.

To deal with the more immediate financial concerns facing many people, Howard recommended four critical steps, some of which are simple but still widely ignored:

• Spend less than you earn. Some folks didn’t learn “financial literacy” while growing up, Howard said. They rely on credit cards and lines of credit to get by, and it often leads to trouble;

• Build and maintain liquidity. Have some reserves you can fall back on when times are particularly tough. People weren’t saving before the recession. Now they are saving an average of 5 to 6 percent of their annual income, according to Howard. She thinks they can do better, and that the practice must continue after the recession ends;

• Lessen your debt. “It doesn’t matter who you are, it works,” Howard said. That might require a simple step such as going out to eat less often. That can make dining out more rewarding, and it definitely feels better when the monthly credit card bill arrives, she said;

• Think long-term with your goals and investing. After completing the assessment of assets and liabilities, define your goals and the issues that are most important to you. Once you know where you are at and where you want to go, it’s easier to plot the path to get there.

“There’s so much opportunity right now,” Howard said.

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