- The Washington Times - Sunday, January 4, 2009

Falling home prices! Tumbling stock market! Layoffs, bankruptcies, bailouts!

The news isn’t pretty and neither is the big-picture financial outlook for 2009. At this time of year, when financial resolutions often top the list of what we will do better with a clean, fresh calendar in front of us, it would be easy to say “why bother?”

Bother you should, though, say most financial experts. Larry Winget, author of “You’re Broke Because You Want to Be,” says you can’t control the stock market and you can’t control the price of gasoline. But you can control how much leaves your bank account and why.

“Don’t worry about the economy,” Mr. Winget says. “You can control your level of consumerism. You can figure out what you really owe. You can look at what you would like, what you want and what you need. You need food, shelter and transportation. Everything else is just a luxury. But for most people, it is a gray and fuzzy line between wants and needs.”

Even if your personal economy is OK right now — meaning you have a job and a few bucks saved — the hallmark of this economy is that we never know what is going to happen next, Mr. Winget says. These days, he says, everyone should worry about losing his or her job.

“You’ve got to have a plan,” he says about 2009. “The average 50-year-old has only about $2,500 saved up. Everyone needs a plan of how they are going to save more money.”

Marketing consultant Mark Stevens, author of “Rich Is a Religion: Breaking the Timeless Code to Wealth,” says planning to do better this year shouldn’t even be called a “New Year’s resolution.”

“People are in the habit of not abiding by resolutions,” he says. “They have to get into the mind-set of ‘These are actions I must take or I will be my own worst enemy.’ Resolutions we are preordained to ignore.”

Mr. Stevens says one way to get started toward improved financial health in 2009 is to only take advice from people you trust. It doesn’t have to be a professional broker or adviser — it can be family members or other people you would like on your “personal board.” The bottom line is that they are not earning a large commission from advising you and have a genuine interest in your well-being.

Second, live one degree below your means, Mr. Stevens says.

“I am not saying ‘live a Spartan life,’” he says. “I am saying just a little bit below. That way you will always have extra money. Millions of people are losing jobs. That will still happen; but if you live one degree below your means, you may be able to weather the storm.”

A great example is real estate, Mr. Stevens says. Look at the thousands of people who bought high during the housing boom, and are now in foreclosure or upside down on their mortgage — meaning they owe more than the house is worth. Had they bought just a little bit less house, the rise in interests rates or falling prices wouldn’t have hit them so hard.

“That’s how we got in this mess,” he says. “If you can choose between a house close to $300,000 or stretch a little and get one close to $400,000, always pick the $300,000 one. That way you will be in control of your own destiny. Peace of mind is the greatest financial gift you can buy.”

Mr. Winget predicts that collectively, this could be the year Americans’ thinking changes, similar to the frugality of the Depression and the sacrifices of families during World War II. He envisions a move toward a cash-based society, which means people can’t spend it if they don’t have it.

Trend consultant Faith Popcorn also predicts a dramatic shift in 2009.

“It’s really a brand new world,” she says. “What we will be deciding in 2009 is whether we’ll simply succumb, or whether, through a new set of rules of engagement, we will find a way to set our priorities.”

Ms. Popcorn says 2009 will be about “reclaim, retrench, reset and reinvent.”

Reclaim means people will re-evaluate their relationship with companies. She says it will be the “death of the consumer and the birth of the citizen” — there will be less emphasis on stuff and more value on shared interests and democratic decision-making.

Retrench means an emphasis toward home and hunkering down. Watch for a premium based on brands that demonstrate empathy about the plight of today’s consumers, Ms. Popcorn says.

Reset means people making voluntary cutbacks — living a notch below one’s means — and opting for simpler living.

Reinvent means back to basics. Look for more bartering and sharing, less charging and rationalizing. We’ll be reusing and reinventing.

“It all harkens back to a time where a direct citizen-to-citizen relationship drove the economy,” Ms. Popcorn says.

Ms. Popcorn sees “one-downmanship” as the new “one-upmanship.” So the Joneses bought a new car and a giant flat-screen TV? That’s so 2008. This year is all about who has less.

“Let’s take vodka,” Ms. Popcorn says. “You’ve got the guy drinking the status brand, say Gray Goose. His friend will say, ‘I drink this other less-expensive brand,’ say Absolut. The third guy gets in the conversation by bragging he only drinks Smirnoff. The fourth guy says he drinks some no-name brand, but adds his own pineapple to make it homemade and special.”

In other words, if you want to keep up with those Joneses in 2009, resolve to start shopping at thrift stores and baking your own bread. They’ll be impressed, and you’ll have room to breathe after the bills are paid.

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