Greek to me
By Diana Sarandos
My husband and I were excited about our vacation last month but also a little nervous. Part of our concern was traveling two weeks overseas with our two active young sons to visit family. Part of it was our destination: Greece.
We are all familiar with the economic turmoil surrounding the small nation by the sea: 327 billion euros in debt, a four-year recession, political upheaval.
We know that Greece was living beyond its means even before it joined the euro in 2002, and once it joined, public spending soared. From there, the good times rolled.
Once the global financial crisis hit, it became more apparent that Greece was unprepared to cope with its growing debt. As a result, the European Union and the International Monetary Fund stepped in with bailout loans that imposed austerity measures.
Austerity proved to be unpopular with a Greek electorate engulfed in high unemployment, burgeoning personal debt and higher taxes. Whether Greece remains in the Euro zone is yet to be determined.
All this left my husband and me wondering what we would find in the popular tourist areas that we had grown to love. Since our last trip in 2009, would our favorite shops and cafés be boarded up? Would we find family and friends in despair over higher taxes and rising unemployment?
Surprisingly, we found quite the contrary. Things didn’t appear to be as bad as we thought.
Most of the people we talked to had the attitude that “life goes on.” Taxi drivers, shop owners and friends all said the same thing – their lives did not come to a grinding halt in the wake of all the negative news. People are still getting married, having children and buying homes.
However, much like the harsh reality that hit Americans in 2008, Greeks are realizing that the party is over.
Living beyond their means and not planning for tomorrow brought a rude awakening for Greeks. But also it’s reminiscent of what we Americans experienced during our Great Recession.
Here are some common big-picture lessons we can learn from these crises:
Sometimes you have to take the difficult road.
Greece cut government salaries and pensions and increased taxes, even in the face of stiff backlash. Being fiscally responsible is difficult and usually not fun. Coping with financial hardship usually entails a lifestyle change – sometimes minor, sometimes more drastic.
Anyone can have a financial crisis – whether it’s unforeseen or years in the making – so you’re wise to save money in an emergency fund and enact personal austerity measures.
Live within your means.
It is easy to say that Greece should have seen its problems coming. When its governmental debt grew to 160% of its GDP, there was no denying there was a problem.
Governments obviously run differently than households, but if your financial house is in disorder, it’s important to review your balance sheet. Our advice to clients is pretty simple: create a plan and stick to it. When you get off track, review your plan. Circumstances change, and it’s important to design your financial life to be flexible and adaptable.
The last lesson is one of resilience.
From our vantage point, my husband and I would not underestimate the resilience and adaptability of the Greek people. The majority of the people we talked to were optimistic even in the face of economic catastrophe.
Most of us know a family member, neighbor or friend who experienced a life-changing event as a result of the recent recession, and those same people likely found ways to rebuild financial stability. Optimism, coupled with hard work, likely led to positive results.
Those are the same characteristics that will carry the Greeks through these difficult times. During our visit, we saw some graffiti that said, “who cares about the Euro – we still have the sea.”
That summed it up for us. There we were on a vacation in a country that is in the news almost daily for its troubles. And we were surrounded by loved ones, feeling rich beyond our means.
Diana Sarandos is an associate at Landaas & Company.
initially posted Sept. 20, 2012