The Family Meeting 06/01/2011

Dad came home an hour early looking concerned.  It wasn’t fear or gloom that Mom read in his face, but just a seriousness of purpose.  This approach he took to seemingly unsolvable problems had served Dad well over the years - analytically calculating alternatives.

“We need a family meeting,” he told Mom.

Dad did business consulting.  Not the kind that goes into a failing business and pulls it out of the slump, but the kind that takes a successful business with extra cash and propels it into higher margin new markets.  He loved his job.

Dad had a few small clients, but the big ones provided 47% of his company’s revenue.  The economy was slowly eroding Dad’s business, but he had been able to keep things going by reducing some expenses, and the good years helped him build up good credit of which took advantage to keep the business afloat.

“I just lost my biggest client today, two other big ones cut back again, new ones have been harder to contract, and for the last three years everybody has been spending less.  You know how much we have cut back at the office, but we have to take a look at the future and make plans.”
Mom had a lot of confidence in Dad, and they were always up front with each other about the family finances.  Dad would have been happy to talk to the kids about the finances over the years, but as long as they got what they wanted, they were only casually interested.  “Well, just spell it all out with the kids. They’ll understand.”

So, Dad had to explain to the kids that things are OK now, but if plans were not made to stretch his paycheck and make payments on the loans, the family would be in serious financial trouble in a few years.

The three kids ranged in age from 12 to 17 and lived well: summer camps, sports, private music and dance lessons, late model cars, the latest clothes, iPhones, iPads, nice laptops, HD flat screens in their rooms, health club memberships, nice allowances, private schools, college saved for - the upper middle class good life.

Dad has always felt strongly that the kids would be better prepared for life if they were not so pampered; Mom always wanted the best possible of everything for them, and Dad, being able to afford it, relinquished to keep the peace.  Although Mom and Dad had seen tough times when they were starting out, the kids had never had an idea what it would be like to sacrifice anything.

The meeting was called for late Saturday afternoon when all could be present in between activities.
“OK, guys, here’s the deal.  Business has been getting worse over the last few years and I just lost my biggest client.  There are very few prospects in the foreseeable future.  I have cut back at the office as much as I can, so now we have some decisions to make.

“Here are the options:

“Borrow some more, and act like nothing happened, hoping things will improve before the money and the credit runs out.  Nothing changes in the near term, but if things don’t get better, we will be in big trouble - we may lose everything and I really don’t see things getting any better for a long time.
“Cut back to the point where we would not need to borrow any more money.  You kids will have to use your allowance, which will be cut, for some necessities and for some of the things we have been buying for you, and get part-time jobs if you want to continue to get all the stuff you get now.
“Cut to the bone and drop back significantly to play it safe.  If sales should pick up we can look to increase our spending gradually.

“Your Mom and I have to ultimately make this decision, but I need to know what you all think.”
“Dad, we like everything you have given us, we don’t want to give up anything.  All these things are good for us.”

“I agree, since we have been getting all this stuff, I think it’s a right to have these things.  It wouldn’t be fair to take these things away.”

Dad listened and gave it a few days for thought.  The family went back to normal, forgetting the meeting completely, figuring that they made their point and everything will be fine.
Dad and Mom talked before the next meeting.

“I agree with the kids, Dear.  I talked to them about your plans and it scared them.  We can’t make the kids sacrifice the things they are used to. They need their phones for safety.  The computers and TVs are essential to their education, the gym memberships and sports and other activities keep them healthy and saves on medical expense, without the cars we will have to taxi them everywhere, and how can they be with their friends without some cash in their pockets?  We are proud; we can’t have them in public with cheap clothes.  Think of their self-esteem.  With the sports and other school activities, they have no time for jobs.  There is simply nowhere we can cut.  Borrow the money things will get better.”

“I know, Dear, but I see a train wreck coming.  I have to lead here, I am responsible for our futures and it would be irresponsible to spend and borrow when the future looks pretty clear from where I sit.  When you’re in debt, borrowing does not get you out of it.  I have a list of cuts we should go over….”

The next meeting did not go well.  Data service on the cell phones, the kid’s cars, summer camp, gym memberships, allowances, shopping trips, private lessons, all cut off by Dad.

“I took another look at the numbers and we can keep the house, one car, the private school tuition, cell phone service with texting only, sports, but no more sports camps.  I’m not touching your college funds.  Mom and I will not be eating out as much, taking vacations, and we will do a lot less of everything else.”

Dad started to get warm as he saw the look of betrayal on their faces turn toward hatred, then panic.

“You can’t do this.”
“You ruined my life.”
“This can’t be happening.”
“I’m with the kids on this one, Dear. We can’t change, now.”

They all ran from the room crying.
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Mom soon divorced Dad and went back to teaching.

Dad was able to make enough money to pay the court settlement to Mom and survive in an apartment in town.  Business got marginally better, but never recovered.

The kids ended up losing almost everything, including what Dad had proposed at the meeting.  Mom spent the college fund, but the kids made it through a local community college, then they left town to find jobs.

Their hatred turned toward Mom, blaming her for not providing everything they wanted and not supporting the plan Dad worked out for them.

Mom got to keep the house.  The pool was closed, the car was traded down.  When the last kid left town, she gave the house back to the bank and moved out of town.