May. 5, 2014

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FAMILY WEALTH

 

          Today's discussion is about the current economic dilemma's that are facing so many of our family members, friends, and neighbors.  The economy is certainly in dire straits and it is having its effect on each of us.  What I'd like to ask you to examine is; Am I doing what is best for my family and am I teaching my children how to survive.

 

          I am old enough to remember when attitudes concerning family and security were much different than they are today.  I can still remember when family was family and even if you disagreed you were still family.  I can still remember when family members either went to college or work and if they went to college they moved back within shouting distance of the rest of the family. I can still remember when welfare and food stamps were a disgusting illustration of your inability to support your family and was a direct reflection on your families lack of concern for its members. I can still remember when a person paid their debts even if it meant the family did without. 

 

          When did this change??  Well it was a gradual evolution that took place throughout the 60's,70's, and on until today.  It was precipitated by the shift in focus from building a family to having a "successful" career.  Young "upwardly mobile" adults began seeking higher paying positions regardless of location while families were put on hold or assistance was bought to help with the rearing of the children.  Because of this dispersion and the prevailing view toward "careers" young adults no longer faced the disapproval of a family and community when they overextended or dissolved their wedding vows.  The phrase "don't judge others" became the byword of everyone. (by the way read the passage in the bible this is taken from and continue reading as it actually says not to judge unless you are willing to face the same judgment) Another phrase that became popular was, "If you are so smart why aren't you rich". That phrase would never have been used when I was a boy as many of our smartest were not rich. I can't imagine anyone saying this to my elementary teacher, Mrs. Bailey,  it would have been viewed as rude and crude.

 

          So, what has been the result?  We have slowly demoted the family unit to a status of individuals who are related each striving to "outdo" the others.  Families have become groups of children who haven't faced the same or similar life development experiences. More importantly, however, we haven't learned to develop our familial wealth so that all of us grow in wealth and become middle income regardless of what our beginnings were.

 

          Those of you who have taken an economics course will remember lectures directed toward the development of "capital wealth".  I'm sure that your professor emphasized the ability of the accumulation of capital assets to increase the growth rate of an economy over time.  Well, the same theory applies to familial wealth.  You see, by dispersing our family units we have limited the ability of each to expand their wealth.  Military members can often see this more clearly.  As the military family is transferred from base to base they are limited in the amount of capital (things) they can keep and are often required to purchase new items to "fit the situation" e.g. the refrigerator won't fit in the new home. At the end of 20-30 years the military member often finds that the family has just enough to "get started".  At the same time their brothers and sisters, who never left their hometown, have much more.

 

          This is the essence of a family gaining capital and growing as a unit.  Families that share in each other's growth see larger aggregate growth over time.  I like to use the example of the successful sibling who decides to buy one of those neat new lawnmowers with the zero turn radius.  What does he/she do with the still useful ordinary lawn tractor?  If the family is dispersed or the family has developed an everyone for themselves attitude the tractor will be sold at a yard sale. When I was a boy the FIRST thing that my dad would have done was to call the relatives and especially the newly married ones and see if any of them "wanted a deal".  This meant that the less fortunate family members weren't forced to direct their limited disposable income toward purchasing a lawn mower at full price.

 

          The reverse side of this was the attitude that debt and relying on the government or others to meet family needs was irresponsible.  As a result, we knew that debt was not an acceptable way to get what we wanted and if debt was used we had to be able to meet our obligations.  People who bought on credit were known by many disparaging terms that all equated to being "poor-rich".  This meant that you were trying to appear rich while merely getting further and further in debt. We all knew, it was ingrained in our psyche by our parents, that debts had to be paid and that we would be judged, not by what we had, but by who we were.  Because of this we didn't overextend and even when we did we often asked a family member to give us a loan.  These loans were paid with interest but with the knowledge that that interest was helping the family not the bank.

 

          When house hunting I witnessed young married couples looking at 2,500 sqft. homes with bathrooms larger than my dining room. (I've often wondered what they do in their bathroom that I don't do) As a result they are placing themselves immediately in a position where they must have two incomes and are facing debt for life.  On the flip side, I saw one young couple purchase a "fixer-upper" for $50,000, pay it off, and begin to plan for expansion.  The second couple now has a home, no debt, and can make realistic choices as the family develops. 

 

          A touchier subject is the one of child rearing.  It was accepted that "family values" meant "family" values.  It did not mean the values of the nanny, child care center, soccer coach, etc.  While there can be long and heartfelt discussions about the families who "stayed together for the kids", it is a fact that this attitude was based on the fact that parents felt it was their responsibility to rear their children.  The values on debt and family support were emphasized by those parents.  I can tell you that in my hometown in the 50's you didn't want to be disrespectful toward a female of another family or pick on (bully) someone.  As my daughter said one time when she got in a fight with a young Hispanic, "I didn't know if you fought one bean you would have to fight the whole burrito."  I know that's not politically correct but at the time she was nine years old and I had to try awfully hard not to giggle when I heard this.  The point is that families had a sense that in every area they would grow and succeed as a unit or they would have to face the world alone.

 

          As we face economic problems as a nation I have to ask," Have we placed ourselves in jeopardy as individuals".  If the economy falters or fails will we face personal devastation or will we survive.  Our ancestors had to suffer the great depression to learn the result of not being solvent are we not making the same mistakes?  You might want to read the posting on "shirtsleeves".  I will posit two examples for you to consider.  One is the family that has a $250,000 mortgaged home, two $40,000 mortgaged autos, two credit cards with balances, a cell  phone bill of over $100 per month etc. etc. etc.  The other has a $130,000 home paid for, New vehicle paid for, fishing boat paid for, tractor/equipment paid for, a trac phone for $150 per year, and no outstanding debts. When a crisis occurs which is more capable of meeting the problems?  Now, did that person get in that shape overnight, no it took time and discipline but can be done. 

 

          Families that work as a team and consider long term growth will eventually leave their descendants more wealthy.  The middle income class in the U.S. is not deteriorating because of the Wealthy, in contrast it is deteriorating because of the inability of the families to discipline themselves to move the family unit into middle income.  Instead families are taking all of the steps that ensure they will never become middle class.  All of us need to reconsider our goals and what we want for our families.  If family has no value to us then we have to be committed to "going it alone" and not gaining from the synergy of a family unit.

 

THE BABBLING OF A "GRUMPY OLD MAN"