Portrait of a family BEATING $20,000 IN DEBTS
Four years ago, the man in the picture below went suddenly broke. This is his own story of how he and his family have struggled and schemed since to keep their creditors happy, most of the time, and how they’ve cut what they owe to $5,000 — a quarter of what it Was then
AT THE BEGINNING OF AUGUST, 1959, I was president and principal owner of Fulco Ltd., a busy little Hamilton, Ont., plant that made cabinets and plastic material. We employed thirty-five people and made sales of ten thousand dollars a week, and I was about to expand by taking over a faltering window factory. My wife Jill and I had five children and a mortgaged twenty-two-thousand-dollar home in suburban Burlington.
On August 28 Fulco went out of business. I was left with nine dollars in my pocket, twenty thousand dollars in personal debts, and seven dependents — Jill chose that very day to produce our fourth daughter, Elizabeth.
What caused the collapse is not important (except to the Chesters and their numerous creditors). It was largely a matter of misplaced
confidence in a person who undertook to finance the merger hut whose methods made it impossible for even the parent company to survive, it was really my fault, I suppose, for being incautious enough to let it happen.
But on that black Friday I was less concerned with the “why” than with a more pressing question: just what does a man with a large family do when he starts a day well-to-do and solvent and ends it flat broke and deeply in debt? The first thing I did was to go to Jill at the hospital and break the bad news as gently as possible. Then 1 gave her eight of the nine dollars so I couldn't spend our remaining money extravagantly. Jill, who is as philosophical as she is pretty, took it calmly (fortunately the hospital had been paid). “Just be sure the housekeeper is paid and there's
food in the house for you and the children.”
“Of course,” I answered automatically — then suddenly 1 had a queer hollow feeling. I realized that it was impossible for me to make even the smallest disbursement. Even to survive that first weekend 1 needed ready money.
Among my debts was a thousand dollars to a local bank branch on a demand note, without security. I hurried to the bank and suggested to the manager that he increase the loan to thirteen hundred dollars and take a chattel mortgage on my furniture. He agreed, and 1 walked out with three hundred dollars in my pocket and gratitude in my heart. True, it was a good deal for the bank, which now had a secured instead of an unsecured loan — and at eleven percent interest instead of six. On my side, 1 now had a small cushion of ready-
cash, and my furniture was safe from seizure by other creditors. My esteem for the bank remains high. The calm and helpful attitude of its officials then and since has been a bright spot in what was to become a frantic financial cat-and-mouse game.
(Incidentally, when the bank's appraiser came to list our chattels he entered all our shiny, nearly new furniture but ignored all Jill's "priceless” antiques, which miffed her greatly.)
When I got home that first afternoon 1 asked the children what they would like for dinner to celebrate the arrival of their new baby sister (and, 1 did not add, as a last splurge before austerity set in). “Hamburger!” they chorused.
Poor little devils! If they had known how much "special three-pounds-for-a-dollar” ham-
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He couldn’t afford bankruptcy — or a job that paid a salary
burger was to be on the menu from then on, they might have demanded filet mignon. Nevertheless, their capacity for Jill's disguised and redesigned hamburger concoctions remains insatiable to this day. a tribute either to healthy young appetites or their mother’s ingenuity.
Monday brought back the grim realities. I saw a lawyer and he advised me that the simplest way out of my predicament was to file a bankruptcy petition, as two thousand other Canadians did every year. The alternative would leave me and my family open to endless badgering by creditors, bill collectors and lawyers, to numerous summonses to court which must be answered even if the plaintiffs couldn’t collect because I had no assets, and to garnishee orders if 1 got a salaried job.
“Employers don't like garnishees,” the lawyer warned. “More people lose jobs because they are garnisheed than because they’re lazy or inefficient.”
Nevertheless I decided not to go bankrupt. This wasn't wholly or even largely a “chin-up, stiff-upper-lip” attitude. True, I had left England a few years before because I couldn't abide cradle-to-grave socialism. I had come to Canada to try out my theory that a reasonably enterprising man who was willing to work hard could succeed in a free economy. To go formally bankrupt would be to admit the failure of my theory. (My de facto bankruptcy I could accept as a temporary setback.) I also had less noble but more practical motives. Bankrupt or not. my personal credit was shot, anyway. I intended to get back into business for myself as soon as possible, which I couldn't do in bankruptcy and I figured that even as a discharged bankrupt my business credit rating would be so shaky that Ed start with two strikes against me.
A third reason made the others rather academic. It would, ironically, cost four or five hundred dollars to register formally the fact that I had
no money. (Later.a relative in England offered me five hundred dollars if I promised to use it to go bankrupt. But by that time I was well into my four-year comeback struggle.)
When Jill came home with the baby we plotted strategy. The Chester plan boiled down to this: I would get the best job I could find and work as hard as I could. The point of this noble resolve was that it would have to be a commission job since garnishees could add up to thirty percent of salary. (Commission income can be garnisheed, but it’s so complicated that few creditors bother.) Meanwhile we would live as economically as possible and pay off our debts as fast as we could.
Mortgage payments of $ I 65 a month were by far our largest fixed obligation. I had paid off four thousand dollars, and although we were reluctant to uproot ourselves from a pleasant neighborhood and the children were dismayed at the thought of starting in another school, it was tempting to sell the house, pay off the mort-
gage and salvage four thousand dollars in cash. A real estate agent solved that dilemma. He told me that the house market was “soft” just then, and in a quick sale the price would barely pay off the mortgage and leave nothing over for me. So I made a deal with the mortgagee to forego mortgage payments and rent me the house for thirty dollars a week, with an option to resume the mortgage later — and thus possibly salvage my four thousand dollars.
His willingness to accept my proposal led to an interesting discovery: it costs money, time and trouble to take legal steps against a debtor, and a creditor is likely to listen to almost any proposition that offers hope of repayment without risking good money after bad. A finance company let me keep my nearly new car in the hope that a miracle would enable me to start payments again. Only after several weeks did the company lose faith and seize the car. The grocer with whom we ran a charge account offered to pigeonhole our considerable bill
if we would continue to buy from him for cash.
I learned, too, that when a man is broke any dollars he can scrape together are worth three or four times more than the dollars of a solvent man. Later when I had saved some money I asked the manager of another finance company to which I owed twenty-eight hundred dollars how much he would accept as a cash settlement.
“How much have you got?” he asked.
"Six hundred dollars,” I told him. He surprised me by saying quickly, “It's a deal!” He surprised me even more by telling me as I left his office, “Don't forget we’re reasonable people. When you're back in business we want you to deal with us again.”
Nevertheless, arriving at a workable survival-and-revival budget was an agonizing process. As near as Jill and I could figure (we had kept no budget.) our overhead had been averaging two hundred dollars a week. We decided we'd have to cut the family’s operating expenses to under a hundred dollars a week if we hoped to be in the clear before we got the old age pension — and I was only thirty-one, Jill was still in her twenties.
We spent a frustrating afternoon and evening trying to reduce two hundred dollars to one hundred by the process of elimination, but that didn't work. My noble resolve to switch from cigarettes (seven dollars a week) to pipe tobacco ($1.20) and to eliminate our one bottle of whisky a week added up to a mere ten dollars. Letting my hundred-thousand-dollar life insurance lapse contributed only twelve dollars a week. We laboriously worked out our previous food and household-necessities expenditure, something we had never bothered to do before, and it came to a surprising sixty-seven dollars a week. Even if we could reduce that to one third it meant only twenty-three dollars a week. By midnight we had run out of economies and were still little more than halfway to our goal.
“We're going about this the wrong way,” Jill finally announced. “Let’s start with nothing, which we have anyway, and put down what we have to spend."
That worked — mathematically, at any rate. After we added up the bare
necessities there remained the absurd sum of twenty-one dollars a week for food and household necessities. Jill said. “We forgot something. We must have some money to spend foolishly, even if it’s two dollars a week.” So the household budget shrank to nineteen dollars a week.
"You’ll never be able to do it," I told Jill. And she hasn't, either. In the four years of our austerity program her expenses have averaged $19.23 a week! Of course, Jill has an excuse. In the four years we have added two new members to the family, Nicholas, aged two and a half and one-year-old Andrew.
If Jill and I had grown up in North America's affluent society > doubt we would have even attempted to feed a family of eight (which soon became nine and then ten) on a budget that added up to about a dime a meal each. But we had been raised in wartime England and we knew that the English diet, limited both in quantity and variety, had actually improved the health of the population. I’ll explain later how the budget worked, but at the time we drew it up I did not yet have the main thing we needed — an income.
John Diefenbaker helped out
The first job 1 took was selling life insurance. The branch manager assured me that my sales were better than average, but \ was making so little more than the hundred-dollar-a-week family overhead — even with the help of the forty-five-dollar-a-month baby bonus — that I quit after six months. Then, with an assist from John Diefenbaker, at that time prime minister, 1 got into much better paying work.
It came about this way. In a speech boosting the government’s home-improvement-loan legislation. Mr. Diefenbaker urged home owners to make greater use of the home-improvement program to stimulate Canada’s economy. He practically said that it was the patriotic duty of Canadians to spend money on their homes. So I became a home-improvement salesman, specializing in aluminum siding.
I soon discovered that this line of work was so potentially profitable that many salesmen needed only one sale a week to make a living, and as a result worked only one or two days a week. 1 decided to make it a full-time job, and even started making calls on Saturdays. ( But that wasn't worth the effort. No sales talk, 1 found, could compete with televised football and baseball games for a householder’s attention.)
I also discovered that profits could be increased if the salesman did his own installing. It was, however, beneath the dignity of a “home-improvement designer” (which is what most of us called ourselves) to do this menial job, so 1 made an arrangement with another salesman: he would do my installing and I would do his. So half the time 1 was a dapper whitecollar salesman and the other half an overalled artisan. This double-shift program made me practically a stranger at home, but it also got the Chester debt-reduction plan off in high gear. In one memorable week I cleared a thousand dollars, which meant a ninehundred-dollar pay-off of creditors.
There were lean weeks too. of course, but never has there been a month in which we did not nibble away at our mountain of debt. In four years we have liquidated fifteen thousand dollars of the twenty thousand 1 owed when my business failed.
It was tempting, with good money coming in. to ease our austerity budget. but Jill was adamant. "It’s working. and nobody is going hungry,” she pointed out. Here’s how the budget worked :
We had been spending $4.75 a week on bread, cakes and cookies. Jill thought she could save all this by doing her own baking, but she soon discovered that it was cheaper to buy bread than to make it. although much cheaper to bake cakes and cookies than buy them. So the bakery budget became $2.25 a week, all for bread.
Our milkman used to deliver $6.40 worth of milk, fruit juice and butter a week. We cut this to $2.50 by eliminating the juice and butter and mixing homogenized milk half-andhalf with milk made from skim-milk powder. Our former meat budget of five dollars was cut to $2.25 by concentrating on three types: hamburger, brisket and bulk bologna for lunch sandwiches for myself and the schoolgoing children. We introduced that delectable institution of the French peasants, the pot-au-feu into which went all leftovers plus soup bones supplied gratis by the butcher, to provide us with endless tasty soups.
Our vegetable bill came down from three dollars to $1.56 by cutting out all out-of-season items and substituting rice for potatoes. Rice proved to be a peerless stretcher for meat. Our outlay for fruit came down from three dollars a week to sixty-five cents, largely because our neighborhood was formerly an orchard and each back yard had one or more fruit trees spared by the builders for decorative effect, and most of the neighbors scrounge to their hearts’ content.
Three food items actually increased in our new budget — shortening from a dollar to $1.10 a week because Jill was making her own cakes and cookies: flour from thirty cents a week to forty-seven cents for the same reason, and tea from thirty-nine cents to forty-seven cents because we cut out coffee, which formerly was a $1.10-a-week item.
Canned goods came down from three dollars a week to ninety cents largely because we cut out baby foods (we always had a couple of children at the baby-food stage). They now were fed what we ate. but theirs was pureed. And, for the record, they have had fewer illnesses than the children born earlier.
Our frozen-foods bill dropped from four dollars to one dollar a week, and was largely made up of fish for our Friday menu (we arc good Catholics) and bulk-packaged peas, which are cheaper in that form than in any other. We saved nearly a dollar a week on bread spreads — $1.60 instead of $2.50—by substituting margarine and peanut butter for butter. Cleaning materials and paper products dropped from five dollars a week to $1.98, via the discovery that toilet tissue makes a cheap substitute for paper towels and even pipe cleaners. Wax paper, aluminum foil, special garbage
bags and sandwich bags all wore eliminated and replaced by grocery bags and wrappings from bread — both free.
Laundry and dry-cleaning bills were cut from $3.50 to fifty cents a week. We have an automatic washer and dryer, and all the family’s clothes that weren't wash-and-wear, except my business suits, were mothballed and put away for the duration. The cleaning woman that came in one day a week to “do the heavy” as the English call it. for seven dollars, was dispensed with and the older children took over the chores. We stopped buying fireplace coal and wood with the discovery that newspapers packed solidly into grocery boxes provided an excellent substitute. True, that fuel created more dust, but hand labor was one thing we did not lack.
The decision as to how we would spend our two dollars of “foolish money” became a weekly family ritual. Everyone from twelve-year-old Sally to five-year-old Simon had equal rights to state his or her preference — the three youngest were not given a vote. We parents presided to keep the discussions within bounds. Mary, aged ten, kept holding out for ballet lessons, for example, and seven-year-old Theresa’s simple wants usually included skates (“new, please”) or a “wetsie” doll. Sally’s demands were modest (“just once I'd like to have a whole new pencil for school”). Sometimes the children would decide that we should carry over the two dollars to next week “and get something really swell with four dollars.” So back it would go into the savings pot.
For the first year the harassment
from bill collectors the lawyer had warned against was noticeably absent, probably because I had told all my creditors: “I’ll pay you in reasonable amounts at regular intervals” — without specifying what I considered reasonable amounts or regular intervals. Later when neither the amounts nor the intervals satisfied some of the creditors, they started a barrage of demands via mail and telephone. Since I was away from home most of the time, my wife had to become “vicepresident in charge of fending off collectors,” an unpleasant job which she has carried out with tact and firmness.
We found that the cycle of threatening letters follows a definite pattern. They start gently and almost sympathetically, become more and more dire in their threats — then suddenly stop and resume a tone of sweet
reasonableness. Telephone demands are more difficult to cope with, and last year I decided that my wife had borne enough — although she did not complain — and had our telephone unlisted. Since then we have lived in comparative peace.
That’s our story' to date. Perhaps the most unexpected and heartening by-product of our four years of austerity is that our children have long since forgotten that we are “poor.” The other day twelve-year-old Sally said to me: “You know, daddy, I feel sorry for orphans. They don’t have nearly as many things as we have. I think we ought to adopt two or three of them and make them happy.”
It might be a good idea, but it will have to wait. Early next year the eleventh Chester is expected to join the family. ★