A Debt Crisis Parable

The head of a family was laid off from a high-paying manufacturing job that technology was making obsolete. The family called in a counselor to talk about what to do. The family’s expenses had been unusually high over the past few years with a lot of unexpected bills. The family was deeply in debt.

The spouse of the head of the family lived on a trust fund left by a parent. The spouse did not want to spend the trust fund on family expenses. The fund was for the spouse, not the family.

Now, with no job for the head, and the spouse unwilling to draw on reserves, the family was in crisis.

The kindly counselor, Mr. Keynes, settled down on their couch and listened to their story. He told them that he was sure the head of the family could get work again, but the head of the family would have to get training for a new kind of job.

The head’s previous experience and skills indicated the head could pass that training and get the new job. All the head needed, said Mr. Keynes, would be the fees for the classes along with some new clothes and travel expenses for job-seeking when the head got done with the training program.

The head of the household thought that was a great idea. The spouse however, saw things another way. “If we’re going to have to live on less in the future, we should start doing that. We can’t burden our children with our problems. We’ve got to cut expenses starting right now.”

The counselor pointed out that the head needed a new job if they were going to pay for the remaining expenses. The spouse replied they were broke. They couldn’t spend any more money. They’d spent too much already.

The counselor turned to the head of the family and asked if the head could come up with money needed. The head said yes, by borrowing the money.

“Borrowing” shrieked the spouse. That’s all we’ve been doing! And look where it’s gotten us. We’re in debt! We’ve got to get out of debt!

“How will we pay our bills?” asked the head of the family.

“We’ll just pay interest on the debt. Other people will just have to wait until we can pay them.” answered the spouse.

“That’s insane,” the head said, turing red in the face. “We owe them. They already provided us with credit, heat and electricity, and cable. They’ll expect payment, not interest. What about the bank? It will repossess the house and car if we don’t pay.”

“Screw that,” replied the spouse, “you should’ve thought of that before.” The two glared at each other.

Mr. Keynes stepped in. “Well, I do have a solution here. Just spend a bit now for getting the new job and save a lot later.”

He continued, “After all, it will run you legal fees and impound costs if they take your house and car. And you’ll have to pay to get the gas and electric and cable turned back on. The interest rates on your accounts will all go up, and you’ll probably lose some of your credit. I suggest you spend money now and save it in the future.”

“SPEND MORE NOW!” screamed the spouse. ARE YOU CRAZY? WE’RE IN DEBT!  We have to cut costs or WE’RE GOING TO BE BANKRUPT. Even my trust fund won’t be able to pay all we’ll owe if we do that. Short-term spending got us into this mess. WE HAVE TO STOP SPENDING NOW!”

The children who were sitting playing in the corner froze, fear on all the little faces. What, they wondered, was wrong with their parents? Did this mean no more bubble gum? What was happening? Why was it happening? Would they all wind up out on the street?

Mr. Keynes tried one more time. Clearing his throat he said, “I don’t think you’ll go bankrupt if one of you gets a job. Do you?”

The spouse’s reply to Mr. Keynes was “F^#k off, a-hole.”

Mr. Keynes picked up his briefcase, and left the house.

The children sat wide-eyed and frightened.

The head of the family and the spouse both were now in agreement. They each wanted only one thing now, the same thing – a divorce.