Learning
Respect
Health
Love
Fun
We knew we needed to review and crystallize our guiding principles to help raise our privileged children in a period of deep financial and lifestyle uncertainty. For the first time in our family life, we were going to have to make decisions that would require a substantial adjustment on everyone’s part. It would need to be explained in a kid-friendly language, linking decisions to respect, learning, contributing to each other, and maintaining family fun.
As is often done at the office, we put our new commitments on the wall at home, a visual prompt to keep us concentrating on the basics.
We created Sunday-night family meetings to discuss our respective preparation for upcoming events during the week, plan our family fun, and work in the new austerity program. All of us – including our daughters – took turns chairing the meetings. We learned a new language, with words such as “re-use,” “conservation,” and “contentment with what we have.”
Our ambitious family project involved cutting out 25 percent of our annual spending, a budgeting exercise I hadn’t done in years. It was a great lesson in how we can become prisoners of the choices we make when times seem endlessly abundant.
Not surprisingly, itemizing and debating everything was not a fulfilling family exercise. It created its own level of tension.
Budgeting activities that were ingrained in me as a teenager and young adult now had to be revisited. It was time to fire up the Excel spreadsheet and start the cutting. The first $100,000 decisions were painful but obvious: The Toronto Maple Leafs season tickets had to go, a $40,000 cut (yes, rail seats, but this didn’t hurt too much: I am a Montréal Canadiens fan); we would become a one-car family, saving us $25,000 annually; I wouldn’t be attending the annual client golf event in the Muskoka region with seaplane – another $8,000 gone; annual family trip – $7,500; gold patron at the Toronto International Film Festival – $5,000; family golf membership at the cottage – $1,500.
Other cuts were fun. No more buying wine; let’s drink our own wine cellar instead of collecting (an idea we got from a neighbor in the same situation). If we needed to travel, we’d do so on points. Honey, do we really spend $3,500 a year at Starbucks? OK, let’s become baristas and buy an espresso machine instead.
Others were brutal. Is this $5,000 for gardening? OK, I can learn to love gardening at that price. What – $3,000 for Christmas lights? $4,000 for your hair? $2,000 in dry cleaning? Argh. These conversations would lead us to new romantic highs – not!
A close friend would sagely advise, “If you cut out some of these small things, then you will suck the life out of your marriage; you and your wife will be doing stuff you don’t want to do and it will spiral down from there.”
I couldn’t hear it then.
Our second big project, after cutting our budget, was to make the necessary adjustments at home. Leslie would be going back to work as an executive coach after eight years at home. Each of us would have to pitch in to ease the transition.
October 11, 2008
I got up in the middle of the night with a headache and a clenched jaw. Just like the night before, and the one before that. I walked outside and looked at the yard, half grateful for the view, half worried.
I’m 44. How did this happen? I asked myself. Feels like I should have seen this coming. I beat myself up for 20 minutes and went back to bed to try to sleep. It was pointless. In the last week, we had lost 20 percent of our stock portfolio due to the collapse of the stock market.
“Only five more years of work to make up for that loss,” a friend shared with me in disgust.
Five years is not my problem right now, I told myself. If this maintains itself, it will be ten years. My burn rate was now well over my income. I was spending money I no longer made and depleting a dwindling savings account.
I wondered what we were most attached to that I could cut out right now. Our kids’ private school? Our newly renovated cottage? Our house? The family skiing lifestyle in Collingwood? Our family membership at the Granite Club?
I added it all up in my head. Cutting these six items still left us with $120,000 of fixed, annual operating expenses, after tax. We hadn’t cut out enough, I thought, processing the multi-tiered lifestyle that I had taken for granted. I’ve earned it, I protested to myself. I still want it. Do I need it? Do I even like it? I continued sparring with myself, without any definitive answers. The life of privilege that we had built now looked like a heavy load that could take me down emotionally and financially.
We were going to need another whole redesign of how we would now live, and soon. We had let things get away on us; our life was now controlling us as opposed to our controlling it.
A good money manager would say we were over-extended for my risk profile. It was time to press the reset button.
A kite rises against the wind
rather than with it.
—UNKNOWN
October 16, 2008
Our firm is part of a global executive search network called IMD. In mid-October I attended the twice-a-year conference along with 40 other colleagues who ran similar firms in various parts of the world. This time it was in beautiful Prague.
Fear was palpable at the meeting. Leading markets, such as the United States, England, and France had declined further than ours, a sign of things to likely come our way. Some Eastern European nations, especially the Czech Republic and Hungary, were in the worst shape, and negative reports were coming in from Russia. Spain’s economy was in a shambles. I was shaken by the magnitude of the declines in some of our most important markets. I was struggling with a 35 percent decline, and some of my international colleagues were having a near-death experience: Their business was going down 50-90 percent.
I don’t have many personal relationships with direct Canadian competitors. Discussions with these global colleagues gave me a frame of reference on the extreme conditions we might face at home, solidifying my belief that we were heading straight for the abyss.
On the flight back, I started to prepare for a speaking engagement on talent management for the Marketing Agency Association Worldwide global conference, which was taking place in Toronto on October 20. The attendees were managing directors, presidents, and CEOs of marketing services businesses, for the most part privately held, and most were owners. I had been booked by David Ploughman, CEO of BSTREET and president of MAAW, nine months prior, a time when everything seemed perfect, when managing and recruiting talent was a top priority for CEOs. As I dusted off my materials to make some edits, I was confronted with the now irrelevance of my presentation. What had been topical in January was worthless in October.
A War Story
With the blessing of the conference organizer, I scrapped my original and instead presented a war story of how my partners and I had led our own firm in the previous two recessions, segueing into what we were going to do in this current one.
As I rewrote the presentation, I did a critical review of my decisions, key lessons, and with my leadership style when I was under duress. It became clear that each recession had left me scarred personally, the first culminating in a divorce and the second in weight gain. I also realized that when the economy was at its grimmest, it was a new vision for the business, focused on innovation and new services that had ultimately got us out of the muck, while some of our competitors were going out of business.
Equally important, I had found a way to inspire myself by participating in