“Every front door looks beautiful” is one of my favourite Irish sayings. It came to mind in Deadwood South Dakota, in the Black Hills where I was listening to the woes of a young ranch couple. They have a strong desire to ranch as “debt-free” as possible, but her parents, the owners are struck on new pick-up trucks and “keeping up an image” with lots of debt.
My friend Wayne Buhr in Brandon is an insolvency manager for Debt-Free North. Buhr’s approach is to invite folks into the office or zoom in with them to discover why folks are not dealing head-on with their financial disasters. He told me the story of a distraught parent bringing her son in for a serious discussion to start finding financial solutions to release the stress of too much debt. He has also seen adult children bring their parents in to have a reality check on their financial habits that are keeping them stuck.
Recently I coached a very complex dairy business with heaps of cows (more than 2000) who struggle with a sibling who is expecting to be bailed out continuously by the parents. The successors of the dairy are worried about cash flow issues when the estate is distributed.
Solutions to financial stress start with courageous conversations.
The young ranchers brought their parents to my workshop and the parents heard the message regarding securing income streams, hiring a fee-for-service financial planner, and ways to approach talking about debt servicing.
How much debt can you sleep with at night?
Do you understand the difference between good debt and debt that is bad for you?
Do you really need a fully-loaded pickup truck, brand new? Good luck getting one these days if the chip for the truck is not available. I once rode with a single young farmer who said he “deserved” his $84,000 truck, and I observed that he likely was not making money with this new truck, especially since his dad had passed and his mom was struggling with farm cash flow.
Another aging rancher, over 75 proudly told me that he was not going to transition shares of the ranch to the next generation who were eagerly awaiting more security in their future. This stubborn horse rider had over $2M in long-term debt. I questioned him as to why he was not letting go, and he said he would transition equity when the debt was zero. Oh boy.
Another farm family has reached out because Dad is not accepting that he must settle a divorce with Mom before he can navigate a transition plan. The debt of the parents needs to be settled before the next generation can start charting their debt servicing and equity purchases as they learn how to manage and start to gain ownership of equipment, shares, land, or other farm assets.
For 10 years I served as a mediator with the Farm Debt Mediation Service. I think the service has been quieter in the last few years before COVID, but I suspect with the drought, lost income, and the cash flow crunch on many farms, there may be a need for Farm Debt Mediation. The good news about this program is you get a farm financial planner who helps you create a recovery plan to present at a formal session to your creditors. Again, open, honest communication is the key here to success in finding a solution that all parties can agree to.
The number to call is 1-866-452-5556, or just google Farm Debt Mediation Service.
Reach out to find a fee-for-service financial planner in your area, or consent to work with one over zoom. I’ve written before about Sara McCullough who resides in Kitchener, Ontario specializing as a divorce financial analyst, she also works with folks who plan to stay married.
You may have seen the Producer article in late December 2021 on the great work that Ray Riel does in Regina, you can find him at email@example.com. Carberry’s Forbes Wealth Management and Winnipeg’s Colin Sabourin of Harbourfront Wealth Management are very well versed in what farmers need to succeed.
Many farms this spring are suffering a cash flow crunch. The debt servicing conversation is important, so stop procrastinating and reach out to your lenders to create solutions.
If your money script and attitudes toward debt are very different from your parent’s, then you need to question if you really want to be business partners with folks whose values are not aligned with yours.
You can also find podcasts to challenge your thinking about money. Bruce Sellery, a friend of mine now has a podcast called “Moolala Money Made Simple”.
For those of you struggling with family members who just cannot seem to get a good grip on sound financial habits, check out Dave Ramsey’s Financial Peace University. His methods are unconventional, yet he has had lots of success in transforming people’s pain with debt.
Talk does not cook rice. But it is a start. Behaviours must shift. “Farm families need to embrace financial transparency for the farm books, and their personal balance sheets if they want to be business partners,” says Dick Wittman. I highly recommend his digital farm management binder and templates to get you great tools for farm management.
People often ask me why I am passionate about the work I am called to do as a farm family coach. I have seen strong families make collaborative decisions and enjoy family harmony. I have also experienced deep loss when folks just won’t engage with professional advisors who could have helped create a much more positive succession scenario.
My front door is boring white. After my trip in 2011 to Dublin, Ireland I considered painting it red. “Every front door is beautiful.” When I visit your farm, I hope I find all the generations happily managing the debt. I give you permission to ask for what you truly want to navigate the debt on your farm.
Elaine Froese CSP, CAFA, CHICoach has a team of coaches ready to serve your family to find harmony through understanding. Go here.
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