Anne enjoys budgeting bliss, but her business is stressing her out. What advice would you give her?


“Anne” emailed me last night for two reasons: first, to celebrate the success and stability budgeting with YNAB has brought to her life. Second, to ask for the community’s advice on a very sticky situation with her husband’s job. Take a look:

Hi Mark –

I’m in quite the pickle. We’ve been using YNAB for over a year and it has changed our lives. We’ve paid off a good chunk of debt, saved and gotten our monthly expenses way down. But now we’ve got a major problem with our income.

I’ve discovered that my husband’s father (who owns and runs the family business) has actually been withholding retirement contributions from his paycheck, but using that money for business expenses.

Also, last week my husband had to fill the work truck with gas and the work credit card was declined so he had to use our personal debit card.

And the kicker is his father wasn’t able to make payroll this week, which meant no paycheck for my husband! Thank goodness we have a buffer! The business has about 15 employees and has been going strong for decades. The plan has always been for my husband and his brother to take over someday.

We’ve expressed concern over the financial stability of the business and my father-in-law says not to worry. How long should my husband “hang in there” and hope things turn around?

If the company goes under I can pick up more hours at my job and my husband would qualify for unemployment and I’m sure he’d find another job quickly and we’d be able to keep up with our monthly bills.

I’m so thankful for YNAB in that I know exactly what we need to bring in every month, not to mention where we could easily cut back. And, we have our buffer.

What do I do now? Save, pay down debt, convince my husband to walk away from the family business, punch my father-in-law in the face (okay, maybe violence isn’t the answer)? Hubby comes from a financially illiterate family and any advice would be tremendously appreciated!

Thank you,
“Anne”

Hi Anne –

Your husband may come from a financially illiterate family, but you two are handling your business. Great work! You’ve already pointed it out, but just think how desperate the situation would be if you weren’t living the budgeted life. I’m so relieved to hear your budgeting discipline has left you plenty of options for getting through this sticky situation.

Yes, this is a serious can of worms. I can’t even begin to speak to the family issues involved, so I’ll offer some advice as though it weren’t a family-run business.

If this business weren’t owned by a family member, how would we evaluate the situation?

The owner/manager is stealing from the employee (“borrowed” retirement contributions) and also implicitly requiring the employee to cover business expenses (gas for the truck), and has now missed payroll.

Worst-case scenario this is a criminal situation. Best case scenario, the writing is on the wall: there’s no money.

As you decide whether to stay or go, ask yourself a few questions:

Is the cash crisis due to poor management? Reduction in demand for services? What would turn around the business’s cash crisis? Is the business expecting an influx of new customers? How about a bunch of big receivables that will be paid soon? Has the business experienced and survived similar shortages in the past? Does the owner have a record of repaying money “borrowed” from employees?

In other words, is there any indication things will get better?

Only you can answer, but I take it as a bad sign that the owner of the business is telling you to relax while missing payroll.

If it were me, I’d move on. Mixing family and business is tricky enough in the best circumstances, and these are clearly not the best circumstances. I know the goal was to eventually co-own the business, but it sounds like the business may not be around much longer.

I’d want to protect the family relationships, so I’d leave in the most peaceful way possible. I’d line up a new job, then let the owner (Dad) know there are no hard feelings and I have no expectation of being repaid the money owed. “I’m just moving to a situation that feels more secure for my family right now.”

That’s just my two cents. Again, I’m just happy to hear that budgeting will let you survive and thrive through some really tough circumstances. Good luck!