The story of a father who almost went bankrupt while profitable and borrowed $2,000 from his elementary school son
Hello, I am a bohemian pursuing a lifestyle true to myself!
This year, what could be called one of the three major incidents in our household:
the crisis of profitable bankruptcy.
I quite like this article myself, so I really want you to read it, but to put it simply, various payments overlapped, the salary saved during my overseas assignment ran out, and it is an episode about how difficult the cash flow was.
Regarding this matter, I managed to raise funds, and I thought I had safely avoided the household bankruptcy crisis.
The crisis of profitable bankruptcy recurs!
However...
there was still more to this financial difficulty.
I received a message from my wife during work on a certain weekday.
She said she received a call from the school saying that the tuition payment for our youngest child could not be withdrawn.
Upon receiving the call, I had a bad feeling.
I had completely forgotten that a lump sum would be
automatically withdrawn
in the middle of the month.
Without even checking the account, it was clear that the reason for the failed withdrawal was
insufficient funds.
I had planned to use my credit card for living expenses until payday, so there were only a few hundred dollars in the bank account, so the crisis recurred! (The requested amount was
about $1,500.)
Consideration of fundraising methods
No matter what,
under these circumstances of a weak yen,
I did not want to convert Japanese yen, so I thought about the fundraising method again.
There is actually a
sanctuary that I did not touch in the previous fundraising.
My second son's Singapore stocks!
By the way,
please refer to this article for the background on how my second son started investing in Singapore.
(This article is also one of my favorites, and it describes a system in our home that I strongly recommend for financial education.)
The stocks my second son held and their market value at the time.
Keppel approx. $10 x 100 shares = $1,000
Singapore Airlines approx. $6.3 x 100 shares = $630
If I sell these, I can make the payment!
Dialogue with my second son
Although the father transferred the funds for the stocks the second son holds,
the ownership rights belong to the second son.
It would not be impossible to secretly sell them without the second son knowing and then quietly buy back the stocks once the salary comes in.
However, that would not be fair to the second son.
Therefore, I decided to obtain the second son's consent by providing a solid, rational explanation.
These are the key points for talking with him.
Since I am borrowing money from my second son for two weeks, I need to pay interest.
I will clearly explain the concept of interest and how much is being borrowed and returned.
The decision-making on whether or not the second son lends money to his father will be entirely up to him.
So, I explained the following to my second son, including the concept of interest.
“Did you know that when you deposit money in a bank, there is a bonus called
interest?”
Naturally, the second son does not have that knowledge.
“If you have money now, you could buy stocks, and if the stock price goes up during that time, your money might increase, right? That is why, usually, when you lend 100 yen, you return it with interest added to the 100 yen.”
“This interest rate varies by country. Shall we ask ChatGPT what the interest rate in Singapore is?”
Since the calculation is difficult, I didn't teach him the details, but if you calculate
$2,000 at 4% interest, compounded over 14 days, it comes out to roughly
$2,003.(Exactly like asset securitization or factoring!)
I explained this to my second son,
“If you sell your stocks now and lend your father $2,000, I will return it as $2,003 in about two weeks when my salary comes in. How about it?”
Three dollars to a child. It is by no means a small amount of money, and the second son grins.
And then,
“Okay!”
I decided and answered immediately.
Completion of stock sale and bond liquidation
With the deal closed,
I sold the stocks on behalf of my second son the very next day.
(By the way, under Japanese law, a contract is valid even if it is verbal.)
Keppel: $10.08 x 100 shares = $1,008
Singapore Airlines: $6.31 x 100 shares = $631
Including my second son's cash, I withdrew $2,000 from the bank account and completed the payment for educational expenses on the same day.
Once again, I managed to avoid bankruptcy while profitable!
Thank you, my second son!
When my salary is deposited at the end of the month,
I must pay back $2,003 with interest.
It is by no means a good example, but
practical experience is the best way to learn financial education rather than studying from textbooks.
It was never intentional, but
as a result, it became a good opportunity and experience for my second son's financial education.
Even if he doesn't understand the details now, I just hope that in the future,
it will become a memory and an episode that will trigger his interest in finance.
And
I must reflect on this myself.
Money and trust are two sides of the same coin.
To ensure that a similar financial crisis does not recur in the future,
I will not neglect the management of household finances and expenses.
Bonus
I would also appreciate it if you could read
the trilogy (plus an extra edition) of my second son's investment performance that I wrote last month.
いいなと思ったら応援しよう！
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