‘My mother is sending money to a young lover’: Barefoot Investor’s advice to a desperate daughter

When your mother is in debt and nearly homeless after sending large amounts of money to an overseas holiday fling, what should you do? Barefoot has some advice.

The number of Aussies visiting Japan in May this year is up a staggering 63 per cent on last year, according to the Japan National Tourism Organization.

“Don’t lick the tray table!” I warned my three-year-old as we boarded the plane to Tokyo.

His bottom lip dropped and he whined, “Are we there yet, Dad?”

“No, we’re still on the runway, mate”, I sighed.

Still, I knew that wedging myself into an economy seat next to germ-boy for the next 10 hours would be well worth it. After all, Japan is the thinking man’s Bali. (In fact, Bali was dethroned as Aussies’ favourite spot for international travel on last year’s Expedia ranking.)

So it’s official: Kuta is cringe … Kyoto is cool.

And the figures back this up: the number of Aussies visiting Japan in May this year is up a staggering 63 per cent on last year, according to the Japan National Tourism Organization (JNTO).

Why?

Well, because for many Aussies Japan is a parallel world:

Everyone is impeccably polite and respectful.

Scott Pape is the Barefoot Investor. Picture: Jason Edwards

Their subway system is cheap, clean, safe and on time (as in, to the second).

Their public toilets are cleaner than mine at home … and they sing when you flush them.

Yet the biggest thing you notice is that food is really cheap. Unlike in Australia, where you have to Afterpay a banana, in Japan we would load up on good-quality gyoza, sandwiches and bao buns from the 7-Eleven for $A3 a pop … or we’d grab a bowl of ramen at a restaurant for less than $A10.

This is a far cry from the go-go 80s when Tokyo was one of the most expensive cities in the world.

Yet with their economy a chopstick away from a recession, and the yen plummeting – it’s now 25 per cent cheaper to visit than since before the bat-flu – Tokyo has actually become a shopper’s paradise (especially given that in most department stores you can shop tax-free simply by showing your passport).

Ring those bloody registers!

This explains why ‘G’day’ to a Japanese shop owner translates to ‘kerching’: Aussie tourists are (per capita) the biggest spenders in Japan, according to the JNTO.

Not that I got to do much shopping.

A few days into our trip, germ-boy predictably came down with a fever … and promptly gave influenza to his mother, sister and two brothers. They couldn’t lift their heads from their futons. So I spent the last week in a hotel room roughly the size of a Kia Carnival – with no windows or natural air – playing doctor Scott.

Sayonara, Tokyo!

Tread Your Own Path!

Tourists taking a boat ride at Suigo Sawara Ayame Park in the city of Katori, Chiba prefecture, north of Tokyo. (Photo by Richard A. Brooks / AFP)

My Mother has a Lover

Hi Scott

My mother has been sending large amounts of money to a holiday fling for the last 14 years. She has almost lost her home, she’s drawn on her super, and I fear she will be in dire straits soon if this continues. It happened like this: in 2010 she met a young Casanova in Egypt, and a holiday fling quickly became a business partnership.

My mother has zero business experience. She’s borrowed against her home to fund some outlandish ideas. She has been back a number of times and has seen where her money has gone – apparently! I’m not sure whether it was the car manufacturing plant or the haute couture fashion house. I wish I was kidding – these are examples of their ‘ventures’. Despite 14 years, hundreds of thousands of dollars and zero return, she’s even more optimistic now.

In reality she is a teacher struggling to find a permanent position because she is past retirement age, is burdened with debts she can no longer afford, and has enough super to keep her until Christmas this year.

And she will not listen to my concerns! I was hoping this was something I could report to the relevant authorities so they can intervene before she loses everything.

Linda

Romance scams are on the rise globally.

Hi Linda

That sounds like one hell of an expensive shag!

Still, you can’t call the cops. From the sounds of it, he’s not doing anything illegal (immoral perhaps, but not illegal). And you’ve tried talking sense to her, but clearly after 14 years that hasn’t worked.

So what can you do?

Well, you need to protect yourself emotionally and financially.

I’d suggest writing a letter to your mum explaining how much you love her and how concerned you are for her financially.

Then detail the likely consequences of her actions. Paint her a picture of what her retirement will look like. How will she service her debts when she’s too old to work?

Understand her debts will die with her: you won’t inherit them … but that also means you won’t inherit any dough from her either. So double down on your Barefoot plan!

I’m Disappointed in You, Barefoot

Scott,

You used to be informative. Now it’s very transparent that you are charging brands to advertise on their behalf. Not happy, Jan.

Jan

Hi Jan

Well I’m not happy with you, Jan.

You are referring to my recent column on the electric blanket I bought.

(I’m just trying to keep people’s beds HOT. So shoot me.)

For the record, all I did was write about a recommendation by CHOICE.

And I’ll have you know that I paid full pud for both the blanket and the CHOICE subscription.

For reasons I still don’t understand, my newspaper editor pays me way too much money to write about irrelevant things like electric blankets. Take it up with him, Jan.

Revenge of the Dollarmite?

Hi Scott

I recently found out that the bank signed up my 18-year-old son for an $8000 credit card. He was so excited to be a grown-up, to have a job making enough to earn spending money, and to cross the line of being an adult by being given a credit card. I don’t for the life of me understand why the banks feel $8000 is a good starting amount for someone who has never had to prove they can pay it back!

Sadly our story ends with me finding out about the credit card via the post when the default notice arrived. In six months my son had spent all the large balance and kept it secret – he is 18 after all – but has no skills to be able to understand the outcome he has created.

We are working with him now to resolve his debt, but it’s clear the banks are setting up young adults for failure by allowing this amount of credit.

Kate

The real danger of getting a credit card when you’re a kid is that you view the available credit balance as your money.

Hi Kate,

I agree with you – eight grand is a lot of credit to start him off with.

Now I’m showing my age, but back in my day the banks had a student package that came with a credit card with a $500 limit. Then they ramped up the limit from there (kind of like a meth dealer does).

The real danger of getting a credit card when you’re a kid (and, post the Covid lockdown, 18 is the new 13) is that they’re effectively teaching him to view his available credit balance as his money. It’s not, of course, but that’s how they can effectively impose a 20 per cent tax on everything he spends, hopefully for the rest of his life.

Yet thankfully your son screwed up … and as a result he was booted out of the brainwashing.

This is a very good thing, Kate.

Please keep the parental helicopter on the helipad and do not bail him out under any circumstances.

This is a life-changing, teachable moment.

First, explain the seriousness of a default notice: the bank could take legal action against him, and he now has a black mark on his credit file.

Second, have him calculate how much the credit card has actually cost him in interest. That’ll make him feel sick. Then jump on ASIC MoneySmart’s website and show him the bank’s plan for that $8000 credit card. Making the minimum payments would take 61 years to pay off and $44,168 in interest.

Finally, when you’ve scared the living bejeezus out of him, have him call the bank and negotiate a payment plan to pay off every last cent of the debt.

Play your cards right and this may just be the best financial thing that ever happens to him.

DISCLAIMER: Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.