- August 12, 2023
- Posted by: legaleseblogger
- Category: Related News
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Title: Exploring the Option of Utilizing an AI Legalese Decoder: A Solution to Weigh the Risks and Benefits of an Unconventional Financial Decision
Introduction:
At the age of 15, I find myself in a unique position – having worked two part-time jobs since early January 2023. As a result of not having immediate spending needs, I have made a decision to save all of my income in order to accumulate a deposit for a future house. Currently, I have been depositing my earnings, which amount to approximately $16,000 per year, into a CommBank saver account. With an attractive interest rate of 4.75%, this seems like a financially sound plan. However, my father has recently presented an intriguing proposal. He suggests that I allocate 80-90% of my income into his offset account, potentially reducing the amount of interest he would have to pay. In return, I would be able to keep the portion I contribute, without compounding interest, and continue residing at home until I am financially stable enough to purchase my own house. This proposition has left me contemplating whether to accept my father’s offer, or if it is a decision with potential drawbacks.
Exploring the Conventional Approach:
Before delving into the alternative option provided by my father, let us consider the conventional path I have been following. Placing my income into the CommBank saver account not only ensures my savings are secured but also allows me to earn 4.75% interest. This approach aligns with traditional financial wisdom, providing a steady, predictable growth in my savings over time. It allows me to control my finances independently and offers flexibility in terms of when I choose to move out and purchase my own house. However, this approach may not be optimal, as interest rates can fluctuate and 4.75% may not be the most competitive rate in the future.
The Proposition and its Advantages:
Now, let us examine the proposal suggested by my father. By redirecting 80-90% of my income into his offset account, the primary goal is to reduce the amount of interest he would have to pay. Given the current interest rates, this potential saving could be substantial. In return, I would be allowed to retain the portion of my income that I contribute without factoring in compound interest. This arrangement offers the advantage of allowing me to continue living at home, providing stability and security while I work towards achieving financial stability to purchase a house. This offer may be especially appealing if I anticipate a longer timeline required to save for a deposit or if I am uncertain about the stability of my income in the future.
Reaching a Decision with AI Legalese Decoder Assistance:
While the proposition presented by my father holds potential benefits, it is crucial to evaluate its legal implications and associated risks. In such situations, an AI Legalese Decoder can play a pivotal role in analyzing and breaking down the complex legal terms, conditions, and potential pitfalls that may exist within such an arrangement. This AI-powered tool can assist in comprehending the nuances of the proposal, including obligations, rights, and any financial or legal consequences involved.
By utilizing the AI Legalese Decoder, I will be able to gain valuable insights into the intricacies of this proposed agreement and make an informed decision. The Decoder can decipher the legal terms within the agreement, assisting me in understanding the potential long-term impact, identifying any potential loopholes, and highlighting any clauses that may require amendment or clarification.
Conclusion:
In conclusion, the idea of leveraging my father’s offset account to minimize his interest payments in exchange for financial stability and a longer stay at home is certainly an interesting proposition. However, it is essential to approach such arrangements with caution and thorough understanding. Employing an AI Legalese Decoder can serve as a valuable tool in evaluating the risks and benefits associated with this alternative financial choice. By harnessing the power of AI, I can make a well-informed decision that aligns with my future goals and ensures legal clarity and protection in any agreement entered into.
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****** just grabbed a
Just to offer a different perspective from most of the comments: After getting my first job at 15 my dad asked to do the same. I agreed and from then on, I put my all savings from my part time jobs, scholarships, etc in my dadÔÇÖs offset. After graduating uni, getting a full time job and moving out, I continued to give my dad 50% of my salary for 2 years. All together I had put in about $80,000 between the age of 15 and 22. My family wasnÔÇÖt well off but they still did everything to give me the best they could, so it was my own way of helping them out. I should also mention that IÔÇÖve always been very close to my dad and had complete trust in him not actually spending that money. I recently bought my own place and my dad gave the $80k back to me for a down payment. (Now I keep my savings in my own offset!)
If you trust your dad to be responsible with your money I donÔÇÖt see why not. ItÔÇÖs still your money at the end of the day. Perhaps you could propose that he pay you whatever amount of interest he saves, if that matters to you.
In this thread people from emotionally healthy families: ÔÇ£this seems fineÔÇØ.
Everyone else: ÔÇ£are you crazy?ÔÇØ
By the way, legally, should he refuse to return your money, it’s highly unlikely that you’ll have any legal recourse. Courts aren’t super keen on enforcing undocumented loans between family members.
Suggesting this to my own 15yo is unfathomable.
The difference saving between your 4.75% and the probably 6ish your dad is paying would be negligible over the year. But use your own judgement, maybe your dad is struggling and needs help, maybe hes just wants money, thats something you should think about.
That seems a strange arrangement to offer to a 15-year-old.
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So you move from your 4.75% savings account to his (presumably) 6% mortgage offset, but he pockets the 6%, which is $960/yr and in return he “lets” you stay at home.
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But… you’re 15, you already get to stay at home for free, that’s like the one advantage of being a kid. You shouldn’t be charged anything at all until you’re 18. When I turned 18 I paid a small amount of rent, but it certainly wasn’t market rates, nowhere near.
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It’s perfectly reasonable for your dad to ask for some rent after 18, but it might be unsafe to hand over control of your entire savings. You’re doing amazingly well to save up so much at such a young age, and unfortunately you just never know what adults might do even if you least suspect it: gambling, alcoholism, drugs.
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Maybe explain to your dad that you just really love holding on to money in your own account and watching it grow and that brings you more satisfaction, but that you’d be very happy to pay rent when you turn 18.
The offset saving on $15k is minimal – not substantial. ItÔÇÖs perhaps $800 a year at the current rate.
Not sure what the OP gets out of this deal a part from risk. They donÔÇÖt even get any interest in the amount they lend to their parents. So one side basically gets all the upside.
Objectively this is a bad deal and poor form by the parent
OP far better off investing that in low cost index fund until ready to buy a house
Nah, your money is your money. Keep it in savings and see it grow. Once you’re done with school, and working, just pay him a rent.
You are 15, so he has a duty to house you. At this stage you would be better off accruing the money in your own bank account and get interest. Alternatively, you could ask you dad to pay you interest. It seems a bit stingy to cheat a child out of a little bit of money.
When you finish school, you will have to decide where you want to work/study. At that stage, you need to work out if you still want to live at home. The “deal” shouldn’t be considered until then imo.
Don’t lend money to family and friends that you can’t afford to lose.
If you really want to help, then pick an amount that you are ok to lose.
Consider it a bonus if it is ever repaid.
No, no no. You need access to your money. This poorly affects you, you have no access to the money, no compounding interest and no say if he needs it if times get tough. And once you transfer it to him, itÔÇÖs not yours anymore.
I know heÔÇÖs your dad. But IÔÇÖve seen this happen between family before.
This is really dependent on the family relationship you have, and what sort of person your dad is. I see so many terrible stories on reddit about families who fight over money etc. But not all families are like that.
Personally, there was a time in my life I was first earning money and had no need for alot of it. It was doing crap all in a savings acc. I offered to give it to my parents to help pay off their mortgage faster and save interest. I dont even know exactly how many thousands of dollars I gave them over about a 2 year period.
2 years later I wanted to buy a place. I had some savings for 10% but my parents wanted me to put down a larger deposit to help reduce my loan amount so they gave me a big chunk for my deposit. It was probably more than what I had given them.
I did this with my dad when I was younger but I got a return on my money, that’s what I take issue with, you are giving your dad an interest free loan which is a pretty poor thing to do to your 15 yr old daughter. What life lesson is he teaching you here? Even your family can screw you……I guess that’s a good lesson the learn!
As someone who was thoroughly blindsided by a parent, absolutely **do not** do this. Parents like anyone can change and are flawed human beings. Just one aspect of getting that money back depends entirely on where your relationship lies in x years. There are things that could effect that relationship that might not even have begun.
The truth is that **if** youÔÇÖre never going to see that money again, itÔÇÖs not likely that youÔÇÖd have enough information right now to know. ItÔÇÖs a significant risk for non guaranteed reward (also rather vague?) that rests on an informal and rather unenforceable understanding. Remember that you are 15, they have significantly more power over you in this arrangement. The more they try to push you into it, the faster you should run. *It may or may not be well natured but itÔÇÖs just not worth the risk, and what is well natured today may not be tomorrow.*
ItÔÇÖs probably much safer, and important for your own growth and independence to maintain complete control of your own finances, wether you decide to invest a little bit or keep it in a HISA. If youÔÇÖre worried about impulse control or spending then go for term deposits. ItÔÇÖs very important to stay focussed about your end goal.
If it is a well natured gesture, your father should be equally encouraging for you to these things. ItÔÇÖs important in life to identify financial risk where it isnÔÇÖt always obvious. Even putting money in a HISA or a term deposit, although we often pretend it is, isnÔÇÖt completely risk free. Getting an extra 1-2% interest, paid to someone else, by relegating complete control of that money to them is very high risk.
There will be times in your life when you will be able to loan money to your friends and family in need or otherwise. Just trust me being 15 isnÔÇÖt one of them.
I can’t believe a father has the audacity to even consider this. He has some serious work to do….
That seems pretty poor form by your father.
Tell him no thanks. $16k a year until you are 19 and then you find a full-time job, let’s just say for $50k a year. Once you are 23 you ask your money back, your dad will have to give you more than a quarter million dollars on the spot. Once the house is paid off he could discharge the mortgage, if this happens before you get back your money that money will be gone and there will be no legal way to trace it back to you.
I’d say keep it yourself and pay rent when you get older. Your Dad might mean well but these things can get complicated. Keep it simple, keep your control.
Just want to say well done for being so mature at 15, and congrats on starting your financial journey. IÔÇÖm a big believer in the donÔÇÖt do it camp – but I come from a very dysfunctional family 🙂 as others have said itÔÇÖs not going to make that much difference for his offset. Maybe have another chat with him? But also IÔÇÖm not loving the whole you get to live there free as the trade off when youÔÇÖre 15. Unless of course itÔÇÖs just poorly worded and he means later on when youÔÇÖve left school etc (edit – too early in the am for me to type)
One other thing to keep in mind.. if your dad were to pass away unexpectedly (heaven forbid but things happen) you would not be able to access that money until after probate, if at all. I donÔÇÖt see anything inherently wrong with the proposal if you trust your dad but there are risks you should be aware of. On the other hand, congrats on saving so much! ThatÔÇÖs an awesome effort
Good on you for starting your house deposit so early!
When I was saving, I used [term deposits](https://www.canstar.com.au/term-deposits/highest-term-deposit-rates/) to get better interest on my money (which I would roll over every 12 months) and also to lock it away so I couldn’t spend it. Every $10k would immediately be invested. The interest rates are lower than what your dad would save if you gave him the money to hold in his offset, but at least your savings would be earning you *some* money. I don’t think it’s fair of your dad to ask to hold your money and deny you any interest.
>Should I take my dad up on this offer
depends, is your dad a straight person?
if yes, then he issues you an IOU for every amount you give him
when you are ready to leave, cash in your IOUs
if he doesnt pay, lawyer up.
Man I hate it when parents try to take advantage of their kids
Is the alternative that he’s going to charge you board or rent for continuing to living there?
I see a lot of responses about numbers and a lot of responses with opinions based on trust of your dad, but there’s something I don’t see: Your dad brought you into the world. You are his responsibility. He doesn’t get to spin it like you owe him something.
I wonder how he framed this proposition.
>and in return get to stay at home until I’m financially stable to buy a house.
Is he suggesting that if you weren’t to take up his offer then he’d be a good dad to kick you out at 18? We don’t know your relationship with him but I’m annoyed that he wants to take advantage of you. (Others have commented on the financial down sides of putting the money in his offset account.)
I lent money to my dad when I was 22. It ended up creating tension for a while when he couldn’t pay it back. He was never good with reigning in his spending enough.
ItÔÇÖs not going to make enough of a difference to the mortgage, I donÔÇÖt think.
You should invest it high savings or ETF.
Compound interest is going to do wonders for you.
You’re 15 and your dad is trying to make deals with you. He should just be educating you with the basics first.
IÔÇÖve done the same and it was perfectly fine, my dad is a great person with no reason not to trust him and all worked out fine.
Later, when he got some inheritance from his dad, he gave me a huge amount to leave in my offset account as he was mortgage free by that stage. ItÔÇÖs still his money but itÔÇÖs in my offset account
No reason not to do this if you trust each other BUT speak to a broker before you want to get a loan (in five years time) to find out how best to move forward
You might need to take your savings back from dad Sox months or 12 months before applying for a loan so it is considered real savings and not ÔÇÿdad putting money in her accountÔÇÖ
Also make sure this is all documented somewhere and other siblings know about it so if something happens, like your dad passes away and the house is sold, you get your money back before the estate is divided up
If you have siblings and something happens to him (eg accident) and another sibling is power of attorney or Executor, it could get messy. Keep detailed records of all the transactions and write down anything that was agreed.
Every month since both my kids were born IÔÇÖve put aside $100 a month each into an account for them so that when they are old enough they can buy their first car, put towards a home deposit, wedding etc. in the beginning i kept them in high interest savings accounts but once we bought a house I have changed both their accounts to offset accounts. Slightly different scenario as they havenÔÇÖt earned this money themselves but weÔÇÖre benefitting roughly $300 a month in saved interest
It’s not a bad idea provided your Dad is good with money and he can show you the total thats in the offset when requested.
Make sure everything is documented with receipts and create a ledger. Also write up a contract that you are transfering the money to him to hold for safe keeping but can withdraw funds at anytime yiu deem necessary. Also see if he will go guarantor on a house when you go to purchase.
With the arrangement your father is offering I assume hes classing the interest hes saving in the offset as board. Other option is to possibly pay board where you wont get that money back.
When I was 16 I paid $80 in todays value for board. Also paid for internet (early 2000’s and mum didn’t have it), a pc (lease to own), any food outside of what was provided, Fuel money to go out and a mobile phone.
Those saying your parents should be providing accommodation are legally correct. But, in my personal experience, I came from a low socio-economic family where parents divorced. If my memory is correct, when I turned 16 my mum stopped receiving centrelink benefits for me and I started receiving Abstudy, and at 17 started part time work. She would have struggled more without the small amount of board I paid.
This arrangement set me up with decent financial literacy going into adult hood.
No. Keep your money separate and invest it yourself. You never know whatÔÇÖs going to happen.
Kids shouldnÔÇÖt be paying to live at home.
No. Keep it separate. If you want to help, good on you, but offer to pay a rent and have a written agreement on that (not even a legally binding one, but something you can sit down, discuss, and agree too).
I know everyone has shared different ideas for and against.
No one knows your relationship with your dad more than you, so no one can make that choice but you.
Realistically the offset won’t be much for your dad(yes it can add up) compared to increased savings for you at the beginning of your working life.(compounded over your life time or at least till you get a mortgage)
I’d keep saving the way you are.
In fact I’d look as the bank SA incentive saver. 5% (5.1 for first 3 months, woo hoo .1% bonus /s)
You only have to deposit into savings at least 1c a month (once you’re 21, it will be minimum $50)
https://www.banksa.com.au/personal/bank-accounts/savings-accounts/incentive-saver
Better than the commbank.
Or review here
https://docs.google.com/spreadsheets/u/0/d/145iM6uuFS9m-Rul65–eFJQq_Au7Z_BA4_CwkYwu2DI/htmlview#
It has higher % savings options but you will need to check the T&Cs
Highest is ME bank 5.65% interest. Minimum $2000 account and up to $250,000. This is close to what your dads loan would be (commbank 6.62% comparison homeloan). So there would be little difference except you would get the interest as opposed to your dad getting the interest.
I found it hard to follow exactly what you’re saying. Is this right?
You’re going to store your money in your dad’s offset. When you need the money, you’ll collect it from him and he’s going to keep all the interest he saved, as ‘rent’ paid to him by you.
Personally I think it’s a bit harsh to charge a 15 year old board, but maybe you feel like you would like to contribute and that’s the point.
Have you considered doing the same thing but rather than ‘no interest’, you collect your money back with 5% interest? Then he gets the difference so it’s a win/win. I did this with my family for years (I wasn’t even living with them).
I lend my parents all my savings when I was around 20 to help them with the offset.
They agreed to match my bank savings interest which was less than the interest they had for their mortgage.
My money was just sitting there anyway, why not help our the family.
While you’re under 18, keep the money in your savings account. Once you turn 18, it may be a nice thing to do to help your dad save on his interest. When I moved back home with family during COVID, I started saving for a deposit and sent the savings to my parents’ offset, and we split the difference of the current HISA rates at the time (they were low, under 3%) and parent’s mortgage (something like 6%), so it was a small little win-win for both of us. But in your case, there’s not much upside to you, and while you’re a minor you shouldn’t have to be losing on the interest IMO.