Helping a Bad Saver - Cosign Account?

[eXc]

Hi All,

I have a friend that is not good with money, after many years of trying to help in various ways, one of the last options I thought of was a savings account where he can't get money out without someone signing with him, and that someone not letting him get money out except for things like rego and insurance.

Last night he actually brought this up as an option.

What is this type of account called? Cosign?

What is the risk for me if I am down as the person to sign? Does it mean I will be on the account, and thus subject to his bad credit rating? Or will I just be a signature?

I don't want to take on his bad credit...

Thanks
Chris

 

[Jamie M]

Hi Chris

I could be wrong but I'd assume you'd have to be the other account owner in order to do that.

Cheers

Jamie

 

[TMNT]

Surely you are over stepping the boundaires of friendshup if your friend simply cant restrain himself from withdrawing cash!

maybe once an account is opened. Hide his bank card?

 

[Jen_PFR]

I agree. Be very careful doing this. You're his friend, not his mother.

 

[Jen_PFR]

Just thought of something constructive. Why doesn't he get X amount from each pay (I assume he's working) sent straight to his super? Surely that's fairly safely locked away then? And no need for inappropriate boundary-crossing which could ruin a friendship.

 

[MTR]

You are a good friend, but anything you do will fail unless your friend is prepared to take responsibility for their actions, there will always be an out unfortunately

 

[Colin Rice]

This is a midset issue and will only be changed via education. Sounds like the pain level is hitting critical mass and change is afoot.

If you get involved I predict you may get burnt and the friendship will be jepordised. The older I get the more I realise that friendships/relationships are true riches in this life.

I would buy your friend some books to assist in renewal of the mind. There are book threads on here if you need help with appropriate choices. Point your friend to forums like this. If they dont respond to your kind gesture then let it be.

The change process can be slow so be patient.

 

[D.T.]

This is a midset issue and will only be changed via education. Sounds like the pain level is hitting critical mass and change is afoot.

If you get involved I predict you may get burnt and the friendship will be jepordised. The older I get the more I realise that friendships/relationships are true riches in this life.

I would buy your friend some books to assist in renewal of the mind. There are book threads on here if you need help with appropriate choices. Point your friend to forums like this. If they dont respond to your kind gesture then let it be.

The change process can be slow so be patient.

Richest man in Babylon comes to mind as matching this topic.
If too lazy to manage money, probably too lazy to read too though.

Best bet might be to encourage them to set up an auto debit of $x per week off to a high interest account , less likely to miss it then.

 

[Terry_w]

Maybe a trust arrangement. The trustee can hold on to their money and release for specific events. This is often done in wills to stop kids blowing their inheritances.

If really bad a tribunal or a court can appoint a financial guardian over the person. This happens for intellectually disabled persons, but I imagine it would be very hard to gain an appointment over someone who is knowingly spending all their money - they are free to spend all they like generally.

 

[Macca]

I wouldn't do it, your friend needs counselling to help them get things under control. Some charities have qualified people to help or they can seek out a professional counsellor.

In the meantime you could help them set up salary deductions so that bills are being met by DD plus an account like a Christmas Club where they can only get the money in December.

The spare cash then is put onto a Debit card for them to live on, hand in all credit cards

 

[EN710]

Has he consider Term Deposit? Use the monthly term and set it to take money from his account whenever the term deposit is renewed.

Or get him to create a high interest savings account on a different bank and automatically set the salary to go to that account. It's not foolproof but at least your friend will need to go with the hassle of transferring the money back to his transaction account on another bank if he wants to access it.

 

[VYBerlinaV8]

Giving advice to a friend is one thing. Having legal control over their finances is another.

I wouldn't touch it.

 

[eXc]

Just thought of something constructive. Why doesn't he get X amount from each pay (I assume he's working) sent straight to his super? Surely that's fairly safely locked away then? And no need for inappropriate boundary-crossing which could ruin a friendship.

He will need the money he is 'saving' to pay for rego etc...so Super won't work.

Surely you are over stepping the boundaires of friendshup if your friend simply cant restrain himself from withdrawing cash!

maybe once an account is opened. Hide his bank card?

It's something he has put forward... Hiding his card...He'd just get it through net banking...although it may work if he doesn't enable net banking, he keeps the pin but i keep the card...

This is a midset issue and will only be changed via education.
The change process can be slow so be patient.

Agreed it is a mindset issue, for him, preventing easy access will assist with that mindset.

Giving advice to a friend is one thing. Having legal control over their finances is another.

I wouldn't touch it.

The idea was just for me to need to be present to get the money out, but it would be 100% his and my name only on it for that reason.





Looks like it may not be worth bothering with, I'll just tell him to do what I always have - start a new account and put $x per week that is only touched for x items.

 

[TMNT]

What about an online account like ing direct where you get no card and you dont tell him the password

 

[Ace in the Hole]

Richest man in Babylon comes to mind as matching this topic.
If too lazy to manage money, probably too lazy to read too though.

Yes, this works, converted my mind completely.
Get him the audio version if he won't read...

Another good way of forced savings is to buy a PPOR or IP, but you generally need a deposit for that, which means you have to save money first.....