Wealth Check: 'All my spare cash goes on shopping. I can never say no'

Camilla Maddern has recently started work at a public relations company. As part of her business studies degree, she took a work placement for a year in London. But this added to both her student loan and credit card debt.

Camilla Maddern has recently started work at a public relations company. As part of her business studies degree, she took a work placement for a year in London. But this added to both her student loan and credit card debt.

Outside work, Ms Maddern enjoys going out with her friends at the weekends, including travelling. She also like to shop and admits that this is where most of her spare cash goes. "I can never say no to anything!" she says.

Ms Maddern would like to move closer to work, as she finds her current commute from her parents' house quite tough. She would also like to know how best to set money aside to own her own property in the future.

We put her case to Matthew Morris at R T financial planners, John Donaldson from Think Positive and Rory Percival at Destini Fiona Price.

CAMILLA MADDERN, 23, PR EXECUTIVE

Education: Business Studies degree from Bristol UWE.

Debt: Around £20,000. £14,000 student loans, £5,000 loan with Egg to clear all credit card debts, paying £150 a month.

Salary: £17,000.

Property: Lives at home.

Savings: None.

Investments: None.

Pension: None.

Monthly outgoings: Train £280. Loan £150. Housekeeping £100. Phone £100. Lunch £30 a week. Going out: varies.

DEBT

Mr Donaldson describes Ms Maddern's situation as "having a mini mortgage around her neck", and points out that this is an all-too-common problem for new graduates.

With the minimum repayments, it would take Ms Maddern a full 22 years and three months to pay off her student loans. To clear the debt in five years would mean paying back £236.25 a month. But as the student loan attracts a low rate of interest, this might not be her highest priority.

Mr Percival points out that Ms Maddern's personal loan is also on quite a good rate of interest - 6.9 per cent - so it is probably not worth switching lenders at this stage. But he cautions that Ms Maddern should take care to make sure she does not increase her debt.

Mr Morris says that Ms Maddern could, however, look to repay her Egg loan early, assuming there are no penalties for doing this.

Paying back an extra £50 a month would cut the term of the loan by 10 months. Paying off another £100 would allow her to clear the loan even more quickly - assuming Ms Maddern can spare the cash.

SPENDING, SAVING AND BUDGETING

Mr Morris calculates that Ms Maddern has around £290 a month available for going out and saving, once her fixed costs are taken into account. If Ms Maddern saves some of that money now, it will put her in a better position when it comes to buying a property.

Mr Donaldson cautions that if Ms Maddern is to improve her financial situation, she will have to say no to impulse purchases and cut down on socialising with her friends; she might even want to consider working some evenings or weekends.

He also says that although it might not be that convenient for Ms Maddern to live at home, her housekeeping is considerably less than any rent she is likely to pay closer to London. For now, that money is best kept for savings or paying off debts.

Mr Percival advises Ms Maddern to undertake a budgeting exercise, because how much she thinks she spends, and how much she is actually spending, might not match.

If Ms Maddern has any money spare, she should look at putting it into a cash Isa. However, even the best rates on the market will be below the interest she is paying on her loan. If her lender will not allow Ms Maddern to increase her payments, putting the money into a high-interest savings account is the next best option.

PROPERTY

Planning ahead for buying a property is certainly sensible, even if Ms Maddern cannot afford to step on to the property ladder now.

To buy a property, Mr Donaldson says that Ms Maddern will need a deposit of five per cent of the property value. She would then be able to borrow three and a half times her salary, currently around £50,000.

In addition, lenders will take her other ongoing loan commitments into account, so her personal loan with Egg will reduce the amount available to buy a house.

Mr Percival says that Ms Maddern should not be too anxious to buy a flat at this stage. Property might become more affordable over the next few years, and her career might also take her to a different part of the country. Renting - or continuing to live at home - is probably the best option at the moment. Ms Maddern can use the money she saves to build up a deposit.

Advisers' views are given for guidance only

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
United States President Barack Obama, right, uses actor Keegan-Michael Key from Key & Peele to play the part of 'Luther, President Obama's anger translator'
video
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

    Day In a Page

    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
    Public relations as 'art'? Surely not

    Confessions of a former PR man

    The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
    Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

    Bill Granger's luxurious sweet treats

    Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
    London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

    The mother of all goodbyes

    Paula Radcliffe's farewell to the London Marathon will be a family affair
    Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

    Steven Naismith: 'We know we must do better'

    The Everton forward explains the reasons behind club's decline this season
    Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

    Michael Calvin's Last Word

    Praise to Wenger for having the courage of his convictions