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

Finacial products from our partners
Property search
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

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

    Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

    Briton pumped up for dream meeting with world No 1
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

    Damien Martyn: 'England are fired up again, just like in 2005...'

    Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
    Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

    Twins have a mountain to climb during Tour of duty

    Yates brothers will target the steepest sections in bid to win a stage in France
    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy