Wealth Check: 'How can I save when I have so many debts to pay off?'

Benjamin Francis, 23, from Brighton is a recent graduate with significant debts and no savings. He is worried because he has no financial buffer, but struggles to save anything. "I am concerned that I have no savings set aside for a rainy day," he says. "Especially in the current economic climate.

"I want to save a deposit to rent a flat in London. But I pay considerable sums to commute to work, and when electricity or water bills come in, I have to borrow the money or wait for my next pay day."

Case notes

Benjamin Francis, 23, Brighton
Income: Benjamin earns around £25,000 a year
Monthly spending: Benjamin's £1,400 worth of outgoings include rent, commuting, utilities, council tax, debt repayment and pension contributions
Debts: Benjamin has £4,000 on a credit card; a £1,750 overdraft, £2,000 on a car loan; and around £500 on store cards
Mortgage: £0
Savings: shares worth £1,500
Pension: £25 a month

Three independent financial advisers offer Benjamin guidance this week: Jason Witcombe of Evolve Financial Planning; Ajmer Somal of Positive Solutions; and Raj Shah of Simpli Independent.



Debt & Expenses

With over £8,000 in unsecured debts on credit cards, store cards, overdrafts and car loans, Benjamin needs to cut down his borrowing before he can start saving, the advisers agree.

His budget is very tight, with little left over at the end of the month to save, but Jason Witcombe believes he can still cut costs. "Benjamin needs to have a good look at his expenses to see if there are any items that could be cut out," he says. "He could spend almost nothing on his phone, for example, by receiving rather than making calls, and by using email." He could also consider cheaper accommodation, cancelling any unnecessary direct debits, and shopping around to reduce his utility bills, ploughing the extra cash into paying off debts.

He should prioritise paying off his most expensive debts first. "Benjamin should try to clear his overdraft, credit and store cards first, as these will charge the highest rate of interest," Ajmer Somal advises, adding that he may even wish to give back his car to save on the loan.

"Benjamin unsuccessfully tried to switch his total credit-card debt on to a 0 per cent-interest deal, but he should be able to move at least some of it on to such a deal," adds Raj Shah.

Once Benjamin moves to London, he can reduce the £370 he pays to commute, which costs him almost a quarter of his net income, Witcombe says. "But until he begins to cut down his debts, he won't be able to move and save more," he adds.



Savings & Investments

Once Benjamin's debts are more manageable, he can save for the deposit and financial security. "He should consider saving his extra disposable income in a cash ISA," suggests Somal. "One he can contribute to monthly, and thus build up a lump sum."

Benjamin has also built up a portfolio of individual shares worth around £1,500, mostly due to employee schemes, but the advisers believe they are not appropriate for his current situation. "Unless Benjamin is prepared to put in the time and effort to research them, investing in individual shares is a big risk for someone who is risk averse," Witcombe warns. "They are a luxury he can't afford to keep and he should sell them to help pay off debts."



Pension

Benjamin puts £25 into a pension scheme every month, but by contributing to his employer's scheme he could double his money. "He should join his employer's pension scheme as it offers employer contributions matching his own savings every month," says Somal.

All the advisers also recommend that Benjamin looks into his employer's long-term sick pay scheme to find out if he is eligible.

To find an independent financial adviser in your area, visit www.unbiased.co.uk

For a free financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS; or email cash@independent.co.uk

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

PROMOTED VIDEO
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: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Recruitment Genius: Outbound Sales Executive - OTE £25,000

    £16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

    £45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

    Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

    £35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Day In a Page

    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project
    Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

    Diana Krall interview

    The jazz singer on being friends with Elton John, outer space and skiing in Dubai
    Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

    Pinstriped for action

    A glimpse of what the very rich man will be wearing this winter
    Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

    Russell T Davies & Ben Cook: How we met

    'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
    Bill Granger recipes: Our chef serves up his favourite Japanese dishes

    Bill Granger's Japanese recipes

    Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
    Michael Calvin: How we need more Eric Cantonas to knock some sense into us

    Michael Calvin's Last Word

    How we need more Eric Cantonas to knock some sense into us