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; request a free guide on NISAs from Hargreaves Lansdown

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

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there