Wealth Check: 'I live totally beyond my means'

Since Richard Petrie left college in 1992 owning around £4,000 he has not been able to clear his debts.

Since Richard Petrie left college in 1992 owning around £4,000 he has not been able to clear his debts. He is the first to admit that until about two years ago he had a very poor grip on money and lived totally beyond his means.

Since settling down with his partner, Mr Petrie has really been trying to sort out his finances, but finds that every time he makes progress something crops up that sets everything back. He has no savings and as he has a poor credit rating the only credit that is available is expensive and leads to debt he cannot manage. The birth of his daughter is an additional strain on finances. Mr Petrie's goal is very simple: to get back on his feet financially, be able to have a mortgage and provide security for his family.

We put his case to Colin Jackson at Barronworth, Steve Martell at Benson McGarvey and Ben Yearsley at Hargreaves Lansdown.


Salary: £25,000; partner earns £12,000

Debt: £8,800 owed to mother; £7,300 HSBC managed consolidation loan; £3,200 Citibank loan costing £165 per month; £2,200 First Direct credit card; £1,250 council Tax; £500 disputed debt from a credit card.

Property: Rent for £375 a month

Savings: None

Investments: None

Pension: Company pension from more than one employer

Outgoings, monthly: Rent £375; bills £150. council tax £123; phone, mobile and internet £115; commuting £120; child care £160; leisure £100; food and clothing £250; debt repayment £800


Mr Petrie's problem, as he readily acknowledges, is his debt. His university and subsequent borrowings have spiralled to the point where he has a poor credit rating, and where the need to service the debt means he has little money left at the end of the month to save. This means he has no contingency fund, so if he has any unexpected demands on his finances, this pushes him further into the red.

The panel are united in saying that Mr Petrie's overriding priority is to deal with the debt. But with borrowings coming to almost £20,000, this will not be easy. Mr Martell says Mr Petrie's debt is excessive, compared with his income. His first step should be to try to find as competitive an interest rate as he can for his borrowings.

One of the best options is to take out a credit card with a 0 per cent period on balance transfers. Mr Martell says Mr Petrie should also look at the interest rate on his loan with HSBC, as an alternative personal loan could be substantially cheaper. Liverpool Victoria, for example, has a personal loan at 5.5 per cent. Extending the repayments over a longer period of time, although more expensive, may be the best way to improve his cash flow.

Mr Jackson notes the loan from Mr Petrie's mother is due to be paid off soon. He should use the money he saves from these repayments to tackle his other debts.

Mr Yearsley suggests Mr Petrie should look at consolidating his debts, but stresses that he should take advice. The Citizens Advice Bureau is one option; another is the Consumer Credit Counselling Service ( www.cccs.co.uk). Neither service charges, and will be able to help Mr Petrie find the best way to cut the costs of his debts.


Debt repayments eat up a large proportion of Mr Petrie's income, but he needs to make savings elsewhere too.

Mr Jackson cautions that Mr Petrie's bills for the phone, mobile and internet are high. He should look around for more competitive tariffs. Mr Yearsley says unless Mr Petrie takes action to trim his expenditure he will never get on top of his debts or be in a position to take out a mortgage. He needs to cut out all non-vital expenditure, for the next couple of years.

Mr Martell says if Mr Petrie can move some or all of his debt to cheaper lenders that will free up some money. But as he and his partner spend almost all they earn, they need to budget to avoid building up an overdraft. Mr Martell adds that Mr Petrie should build up some savings for emergencies. One option would be to save the Child Benefit payments, and put them into a high interest account such as a mini-cash Isa.


The state of Mr Petrie's finances means buying a property may be very difficult. Mr Yearsley says Mr Petrie might have to leave this until he has improved his debt position, as right now it will be hard for him to find a lender.

Mr Jackson also says it might be a few years before Mr Petrie can buy, as his poor credit rating is likely to be a barrier.

Mr Martell is a little more optimistic. He says it may be that Mr Petrie can buy a property and have a mortgage that is little more than his current rent. He might also be able to take out a larger loan, and use this to repay his current - and more expensive - debts. Mr Petrie should see a specialist mortgage adviser who can help him find a good deal, and will be able to assess his credit-worthiness.

Advisers' views are given for information 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

Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
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

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power