Wealth Check: 'I never have money left at the end of the month'

Louise Fishleigh has worked in the field of recreation development and event management for British Waterways for nine months. Her boyfriend is buying a property in Crystal Palace, south London, to do up and either sell on or rent. They are thinking about buying a place together, perhaps in a year's time.

Louise Fishleigh has worked in the field of recreation development and event management for British Waterways for nine months. Her boyfriend is buying a property in Crystal Palace, south London, to do up and either sell on or rent. They are thinking about buying a place together, perhaps in a year's time.

She knows that she should probably use her savings to pay off debt but Ms Fishleigh feels that she needs to have something in the bank in case of emergencies, as well as for possible work on her flat.

She also wants to know what is the best way to save money, with a view to buying a property with her boyfriend in about a year.

We put her case to Ben Yearsley at Hargreaves Lansdown, Kevin Tooze at Equal Partners and Anna Sofat at Destini Fiona Price.

LOUISE FISHLEIGH, 31, RECREATION MANAGER

Salary: £25,000.

Education: BA Hons.

Debt: Lloyds TSB Platinum card £2,200 at 0.482%; Egg £900.

Property: Shared mortgage £157,500.

Savings: £3,000 cash Isa with Northern Rock; £1,000 bonds; £2,300 in Nationwide account.

Investments: None.

Pension: Company final salary scheme.

Monthly outgoings: £600 mortgage/bills; £90 travel card; £180 credit card; £40 phone; £60 gym; £50 petrol.

SAVINGS

"Ms Fishleigh's main problem seems to be her inability to save regularly," says Ms Sofat. If she were to keep a record of her spending for three months, she would know where her money is going. She could then set herself a realistic target for savings.

Mr Tooze says that Ms Fishleigh could earn more on her savings. Her Nationwide account's interest rate of 1.55 per cent could be increased to 5.36 per cent by switching to the AA's phone banking service.

For her Isa, Abbey pays 5.35 per cent with no notice. Northern Rock has a competitive, fixed-rate Isa paying 6 per cent if she is able to tie up her money. Mr Yearsley says that Ms Fishleigh should boost her savings, by careful budgeting, if she intends to buy property.

DEBT

Ms Fishleigh has looked for good deals on her credit cards, but the rate is higher than that on her savings. Mr Yearsley suggests that Ms Fishleigh should use her Nationwide savings to pay off debt. She can then divert the money saved to building up her savings again.

Mr Tooze suggests that by using her savings, and being disciplined about her spending, Ms Fishleigh should be able to clear her debts in six months. She should cut up her credit cards and refrain from taking out new ones, however tempting the offers might seem.

Ms Soffat agrees. Although it is tempting to keep cash to hand in case of emergencies, it is not an efficient way to manage money. Ms Fishleigh will have more flexibility if she pays her debts off now.

PENSION

Ms Fishleigh is fortunate that her employer has a relatively generous pension scheme, says Ms Sofat. One option she could explore, is to use money from any previous pension plan to buy extra years in the British Waterways scheme, especially if she plans to stay with the organisation for some time. But she should take professional advice as this is a complex area.

Mr Yearsley points out that by today's standards, Ms Fishleigh's pension is luxurious, and she should continue it.

PROPERTY

Ms Fishleigh has a good rate on her current mortgage, but her property position is complicated because she shares with a friend. Should she want to buy with her partner, she will have to come to an arrangement over releasing equity in her home.

Mr Tooze cautions that there might be penalties for redeeming the joint mortgage, so Ms Fishleigh would need to investigate. She might find it more cost-effective to keep the existing mortgage going, at least until the end of the fixed rate and any penalty period.

Ideally, Ms Fishleigh will have bought her property as a tenant in common with her housemate. This will make it easy to release her share of the equity. If not, she will need legal advice.

In the meantime, she should try to pay off her debts, then build up her savings, so that she has a deposit. She could also look at equity investment, Mr Tooze says, as a way of building up funds for the longer term. She could start by investing as little as £50 a month.

Mr Yearsley, however, says that Ms Fishleigh should delay equity investment until after her next property move, as stock market investments are risky for anyone who might need their funds in a hurry.

Advisers' views are given for guidance only.

* If you would like a financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk. You must be able to be photographed.