Wealth Check: I want my theatre company to prosper
Saturday 14 November 2009
Ellie Simpson, 21, from Oxford, graduated this summer from Queen Mary in London with a First in English and Drama. She is currently living back at home and has a job supervising a bar at her local theatre with the view to pay off her overdraft.
Importantly for Ellie, she is part of a theatre company which is in its early stages and she plans to turn the part-time venture into a professional business. She explains: "You could say that I'm running a business; however, it's currently not-for-profit because all the money we make goes back into the company. I'd like to change this
Salary: £7 an hour as bar supervisor
Savings: £9,000 saved, £3,600 in a NatWest Online ISA
Monthly outgoings: £400 for living expenses, £550 expenditure overall
Debts: Student loan and £2,000 overdraft
Offering advice this week is Aj Somal from Uniec Financial Solutions, Chris Pratt of James Ryan Thornhill and Danny Cox a financial planner from Hargreaves Lansdown...
Ellie's main priority is to repay her overdraft and Chris Pratt says she's right to do so. "Ellie's main concern is to repay her debts and this is a good place to start. I would suggest she focuses on her overdraft, as the interest rate she pays is likely to be a great deal higher than the interest rate she receives on her online savings account."
Aj Somal suggests that she uses the money from her Natwest Online Savings account to clear her overdraft and get back in the black, and Danny Cox echoes this, adding that "the interest rate from the overdraft, plus any fees, is likely to be much higher than the interest she will be receiving on her savings."
Her student debt is less pressing, and Somal advises that she delay repaying it until she is earning an adequate wage from her theatre company.
Ellie's savings are impressive and are described as a "sensible step" by Cox. Somal suggests that she continue to put money aside; however, he warns her to ensure that she is receiving a competitive rate of interest.
Chris Pratt recommends she keep her cash ISA intact but urges her to "keep a close eye on the interest rate. Some banks reduce the interest rate payable on these cash ISAs below that paid on other deposit accounts, thus minimising the overall benefit of them."
Cox suggests that Ellie "shops around" to get the best deal on her savings. "The NatWest Online ISA is paying a pretty good rate at 2 per cent, however others, including the Chesham Building Society and the Newcastle Building Society, are paying 3 per cent," he points out. "Ellie can always transfer her cash ISA to another, better provider, to get a better return."
Additionally he suggests that she set herself a "savings target, a goal to aim at. The amount she can afford to save now may be small, however, getting into the savings habit is important and she can always increase her savings as her earnings improve."
Ultimately Ellie should aim to build her savings, fully using her cash ISA first. This way she can start to repay her student debt as soon as possible because, as Cox explains, "the student debt is low-cost borrowing, however it is still debt that requires repayment."
Ellie plans to be on the property ladder in 15 years, and Cox feels that "she should think about how much money she might need for the deposit for a house or flat. The larger the deposit, the better the mortgage deal, and currently the best rates can only be enjoyed with deposits of 40 per cent of the value of the property or more."
Ellie's theatre company is in its early stages and remains a not-for-profit venture; however she is determined to make it financially viable, and would love to be able to earn a small wage from it in the future. She aims to achieve this within five years. Both Pratt and Cox say she should seek business advice. Chris Pratt believes she should "make use of the local free support on offer from places like Business Link. They will come and talk to you without charge and might even be able to help you with networking ideas, marketing and even grants."
Danny Cox echoes this: "Business expense can generally be offset against profits and advice from a good accountant can literally save thousands of pounds. There are also various returns required, particularly if Ellie has set up a limited company. It would be best for the company to get on a firm footing, even if profits are being reinvested into the business for now. A good relationship with her bank is also important. There are times when small businesses need some flexibility and extra cash flow."
For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email email@example.com
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Video: The official full-length trailer for the Jurassic Park sequel has dropped – two days early
How to get fit in minutes
Money Round-up: Bank fraudsters; free wine; free home improvements; and rip-off extended warranties
How to cut the cost of car insurance: A five-step guide to getting a better deal
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
10 tips for taking out a personal loan
- 1 Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
- 2 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 3 Black Friday 2014: Opening hours for John Lewis, Asda, PC World, GAME and Argos
- 4 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 5 Girl, 7, gets Tesco to remove 'stupid' sign suggesting superheroes are 'for boys'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Revealed: How the world gets rich – from privatising British public services
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
iJobs Money & Business
£Attractive: Citifocus Ltd: High calibre individual with significant product d...
£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...
£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...
£Attractive: Citifocus Ltd: High calibre individual with superior academics an...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens