Wealth Check: 'I want to pay off my debts, train as a healer – and go on holidays'
Saturday 02 May 2009
Linda Rostron, 44, works at the Houses of Parliament as a computer operator. Over the years she has built up a number of debts and wants to clear these, without giving up all her luxuries. Linda eventually hopes to train as an alternative therapist to boost her income but is finding training courses prohibitively expensive.
"I want to manage my personal debt while still being able to enjoy holidays. I also want to fund training to become a self-employed healer." In time Linda may also become a full-time carer to her elderly mother.
Salary: Linda earns £24,000 a year as a computer systems operator.
Monthly outgoings: £850 on rent, bills, food and essentials, £30 on holidays, £30 to charity.
Debt: Linda owes £24,000-£25,000 on personal loan and credit card debts.
Savings and investments: Linda saves £60 a month. She has £400 in an ISA, £100 in a saver account, £100 with NS&I and £200 worth of Premium Bonds.
Advice this week is given by independent financial advisers Danny Cox of Hargreaves Lansdown, Adrian Lowcock of BestInvest and David Brunning of Brunning Newman Houghton...
All three experts agree that before Linda can seriously think about saving or training courses she must clear her debts.
Lowcock says Linda should review her debts with her bank manager as low- or interest-free rates will be coming to an end. David Brunning agrees and says the credit card debts will be particularly expensive.
"Interest rates are going up. Linda needs to seek advice on whether she can get lower interest rates on some or all of her loans. She has been switching her credit cards around to chase the 0 per cent interest rates, which is good, but offers like this are drying up," Brunning says.
Cox notes that Linda is only making the minimum monthly payments on her credit card debts. He says: "This means almost all the money she repays a month is wasted on interest".
Brunning advises Linda to review her non-essential monthly outgoings.
"Could the £360 she gives to charity each year be better put towards repaying her debts? It's not popular, but tough times call for tough choices. Linda needs to prioritise what she needs to spend on debt repayment," Brunning says.
He adds that Linda is paying payment protection premiums on some of her credit cards, which is likely to be the most expensive way of obtaining protection. "Check the terms, and then look around the market or take independent advice. Payment protection can be valuable, but make sure you are getting value for money," Brunning says.
Lowcock adds that, as a single person with no dependants, the life assurance Linda is paying to cover her loans is unnecessary. Brunning agrees: "Concentrate on repaying the debt, not buying additional life assurance."
Cox says Linda needs to use the money she is saving to pay off her credit card debt. Lowcock says it is good Linda has savings accounts to fund her holidays but advises she move more of her spare monthly money to her ISA. "A monthly standing order would be a good way to do this," he says. Brunning says: "Linda needs to build up and set aside at least three months' household spending as an emergency reserve. Having money to meet three months' worth of bills could provide a lot of security. A cash ISA would be ideal for this."
Linda hopes to retire at 60. She has a Civil Service final salary pension scheme which Cox says is "one of the best" available. He adds: "Therefore, she does not need to worry about pensions and retirement planning for now."
Linda wants to fund a training course to become an alternative therapist but cannot afford the expensive fees.
Brunning says that setting aside money for expensive professional training will not help the more pressing concern of Linda's debt repayment.
He advises her to train through evening classes, which would be cheaper but still effective. "She could also contact healers already practising to see if any would offer training in exchange for her IT skills," Brunning says.
Lowcock says Linda should seek assistance from the Citizens Advice Bureau and look into the government-run New Deal 25 plus for people over 25 who want to train.
"Linda should also speak to her bank about a business loan, however she will need a detailed business plan for them to approve any loan as they do see these as high risk," Lowcock says.
For a free financial check-up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS; or email wealthcheck@ independent.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Questions of Cash: Bupa costs bore no relation to what I'd been quoted
Bargain Hunter: Getting your hands on these baby goodies is child's play
Time is running out for holiday home tax relief
Problem gambling: Amid heavy advertising and a surge in remote sports betting, more and more 16 to 24-year-olds are now seen as 'at risk'
The Cyprus dream becomes a nightmare
- 1 Secret Cinema: Why were Back to the Future screenings cancelled?
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
- 5 Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
iJobs Money & Business
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...
£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...
£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...
£30000 - £45000 per annum: Harrington Starr: A Global Financial Service Organi...
Day In a Page
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
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000