Wealth Check: Plight of the part-time singer with no security

Lecturer finds her work intellectually rewarding, but she cannot make enough money to buy herself a small home after 20 working years
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Amanda Tatton is becoming increasingly frustrated with her job as a part-time lecturer. Although she derives satisfac-tion from the work, she feels people on part-time contracts are ill-used by the Government. "Further education is run by businessmen, people who seem to have little respect for teaching," she says. "It's rewarding work, and that's why people like me do it, but the pay and conditions are poor."

Ms Tatton, 43, is a psychology lecturer at the People's College in Nottingham. She teaches A-level students and women returning to education. "I enjoy teaching mature students," she says. "Those classes are the most rewarding."

She wants a permanent contract but the college have not offered one. She claims benefits in August and September when there is no work. Last year, she also earned £1,500 teaching English to foreign students.

Ms Tatton is a singer and occasionally performs at small gigs in local clubs. "I mostly do jazz, but Brazilian stuff too." She has a singing student and makes £600 a year from her music. She drives a Volkswagen Polo E-reg to work, costing £40 a month in petrol and £414 in insurance and tax a year.

Ms Tatton is living at a friend's house in Sherwood, Nottingham, paying £25 a week rent. "It's temporary," she says. "I'd like the security of tenure that buying my own place would bring but I can't see how it's possible on my salary." She wants to know more about buy-with-a-friend mortgages and what home loans are appropriate for part-time workers.

"I'm unable to afford the £80,000 I'd need to borrow for a house despite working in the public sector for the past 20 years," she says. Her only pension provision dates from her time in mental health services. She contributed £3,000 over three years.

Ms Tatton wants to know the best way for part-time workers to save. She has a £12,000 loan from Lloyds and a £1,500 credit card debt."What would be the best approach to streamlining my finances?" she asks. "I'd also like to know the most cost-effective bank account and credit card."

We asked Anna Bowes, savings and investments manager of Chase de Vere Investments in Bath, Mark Dampier, head of research at Hargreaves Lansdown in Bristol, Toni Chalmers, of Finance for Women at Millfield, Cambridgeshire, and Juliet Schooling, of Chelsea Financial Services in London.

AMANDA TATTON, PART-TIME PSYCHOLOGY LECTURER AND MUSICIAN

Age: 43

Status: Single;

Occupation: Part-time psychology lecturer and musician;

Education: Three A-levels; BA in psychology; PGCE;

Motoring: Volkswagen Polo E-reg;

Debts: £12,000 loan from Lloyds; £1,500 debt on credit card;

Salary: (Per year) £13,800 gross from further education work; £1,500 net from teaching English to foreign students; £600 from music; £800 from benefits;

Savings: None;

Pension: Small pension from three years working in mental health sector;

Stocks and shares: None;

Rent: staying with a friend in Nottingham for £25 a week;

Outgoings: (Per month) Loan £251.99; bank charge £8; rent £100; council tax £50; credit card £35; gym £32; petrol £40; cash £200 (total: £722.77);

Car finance: insurance £242 a year; tax £172.

Solution 1: Property

Ms Schooling says purchasing a property jointly poses difficulties. It is important to establish at the outset a minimum holding period for the property. Should one party wish to sell within a year it could result in financial loss, because the rise in property value may not outweigh the costs involved. There are two forms of joint ownership: tenancy in common and joint tenancy. Ms Tatton should consult her solicitor to find the most appropriate.

Mr Dampier says if Ms Tatton should opt for "tenants in common". This means the house can be divided into any proportion. It also means the property passes to a person's estate rather than their chosen house-mate.

Ms Chalmers says if Ms Tatton considers purchasing a property with someone else she must have a solicitor draw up a trust deed, a legal agreement detailing the ownership split.

Solution 2: Mortgage

Ms Bowes says Ms Tatton needs to pay off some debt before she even considers buying a property. She should look at other costs involved in buying. If the property costs more than £60,000 but under £250,000, stamp duty is 1 per cent. Valuation costs will be £250. Legal fees will be £500 to £600, administration £300. There may well be other expenses too, such as removals and furnishings. Ms Chalmers says self-certification mortgages are designed for self-employed and contract workers. Most mortgages require proof of stable income from employment, but self-certification mortgages are more flexible. Details of income are required but no proof is needed.

A conventional shared-ownership scheme means you buy part of your home, usually 50 per cent, with the option to "staircase" up to full ownership. If 100 per cent staircasing is not allowed it is more difficult to get a mortgage, this needs to be checked with a housing association. The purchase of these shares is through a shared ownership mortgage. The schemes are administered by housing associations. Many will accept only first-time buyers, and d some offer 100 per cent mortgages on shared ownership schemes.

Ms Schooling says a self-certification mortgage will require a deposit. the maximum she will be able to borrow is 3.5 times earnings. And the loan she already has will reduce her borrowing power.

Solution 3: Expenditure

Ms Chalmers says Ms Tatton should review her loan with Lloyds to see if the APR interest rate is competitive. If not, she should try to renegotiate a lower one. If this is not possible she should transfer the total balance taking into account there may be redemption penalties to a cheaper personal loan. Her monthly bank charges seem high at £8 per month. She should ask her existing bank if they offer an account with no monthly standing charge. If not, she should open a current account with another bank or building society. For a current account with a higher interest rate, Northern Rock offers an instant access one with a gross interest rate of 4.10 per cent.

Mr Dampier says Ms Tatton should move her credit card to one that offers no interest rate for at least the first six months, such as Egg or Morgan Stanley. She should use this time to pay off the card.

Ms Schooling recommends that Ms Tatton keeps a close eye on all her outgoings. Often writing down every single expenditure, even small ones, can help highlight unnecessary purchases.

Solution 4: Savings

Ms Bowes says Ms Tatton must start to save into a pension or she will have to survive on the state pension, which will not be pleasant. She does still have perhaps 20 years to build a decent pension fund. She can invest up to £3,600 a year (£2,808 net) in a stakeholder pension.

Ms Schooling says Ms Tatton must start a regular saving routine and £250 a month could be put aside. She should set up a direct debit at the beginning of the month into a mini-cash Isa such as Northern Rock, paying 4.35 per cent.

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

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