Wealth Check: The actor who's looking to drop anchor

Each week we give 'Independent on Sunday' readers a financial makeover


The problem

The problem

In a good year, actor Grant Stimpson earns nearly £40,000. But when the work dries up, it can be half that or even less. "That's the lot of an actor: one year I can do really well, and the next there's nothing," he says.

This makes it particularly difficult to manage money. "When I don't get paid for a couple of months, I have to rack up debts on a credit card.

"And then, when the money pours in, I pay it all off and start spending again. It can be a bit of a nightmare."

His sporadic cashflow has so far held him back from starting a pension or saving up a deposit for a property. "I really want to sort this out but, as my income varies so much, I'm not sure about the best way of doing this."

Grant has been renting for 15 years: he pays £400 a month for his room in a shared house in London. A well-paid acting job last year allowed him, for the first time, to hunt for a place he could call his own: a barge.

Yet the cost of living on a boat where he looked - in both central London and Hertfordshire - proved horrendously high. After struggling to find a good deal, he decided to hold off for a few months. Since then, prices have soared even higher.

"I am still planning to buy somewhere but London is crazy for prices - even the mooring rent for a barge is astronomical. I'm trying to save and build up a decent deposit."

So far, he has invested £1,500 in National Savings & Investments (NS&I) income bonds and the same sum in premium bonds. He also invests £200 a month in a mini cash individual savings account (ISA), which currently pays 3 per cent interest per annum.

He has neither income protection nor critical illness cover to guard against sickness or accidents, and has yet to take out life cover. As for debt, he owes £700 on a NatWest credit card.

Interview by Sam Dunn

The patient

Grant Stimpson, 35, from Finsbury Park, north London.

Job: actor, currently touring the UK with a version of EB White's Charlotte's Web.

Income: varies from year to year but averages between £20,000 and £25,000.

Savings: £200 a month in the Co-operative Bank's mini cash ISA.

Investments: £1,500 in premium bonds, £1,500 in NS&I income bonds.

Goal: to buy a houseboat and sort out his retirement plans.

The cure

Grant must make his money work harder if he is to drum up a big enough deposit to put down on a home, says Justin Modray, an investment manager at Bestinvest, an independent financial adviser (IFA). And since his income is so variable, he needs an emergency sum of three to six months' salary to carry him through if the work dries up.

Darius McDermott, the managing director of IFA Chelsea Financial Services, recommends setting up a monthly savings account: the best rate available is 4.75 per cent at Bank of Scotland or the Halifax.

Debt

Grant's £700 credit card debt should be cleared quickly, advises Mr McDermott. "There is no point saving at 3 per cent [with Co-op] when your outstanding [NatWest] debt is charged at 17.4 per cent."

David Holbrook, the managing director of Hallmark-ifa, suggests switching the debt to a 0 per cent introductory deal to save on interest. Halifax One Visa would enable him to do this, says Mr Modray, as it charges 0 per cent on balance transfers for nine months, before reverting to a standard variable rate of 9.9 to 15.9 per cent.

Savings

The premium bonds will produce a return of no more than 2.4 per cent a year tax-free, warns Mr Modray, for just the small chance of a big win. The NS&I income bonds aren't much better: although they pay 3.45 per cent interest, Grant would be better off switching to a high-interest savings account such as ING Direct, which pays 4.5 per cent gross.

Alternatively he could transfer all the income bond money into a mini cash ISA for greater growth.

Mr McDermott recommends switching out of the Co-op mini cash ISA: Abbey currently pays 4.6 per cent, while Marks & Spencer offers 4.5 per cent. If his income becomes more regular, he should also think about "exposing some of it to a stocks and shares ISA".

Retirement

A stakeholder pension is a good start, say all three IFAs: charges are capped at 1 per cent and it can be carried from job to job. However, Grant has a great deal to save, says Mr Modray. "If he starts saving £100 a month [5 per cent of his income assuming £25,000 a year], this might provide a pension of 17 per cent of his income at the age of 65."

Mr McDermott recommends Scottish Widows' stakeholder pension.

Protection

"It's worth considering critical illness cover to protect against a health calamity," says Mr Holbrook.

But this won't be cheap. "For £100,000 cover for 25 years, it could cost Grant £50 a month or more," says Mr Modray.

Property

A houseboat may be Grant's dream, but his profession and income make such a purchase hard at the moment. Few banks are willing to lend on any structure without foundations, and specialist mortgages tend to be much costlier.

Without a sizeable deposit, Grant should instead consider buying a property jointly, advises Mr Holbrook, or a shared ownership scheme. This will enable him to buy a share in a property and pay rent on the remainder to a housing association. Over time, the idea is that he increases his stake until he owns the home outright.

PROMOTED VIDEO
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trade Desk Specialist (Linux, Windows, FIX, Finance, Networks)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (Linux, Windows, FIX...

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Project Manager - ETRM/CTRM

    £70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

    C#.NET Developer

    £300 - £350 per day: Harrington Starr: C#.NET Developer C#, WPF,BLL,MVVM, SOA...

    Day In a Page

    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform