Wealth Check: The warning signs are going off everywhere
Saturday 25 March 2006
Carly Sugarman graduated from the University of Leeds in 2004. Plans to live with her parents and save monthly for travelling have since given way to having fun and a considerable shopping habit. She recently sold her car and used the money to clear her student overdraft. The remainder has been put into an ISA.
She hopes to pursue a career in London but is concerned she would be unable to afford the living costs on a starting salary. Carly aims to pay off her credit card and loans within the next five years but would like advice on how to do this.
We asked three independent financial advisers for their help: Susan Hannums of Chase de Vere, Chris Holmes of Harrington Brooks and Philippa Gee of Torquil Clark.
Carly Sugarman, 22, Manchester
Personal: Carly works as an ssistant manager of a shoe shop. Her annual salary is around £12,660 after tax, which gives her just over £1,000 of disposable income each month.
Property: Recently moved out of her parents' home into a rented (£400 a month) shared city centre flat. She would like to buy her own property within two years, but has yet to start making significant savings for a deposit.
Savings: £750 in a NatWest individual savings account.
Monthly spending: Living expenses £615; bank loan £98; credit card £46; entertainment and clothes £300; student loan according to monthly earnings and inflation.
Pension: Carly has yet to start saving for retirement but does not feel able to open a pension.
"The warning signs are going off everywhere with Carly," says Hannums. "She's having fun - and why shouldn't she at her age? - but her need to assess her situation couldn't come at a better time."
Carly is spending £300 a month more than she is earning and so is only adding to her debt. All three advisers recommend that Carly concentrates on her budgeting skills. Gee fears that if she carries on as she is the debt will cripple her.
Gee recommends a two-fold plan, including calculating a weekly spend. "First you need to identify exactly where you are with your finances, and look at ways of cutting costs such as mobile phone and utility bills," she says. "Second, you need an immediate plan to boost your earnings, moving up the career ladder."
Gee also advises that the interest rate Carly is paying on her debt will be higher than that which she gains from her ISA. Therefore, she is actually losing out each month by keeping the money in an ISA.
Holmes agrees that a new financial regime is necessary. Carly must not take on more credit, must keep up to date on payments and cut her spending.
Holmes suggests that moving back home, alongside cut-backs in other areas, would release up to £725 to put towards saving for a deposit on a property, debt reduction on the credit card and loan, and even some rainy-day money.
Hannums advises that by saving on her £400 rent, Carly could pay off her credit card in six months, as opposed to the 17 years it will take if she continues paying the minimum. "Done correctly she won't have to give up shoe shopping," says Hannums. "Carry on like this and she'll be the woman who lived in her shoes."
For a free financial check up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS or email email@example.com
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Marvel has released the first teaser trailer a week early after it leaked online
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure' for paralysis
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...
Day In a Page
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
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