Wealth Check: Up to his neck in debt - but full of dreams
We give 'IoS' readers a financial makeover
Sunday 20 February 2005
Daniel Bettridge was willing to get into financial difficulty to pursue a Masters degree in film studies in September last year, but a disappointing academic course has turned his £6,100 career development loan into a millstone around his neck.
Although he is now trying to get off the course and recover £3,200 in tuition fees, he still has to find £300 a month when the loan repayments start in October. That will come on top of his living costs for rented accommodation in Brighton.
Additionally, he already owes £9,000 in student loans from his undergraduate degree and has a £2,000 overdraft; about £160 is outstanding on a credit card.
Daniel has some savings - £652 in a Lloyds TSB account and £250 in an online Egg account - but says his monthly £326 rent will soon swallow this up. His part-time job is critical to easing the financial load, covering household bills and other student living costs.
His aim is not to have to scrimp and save. "I want to free myself from my financial burdens rather than always playing catch-up," he says.
"I'd like to be able to save for a deposit on a house and travel around the US. It's my dream to study at an American university some day."
Although he is mired in debt today, Daniel has plenty of plans for the future. He is passionate about the idea of running an online comic book shop as a business with his friends - beside a full-time job.
"I'd like to save a small sum so I could begin thinking seriously about this venture," he says, "but at the moment my finances are holding me back."
While Daniel wants to start saving for a pension and a deposit on a property, he cannot even consider this at present.
Interview by Esther Shaw
Daniel Bettridge, 22, from Brighton.
Job: full-time MA student and part-time media account manager.
Debts: a £6,100 career development loan, £9,000 in student loans, a £2,000 overdraft, and £160 owing on a credit card.
Income: up to £13,000 a year.
Savings: £900 in two accounts.
Goal: to dig himself out of the red and, ultimately, save up for travel, a deposit on a home and a pension.
Daniel needs a reality check, says Drew Wotherspoon of independent financial adviser (IFA) Charcol. "He wants to draw together his finances to fund various ambitions, yet he has no real income."
He should wait until he is in full-time employment, adds Mr Wotherspoon, before seeking to realise his dreams.
As a starting point, Daniel should look at the interest he is paying on his various debts, says Patrick Connolly from IFA John Scott & Partners. "He should then look to restructure the debt with the highest rate or move it [if possible], so as to reduce his overall interest payments."
Daniel won't have to start repaying his student debt until he is earning £18,000 a year, says Mr Wotherspoon - so that at least can be deferred.
Mike Pendergast at IFA The One Group says Daniel should look at ways of boosting his disposable income - such as living with his family instead of renting, or renegotiating his loan repayments so they begin at a later date.
He could speak to both the loan provider and the university to explain that he has little income. "They may well understand and allow him to defer payments if he is not earning enough.
"While this will mean he incurs more interest, at least his current outgoings will be far more manageable."
He adds that if his course has genuinely not delivered what it promised in the prospectus, Daniel may have a case for taking action to recuperate his costs. Mr Wotherspoon recommends approaching a Citizens Advice Bureau for legal guidance.
Mr Pendergast says Daniel should look either to complete the course and then get full-time work for 12 months to reduce his debt, or pull out now and start work straightaway. "Daniel's business could be run alongside the full-time job to provide additional income."
But Mr Connolly warns that the venture could hinder rather than help Daniel's finances. "It is debatable if he should proceed with this while still in debt. [Much] will depend on the costs involved and whether Daniel is sure he'll make a success of it."
Other than holding some cash in an instant-access account to meet any short-term emergencies, Daniel should leave additional savings on hold, says Mr Connolly. "There is no point unless you are sure the return on your savings will exceed the interest payable on your debt."
Mr Wotherspoon recommends Daniel use some of the funds in the Egg account to pay off his credit card.
Daniel "should not think about buying a house until his debt problems have been resolved", says Mr Connolly.
"At 22, Daniel has a couple of years before he really has to start a pension," says Mr Wotherspoon.
Mr Pendergast adds that Daniel's pension savings can wait until his debt is reduced.
If you would like a financial makeover, write to Sam Dunn at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS, or email email@example.com
Fuel poverty could kill 100,000 vulnerable people over the next 15 years, charity warns
Bargain Hunter: Affordable art - suddenly being a collector is just a walk in the park
Phoenix Life: Chance of a refund for overcharged policyholders has risen
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Simon Read: That's right, BT, they'd rather pay for a free service
- 1 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Robert Mugabe eats a zoo for 'obscene' 91st birthday party
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
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
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