Angela Durrant, 40, gave up her job selling houses after a near-death experience convinced her to pursue her dream career: voice coaching.
The mother of three from Cardiff was thrown 10ft into the air when she crashed her car while travelling at 80mph, but amazingly she escaped uninjured. She says: "I felt my life had stopped and I didn't know how to restart it. I decided to follow my dream of making a career in music."
Angela, who studied music at college and has since worked as a singer in her spare time, lives with her record producer husband, Paul, 53, her daughter Ella, three, and her step-son Jordan, 15. She recently launched her business using savings, but although she works as much as she can, the profits are small and she has debts to pay off.
Income: £20,000 from her husband's earnings; new business income has not yet been determined
Monthly family outgoings: £2,626
Savings: £800 in a Skandia stocks and shares ISA, £1,200 in a Friendly Society endowment
Debt: £18,600 with Lloyds
Mortgage: £150,000 at a fixed rate of 6.03 per cent
Advising her this week are Richard Barrett from Saffron IFA, Danny Cox from Hargreaves Lansdown and Anna Sofat from Addidi Wealth...
Increasing her number of clients will be tough and most self-employed people find the first few years a slog, according to Cox. He suggests choosing a target market and getting as much exposure within it as possible. "Marketing her business does not necessarily mean spending more money," he says. "One of the easiest and cheapest ways is to ask existing clients, friends and relatives for a referral."
She could also use social-networking sites such as Facebook or offer promotions, "introduce a friend for a free lesson", for example. To improve cash flow, Cox also recommends giving clients the option to pay for a number of lessons in advance at a discount.
Angela should look beyond the short term and formulate a clear business plan, recommends Sofat: "Angela needs to see herself as a professional business, not a one-man amateur set-up. Knowing what you want to earn means you can work backwards to see how many people you need to see each month," she says.
Clients need to know they cannot miss appointments, so Sofat suggests a system to enforce cancellation fees, such as a deposit requirement. If Angela is working to full capacity, she should consider running classes for groups or corporate clients – which she would be able to charge more for.
Sofat adds: "Singing is increasingly seen as a feel-good recreational activity and she may want to provide group sessions aimed at hen parties, children's parties and so on."
Angela's voice is her fortune now, so it is imperative that she takes out insurance on it. "If you had a money-making machine in the shed, you would want to insure it against breaking down," says Barrett. "You should view yourself as that machine. Inability to work because of accident or sickness would be a real problem."
Because Angela has no company scheme to fall back on, she should investigate her own accident and sickness cover as well as critical illness and personal health insurance.
Although she is keen to get out of the credit card trap, Angela is nervous about using her savings to pay off her debts. "The question of maintaining savings versus clearing debt is a controversial one," says Barrett. "Interest on debts is almost always significantly higher than the interest earned on savings and therefore the obvious answer would seem to be to sink any savings you have into clearing debt."
However, he warns that debt providers are currently reducing credit limits, which could leave Angela unable to take out another load should she need it. Cox recommends clearing the most expensive debt first: a £5,600 credit card consolidation loan charged at 14.9 per cent.
Sofat says Angela is paying over the odds for her mortgage at Abbey, and recommends opting out if the penalties are less than the benefit from a lower interest rate. "She should start by talking to her current provider and see if they can help. If not, then go and see a financial adviser – don't be put off and definitely don't feel stupid," she says. "Many more people are in your situation than you realise and at least you are doing something about it. Ensure they are independent so you get the full range of options."
The business may well take off, but for the meantime Angela needs to keep to a strict budget to avoid sinking into further debt. "The real key is to get really brutal about managing your income and expenditure," says Barrett. "Keep a record of all spending each month, and then decide whether this is typical of normal expenditure. This will help highlight any areas where Angela might be overspending." A number of accountancy tools can be found online to make this easier.
Retirement savings are not Angela's biggest priority right now, but should be once her cash flow increases. Cox says she should take out a private pension, explaining: "A £100 contribution costs just £80 and the fund grows almost free of tax."
For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email firstname.lastname@example.org
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