Can I afford to put six through college?

Don Grunbaum
Age 52
Lives in East Harling, Norfolk
Occupation IT manager
Earns joint income ?40,000
Mortgage ?45,000
Debts ?5,000 five-year loan
Investments ?3,000 in deposit accounts, Tessa, Isa
Pensions company pension
Aims to check if he is financially secure and to plan
ahead for children's further education

Don Grunbaum is worried about funding his children through university. At the moment he is getting off quite lightly because his eldest child, Eleanor, 20, has just started a midwifery course. She gets her fees paid and receives a bursary of £100 a month. But her accommodation costs £50 a week and she has to commute between the university in Nottingham and a hospital in Milton Keynes.

This, though, is just the beginning. Don and his wife Wendy, 48, have another five children: Adele 15, Charlotte 13, Lydia 12, Laurence eight and Alastair four. 'As yet we're not sure what our commitment will be for Eleanor and, as we would also like to make allowances for the others to go to university, this is a long-term commitment.'

Don wants to know if they are financially secure: 'We would like to be able to replace our main family car next year. This is a 12-year-old Citroën eight-seater that we have owned for eight years.' They have another two cars which are both classics but not expensive to run. One car is a 1960 Ford Prefect which Don uses to get to work and the other a 1968 Morris Minor that has just got through its MOT. Eleanor wants this to commute between university and hospital but Don is worried about insurance costs: 'She is already a named driver on our insurance but then she will become the main driver.' Despite the two classics, cars are not Don's hobby: 'I only tinker with the cars when I have to. Most of the time it is point and pay - you point out what is wrong with it and pay someone else to do it.'

A major expense this year was a holiday in Australia for the whole family: 'We wanted to go to Sydney, despite the fact that it was a long way.'

Their four-bedroom house is worth about £150,000 although, as an 80-year-old 'one-off', it is difficult to value without putting it on the market. They have an interest-only mortgage of £45,000 with Direct Line, covered by four life insurance policies, three with Sun Alliance and one with Barclays Life. These mature over the next three years, with a projected surplus of £16,800.

Don's job includes life insurance and long-term sickness insurance. They also have a joint whole-life insurance policy for £40,000 which pays out when the first one dies.

He contributes 10 per cent of his salary to a Norwich Union pension and his employer puts in 7 per cent. Although his youngest son will still be facing GCSEs when Don is 65, he is toying with the idea of early retirement: 'I'd retire tomorrow if I could and it has been suggested that I might be able to retire two or three years early because there will be sufficient funds for me to take retirement. But I would like to know if I am contributing enough.'

Adviser 1: Joanne Cox

The spread of the children's ages means that
Don and Wendy have plenty of time to save and,
when the mortgage is repaid, will have extra
disposable income as well as a lump sum.

As they want to change their car, and Adele is 15,
their short-term needs are the more pressing.
They should choose between National Savings
and bank and building society accounts. For tax
relief, they should maximise contributions to a
mini cash Isa and take out another next year.

For the longer term, the best returns come from
equity Isas, provided Don and Wendy are
comfortable investing in a share-based fund. They
should write down their income and expenditure
to see how much it costs to keep the family afloat
each month and plan forward for up to 15 years,
then check if Don's sickness insurance continues if
he is ill for a long time, and whether they could
manage if Wendy was ill. If not, they should think
about health insurance.

Don should budget for after retirement,
remembering that some costs will disappear but
others increase, particularly for leisure activities.
If his projected pension does not cover the
planned expenditure, he should save more.
Wendy should check whether she can join an
employer's pension scheme or look for a low-cost
stakeholder pension next April.

The lump sum from the endowments could be
used to repay any loans and the excess invested
for future university costs.

• Joanne Cox works for Co-operative Bank Financial
Advisers.

Adviser 2: Lynne Maltby

Don should bear in mind that the easiest way to
increase income is to reduce outgoings. His
monthly expenses will be fairly static until 2002
when the mortgage is scheduled for repayment.
In the meantime, he could move his ?5,000 loan
on to his mortgage which will immediately
release spare cash. This, in turn, could be
diverted towards Eleanor's university costs.

The good news, of course, is that come
September 2002 his monthly outgoings will
reduce substantially, by about ?450. At that time
he should start a short-term cash-based saving
scheme for Adele and Charlotte's university costs
and look at a longer-term savings structure for the
three younger children.

Regular saving maxi Isas are appropriate for his
five- year objective as they provide tax-free
flexibility and a range of low to medium-risk
funds.

The mortgage is pivotal to Don's financial
planning as it looks likely that an extra ?15,000
lump sum will be available when his endowments
mature. So, as well as having more money to
save each month, he should use at least a
proportion of the lump sum either to kickstart the
savings regime or to provide an additional
retirement fund for himself and Wendy.

They could think about remortgaging their home,
using a repayment mortgage vehicle to tie in with
Don's retirement age. This releases equity for
their substantial university funding needs.

• Lynne Maltby is a manager with Willis National.

Advice is for guidance only.

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