Stuck learning to crawl as Ireland races ahead

Janice Holmes
Age 33
Lives in Portstewart, Northern Ireland
Occupation Lecturer
Earns ?21,000
Mortgage ?37,500 endowment
Debts personal loan ?15,000, credit cards ?4,200
Investments None
Pensions University superannuation scheme and FSAVC
Aims To make ends meet

Janice Holmes left Canada for Ireland 10 years ago, to do the second year of a master's degree in history at Queen's University, Belfast. She found Northern Ireland 'a great place to live', applied for a bursary to do a PhD and stayed a further three years.

'When that finished, I got a job at University College, Dublin and worked there on a post-doctoral fellowship.' She is now a history lecturer with the University of Ulster. She loves the life but there is a problem: 'At the moment I am really struggling to cover all my outgoings. Even as a professional, I can't make ends meet.'

Although she did not get a proper job until she was nearly 29, she had no student loans but, since starting work, has had to borrow heavily: 'I have accumulated all this debt since I bought my house. I didn't have any idea how expensive it was.' Interest rate rises pushed up repayments from £120 a month to £180. 'I think I probably should have kept renting for a while but you feel the pressure to get into the housing market.

Particularly in Northern Ireland there was a concern that house prices had been artificially kept down and were going to sky-rocket.' Her other big expense is the car. One failed the MOT: 'So I changed the car rather than pour more money into it but that was probably the wrong thing to do.' Insurance had been costing £30 a month, but for her new Honda Civic she pays £115 a month, partly because had also lost her no-claims bonus.

She recently spent £200 getting the car fixed: 'I was in an accident and I'm trying to get a no-claims bonus this year, so I'm paying for the repairs myself.' She lives in a rural area and spends about £80 a month on petrol: 'The recent increases in petrol prices have not helped.'

All this has put pressure on her credit card: 'Usually, I use it when 'normal' money is awkward, like buying stuff over the internet or buying cheap petrol in the Republic. But at the moment I'm using my credit card for essentials like petrol and groceries.' She can afford to repay only the minimum amount each month. 'I'm trying to spend less on credit cards and I'm in the process of transferring my balance to two other, cheaper cards.

She supplements her income by £2,700 a year with part-time teaching for the Open University. She contributes £48 a month to a Friends Provident free-standing AVC and £110 to the university pension. She contacted a local financial adviser but he did nothing: 'He said that nobody local dealt with my kind of situation, which I understood to mean that I needed help, but didn't want to buy anything.'

She asks: 'Can you help? Or is the solution to get rid of the television and read the newspaper by candlelight?

Adviser 1: Donna Bradshaw

Janice already has good deals for her
mortgage and personal loan but should check out
cheaper car insurance and utilities.

After paying her main expenses, she has ?680 a
month for utility bills, council tax, food, clothing,
sundries, and paying off her credit card. This is a
reasonable amount to live on so she probably has
a problem budgeting.

She should stop paying for petrol on the credit
card as this just adds to the problem. Transferring
her current credit card debt is a good idea and
she should look for a card with a low interest rate
that continues until the debt is cleared. Rates start
from 5.9 per cent; standard rates may not be so
great but if she pays off new purchases in full
each month she will not incur further interest. She
would do even better not using a credit card until
she is out of the woods.

Next she has to cut down on monthly outgoings
and start clearing her credit card bill. She should
write down absolutely everything that she spends
for a month to see where the money is going and
why she spends more than she earns.

Janice might also be able to augment her income
by car sharing to work or renting out a room in
her house for up to ?4,250 a year tax-free. She
should check her FSAVC as her employer's AVC
scheme or added years could be more suitable.

Donna Bradshaw works for London-based Fiona
Price & Partners.

Adviser 2: Anna Bowes

At the moment Janice uses her credit card as a
float and of course that builds up. She could ask if
she can take a contribution holiday, for no more
than one year, from the Friends Provident
free-standing AVC as this is money that she just
does not have at the moment.

As the ?15,000 personal loan was for home
improvements, she might add that to the
mortgage. Spreading the repayments over a
longer period dramatically cuts her outgoings and
she will pay a lower rate of interest than on the
personal loan.

She could also add the credit card debt to her
mortgage although this depends on the amount of
equity she has in the property and she may feel
this is building too much debt for the future.
Reducing the mortgage payments and other
outgoings should help her pay off the credit cards
quite rapidly.

She should shop around for a new credit card
provider as this is a competitive market and new
issues are being offered all the time.

She could also research car insurance although
there is likely to be a penalty for cancelling
mid-term, so she may need to wait until the
renewal date.

After reinstating the free-standing AVC, she
needs to start saving for a rainy day. Inevitably
some big bill comes out of the woodwork at just
the wrong time and the only way to deal with this
comfortably is to have a float.

Anna Bowes works for Bath-based Chase de Vere.

Advice is for guidance only.

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