Wanted: a life in balance for family of super savers

James and Zehavit Huddy
Ages 32 and 27
Live in North London
Occupations Internet support worker and housewife
Earn ?32,000
Mortgage ?109,000
Debts Personal loan and student loans
Investments SAYE share scheme, shares and cash
deposit
Pensions James - occupational scheme; Zehavit -
none
Aims To reduce mortgage debt, to invest, to provide
pension for Zehavit and for James to spend more time
with family

James Huddy works a total of 50 hours a week, and wants more time for his family. He has a part-time job with BT and a full-time one at the BBC which involves shift work in the evenings and at weekends.

The shifts enable him see more of his nine-month-old son Gabriel than if he worked from 9am to 5pm, but he wants fewer hours.

However, he also wants to reduce his mortgage as fast as he can, to save and provide a pension for his wife, Zehavit. Last year he took a Standard Life Bank flexible repayment mortgage, which enables homeowners to pay off their loans early without penalty. Since then James has paid £160 a month more than he needs to. At this rate, he will have cleared his loan in 16 years rather than 25. He likes the fact that this type of mortgage allows homeowners to borrow back their overpayments.

He is saving £200 a month in a Save As You Earn (SAYE) share option scheme. He has gradually increased his savings each year for the past three years from £40 a month to £100 to £200. The first scheme matures next year. Other savings and investments include £2,000 in BT shares which he bought last October. He has invested more in shares at other times.

He has £4,000 in an Egg account, invested over the internet, but is now looking for another internet savings account. He likes arranging his finances over the internet, which he can easily access at work or at home.

He is considering opening a cash Isa with Smile, the Co-op's internet bank. He says he shies away from savings plans where you can't judge the value yourself, such as with-profits endowments. He likes investments that are completely transparent.

He feels his own pension is 'sorted'. He has been a member of the BBC's final salary scheme for the past 18 months. Before that he was a member of money purchase schemes with three previous employers. However, he would like to start a pension for his wife.

His debts include a per sonal loan taken out when he moved home last year, though he has already paid off most of it. Both he and his wife also have student loans.

He met Zehavit on a kibbutz in Israel where he spent two years after graduating. She has recently completed an archaeology degree. She is a full-time mother but is considering self-employed work, or further studies at university. They plan to have more children.

Adviser 1: Andrew Jones

The balance between James's work and home
life involves a personal decision that only he can
make. If he wishes to continue saving and
repaying his debts at the current rate, he will
have to keep his current workload.

Given the amount of his earnings relative to his
outgoings, I am impressed that James is able to
save as much as he does. He is right that a cash
Isa is the most appropriate place for his cash
savings, as this will shelter his money from tax. A
maximum of ?3,000 can be invested in one of
these Isas in the current tax year. He should also
consider using his stocks and shares mini-Isa
allowance of ?3,000 for longer-term investment.

He could use his wife's Isa allowances to provide
cash for her retirement.

He is right in trying to repay his debts as soon as
possible. He could use some of his maturing SAYE
scheme money for that, too. However, he and his
wife could keep their low-interest student loans.

James's wish for a pension for Zehavit could be
partly met by the new stakeholder regime, which
starts next April. This allows up to ?3,600 to go
into a scheme without evidence of earnings. This
money would benefit from tax relief at 22 per cent
and will grow in a virtually tax-free environment.

James's ?180,000 life insurance is adequate. But
he should consider critical illness insurance as his
earnings would be badly hit if he were seriously
ill.

• Andrew Jones works for chartered accountant
Blick Rothenberg

Adviser 2: Gillian Cardy

James and Zehavit's mortgage allows them to
reduce repayments if he decides to work less. He
may have to save less, too, but he could
maximise returns by rearranging his existing
savings.

For example, if cash deposits are made in
Zehavit's name, she should register to receive
interest without tax deducted, as long as she is a
non-taxpayer. Maximum use should be made of
Isa allowances. James is right that the Smile
mini-cash Isa has one of the highest interest rates.
However, to invest in a mini-cash Isa would limit
his potential investment in a stocks and shares Isa
to ?3,000.

As he is interested in shares, he could open a
maxi self-select Isa account instead. This would
enable him to invest up to ?7,000 this year in
shares or unit or investment trusts and make tax
savings on any gains.

Once his SAYE schemes have reached their end
dates, he may consider other forms of saving,
such as a monthly savings Isa or taking out a
stakeholder pension for Zehavit.

However, it is important to understand that money
invested in a pension cannot be used until
retirement. If they have more children, getting at
their money could be important.

I would be surprised if James's own pension
really was 'sorted'. The amounts due at retirement
may be less than he expects. And he may wish to
consider critical illness cover.

• Gillian Cardy works for financial adviser
Professional Partnerships.

Advice is for guidance only.

• Do you want to appear in Wealthcheck? Write,
including daytime and evening telephone
numbers, a brief list of circumstances and any
investments, to: Wealthcheck, The Observer, 119
Farringdon Road, London EC1R 3ER, or
e-mail: cash@observer.co.uk. You must be
prepared to be interviewed and photographed.