Wealth Check: 'Can I rein in my spending and achieve my life aims?'

The Patient

Christel Robbins from Reading dreams of paying off her debts so she can buy into her veterinary practice as a partner and devote more time to her hobby – dressage.

The 32-year-old has worked as a veterinary surgeon since qualifying in 2002 and currently earns £45,000, but struggles to balance her outgoings with her income.

"Our regular monthly expenses, including food and fuel, come to about £200 a month more than my wages," says Christel. "I'm able to supplement this with earnings from my second job as an acupuncturist. My husband also earns a modest income from running a dressage yard, and contributes about £300 a month to the joint account."

Christel currently owes £4,000 on a Capital One cashback card; the 0 per cent deal is due to run out just before Christmas.

She has, however, been disciplined about squirrelling a little money away into savings and investments, including £3,700 in an individual savings account with Nationwide and £900 in an e-savings account with Santander.

"I also have a selection of shares including 437 with the BG Group, 405 with Centrica, 300 with Shepherd Neame and 165 with the National Grid," says Christel. "But I have no idea of their current worth, as these were inherited from my grandma."

Christel and her husband Andrew own a three-bed house, and have £169,000 outstanding on their fixed-rate mortgage with Nationwide.

"This is a repayment deal, and costs about £1,200 a month," she says. "We also pay £34 a month for critical illness and life cover with Aviva."

Christel does not have a pension at present.

"I don't feel that I can afford this at the moment," she says. "I'd love to be in position where I could clear my debts and feel completely in control of my finances so I could spend more time – and money – on dressage which is quite a pricey hobby.

"I'd also love to pay off the mortgage altogether and buy into my practice as a partner or, better still, set up my own practice."

The Cure

Our panel of independent financial advisers (IFAs) agrees that Christel needs to redress the balance between her expenses and her monthly income by drawing up a budget and sticking to it. They urge her to think about the need to provide for retirement and the need to protect her earnings against long-term sickness.

They also suggest she set targets to achieve her goals to be debt free, mortgage free and able to buy into a veterinary partnership, adding that financial discipline in the short term is the key to longer-term success.

Assess expenditure and set a budget

Christel needs to keep track of income and expenditure to see where her money is going, says Anna Sofat, director of Addidi Wealth.

"There are plenty of phone apps and online tools she can use," she says. "Keeping track will throw up obvious areas where savings might be possible. She can then set a budget which will enable her to gain more control and be more efficient."

Christel could also see if she can save on utilities and other financial products, such as insurance, by using a comparison site such as Moneysupermarket.com or Uswitch.com.

Deal with debts

Robin Keyte from Keyte Ltd says the Capital One credit card is a "cause for concern". "When the 0 per cent deal runs out, Christel needs to make sure it is paid off," he says. "She should use the money she has in savings to pay this debt. It may feel odd to do this, but the interest charged on credit card deals will be far higher than the interest she is earning on her savings – so it's a false economy to delay paying off the card."

Keep a cash reserve

If Christel uses her savings to pay off her debts, there will be a short-term need to boost savings, according to Mr Keyte. "I suggest using a cash Isa to build an emergency fund of between three and six months' expenditure as this will allow her to benefit from tax-free interest," he says.

Ms Sofat adds that Christel should then get into the savings habit by slotting away money into a regular savings account each month. "The funds are accessible but pay a decent rate for 12 months at least," she says.

Christel could use a comparison site such as Moneyfacts.co.uk to find the best rates on her savings accounts.

Make use of the shares

As the shares are currently worth about £10,500 in total, Christel could consider using these to help pay off her credit card, says Duncan Carter from Clearwater Financial Planning.

"Or, if Christel wants a share-based portfolio, she could sell the shares and reinvest the money into an investment Isa, selecting a broadly based and low-cost passive fund," he adds.

Review protection policies

Mr Carter suggests Christel leave her life policy as it is, as it will protect the mortgage, should the worst happen. However, he urges her to take out income protection to ensure her earnings are covered should she be unable to work because of illness or injury. "The loss of Christel's income would cause significant problems," he says. "She should ensure the maximum cover is obtained on an 'own occupation' basis which is index linked."

Start pension saving

Christel needs to get into the savings discipline of paying money into a pension, says Ms Sofat.

"She may feel she has little head-room, but it's important she makes a start now – however small," she says. "I would suggest she starts paying £50 a month into a stakeholder or personal pension."

Mr Keyte urges her to think carefully about her choice of pension investment funds.

"Younger pension scheme members often want to protect their fund with a low-risk investment, without realising that the potential for long-term investment returns ahead of inflation are very poor," he says. "Given that Christel's fund will probably be invested for up to 30 years, a fund mostly invested in shares would be preferable."

Overpay the mortgage

As the mortgage is on a repayment deal, it is certain that it will be repaid in full at the end of the mortgage term, says Mr Carter.

"But Christel could chip away at this by making overpayments, as even relatively small amounts can make a difference in the long term," he says. "Christel should also note when the current fixed deal ends to ensure she secures a good rate at that time."

Set realistic career targets

If Christel is serious about her goal to buy into the practice as a partner, she needs to speak to the current equity partners about their own exit strategies – and see how they see themselves eventually realising value, according to Mr Carter. "This may lead to some form of equity participation plan, with a view to buying out in the long term," he says.

Ms Sofat says this should be a goal that Christel sets herself for the next five to 10 years. "Right now, I think it would leave her too exposed, and jeopardise her financial security," she says.

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Write to Julian Knight at The Independent on Sunday, 2 Derry Street, London W8 5HF or email j.knight@independent.co.uk