Wealth Check: 'How can I move on and leave my debts in the past?'

Peter Marshall, 22, has an unusual day job: dressing up as the 16th-century Earl of Southampton. He is a costumed interpreter at Hampton Court in London, but leaves the job at the end of the month. "It's been fun," he says, "but my project is to save enough money to study for the Bar."

Mr Marshall has a £12,000 student loan, a £2,000 graduate overdraft and £500 on his credit cards. "I'd probably have to take out a career development loan to train as a barrister," he says. "But I need to pay off my credit card and bank debts before I take on any more."

He has been renting in London but his lease is about to come to an end. "I'm thinking of taking a bit of a break and going to live with my parents in Nottingham," he says. He would like to live in London, but is put off by the property prices.

We put his case to Ben Yearsley of Hargreaves Lansdown, Justin Modray of Bestinvest Brokers and Elliot Nathan of The MarketPlace at Bradford & Bingley.

PETER MARSHALL, 22, COSTUMED INTERPRETER

Occupation: interpreter

Education: BA in history at University of Cambridge

Debts: £12,000 student loan; £2,000 graduate overdraft; £500 credit card

Salary: £14,000 a year

Savings: none

Pension: none

Property: renting in London

Outgoings: (per month) £400 rent; £50 council tax; £100 utilities; £40 mobile phone; £16 contact lenses; £100 food; £150 socialising; £147.49 travel card; £70 sundries

EXPENDITURE

Mr Modray says while he is living in London the only area where Mr Marshall can save is on socialising and his mobile phone. Moving back to his parents would be a sensible way to cut expenditure, as this would leave him with few fixed costs.

DEBTS

Mr Modray says Mr Marshall should be in no hurry to pay off his student loan. It is a very cheap way to borrow, with the interest rate equal to the rate of inflation. If he earns over £10,000 a year he will have to pay back the loan using 9 per cent of what he earns over £10,000. This will normally be collected on a pay-as-you-earn (PAYE) basis. Mr Marshall should focus on clearing his credit card debt and then his student overdraft.

Mr Nathan says Mr Marshall should move his credit card debt to one offering 0 per cent interest for balance transfers. By moving to a 0 per cent deal, typically for six to nine months, the overall balance would decrease each month by the whole monthly payment and not a proportion of balance and interest.

However, Mr Marshall should be careful not to continue to use the new card for purchases as the interest charged is usually higher. He should also keep an eye on when the offer period expires and, if he has not paid his full balance off by then, look to move to another 0 per cent deal.

CAREER

Mr Modray says Mr Marshall could probably pay off his bank loan and credit card within six to nine months by moving back to his parents and getting a job in Nottingham. He then needs to consider whether he should continue to work there to build up savings to cover post-graduate training costs.

Mr Yearsley says if Mr Marshall is serious about wanting to become a barrister, then the rewards are potentially lucrative. There are several ways to pay for this training, which can be for up to three years with little or no salary. Taking a part-time job is the first solution, but Mr Marshall needs to decide whether this will leave him enough time to study.

The second option is a loan. He can get loans that defer payment for up to four years, but the interest builds up, and by the time you start paying the loan back it could be 50 per cent higher. Lloyds TSB offers such a loan up to £10,000 but the interest rate is 9.9 per cent. There are cheaper graduate loans without the deferment option. HSBC offers a loan for law students at 1 per cent above base rate. However, he will have to pay this back, so a part-time job would probably be necessary.

Another suggestion is to defer starting training for, say, 18 months and use this period to save as much money as possible whilst living at home.

PROPERTY

Mr Modray says it could be some time before Mr Marshall can purchase a property, especially in London. His only chance of buying a property in the shorter term would be if his parents were to lend a hand.

Mr Nathan says trying to advise Mr Marshall on prospective property purchases is difficult without knowing what sort of salary he will earn. However, in a few years, should he join the Bar, he will be able to take advantage of mortgage schemes designed specifically for professionals. Scottish Widows, Royal Bank of Scotland and Standard Life offer mortgages that offer 100 per cent loans with assistance on initial costs.