Simple moves save a fortune

By THIS IS MONEY
Updated: 19:00 EST, 24 January 2002

WHEN Alison Symes split up with her husband three years ago, she decided to make a fresh start. In the three years since, the 33-year-old strategic planning manager has moved back to London from Warsaw, bought a two-bedroom flat in Balham and changed jobs.

'Being single again changed everything for me,' she says. 'Suddenly, I became responsible for all my finances - there was no one around to bail me out if I got into financial difficulties. It was particularly nerve-wracking buying my flat, it was such a big financial commitment. But I am so glad that I did it as I am very happy there.'

When Alison is not improving her flat, she enjoys going to the cinema and for meals with friends. She also likes travelling. 'I usually go on two holidays a year - one big expensive one, which last year was to Africa, and then a cheaper holiday closer to home. I also take a few long weekends to visit other cities around Europe.'

The problem
Alison has worked hard at reorganising her finances since moving back to London. She has invested £35,000 in a Sun Life Flexible Bond, a Fidelity Pep and Isa with LeggMason Investors and, belatedly, has taken out a pension. However, she doesn't have much spare cash to hand. She says: 'I never really thought about taking out a pension until I changed jobs at the end of 1999. But when my new company offered me one, it seemed to make sense. While I have been good at putting money away for the long term, I don't have much set aside for emergencies.'

Alison also wants to cut her debts. She says: 'I had a deal with the Halifax when I bought the flat. That's now come to an end, so I'm just paying the standard rate, although I'm sure I could get a better deal. I'm also wondering whether I could save money by moving my credit-card debt away from Barclaycard as I think it is quite expensive.'

The solution
'Alison has been very sensible with her finances over the past few years,' says Kerry Nelson, of Deep Blue Financial, an independent financial adviser. 'She has put a lot of money away and now it's just a case of building on that and making sure she is getting the best rates.'

Nelson says Alison can immediately make more of her money by moving her credit-card debt away from Barclaycard. She says: 'Barclaycard is very expensive, charging 17.9%. If Alison switched to Capital One Bank of Egg, she would not pay any interest for the first six months and then pay 12.9% - a much better deal. She should also try to pay off some of this debt once the interest-free period has ended. It's pointless saving if you have loads of debt.'

Alison can also save a great deal of money by moving her mortgage. Patrick Bunton, of independent mortgage brokers Town & Country, says: 'Anyone who is paying the standard variable rate and does not have any penalties could save a fortune by remortgaging. If Alison switched her mortgage to a two-year discount deal with the Universal Building Society, for example, she could reduce her monthly payments from £750 a month to just £484 - a saving of £260 a month. Abbey National's two-year discount would also save her money, bringing her payments down to £497 a month.'

The money Alison saves by moving her mortgage can go towards beefing up her savings. Nelson says: 'Alison has £4,000 in her C&G account but this is nowhere near enough. Someone on her salary needs at least £9,000 put away for emergencies. She should use the money she saves on her mortgage to build up this pot of money but should also move it to a more competitive account, such as Chelsea Building Society's Instant Access account, which pays four% gross a year. Alternatively, she could opt for Intelligent Finance, which pays 4.05% gross, or Fidelity's cash fund, which pays 5.5%.'

In addition to building her cash savings, Alison should start paying money into an Isa to ensure she is making the most of her tax allowances. Nelson says: 'I would recommend HSBC's European Fund, Credit Suisse Monthly Income and ABN Amro's UK Select Opportunities Fund.'

Where the money goesName: Alison Symes Age: 33 Lives: Balham Occupation: Strategic planning manager Status: single Income: £50,000-£60,000 Mortgage: £750 a month Spends: £200 a month on going out, £200 a month on clothes, £3,000 a year on holidays Debt: £3,500 on Barclaycard Savings: £35,000 in Fidelity Pep, LeggMason Investments Isa and Sun Life Flexible Bond, company pension, £4,000 in savings account with C&G.