Wealth Check: 'How can I pay off my debts and get into teaching?'

Nicky Buckingham, a special needs classroom assistant from Southampton, wants to qualify as a primary school teacher, but is struggling with serious debts and can't afford the training. She cut up all her credit cards last year and now has a personal loan on which she owes a little over £10,000. At 12.9 per cent a year, it's expensive - the monthly repayment of £234 accounts for well over a quarter of her disposable income of £790 - but Nicky's bank has said her credit rating is not good enough for it to offer her a better deal.

Nicky also has student loans, but she has no savings and has not begun saving for old age. She's keen for advice on how to reduce her debts more quickly while putting all her finances on a firmer footing for the future.

We asked two debt specialists for help: Stuart Glendinning of Moneysupermarket.com and Frances Walker of the Consumer Credit Counselling Service.

Case Notes

Nicky Buckingham, 30, classroom assistant, Southampton

Salary: £11,300 - disposable monthly income after tax and National Insurance of just under £800.

Monthly spending: £500 on rent, council tax and utilities; £234 on loan repayment.

Savings: none, a concern since Nicky plans to undergo further training in order to qualify as a primary school teacher.

Debts: £10,400 outstanding on personal loan from Lloyds TSB with an annual interest rate of 12.9 per cent; overdraft of £1,480 on Lloyds graduate account. Additional student loans not repayable until her income rises.

Pension: none, though Nicky will be eligible for the Teachers' Superannuation Scheme once she is fully qualified.

DEBT

Nicky has made a good start tackling her problems by cutting up her credit cards and facing up to her debts, says Frances Walker. Given that she took out the loan to pay off her cards, she must resist all temptation to use them again.

At 12.9 per cent, the interest on her loan is about average and it is unlikely that she will get a better rate. Walker also points out that Nicky need not worry about her student loans repayments as these will be automatically collected out of her pay packet at source once she earns more than £15k per year.

Stuart Glendinning believes the situation is not as bad as Nicky may feel. The debt is not secured on her home, he points out, and she is on top of the repayments. If she has problems keeping up with her repayment schedule, she must talk to lenders as soon as possible, avoiding penalty charges or extra interest payments.

BUDGETING

Nicky needs to prepare a proper budget which takes account of both periodic as well as everyday expenditure, Walker says. The CCCS (0800 138 1111, www.cccs.co.uk) has a free self-help pack she can use and once she has worked out how much she needs to live on, she can see if she has any money to clear the overdraft on her graduate account. Nicky should also consider opening a basic bank account as this will remove all temptations for her to go overdrawn in the future.

CAREER

Walker points out that training bursaries are available for postgraduates to train as primary school teachers ( www.direct.gov). Student loans and maintenance grants are also available.