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You, or someone important to you is:
18-25
years of age
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This is a time in your life when you suddenly acquire a huge degree of independence, and of course many more responsibilities.
The problem many young people encounter is that of confidence - who taught you about the myriad of issues that surround your quest for financial independence and a secure existence.
Please talk to us . . . any time. We would be happy to fill in any gaps, explain any of the topics featured on this site, and help you gain a positive and informed perspective.
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You may be about to leave home and there will be a thousand adventures or worries on your mind but don't forget insurance.
Whether this is a specialist long term travel policy to cover a gap year or the insurance that you will need in halls or rented accommodation for your lap top, books, clothing and so forth you should talk to Corrigans about it.
Stephen's parents had extended their own household policy to cover his belongings whilst in halls. So, when his room was flooded during a student prank, new clothes, books and a stereo were provided by the insurers involved.
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It can be hard to admit to your parents that you are having trouble budgeting but do try to talk to them. No, they won't be happy, but they will be happier than they would be if you let things get out of hand.
To illustrate the point, Moira built up more than £29,000 in debt through a combination of her student loan, overdraft, store cards, credit cards and a personal loan before she found her first job.
Corrigans met her because she wanted to join the company pension scheme. Although the pension scheme was good, it made no sense at all for her to join it because she was paying an average of 24.2% interest on her borrowings. Rather than simply turn her away from the pension scheme we agreed to work together over a 2-year period to get her finances into some degree of control. This involved moving debts from one lender to another to get 'interest-free' money for as long as possible, and the cheapest rate of interest for the remainder of the money. All spare cash was directed towards to paying off the highest rates of interest first and after 2 years there was nothing left outstanding apart from the student loan, thanks to a huge commitment from Moira, coupled with the courage to talk to her parents about it which led to a gift from them to help things along.
Whilst that story has a happy ending you can avoid the trauma that Moira faced in the first place by talking to Corrigans if you do not wish to discuss it with your family.
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During the 1980's the government
introduced a scheme called 'rent a room relief' which meant that if
little or no profit was being made from taking in a tenant and there
was no income tax to pay on the rent received and the house could still
qualify for tax-free profits if it was to increase in value.
Obviously there are additional costs to face if you go down this route,
such as finding a deposit, legal fees and furnishings, but it is a
worthwhile alternative to paying out rent in exchange for no return for
any member of the family over what could be a very lengthy period if
this young person goes on from their degree to do a masters and then
possibly a doctorate. From your own point of view, there will be no tax
to pay upon any increase in the value of the investment provided the
house does not increase in value by more than £880,000 before it is
sold!
In Jane's case, a 5-bedroomed mid-terraced house was bought for
£140,000 in 1999 and sold in 2003 after a master's degree. The equity
was transferred to another property in a different university city
where a doctorate was to be taken and eventually sold in 2006 realising
a profit of just over £190,000 for little or no extra cost to her
family.
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Calling all parents, grandparents, wealthy aunts and uncles or family friends.
When a young person goes off to university they usually find that in
the first year they are staying in halls of residence. This fosters
confidence in their new found independence within a controlled
environment, yet limits their impact upon the city or town they have
moved to. But in the second and subsequent years, accommodation will
need to be found in the wider community, and this presents a wonderful
opportunity. Rents are typically between £45 and £60 per week payable
for 10 months and at half that rate for the other 2 months of the year,
amounting to almost £2,400 per year.
The
cost of the rent has to be found from somewhere, so why not turn it
into a mortgage instead? You could buy the house under a tenancy in
common arrangement whereby the young adult owned 99% of the house and
you owned the other 1%, but because you have an income or assets to
support it, a mortgage can still be obtained.
If the money was borrowed at 5% interest then the rent from one person
represents £47,500 in a mortgage. Consequently, if 4 people were
sharing this is a £190,000 mortgage.
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