mental illness and debt mistakes

Moneysavingslave

Hello guys,

I suffer from a severe mental illness. I've generally always been quite careful with my money however recently my health deteriorated and I spent vast amounts of money on stuff I didn't need in a short space of time. Without going into this in detail, I managed to rack up about £5k of debt within a couple of months and little to show for it. Fortunately I used a credit card offer to balance transfer this £5k to 0% until July next year. It angers me as I've managed to be very good with credit cards over the last ten years, paid off my balance every month but one or two months of madness has put me heavily in the red.

I managed to obtain some refunds for some courses that I had signed up to but had no chance of completing. Adding this to money I saved in recent months. I now have the grand sum of £1650.

I am gonna start selling some things to try and increase this total, I have an old laptop I don't need for example.

I receive incapacity benefit at the higher rate and am going to try and live on £70 a month over the next six months to see if I can get this debt down. I have a lot of food in the house, probably several months worth. I reckon its possible to do this, even in the current climate if I make pack lunches etc. You just have to be really careful how you spend your money. Fortunately I live on my own and have economy seven and am only using 1-2 units a day, so electricity is not a big cost.

Wish me luck. If I can do this, I should be able to put back £300 a month. It will be a boring six months.

I've thought about putting the money I save into an ISA for the time being and using a basic bank account. I have a thousand pound overdraft which its best I try not to use.

Happytogetdebtfree

Hi and welcome, why not pay off what you have saved so far? So youbare not tempted to spend it, or are you trying to accumulate some intrest on the savings , I wish you all the best with your target of paying off the 5k I'm sure mse will keep you entertained for 6 months :-) good luck.

Moneysavingslave

Happytogetdebtfree wrote: »

Hi and welcome, why not pay off what you have saved so far? So youbare not tempted to spend it, or are you trying to accumulate some intrest on the savings , I wish you all the best with your target of paying off the 5k I'm sure mse will keep you entertained for 6 months :-) good luck.

Yeah, my plan is to obtain interest from the money I save to offset some of the balance transfer fee I had to pay.

I could also put the £1000 overdraft money into the ISA too as it's interest free but I agree having money there can be risky as it's easy to spend it, whereas paying off the debt may be more advisable.

Speaking of which, I need to find a good ISA.

I had a nice plate of fried onions this morning hehe. Prob a couple of pence.

Ames

Wow, are you me?!

I could have written that post a few years ago, except I did it more than once and got into a lot more debt, so it's great that you've realised early enough.

Are you getting all the benefits you're entitled to? Do you get DLA, as that can link to lots of other benefits. If not, go to DIAL or somewhere similar and get them to help you.

I've found a few things help with the spending.

First of all, having several bank accounts and piggy banks. And then having several purses. I've got one for the food budget, one for my weekly allowance, and one for the activities I do - music lessons, book club, writers group and a coffee when I meet my support worker.

For impulse buys I tell myself not to buy it there and then but to wait a few days and go back. If it's still there, I still like it, and I can afford it, then I'll get it.

Oh, and budgeting can be hard on benefits, cos of getting paid 2 or 4 weekly and bills being monthly. So I do a different budget each 'month', starting with the date my DLA is paid in. Then I know exactly where I am and how much I have for spending money. Well, that's the theory! I've been hypomanic lately and things have slipped, but I'm putting all this back into place, I started a couple of months ago and it's all starting to kick in now.

HTH.

climbintheladderouttadebt

Hi moneysavingslave!

Well done on trying so hard to sort it all and good luck! Your thread title caught my eye as I am just embarking on my friend's problems, she also has mental health issues and she struggles to deal with companies and what she owes.

Will subscribe to your thread and see how things go for you

DarkConvict

Ames has given some worthy advice as Ames has been in your position.

If suffering with mental health, it maybe an Idea to call MIND - http://www.mind.org.uk/
They can give advice on mental health issues, and this includes some help with debt.

For pure debt queries, you can use these people - https://forums.moneysavingexpert.com/discussion/2077631

mrcow

Not being funny, but I wouldn't do the ISA thing. For the short period of time you're talking, it's only going to make a few quid difference. It would be better to take what you have now and pay it straight off the card and repeat each time you have money to do so and watch the balance reduce. Given the way your head has been for the last few months, it's the safest plan.

With regards to getting the balance down, there are lots of ways to encourage this more quickly.

Earnng money, reclaiming money and saving money is an activity that you should just keep at.

Don't think too that you can't do anything whilst you're saving and your life has to go on hold. There are loads of (free) things that help including:

Get yourself subscribed to the free cinema tickets thread and see brand new films for free before they are released
Sign up for free DVD rental trials
Join your local library and read on books that you always wanted to for free
Check out the freebies section of the forums for free offers for eg. days out, make up, magazines etc etc
If you're feeling daring, have a go at matched betting (IF you think you can be disciplined enough)
Get yourself signed up to Quidco for cashback on anything you do buy
Check out which museums etc are free to visit - there is often more than you'd think


The list goes on, but you get the idea?

Moneysavingslave

Thank you to everyone for their advice.

Regarding paying off the debt. Although I agree paying off the debt in the long term is a good idea, I thought maybe it might be better to keep it on the credit card. Not having money in my bank account can be a risky business in itself, as if a crisis happens I have no hard capital to fall back on. Credit on plastic can just sit there. As long as it's not accrueing too much interest I'd rather have the £5k in money somewhere. Besides, by having this debt on the card I won't use it.

I was thinking maybe by not paying off this credit card debt, and keeping a cash balance somewhere, when the day comes that I manage to get better and find a nice job, I'll be able to put £5k down on a mortgage and just bounce the credit card debt around various cards. My abbey one is useful as there are no transfer fees on it.

chevalier

Obviously I don't know the ins and outs of your mental condition, however one thing you could do is put a note on your credit file along the lines of

*suffers severe mental health issues, do not automatically grant credit to this person* ie to give companies pause?

I don't mean to offend just an idea
chev

beanielou

I think you are better to pay off the money you have saved so far to the credit card.

Moneysavingslave

chevalier wrote: »

Obviously I don't know the ins and outs of your mental condition, however one thing you could do is put a note on your credit file along the lines of

*suffers severe mental health issues, do not automatically grant credit to this person* ie to give companies pause?

I don't mean to offend just an idea
chev

Although I agree with the sentiment, probably not a good idea if I want to ever apply for a mortgage oneday as such information is likely to remain on my file for about 8 years.

That said I do know where you're coming from. The problem is, this isn't something that happens that often. Normally I'm very careful with my money such that I have a very good credit rating, have never missed a payment on any of the small amounts of money I've borrowed or any credit agreements (mobile phones etc) in the last 10 years. The people most prone to this though are people with manic depression, fortunately I don't have that, however looking back at what happened a few months ago I do start to wonder. I was diagnosed my a psychiatrist with my mental illness a few years ago.