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6 steps for reducing debt when you have a disabled child

Climbing Out Of Debt

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just a pretty blue line

Disability + Extra costs = Debt

I have found that having a child with a disability can become a huge money pit. It’s expensive enough having a child, but when your child has a disability, I find that I am spending more money on clothing and equipment than anyone else.

Once upon a time, I didn’t have a lot of debt and what little I did have, I was able to pay off with my wages. Now I have found myself in a position that I can’t go out to get a job, as I wouldn’t be able to fit it around my daughters care needs.

From the moment Emily was born, I was searching for toys which would help improve the mobility in her legs. Toys’ R Us (god bless them) didn’t have such toys in 2006, and I was left to searching online. As soon as I searched the word ‘Disability’ and ‘Special Needs’, I was bombarded with an extra price tag, much like booking a wedding.

I bought toys, exercise activities, a skateboard to help her move on the floor, specialist cutlery, specialist drinking cups, an expensive bean bag for her to sit up in. Incontinent pants and hydrotherapy. Then to top it all off, the cost of washing clothes for an incontinent child, having plenty of spare clothes and spare school uniform. It all added up, and I used over drafts and credit cards.

The carers allowance that I receive of £64.60 a week doesn’t even cover my food shopping bill.

I have been too scared to open my mail, look at my bank statements, and every time I have paid by card, I have cringed waiting for the card machine to say ‘Declined’. Interest has been piling up and the debt has been spiraling. 

NHS & Charities 

The NHS provides some equipment, but it seems to be a postcode lottery over which health trust will fund what. Whilst there are charities around who can help with funding for equipment (see my support & advice page), there are certain things that they will and won’t fund.

Also applications need to go through a funding panel before it is approved, by which time I found it easier to pull out my credit card.

The Turning Point   

The final straw was when a bill was unpaid by my bank because I didn’t have enough money to cover it. I realised that this was starting to get really serious.

My husband had got a new job, so I decided to tackle my finances to get rid of the stress. I made an appointment to see my Barclays bank manager. I didn’t get see the manager, just a clerk. The old fashioned way of asking your bank for help, has long gone, and machines have replaced human contact.

I have been a customer with them since 1995, I have paid them a lot of interest over the years, they have made a lot of money out of me. So I consider myself to be a good customer. I asked the clerk to help me.

How can I get rid of all these overdrafts and stop paying all of this interest? Could I get a loan? Could the interest be reduced? I was met with a shrug of the shoulders and a computer that said ‘NO’. I was furious.

Why was this high street bank, who was firmly involved in the banking scandal of 2008, not going to support my family in the situation that we had found ourselves in?

How I started

1. Budget

I worked out a budget, and put in the true cost of things. Even over estimating at times. I worked out all of my debts, as scary as it looks on paper, and bills. Then worked it all out against our income.

2. Advice

I started off looking at Money Saving Expert and looked at the best places to start. Martin Lewis has always given sound advice in dealing with your finances. I could find information and apply for loans, without it affecting my credit score. It told me how likely I was to get the loan, after I had entered some details.

3. Make a Plan

I went to see my financial adviser who we trust and have used since 1997. We are also wanting to extend our house at some point, and he suggested that taking out a loan, paying off the overdrafts for now would be a great idea, until we are ready to remortgage later this year and we can pay off the credit cards and loan in full with the remortgage.

4. Change Direct Debit Dates

Most of my bills were due to go out on the 2nd of each month. I had never changed these dates before. My husband now gets paid on 27th of each month. As the date I had started all of this was around 16th Feb, some bills had already been paid for the month. So by moving the dates to the 28th, a day after he was paid, my next payment date wasn’t until 28th March. So this effectively gave me a month of the bills. Its worth saying, that not all of my bills could be changed to that date, as the companies only have set dates that they are allowed to take the money out. But I managed to change a good chunk of them.

5. Consolidate debt

I got a loan with Ratesetter, who offered a far lower rate than Barclays. They are a peer to peer lending company, which I trust more than a  high street bank who pays their directors large sums of money. The loan is over a 5 year period and I can pay it back early without any penalties. I borrowed enough to pay off all of my overdrafts. The cost of the loan is far cheaper than the interest that I was being charged on my overdrafts.I've paid off my overdrafts celebration banner & balloons

 

 

email from RateSetter
This is the first email that I got from Ratesetter. It tells me that I can pay off my debt early – that’s so refreshing to see.

 

My husband applied for a credit card to transfer the balance on my two credit cards to his. He was able to do this at 0% interest for 23 months. We no longer are paying interest on our credit cards.

The trick is now, not to use the credit card, leave it at home, in an abandon drawer so that we don’t get tempted to use it. We have set up a direct debit to pay off the minimum amount each month. But will add to it when we have excess money.

5. A better Bank Account

 

I discovered Starling Bank, who has high ratings in every review site that I’ve seen. I am very impressed with their service. The company is based in London, and best of all it’s free. Download their app for android or iOS, and find how easy it is to use.  I have been using them for 2 weeks, and have already tried out the customer service.

I have had far better service in 2 weeks, than I’ve ever received in 23 years of being with Barclays. Starling Bank offer an easy way to budget your account.

screenshot from starling bank showing my spending
This is a screenshot of how much I have spent today, and how much balance I have left.

Its very clear to see day by day how much I am spending.

I have managed to put some of money into a separate ‘Goal’ area, for holidays and Christmas, so that I can plan ahead and budget for these high expenses.

starling banks - Goals: Christmas. Emily's Birthday. Holiday
This is a screenshot of my goals. I’ve still got a long way to go.

6. Avoid making the same mistakes again.

I love Starling Bank so much, that I have moved all of my accounts over to them, using their free guaranteed Switch service.  Most importantly….I don’t have an overdraft.

I have decided not to apply for one, even though the option is there up to £250. However, I don’t want to go down that route again of spending money that I didn’t have.

It feels better psychologically to have a new bank account and not feel that we are inside the same trap again.

Amazing Feeling

All of a sudden, I have this amazing feeling. I know that I can afford petrol to put into my car.

I can sit an drink coffee in a coffee shop totally exonerated from guilt.

It’s half term next week, and we booked a night away WITHOUT using the credit card. We even have some extra cash.

I so wish that I had done this years ago.

I’m on a roll.. what’s next?

Now I have tackled the debt. I now need to fight the system and get Direct Payments, for Emily.

But that’s another blog for another day.

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