Money management: ‘I had £30,000 debt, but now I’ve learned to manage money’
Amy McDermott, 32, on how she had to declare herself bankrupt but now has control of her finances
Name: Amy McDermott
Income: £1,374 per month in benefits
Occupation: full-time mother
Life has changed dramatically for me over the past two years – I’ve gone from being married and having a successful career in marketing with a healthy income of £3,500 a month to becoming a single parent and declaring myself bankrupt.
On top of dealing with the breakup of my marriage, I had to move house, start again in a new place and really explore my options. My nine-year-old son is severely autistic and attends a specialist school and, because I don’t have any childcare available as my family work full time, I had to quit my job to become a carer for my son.
He has several health-related appointments a week, and with me on my own now, it would have been difficult to find a job, as employers don’t tend to be flexible. My daughter attends a different school and the school run takes me one-and-a-half hours.
When my mum retires I’ll look to go back to work, as she’ll be able to take over the appointments.
By the time my ex and I split up, I’d accumulated quite a lot of debt: in total it was £30,000. Even though I was earning a lot, I felt that putting it on the credit card was a better option than buying things with cash.
I ignored the letters for a while and hoped the situation would go away. I was petrified to answer my door in case bailiffs were standing there. But in March last year I contacted National Debtline for advice, and explained my circumstances, and they gave me some options. As I didn’t own any assets, I felt the best decision was to declare myself bankrupt, which I did in April 2018. I was discharged from bankruptcy in April this year.
Being debt-free has felt like a new start. I never slept when I was in debt – I felt worried all the time.
I currently receive a carer’s allowance of £264 a month, £720 in tax credits and £390 for housing benefit, all of which comes to a total of £1,374 for the month. Out of that, I pay £550 a month for my rent. My daughter goes to stage school, which is £90 a month, which I pay if I can, or my mum helps us out.
I’ve finally learned how to manage money. Rather than set up direct debits, I physically pay or transfer the money, as paying it makes me aware of how much is in my account. I have a diary in the kitchen where I write down what needs to be paid and what date.
For example, on a Friday I top up £20 on the gas and electricity. I’m quite strict with my budget now. I give myself a food shopping budget of £50 a week, and only carry that amount with me. Every day I write down how much I’ve spent and then, at the end of the week, I go through it, highlighting what could have been avoided.
My friend introduced me to a financial app, Plum, which matches up to your bank account and creates your own savings pot. For example, it looks at your income and outgoings and, based on what you spend, it might take a certain amount out and put it into a separate savings pot. I started it in March this year and I’ve already saved £800. With Christmas coming up, it’s nice to know that in December I don’t have to panic and will have that money to one side.
We don’t have any holidays planned, but earlier this year we enjoyed a break to Haven in Primrose Valley [in North Yorkshire] on behalf of Family Fund, which provides grants to families with disabled children.
Do I spend any money on me? No, not really – all the money is spent on the kids. I don’t go out or drink or smoke. I don’t ever buy myself clothes – the only new clothes are if my mum buys them for us. As long as the kids are happy and they’ve got plenty to do and keep occupied with, then I’m happy.