My Bipolar Disorder Wrecked My Finances

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This post comes from Sarah Freeman at partner site Credit.com.

Ten years ago I was a successful middle-aged professional with substantial savings and investments, an enviable real estate portfolio, and happily on track to my first million. Today, I am a 51-year-old woman with little set aside for retirement, living paycheck to paycheck, and a very long way from financial independence.

Am I just another casualty of the global financial meltdown? No! My financial meltdown was very personal and localized. I call it my “manic money meltdown” and it was caused by my bipolar disorder.

Bipolar mania provides the perfect crucible for money troubles. Lately many people have become familiar with the concept of “the perfect storm” – a convergence of forces or circumstances that work together in the worst of all possible ways in order to magnify the intensity and impact of an already negative event. Undiagnosed or untreated bipolar mania can create the perfect storm for debt, overspending, ruined credit and financial chaos.

The symptoms of bipolar mania, when taken individually, can all be shown to create a predisposition for poor financial decisions. When several, or all, of these symptoms are combined, the likelihood of money problems compounds and amplifies. The disordered thinking of bipolar mania and irresponsible financial behavior share the same dark core. Wish fulfillment, selfishness, delusion, deceit, egomania, self-gratification, escapism – words often used to describe the psychic landscape of the financial profligate are strikingly similar to the experience of mania.

My story

My own “manic money meltdown” was a combination of extravagant spending on clothes, luxury hotels and first-class international travel, time out of the workforce while I pursued irrational business and personal schemes with no earnings, and a ruinous divorce brought on by my own crazy selfishness, infidelity and bizarre delusions.

Most people with bipolar disorder go many years before receiving an accurate diagnosis and effective treatment. One of the ironies of my situation was that I was seeing a clinical psychologist for weekly therapy all through the period when I was shopping compulsively, liquidating my assets, throwing away my career, booking round-the-world trips and destroying my marriage. However, bipolar disorder is still so little understood that an expert completely missed it.

It was only the following year, by which time I had fled my marriage, squandered a small fortune, and made the strange decision to pay for an expensive graduate program quite unrelated to my profession at a university on the other side of the world, that I ended up seeing the college psychiatrist. We had several sessions where she diagnosed acute anxiety and began trying to find a helpful medication. My casual mention of some weekend furniture shopping (I spent thousands of dollars on exquisite Italian furniture for my run-down, very temporary student apartment) set off alarm bells and led to my bipolar diagnosis.

Finding the cause

Diagnosing bipolar disorder often involves a psychiatrist asking a patient if he or she has indulged in unrestrained buying sprees, made any foolish business investments or spent (or wishes to spend) significant amounts of money. However, it is important to understand that it is not only reckless financial behavior that is a classic hallmark of mania. ALL of the symptoms of bipolar mania are ingredients in the recipe for financial disaster.

For example, bipolar mania is often characterized by extreme grandiosity – the delusional belief that one is special, superior and entitled. It is a state of mind where there are no consequences and no limits. Spending in this state is like simultaneously winning $1 billion in the lottery and having only six months to live. Not only does money appear limitless but it seems there will never be any day of reckoning.

It is not just the grandiosity and impulsivity of bipolar disorder that can create money problems. During mania some people simply give away money or possessions. Others gamble. One man I know sold his Rolls Royce for only $20,000 and then lost every dime of it within 24 hours by playing poker.

Some people experience mania as a state of anger and paranoia and may lose their jobs or create expensive legal problems for themselves because they create so much chaos and conflict. Others spend large amounts, not on luxuries but on irrational purchases that make sense only when manic — for example, maxing out a credit card to buy everyone you know a snake bite kit.

Drugs and alcohol can also empty bank accounts and cause substantial debts because substance abuse and bipolar disorder frequently occur together. Similarly, access to credit is actually very much like enabling a serious drug abuser because of the tendency for someone in a manic state to spend money with absolutely no ability to consider the consequences or significance of the debt.

Living with bipolar disorder

Do I wish I still had six figures in my checking account? Sure! Do I miss the security of owning my own home free and clear? What do you think? Would I like to still have the luxury of passive income flowing in each month from my rental properties? Of course I would! However, there is one overriding positive that came out of my manic money meltdown. It was my crazy spending that led a psychiatrist to finally understand what was really wrong with me.

In many ways the day I was told I probably had bipolar disorder was the best day of my life. The diagnosis shocked me but since then I have flourished with medication and therapy and have not had a serious episode of either mania or depression for eight years.

I also have a wonderful fiance and we plan to marry this summer. We have been slowly combining our finances and recently bought a home together. How can my fiance trust me with money? Why would anyone with a history of fiscal prudence and responsibility mesh their hard-earned and carefully managed money with me – the ultimate financial train wreck?

One of the paradoxes of bipolar disorder is that it is episodic. In between bouts of either mania or depression, the person is “themselves.” It is possible during these periods of wellness and rationality to put in place safeguards to protect both the person with bipolar disorder and their family in the event of a serious mood swing.

In my home we have enjoyed a long period of stability and hope it continues. But we both know relapse is always a possibility. There are four specific tools we use together that give my fiance and me peace of mind about our finances and everything else:

1. Daily mood charting

Every day I rate my mood, as well as making a few quick notes about sleep, diet and exercise. This way we can both see if I am starting to enter a period of being either unusually “up” or “down,” and also if I am missing sleep or slipping into the sort of poor lifestyle choices that tend to trigger an episode.

2. A wellness plan

This is a blueprint that describes my own personal signs of wellness, as well as my individual signature bipolar symptoms. It also describes the daily activities that support wellness, the typical red flags that show I am becoming a little manic or depressed, and the particular interventions that get me back on an even keel. I have also found that nutrition is extremely important and I have even written a bipolar diet book to share what I have learned with others.

3. A treatment contract

This is my written commitment to turn over all of my financial and business affairs to my fiance if I ever experience a serious mood swing. It also includes a power of attorney. We have shared it with my doctor and psychiatrist, and I have agreed to accept all and any of their treatment recommendations.

4. Transparency

We use Mint.com, a free Web service that automatically tracks all bank accounts and even credit cards and investment accounts. The result is no secrets and no surprises. It means we can constantly fine-tune our budget and see exactly what we are both spending and saving.

Bipolar disorder is a serious illness. It cannot be cured, but it can be managed. In fact, it is one of the most treatable of all mental illnesses. Most of the damage caused by bipolar disorder could be avoided with speedier diagnosis and adherence to treatment.

Money problems are a common manifestation of bipolar disorder. Next time someone’s financial behavior strikes you as crazy or irrational, stop and look closely. Temporary insanity – in the form of bipolar mania – really may be the explanation.

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