Hi there, I'm new to you all but I've read every single post in this thread. I've been looking for answers to help with some feather plucking on my end with my baby. I'm extremely worried as he's had a small bald patch on his back for a long time now (years) but only recently does it look to be expanding

being that I live on a fixed income going to the vets will be a last resort unless I see him getting sick or stop eating/drinking etc. I want to try everything I can first. Is it possible that coconut oil can make it worse? I've been trying that the last few days, applying it 2-3x a day.
He seems in general to have a harder time relaxing to me. If i put him on my bed to hang out, he's gotta be chewing a towel. I made him a new toy that he seems to be liking a lot (out of an old towel, with a bell at the bottom and two pockets I put shelled unsalted pistachios in once in awhile (he seems to love it, even more than the new store bought ones I got the other day). Yesterday I bought him any stuff I came across that would take him time to eat and chew - string beans, snap peas, corn on the cob, a pomegrante, carrots, etc. he definitely has no issues with eating so for that I'm thankful. But this bald spot looks so horrid and breaks my heart. There's no blood though, he never shrieks - in fact it's hard to tell when he's doing regular preening or removing any possible feathers in that area. But his skin does look really red and raw almost. No flaking - perhaps it's just his natural skin color and I'm just unused to seeing so much of it. he was REALLY good at hiding it with his surrounding feathers but between the oil and the area growing it's getting too hard for him to cover up the crime area...
He usually listens to music throughout the day but I've decided it was good for a little change and have been putting up shows about birds on netflix for give him a bit more stimulation on that end (not sure if he really could care a less or not though to be honest lol, even when the bird "porn" came on today haha).
So besides him seemingly being a bit more on the anxious side, it's hard to tell what I should focus on. I'm thinking also of putting his cage back in my bedroom to see if it would help even though with my asthma/allergies it's not the best thing for me, but if it helps then so be it; I've had him there plenty of times throughout his life. There's been no major changes recently that would have caused any undue stress. The last big change was in august when my dog was moved to my mother's house (whole other can of worms there) but I'd have to say this uneasiness with him is pretty recent. Please tell me, is there ANY chance that coconut oil can make this problem any worse and not better? Just want to be sure i'm not getting off on the wrong foot.
Thanks to anyone who's read this and has any possible words of wisdom for me. He's only given me one other scare in his whole life and that was in college when he got zinc poisoning (he was on death's door and I'm so greatful the vet saved him!) so it's been a long time since I've been this worried or panicked about him. This time, however, is going to be much trickier though I'm guessing due to the fact that if it's purely psychological then it's a beast of it's own. Considering he's had a small version of this for a LONG time, it seems very plausible. Anyways, sorry for the long novel!
Thanks again,
Joanne