Debtor's Prison

In America today, we don't really have a concept of debtor's prison. They have mostly been outlawed all over the world. It was a crazy practice, although the people in charge could probably justify it. If you owed money and were taken to court over it -- say you owed back rent and your landlord sued -- the judge could order you to be thrown in jail until the money was paid. But how do you pay a debt if you're in jail? The debtor's prison was like a locked workhouse, in that prisoners were given piece work of some sort and stayed there until either their debt was worked off or someone from the outside paid the balance. This had a tremendous affect on the debtor, but also on his or her family; if you've ever read the works of Dickens, you'll have read about his "intimate knowledge of the jail that came not though rumour or research but through a deeply personal experience that would profoundly affect his character and his writing" - See more at: http://www.historyinanhour.com/2012/02/07/dickens-and-debt/#sthash.wX7Aq1Xm.dpuf

Debt is a heavy load to bear. Unfortunately, many people in America are carrying that burden. It causes physical problems, like heart and blood pressure issues or stomach ulcers; depression and anxiety; and relational issues as the family tries to manage the stress. We've been sold a "bill of goods" as they say, because despite what our society wants us to believe, it doesn't have to be this way!

Here are some ways to help you begin the process of breaking out of debtor's prison:

1. Stop borrowing money.

This sounds overly simplistic, but it actually takes an intentional, concerted effort. How many envelopes with pre-approved credit card offers did you open this week? How many store accounts did you open because you could get an immediate 15-20% off your purchase? This first step, though, also includes things like financing furniture and test driving brand new cars you can't possibly afford. My downfall isn't the cars but the catalogs-- every month I receive the newest Lands' End catalog and look at it six or seven times, marking pages, doing mental math, until I convince myself I can afford new jeans, even though I can't!

2. Establish an emergency fund.

Now, some sites and experts will tell you it should be $1000, and some will tell you 6 months' income. I think $1000 would be the minimum, because that would be enough, generally, to fix a car or pay a health insurance deductible if there was an accident. But what if that accident kept you out of work for four months? Set it up in a special account that you won't touch. Put in a $100 or so every paycheck until you get it up to the right level, and then don't touch it! If you put it in your "regular" savings, you might end up spending it on vacation instead.

3. Create a realistic budget.

You may need some help with this. I attempted this on my own and the first month in realized I had forgotten to put prescriptions into my budget! As someone who has monthly prescriptions, this was a big oversight. My co-pays are relatively small, but they add up. And budget in the "fun." Otherwise, you'll borrow it from somewhere else. You have a finite amount of money, and it is all going to be spent or saved somewhere. The budget helps you plan where it will be spent or saved.

4. Trim the trimmings.

Everyone has cable and/or DirecTV and/or Netflix, but do we need all of them? If you have streaming Netflix, you have access to thousands of TV shows and movies. If you have DirecTV, or whatever your local option is, you have 2000 channels. Who can watch 2000 channels?! Discuss it as a family and decide which one you are willing to give up.

I have neither cable nor internet at home. That works for me at the moment, but if you have kids who need the internet for homework purposes, that may be a necessity for you. So what else could you trim? Perhaps your kids could choose one seasonal activty -- dance or baseball or soccer -- instead of all of them; those fees and equipment purchases add up! What about snacks? It is easy to run to the store and pick up more chips when you run out, but is it really necessary? When we were kids, Mom bought 3 boxes of cereal every week at the grocery store. Two of them were unsugared, like Cherrios, and one was a sugary cereal, like Fruity Pebbles. All three had to be gone before she'd buy more. Ice cream was a treat, and with 6 people in the house, a half gallon went quickly, and then we'd wait for the next treat. I'm as bad as the next guy in this regard; as adults we control what we buy at the grocery store and no one can tell us differently! But consider it, to help ease the weight of debt your family is under.

However, note that in the story above, my very frugal mother didn't cut out the treats entirely! We still had ice cream. Just not often.

5. Create a plan to pay off debt.

How much debt are you carrying? Most of us would say the mortgage is a necessity and we all need at least one or two credit cards for emergencies. Not so! That's the bill of goods! If you have the emergency fund, there's no need for "emergency credit cards." And it is possible to pay off your mortgage and live debt free. Dave Ramsey suggests starting with the smallest debts and paying those off first. As you pay off one bill, roll that payment into the next lowest and so on. For instance, if your smallest bill is at the car repair shop, and you're paying $100 a month to your very understanding mechanic, when that bill is paid off, add that $100 a month to pay off the lowest credit card, or whatever it is. You won't miss that $100 a month, because you've already been sending it somewhere else, so it will help you pay down your other debt faster. Keep this going until you only have your mortgage left, and think how much extra you'll be able to add to your mortgage payment each month!

You didn't get into debt overnight, and you won't get out of it overight, either. Getting into debt was easy; getting out will take effort. But it is possible, and when you've finally accomplished it, you'll feel like you've just stepped out of a dark,

dank stone prison into the freedom of sunshine and possibilities!