Debt is the new slavery in America

Recently, a strange thing has been happening all over the United States. Even though our country is known for giving its people freedom, millions of Americans willingly put themselves in a form of slavery called financial servitude.

In the United States, people have been forced to work for money for a long time. In the 1600s and 1700s, immigrants had to pay a lot of money to come to America. Most immigrants didn't have enough money to get to the U.S., so they found someone in the U.S. who could help them. When the immigrants got to America, they had to work for their helpers for up to 8 years to pay off their debts. This was called "indentured servitude." This deal worked out well for both sides. The people who helped got workers and apprentices for their businesses, and the people who were helped would soon be able to go after opportunities in the New World on their own.

Today, Americans are once again working for money. This time, though, we don't work as slaves to find work in the New World. Instead, we do it for new shoes, nice meals, expensive cars, and stainless steel appliances. We borrow money through credit cards, home equity loans, and other types of debt until our bills tell us when and how much we have to work, often at jobs we don't even like.

Americans used to try to stay away from debt, but lately we've been convinced to take it on. The process starts early, when high school and college students get pre-approved credit cards even though their only income comes from babysitting or mowing their neighbours' lawns. We are told that borrowing money is a good way to get groceries, clothes, cars, and even houses. We have come to accept debt as a normal part of life.

What happened? In August 2006, consumer debt in the United States hit an all-time high of $2.35 trillion. At the same time, real estate foreclosures are going up all over the country, and millions of Americans are having trouble making ends meet. Americans are more worried about money than they have been in a long time.

We need to take charge of our money and our lives again. However?

I look to what I know from my own life for the answer. I know how painful and hopeless it is to have so much debt that you can't do anything. I also know how it feels to get out of that same debt.

When I was in college, I took out loans to pay for a way of life I couldn't afford. I bought CDs, a pricey bike, skis, stereo equipment, clothes, dinners for dates, concert tickets, and plane tickets with credit cards.

I thought that once I got my degree and started working as an aerospace engineer, I'd be able to pay off my debt quickly. That's not how things turned out. Instead of paying off my debt with my new salary, I moved in with some friends and bought a more expensive car. I also kept buying fancy dinners and going on pricey trips to impress the girls.

My paychecks didn't last as long as my bills for very long. Before payday, I ran out of money. I had problems. I sat down with my bills and did the math to figure out how much I owed. I couldn't believe how much it was. I was 24 and felt hopeless because I couldn't see how I could pay off my debt before I turned 40. I would wake up at night in a panic, worried about what was going to happen.

After feeling hopeless and sad for a while, I was determined to figure out a way to pay off my debt. I learned about money from books, made a budget, and tried to stick to it. But I didn't do very well, and my debt kept growing.

I realised that I wasn't good at managing my money because I had to change how I thought about money before I could change how I handled it. I started putting together a money philosophy that changed the way I thought about money and helped me pay off my debt and get back in charge of my money and my life. Ten lessons and ideas made up my philosophy.

The first thing?

Being in debt is like being a slave.

Some people think it's crazy to compare debt to slavery. But while I was paying off my debt, I had to go to work every day, even though I didn't want to. A lot of people owed me a lot of money. If I didn't go to work, I wouldn't be able to pay my bills, my car would be taken away, and my life would be a mess.

I had to go to work because I bought things on credit, like my car, bike, dinners, and ski trips from last year. I also wasn't free to make the most of opportunities. I had to turn down the chance to go on a three-month trip around Europe because I couldn't afford both the cost and the time off from work.

My debt had turned me into a slave.

After I learned that debt is slavery, whenever I was tempted to use my credit card, I told myself, "I'm a debt slave if I borrow money." Just thinking about that gave me the courage to stop adding to my debt, which made it easier for me to pay it off.

So, the next time you want to buy something with your credit card, remember that debt is slavery. Stop borrowing money and focus on paying off what you already owe. If you do this, your time in financial servitude might be shorter than the 8 years it took our immigrant ancestors to pay off their debts.

Consumer Credit, Federal Reserve Statistical Release G.19, 6 October 2006