Personal Finance

The Complete Money Guide for Ex-Offenders

Personal finance can be a challenge for anyone, but it can be especially difficult when you’re already struggling to get back on your feet after spending time in prison. From budgeting to finding a new home, this guide can help you overcome some of your immediate financial challenges.

The United States has a higher rate of incarceration per capita than any other nation: 698 of every 100,000 residents wind up behind bars. And when those offenders are released, they often face an entirely new set of challenges — especially when it comes to finances.

First, there are the costs associated with incarceration itself, like parole fees, probation supervision fees, DUI-related costs and restitution. Then, there are the accounts that you may have fallen behind on during lockup, like credit cards, student loans and child support payments (the latter two can even lead to wage garnishment).

Since studies show that incarcerated people were earning, on average, 41% less than their non-incarcerated counterparts even before they went to jail, it’s not as if most ex-offenders are set up for financial success right off the bat. But that doesn’t mean that the newly released should give up hope. With the right tools and a healthy dollop of determination, you can find financial freedom.

In this article we’ll discuss:

First things first: Finding work

It’s widespread knowledge that finding a job is a whole lot harder for those who have a criminal record. In fact, some studies have shown the existence of a record reduces callback rates by as much as 50%. And that has implications beyond the immediate need to earn money — unemployment has consistently been linked to increased chances of recidivism.

Fortunately, though, there’s been a recent shift toward a more forgiving hiring culture. A 2018 survey of hiring managers and HR professionals suggests they’re more willing than ever to overlook a criminal record. Plus, initiatives like Ban the Box, which encourages public and private employers to remove questions about conviction history from their employment applications, is slowly making it easier for ex-convicts to move forward based on merit instead of being dismissed outright.

Still, the job market is tough for anyone — and doubly so when you’re walking in with an undeniable handicap. So how do you land a gig with those kinds of odds?

“You need to be honest,” explained Michelle Cirocco, the chief social responsibility officer at Televerde, a business-to-business marketing company that actively recruits ex- and currently incarcerated women. Thanks in large part to Ban the Box, you may not have to disclose your conviction immediately. But you still want to bring it up before your potential boss runs a background check, Cirocco suggests.

Along with keeping your hiring manager from an unpleasant surprise, being upfront about your record gives you the opportunity to explain your side of the story, as well as the steps you’ve taken to learn and grow from the experience. Mention any in-prison programming you went through, whether that’s vocational training or substance abuse counseling.

But one of the most important steps can also be one of the most difficult: putting yourself out there in the first place. “Too often, people are afraid that because of the scarlet letter of their felony conviction, they’re not worthy of a job — so they don’t even bother to apply,” Cirocco said.

“Believe that you’re worthy, apply for the job, and know you can do it,” she said. “You will run into discrimination, but don’t let it stop you.”

Where to look for felon-friendly jobs

Even with all the confidence and straight-talk in the world, you can’t land a gig if you don’t know where to look. Alison Rapping, CEO of the Arouet Foundation, suggests that your job search start on the inside. If you’re participating in any sort of job training or vocational programming, ask the people in charge for leads to pursue down the line. “Usually,” she said, “those people know who’s going to hire.”

She also suggested checking out your local state workforce development program, as well as participating in the job placement and training services offered by Goodwill.

There are also criminal-record specific job boards online, like Jobs for Felons Hub and Jail to Job. But as can be true for almost any job seeker, your network is likely your most important asset, so be aggressive about expanding it.

“Join things — recovering meetings, community meetups,” Rapping suggested. “Find things in your community to get involved with where you can meet people. Networking and connections will help you find the job.”

And if you see an open position that looks like a perfect fit, don’t be afraid to go for it, even if it’s not explicitly felon-friendly. “Call them up and ask them,” Rapping said. After all, the worst thing they can say is no.

Putting a roof over your head

Having a job is all well and good, but it won’t do you many favors if you don’t have a reliable place to sleep at night. However, the same discrimination that can keep ex-convicts from finding employment can also cause trouble when it comes to lease signing.

When first released from prison, many ex-offenders look to public shelters and halfway houses for temporary accommodations, or, if they’re lucky, move in with family and friends. Shelter Listings offers a great list of transitional housing options organized by state.

Once it comes time to find a more permanent living situation, you can stack the odds in your favor by seeking out apartment complexes that routinely rent to formerly-incarcerated people. Brokers and real estate agents can help you find leads, but may charge fees for their services. Jobs for Felons Hub, mentioned above, also offers some well-organized, housing resources.

But your best move, according to multiple sources we talked to for this story, is to stick to private renters; the kind you find by driving around town looking for “For Rent” signs or browsing Craigslist. Individual people are usually far more likely to hear your case than a corporate-run apartment complex.

“As long as you can prove you have good references, good income and an employer who can vouch for you,” said Rapping, you should be able to find a private renter who’s willing to give you a chance. (There’s that networking thing again — it’s important!)

But beware of predatory practices, sky-high fees and scams, which some landlords will run on ex-convicts who think they have no other options. “Read the fine print on anything that you get,” said Cirocco. And don’t fork over that rent check or deposit until you have the keys in your hand.

Budgeting: Setting the foundations for your financial future

Finding shelter and a reliable source of income are major battles won. But now comes the more difficult (and exciting) part: setting the stage for a stable financial future.

The first step, as is the case for anyone trying to get their money right, is budgeting — and learning that not everything is going to happen at once.

“Patience is [a newly-released convict’s] best asset,” said Isaac M. Cooper, CEO and managing partner at Birmingham, Ala.-based IMC Financial Consulting, LLC. IMC is partnering with The Dannon Project to impart practical financial skills to a class of 50 ex-offenders through a curriculum it calls F.L.E.E, or Financial Literacy Entrepreneurship and Education.

Depending on an ex-convict’s lifestyle before jail, the money flow may be different than what they experienced before serving time. Regardless, the first step to creating a budget is to sit down and reckon with your personal priorities. “Write down your plan,” Cooper suggested. “What do you want to get accomplished? What is important to you?”

Before reaching for lofty goals, however, you’ll need to factor out your basic living expenses, including shelter, utilities and food, as well as necessities like transportation and clothing — not to mention any debts owed, including preexisting loans and conviction-related expenses, like restitution. (We’ll dive more deeply into debt in just a minute.)

Be sure you’ve taken everything into account, and don’t be afraid to add a cushion. “Always assume everything’s going to cost a lot more than you think it’s going to,” Rapping advised. Using budgeting apps like Mint or You Need a Budget can help ensure you’ve considered every last expense.

And when it comes to actually sticking to that budget, don’t overlook the power of shopping at thrift stores or taking advantage of food banks. “Don’t feel overly prideful,” Rapping said, adding that food pantries often have relationships with local growers and thus offer excellent produce.

Ditching debt

One of the biggest obstacles the newly released face — and one of the hardest to budget for on a limited income — is debt. You may have gone into prison already on the hook for student loans or credit card payments, and now you’ve potentially got lawyer fees, restitutions and fines on top of it.

To add insult to injury, you may find yourself having to pay penalties for financial scenarios you couldn’t avoid, like a lapse in car insurance coverage. There are all these penalties because you didn’t have the ability to manage your accounts, explained Cirocco. “And meanwhile, here come the bill collectors.”

Whether you have a criminal record or not, paying off debt takes time and persistence, and the only way to get it done is to get started. There are two main debt repayment strategies that might be helpful to consider: the snowball and the avalanche.

Although these tactics go about debt repayment in different ways, the goal is the same: Pay off your debts so you can stop wasting money on interest payments and apply it to bigger and better goals. But again, remember that patience is key, especially when you’re also dealing with so many other financial obstacles.

Building your credit

If you’ve been on the inside for a while, you probably haven’t had the chance to make any positive impact on your credit history. If anything, your accounts may have fallen delinquent if you were unable to pay while incarcerated. Depending on when you were jailed, you may even be starting from scratch, which makes it tough to get access to financial products like a mortgage or an auto loan.

The first thing you’ll want to do is check your credit report to see what it’s been up to during your absence. You can request a free report without impacting your credit score once a year at the official Annual Credit Report website.

Your report won’t necessarily list your credit score — the three-digit number that acts as a shorthand for lenders assessing your creditworthiness — but it will give you the details on your open accounts, payment history and any negative marks like collections pursuits or civil judgments. You’ll also want to check carefully for any signs of fraud or identity theft: If you see an account you don’t recognize or incorrect personal information, file a dispute with the credit bureau as soon as possible.

If you find yourself needing to repair a poor credit history or build one from scratch, there are tools at your disposal that can make a big difference. Secured cards, for instance, require a cash deposit, but report payment to credit bureaus, which will give you an opportunity to demonstrate positive behavior.

Payment history is one of the most heavily-weighted of the factors that go into calculating your credit score, with your amount of debt counting as a close second. Thus, paying off your accounts on time each month is imperative to establishing a solid credit history or repairing a broken one.

Finding the right tools for financial success

Just like any other endeavor, a successful financial journey necessitates certain basic tools. Opening a checking account or taking out a personal loan could be key ingredients to getting your finances back in order.

But once again, these should-be simple steps can be complicated for those with criminal records. Worse yet, there are plenty of predatory lenders out there who are happy to take advantage of your precarious position.

Depending on your financial history, you may or may not have a ChexSystems record, a red flag that can make you look like a risky prospect to banks. Fortunately, some banks offer “second chance” checking accounts with less stringent requirements, although they may come with a monthly service charge. MagnifyMoney, a fellow LendingTree company, compiled a list of the top seven banks that offer second chance checking.

Local credit unions may be more lenient when it comes to offering products for those with imperfect histories, so it’s worth shopping around in your area when you’re choosing a bank. The same is true of personal or installment loans, which can be difficult to obtain for those with little or no credit history.

That said, try to avoid payday loans and other short-term, high-interest financial products, which can carry APRs of up to a staggering 400%, or even more. Although the promise of fast cash is alluring, it’s not a sound financial decision in the long run.

Taking advantage of public services

Although there are plenty of challenges facing those who’ve been incarcerated, there is a little bit of a silver lining known as public services. Depending on your socioeconomic status, location and other demographic factors, you may be eligible for benefits like food stamps, state-sponsored health care or down-payment assistantship grants.

Although it’s natural for your pride to take a hit when accepting charity, don’t let it get in the way of your financial recovery. “It’s totally OK to use the things that are available,” advised Rapping. Public services can go a long way toward keeping your budget in check and finding the things you need to live a comfortable lifestyle.

To find out more about the social supports you’re eligible for, online research is a great start. Help for Felons offers a comprehensive state-by-state guide of reentry programs. You can also head to your local Medicare office, and while signing up talk to your representative about other opportunities that may be available for you. You can also query other ex-offenders, who know from experience.

The bottom line

No matter what part of your financial wellness you’re tackling, the most important step is to find ways to get involved with the world around you and bring new people into your tribe.

As Rapping put it, “Don’t give up. Stay hopeful. Stay connected.” Tapping your network can help you find the services you need to get your fiscal affairs in order, but rebuilding your finances is just one small part of reintegration. Engaging with your community is the best way to feel not merely unimprisoned, but free.

Jamie Cattanach

Jamie Cattanach’s work has been featured at Fodor’s, Yahoo, SELF, The Huffington Post, The Motley Fool, Roads & Kingdoms and other outlets.