Give Me Back My Five Bucks

Can debt make you feel better about yourself when you’re young?

According to a recent study done by a group of sociologists, young adults (aged 18-34) can actually benefit and improve their self-esteem by carrying debt. Debt has the ability to give them a feeling of “mastery” – or the idea of being in control of something. And the more debt you have, the bigger the boost you seem to get. That’s the good (?) news. The bad news is, this false sense of confidence only lasts until you’re 28 – when, as you can imagine, it starts to have the opposite effect. The study found that debt boosts self-esteem because it allows you to live large. Being able to rent the apartment all your friends are jealous of, buy nice clothing, go to those fancy restaurants, or attend that expensive University – it is all attainable to you, as long as you’re willing to sign on the dotted line and live beyond your means. Sound familiar? That’s how I lived for quite a few years.

The study goes onto talk about how young adults might “experience debt as an investment in the future,” regardless if it’s student or consumer debt. Once young adults reach the age of 28, the good feeling associated with carrying debt tends to wear off. They might start to realize that they overestimated how much money they thought they were going to earn at their jobs, and/or that paying off their debts is not as easy as they had anticipated.

But what I found most interesting about the study is how debt affects young adults is dependent on what other financial resources they have available to them. If they come from a wealthy family, they might receive no self-esteem boost whatsoever from carrying debt. However, those that come from a family in the bottom 25% of household income got the largest psychological boost from having debt. Spending beyond their means might make them feel better about themselves – but the drawback is that in doing so, they are making it much more difficult on themselves to overcome their debt (and potentially their low-income status) in the future.

I started to feel guilty about my debt when I was 24. In the 5 years previous, I had racked up $21,000 in debt. So if I hadn’t decided to do something about it, my credit card and student loan debt could have easily doubled by the time I turned 28. It’s kind of a scary thought.

Did your self-esteem improve by carrying debt and living beyond your means? At what age did you start to feel guilty about your debt?


Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. Renee says:

    This article made me laugh because I am 27 turning next month. I've just gotten the itch to become serious about paying off our debt and making improvements to our financial house. For me, that pyschological number in my head is THIRTY.
    My recent post 4 Goal- Begin College Savings Accounts for Our 3 Children

  2. addvodka says:

    I'm only 22 and I had to stop spending and going into debt because my debt would definitely make me feel less confident.

    First of all, I couldn't comfortably go out with my friends like they could – I couldn't just go for dinner and drinks without shuffling money around or making an excuse. Plus, much of my debt was not consumer debt, it was student loan debt (still is), but I did have maxed out credit cards and I felt dumb, so maybe I'm just a little farther ahead than my peers. I would say I started to feel guilty about it at 20.
    My recent post I’m a slacker

  3. Kathy says:

    my immigrant parents, they picked worms as one of their first jobs in Ontario, moved on to other low skill jobs- factory, janitor etc.. this is at a time when the hourly wages were like .90 cents/hr a house cost 30k and interest on a mortgage was 9-10%- they paid off their home speedily, they managed to fully own a 2nd home too, and raise 3 kids and now still have enough retirement money funding their 'glory years'.. That's the family i came from, so i never carried debt, but learned to work and save for what i wanted.
    'sticking it' to the banks brings me confidence and joy. : )

  4. afrugalfiesta says:

    I am 23 and my debt has been bothering me for some time already. It's true that there is a certain positive feeling to being able to own nice things and pretend to all your friends that you have lots of money. Its like eating Mcdonalds though. It feels good when you're doing it, but you regret it 10 times more when its over.
    My recent post Uh-oh

  5. Sarah says:

    Im 24 and I am serious about my debt! I see it as something that will keep me in the poor house. And while we no longer jail people for not paying their debts I often feel like I am in my own little jail since I can not progress until this debt is gone.
    My recent post Bi-Weekly Finances and Funds

  6. Ban Clothing says:

    I also read the same article. Oh course you are going to feel better about yourself if you have a designer handbag and a downtown apartment. I felt guilty about debt as soon as I graduated from university. I felt the 'fun' was over and I had anticipated making more and figured paying off my debt would be easy. I got a wakeup call with high interest and payments which basically forced me to pay it off as quickly as possible. My husband on the other hand felt find about carrying debt until he met me. He had just accepted that debt was a part of life until I rubbed off on him. He is also older than me but definitely had debt young and enjoyed it. I think it was good for him to read this article because he didn't realize his financial situation in his low 20's was common.
    My recent post Thrifting SOB Story

  7. jane says:

    I'm 27 and have almost the opposite problem, I've been saving for so long I'm almost afraid to spend my money now. Was fortunate enough to get scholarships for school and live at home with parents so I've been saving for the last 5 years. Within the last few months however, I've been really restless with my savings habitat, I feel almost a need to spend some of it, to challenge myself to paying off some kinda debt but after saving for so long, it's hard to commit to spending a big chunk of it. I want to purchase a property but I'm being super picky and I wonder if it's because I just dont want to part with my money.

    • gmbmfb says:

      I went through that phase too, where I was too scared to spend my money. It's tough, when you're so used to doing it one way, and then all of a sudden you have to think a different way. It took me a while to find the right kind of balance.

  8. goalsinmoneyandlife says:

    I'm 27, and I started feeling the pinch last year, and that's when I started really looking at our financial picture. But living those years 19-25, I did have a blast, doing whatever I wanted, no matter what the cost! And now I'm suffering the consequences… it's like that study was done on me! haha.
    My recent post Weekly Update June 15-24

  9. Erica says:

    I've always been smart with my money and never wanted to have any debt however going to post education required me to get into some debt. I've never spent beyond my means and I've never liked the idea of being in debt. I'm not a showy person so spending money on things I know I don't need seems silly. In a way I'm proud of my debt an I'm also proud of how fast I've been able to pay it down.

  10. SPF says:

    This was an interesting read, and hit home hard. I DID feel better about myself. At least I thought I did. I thought it was "cool" to eat out all day (breakfast, lunch, dinner, snacks, etc), go shopping, etc. It wasn't until now (I'm 31) that I REALLY started to get serious about debt and my finances. I learned late but, I'll take late over never.

    • gmbmfb says:

      Better late than never for sure. It's so amazing how debt and living beyond your means affects your self-esteem. How can stealing from your future make you feel good about yourself? Such an interesting study.

  11. Pamela says:

    When I graduated from the university and found my first "real" job I had fantasies about buying a nice car and getting my own place. Maybe actually taking a vacation! I soon found out that I wasn't making all that much – what little I did make was getting eaten up by taxes and now I had to save a big chunk for retirement or else I would work until I'm 80.

    But the most important lesson I learned was that not all jobs are great. And you NEVER EVER want to be forced to stay in a horrible miserable job because you are in debt and have to pay bills. Someone once said to me "make sure you have "F U" money so that when you have the worst boss ever – you have the money to say "F U".

    • gmbmfb says:

      Absolutely! Part of being financially independent is having the ability walk away from a job if you feel like you need to. Having money in the bank opens up so many more options in life, and that's a really good, comforting feeling.

  12. Byrocat says:

    My experience was a sense of being trusted and not having to rely on my parents. That lasted until I found out how long it would take me to pay off my student debt, then my car, then my credit cards. Of course, it was all too easy to put it on the card and say "next month" which never came.

    Thirty years on, I still worry about making sure that I stay ahead of the debt game, harder than ever with the mortgage now into the "few years left" category, and I'm looking at retiring within the decade.

    The worry never goes away but is managed by discipline and asking yourself the key question "is it a necessity or a want?"
    My recent post Getting the Christmas Bonus

  13. Kim says:

    I disagree w/ the conclusion of the article that 20somethings feel good because of the debt. They feel good b/c it's not due yet and thus don't realize, not because they actually like debt.

  14. Melissa says:

    I dunno. I mean, I can kind of see how this can be true, but I also feel pretty good about NOT being in debt, and having control of my savings, being able to work towards goals, etc. I mean, I guess the process of getting out of debt is the same as building savings, but…I'm just not sure I'm buying it.

    Then again, everyone I know is a broke journalist in Toronto, so the concept of getting nice things to brag to your friends about is just totally foreign to me. We're all broke!
    My recent post In Defence of Unpaid Internships

  15. You get a fabulous sense of freedom when you have the ability to pay for things – particularly when you are young. It gives you access to all the things you enjoy doing – socialising, partying, courting, holidays etc. At some point, most people feel the urge to settle down – it's then that the realisation of your actions kicks in.

    In a way, it's not the fault of young people – no-one teaches them self-responsibility and the banks actively seek to trap people to their service for life. When you have money, you are free to move around your banking, however if you have large debts, you will stay with them and ultimately earn them lots.

    Things are changing though… slowly…
    My recent post Selling Yourself at Interview – Against Your Self-Doubt

  16. Sidney says:

    NOT AT ALL! It only creates inferiority inside my heart. Being able to save a lot rules!

  17. Angela says:

    I actually agree with that finding. My student loan, for me, was a representation that my parents FAILED to save money and to plan for my post-secondary education. The could say all they want about how they prepared me academically. Later, they offered to pay my student loans and I just have to pay them back. I refused, saying that they should have thought about that before I applied for the loan. And I often used making loan payment as an excuse not to spend money on them. So, yes, it's kinda an empowerment for me. I feel that I was using my loan to backfire my parents.

    Of course, looking back I feel that I was incredibly childish.

  18. TLC says:

    Debt really bothers me & my husband. But I also have a view that not all debt is bad, as long as it's managed properly (I know a lot of people will disagree). I think one day when I pay off my student loans or my husband's truck loan we'll both feel a sense of accomplishment, but also remember that payments aren't fun, so we better watch our spending habits :)

  19. Max Thunder says:

    I’ve never had any debt. I think debts are only acceptable when used for investments (including a primary house). I feel good not having debts because I know that if I get serious trouble, I have money around. For now, as long as I make more than I spend, I’ll be happy about money.

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