Personally, debt is one of those things that can make me feel completely out of control. Owing anyone money, whether it’s credit card debt or borrowing $10 from a friend, gives me such bad anxiety. That’s not to say that at 23 I’m living a completely debt-free existence but unlike the majority of the 3,079 young adults who participated in a recent longitudinal study, I understand that debt is not a positive thing. And it certainly isn’t doing anything to empower me, boost my confidence or up my self-esteem.
Rachel Dwyer, lead author of the study, found that “young people seem to view debt mostly in just positive terms rather than as a potential burden.” The researchers examined two types of debt, loans taken out to pay for college and total credit-card debt, in relation to self-esteem in adults aged 18 to 27. They found that both kinds of debt had positive effects for young people, increasing their self-esteem and sense of mastery. Results also showed that those in the bottom 25 percent in total family income got the largest boost.
They may feel good about their debt only because it allows them to buy the things they want without having to delay gratification… Obviously, they are probably using credit cards for multiple purposes. Along with education spending, they could be using credit cards to pay for non-essential items. They may feel good about their debt only because it allows them to buy the things they want without having to delay gratification.
As someone who’s admittedly a fan of instant gratification, I can definitely understand how easy it is to impulsively charge up the credit card for a pair of shoes. But to say that it gives me a positive self-esteem boost is a bit of a stretch. Dwyer and her colleagues offer a few possible contributing factors as to why debt affects people differently, explaining:
The wealthiest young people have the most resources and options available to them, so debt is not an issue for them… The groups that most need the debt the middle and lower classes get the most benefits to their self-concept, but may also face the greatest difficulties in paying off what they owe.
These findings have a number of potentially detrimental implications. The scariest thing of all is to see that so many young people are ignoring the long-term effects of debt. There seems to be a sense of false security, but Dwyer says that invincibility quickly disappears by about age 28. She found that by 28, “they may be realizing that they overestimated how much money they were going to earn in their jobs.” Is debt boosting your self-esteem or are you aware of the negative consequences in the long term. Let me know in the comments.
Magdalena Frackowiak Photo: Terry Richardson, Harpers Bazaar