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I remember my first credit card well. I applied for it because someone passing out Citibank fliers on campus handed me one. Visions of not-free free money danced in front of my eyes, along with the Gucci purse I wanted and couldn't afford on my waitress/student budget. I could pay it off in installments, I rationalized. I would make wise choices with that card. I would pay my bill promptly. Credit cards were awesome!
Oops. I was correct about the installment part and absolutely wrong about the rest of it. I developed consistently worse and haphazard spending and debt management habits then, eyes consistently bigger than my relatively-small limit. It took me a long time to grow up and out of them, and although I've taken full responsibility and made necessary changes, in some ways I'm not fully recovered.
A new study out of Ohio State University this week suggests that I am not like young adults today in my reaction to debt. The findings ask me to believe that rather than feeling burdened and nervous about sizable debt, people between the ages of 18-27 are actually empowered by owing money for things like credit card bills and student loans. (Yes, I have those, too.)
In fact, this study's survey of more than 3,000 young adults concluded that they also experience higher self-esteem as a result of owing money to people for goods, services and educational expenses that they couldn't afford to pay for in cash. In fact, the more money they owed, the more in control of their lives they felt.
Really? While yes, I do concede that having access to things like cars, trips and college degrees can be life-enhancing in the best kinds of ways, I have never observed debt equating with confidence or self-esteem in my own life or in anyone's I've known who has owed significant amounts of money for anything. Sure, there is something powerful and adult about accessing things we want or (in the case of school or transportation or a place to live) need. But I've more frequently seen the opposite situation -- monthly bills becoming albatrosses, the access to items and experiences beyond immediate means piling up and causing stress, frustration and occasionally shame and anger. I've seen debt affect marriages and family relationships, occupational choices, and daily peace of mind.
The study does acknowledge that what I'll call "debt empowerment" is allegedly short-lived, though. The window of empowerment and self-esteem from carrying debt supposedly closes at 28, and between then and 34, people circle around to stress and worry over significant debt.
Many, many unusually astute comments on the article from young people reject these notions outright. People are writing about sacrifice and hard-earned financial lessons as pathways to esteem, not a monthly student loan bill or a major credit card purchase. They talk also about the lack of financial literacy for students in that transition time from high school to college, the very place that I got into trouble. Looking back, I'm sure I knew that what I was doing wasn't the smartest, but I was sucked in by easy access to funds and the promise of shiny things.
I've always felt empowered and confident when I work hard to earn money to pay my living expenses and to enjoy my life with what's left over. I wish I'd been more interested as a younger person in the feeling of strength I get from looking at my retirement account funds, or budgeting out camera purchases as a business expense. I get a self-esteem boost when I think of the degree I earned, partially funded by student loans, but not the monthly total, not at all.
I'd be really interested in talking to some of these empowered 18-24-year-olds this study found, just so I could understand their rationale and personal experiences. What is "significant" debt, and are all of these people miraculously responsible and on-time, unaffected by job loss or other kinds of financial setbacks that occur frequently in the lives of young people? I tell my students now when money choices come up to be very careful, because what seems easy or even free really isn't, and bills always come due. That $100 Gucci purse from the olden days is long gone, but in some way I feel like I'm still paying it off. Lesson = learned.
Laurie White writes at LaurieWrites. Her photos are on Flickr.
