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Want to Feel More Confident? Get Into Debt!

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Debt PaymentThe way Millennials view money is something that has been the subject of much interest lately, since money habits are changing as a result.

From marriage to the way they accomplish internships, to gap years and whether or not college is the right decision, Millennials seem to be doing things a little differently from past generations. And that even includes the way they get into debt — and the way that debt is viewed.

Debt = Confidence

A couple of years ago, Ohio State University conducted a study as part of the National Longitudinal Survey of Youth 1979, which has been going on for decades. The results of this study focused on how young people view debt. While many of us feel that debt — especially consumer debt — is a Very Bad Thing, it appears that those aged 18 to 27 actually enjoy high self-esteem because of debt.

On top of that, many of the respondents in that age group actually felt more in control of their lives as a result of having debt. The more debt, the more in control young people felt. That’s a stark contrast with the many who feel as though debt leads to less control over their lives.

However, as the respondents’ ages increased, they did begin to feel anxiety about paying down debt. Those in the age group 28 to 34 felt anxiety about their debt, and the ability to pay it down. But, until things start looking serious later on, young people are more likely to feel a self-esteem boost from their debt.

Student Loans and Consumer Debt

The Ohio State study focused on credit card debt and college loan debt. Researchers had thought that perhaps there would be a difference, with Millennials reporting that they felt better about student loan debt (it represents an investment in the future) than credit card debt. Interestingly, though, the researchers found that respondents didn’t feel any worse about credit card debt than student loan debt.

In both cases, students, especially those in lower income groups, felt better about themselves, and their control over their situations, no matter what type of debt they had. Some of the researchers speculated that the credit card debt allows young people to live a higher quality of life, and enjoy instant gratification. Feeling as though you can “afford” whatever you want — whenever you want it — can be a powerful thing.

Socioeconomic Differences

One of the things I found most interesting was the differences in how debt made those from different socioeconomic backgrounds feel. Those in the middle class didn’t get the same boost from holding student loan debt as those in a lower income bracket. And, although middle class young people felt a boost from credit card debt, it wasn’t the same boost felt by their poorer counterparts. The study found that debt didn’t provide a boost to those from wealthier families.

The results seem to indicate that debt allows those who grew up with fewer financial resources make up for what they perceive as a loss, and that is what helps boost self-esteem and a feeling of control.

What do you think of this study? Do you think debt would boost your confidence? Or you in an age group that sees debt as a problem?

(Photo: Images_of_Money)

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24 Responses to “Want to Feel More Confident? Get Into Debt!”

  1. Cindy says:

    So, in other words, kids are stupid. Got it. ;-)

    • Robert says:

      You nailed that one.. I suppose Tattoos = confidence too. I think the list could go on and on.

      There is a simple proverb: The borrower is servant to the Lender.

  2. How odd. I can’t imagine equating debt with confidence. Seems pretty backwards.

  3. CrazyRcPilot says:

    This problem has plagued my thoughts for quite some time. I have never been able to figure why much of my demographic (I’m 26) has been so care free about buying brand new cars or cell phones every few years or wearing top brand clothing. The social status is nice, but I don’t even like having a mortgage weighing me down. I have done well to have zero credit card debt, but only because of a frugal lifestyle that has left me socially ‘wanting’ on occasion.

    Perhaps the next study could be why those people who make “smart financial choices” are so jealous of others running their credit into the ground.

    • Robert says:

      20 years from now as you live in your Paid for home and are taking a 3-week vacation to Europe(that is paid for) it those others who will be envious. They have it all backwards. You have it right. You should be proud of yourself. No Debt = Freedom

  4. Wow, that’s a shock. I can’t imagine feeling a boost from any type of debt…

  5. thunderthighs says:

    As someone who falls into the “millenial” block, I have grown to loathe the media’s love affair with the term.

  6. Vincent says:

    Do you have a link to this study? It’s much more plausible to me that the causal link is in the reverse direction. People who are more confident will be more likely to take on debt. What is the evidence that causality flows the way you describe?

  7. Demi says:

    CrazyRcPilot….very well put. Even at 45 and still living responsible…my home paid for, my education paid for and with continuing ed once funds are saved, my cars…all paid for, I still have that ‘wanting’ feeling when I see my neighbors all on new 4-wheelers. Or with a brand new camper in their driveway. Or across the alley ‘Tom’ has two brand new personal watercrafts he bought ready for the summer. The ‘wanting’ peaks at times for the simplest things. It never really goes away. Successful people learn to control it, channel it into a win-win. The reality hits when ‘Fred’, across the street, stood in his driveway and watched as Rent-A-Center hauled back out the new 60″ wide screen he bought 2 months ago…then lost his job last week. And ‘John’ at the end of the block, his wife’s new convertible…hauled off on a flat bed by the leasing company. Twenty years ago it was worth taking the chance to live in accumulated debt. Today? With job insecurity and tightened credit score requirements, one can ill afford to make a mistake or suffer for years. The problem is people continue to live outside of their means AND on borrowed time. Especially those that simply can not. If there was a poll taken…how many can honestly say they have 6 months of living expense money liquid and available at any time? Very few. I bet very few. Americans live for the moment. It is our human nature. In my opinion the REAL goal should be to find a space in the middle where you can afford to live with minimal debt BUT still feel rewarded with ‘things’. Personally, my ‘high’ comes when I know I don’t owe anybody anything. Or, looking at all the ‘things’ I have and knowing…I TRULY own them. THAT puts a smile on my face.

    • Robert says:

      Amen to that. Couldn’t have said it better. I just recently got a car payment (used car) after driving my 93 accord for 220,000 miles (and still do drive it). Other than that I am working on paying my Mortgage and don’t owe anyone anything. It wasn’t always that way, but it is now and I am very happy about it.

  8. Christian L. says:

    Miranda,
    The little debts I’ve had — and paid off — did not make me feel more confident. However, I wouldn’t connect my finances to my confidence levels anyway. I don’t like carrying debt or living beyond my means.

    -Christian L. @ Smart Military Money

  9. thunderthighs says:

    The study, as represented in the article, suggests it is available credit, not actual debt, that is purported to “boost” self-esteem. Score another one for squishy social science.

  10. admiral58 says:

    Shouldn’t want to get into debt.

  11. bloodbath says:

    Translating that philosophy to seniors like: If you wish to feel young and naive – go into debt!

  12. bloodbath says:

    Translating that philosophy to seniors like me: If you wish to feel young and naive – go into debt!

  13. Shckr7 says:

    There is good debt and bad debt. I dont mind borrowing at 3.75% to earn 12%, but borrowing money to buy something that loses value isnt the best idea. Its funny though, I never equated debt to confidence – I only thought of it was potential leverage to boost returns (or loss…….).

  14. Scott says:

    The boost they are talking about might be statistics just simply showing that the young and poor folks are excited that someone thought they were responsible enough to borrow money in the first place and actually gave them a loan to go spend. Then you get older, wiser, and/or richer and realize it was just a sales gimmick.

  15. Shirley says:

    I personally feel that getting into debt creates a goal… to get out of debt! If that debt is for a necessity, so be it. If it’s for a frivolity, you may well end up in deep water over your head.

    I do understand how those aged 18 to 27 in lower income groups might feel that they had “bettered themselves” by having the ability to obtain the instant gratification that they were unable to have (but saw around them) when they were younger. They are swimming in unchartered waters and while it may be a new and exciting adventure, the riptide or undertow might be much closer and stronger than they realize.

    Only education and/or experience are going to get them back in the boat and safely on shore.

  16. asha says:

    useless advice !

  17. Eastie Sailor says:

    This is not only sad but scary if this is true. Maybe when they realize that having that much debt means they will have less freedom, more stress, they will get it.

  18. John says:

    How silly. You know why poorer people gain confidence from debt? Because they’re not as well educated on financial matters, and are being played on by institutions that earn from it… institutions that bank on the lack of financial education. Kids from wealthy families don’t have the same day-to-day struggle, so debt is smaller if it even exists. They also grow up in families that run the industries creating this mess.

  19. Bucksprout says:

    This study scares me. I think students are rationalizing the debt they take on as a stepping stone into adulthood. These college students need a reality check, debt not doesn’t make you more of an adult or give one confidence.

  20. I read this research a number of months ago, and I thought that the researches had the wrong end of the stick. It’s people who are reckless and overconfident who get into debt–not that debt makes them feel confident. The more foolish students think that any amount of debt is a-ok as long as they graduate, and then everything will magically work out all right.

    That’s why so many who leave college with a mountain of debt don’t have degrees that can land the kind of jobs that can repay it. They never stopped to do an actual financial analysis. Then they reject the lower paid jobs they are qualified for because those jobs won’t pay their bills and provide them with the lifestyle they were expecting.

    It’s a vicious cycle.

  21. admiral58 says:

    Does anyone really think debt means confidence?


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