One of the most interesting things I read earlier this month was the result of a research study from researchers at Ohio State University. Apparently, carrying debt can be a real confidence boost. Science Daily offers this synopsis of the study’s results:

Researchers found that the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class. Only the oldest of those studied — those aged 28 to 34 — began showing signs of stress about the money they owed.

The immediate reaction when reading these results is usually one of surprise. Indeed, when I spoke on the topic of financial self-reliance in my church and used this information, eyebrows shot up. However, once we get through the gut reaction, the result makes some sort of sense, especially consider the material nature of our society.

Credit Cards and Confidence: My Story

I’m in the 28 to 34 age group, and a lot of credit card debt would stress me out. But, when I was younger, the truth is that credit card debt didn’t stress me out. By the time I met and married my husband, I had more than one maxed out credit card. And I have to admit that using my credit cards did give me a feeling of confidence. Here’s why I think that I received a self-esteem boost from credit card use:

  • I could buy what I wanted immediately, without waiting.
  • It appeared that I had more money than I did, since I could buy things.
  • I felt like I could get someone to cover work for me while I had fun, since I “didn’t need the money.”
  • Making minimum payments only made it all feel “affordable.”

My wake up call, thankfully, came before I turned 28. It came when I got married at 22. I realized that serious changes needed to be made. Really, all that confidence was an illusion. I felt in control, and I felt “rich” in the short-term. I realized, though, that long-term I was seriously lacking in actual wealth. What seemed like a good idea at the time was actually a big money mistake. We started paying down the debt, and we opened a retirement account so that we could begin investing in our future.

Borrowing Prudently

In some cases, we do need debt. Most of us can’t afford an education, or a home, without borrowing at least some money. However, even if you are borrowing for a “good” cause, you still need to be careful. I didn’t need student loans during undergrad. I had a scholarship, and a part-time job. By the time I got to my junior year, I had free housing (and a stipend) as a resident advisor. But I took student loans anyway — the full amount. It’s important to be careful about the money decisions we make, and try to limit what we borrow, whether it’s for an education, or whether we’re buying a modest home.

Carefully consider your needs, and re-think what really constitutes a need. Make sure you borrow as little as possible, and remember that short-term confidence is no match for long-term financial stability.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.