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How Debt Increases Self-Esteem – The Upside of Financial Debt

Going into financial debt for school or a business doesn’t feel good, but it can actually your self-esteem and empower you to achieve great things! The upside of debt is that it can help you get what you want out of life!

“Debt can be a good thing for young people – it can help them achieve goals that they couldn’t otherwise, like a college education,” said Rachel Dwyer, lead author of a recent study about how young adults perceive debt and assistant professor of sociology at Ohio State University. “Young people seem to view debt mostly in just positive terms rather than as a potential burden.”

Talk about making lemons out of lemonade! If you’re sick of wrestling with debt and want to set better, higher goals for prosperity read 7 Money Mistakes Women Keep Making – and How to Stop.

And, here are a few different perspectives on debt,  self-esteem, and self-confidence…

Financial debt can offer long-term rewards

There is an upside to owing money – but it depends on your age, what you spent the money on, and whether or not you have a family.

Here’s how destructive debt can be:

“I have [incredible amounts of debt] and it is absolutely devastating. It’s all I have been able to think about for years in every waking moment; last night I was in floods of tears. I wish I could not worry about it, but it has taken over my life. I have nothing to show for the debt. I take out consolidation loans just to pay the bills and feed and clothe my family. There are five of us, and all my adult life I earned low wages and live in an expensive part of the country. I know I could have done better with my budgeting. Now, I am angry and totally disappointed in myself. I wish the black cloud over my head would lift and the sun would come out again.” ~ from the Money Saving Expert forums.

Financial debt can be a very real, destructive, and unhealthy element in our lives! The key to how debt can increase self-esteem may be found in the reasons for debt.

That is, if you’re in debt and have nothing to show for it, then you feel terrible about it. But if you owe money for something tangible, something you love, or something that rewards you in some way, then you may feel good about your debt – and it could increase your self-esteem.

Debt increases feelings of empowerment and mastery

According to a new study by the Ohio State sociology department, many young adults don’t feel stressed about owing money – students actually feel empowered by their credit card and education debts. 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.

Financial debt helps college students feel like they’re moving forward in life. It’s a sign that they’re working hard to achieve something – a degree, diploma, and upward career momentum.

Different types of debt had the same positive effects on self-esteem

“We thought educational debt might be seen as a positive because it is an investment in their future, while credit card debt could be viewed more negatively,” Dwyer said.

“Surprisingly, though, we found that both kinds of debt had positive effects for young people. It didn’t matter the type of debt, it increased their self-esteem and sense of mastery.”

In this study, the adults from the lowest socioeconomic class experienced the most increases in self-esteem due to their debt. Middle class students didn’t experience an increase in self-esteem because of educational or student loan debt, but they did see boosts from credit card debt. The more credit card debt they had, the more their self-esteem increased.

Students from affluent families didn’t experience any increase in self-confidence or self-esteem because of financial debt.

I’m from a lower class family, and I had tons of student loan debt. I saw no upside to my debt…I saw it as a burden. I didn’t think of debt in relation to my self-confidence or self-confidence…it was just an albatross around my neck!

Want to make an extra buck or two? Read 25 Odd Jobs and Hobbies That Make Money in Creative Ways.

Healthy ways to look at financial debt

Some people who owe money have very healthy ways of looking at debt:

“I do not have a problem with debt. We owe about £35k. I have never lost sleep over debt and have never been upset by it. That’s partly because of who I am. I am a practical person. What’s the worst thing that could ever happen too me because of debt? Also, the absolute worst thing nearly did happen – my step daughter nearly died and things were put much more into prospective. Life is far more important than debt. I still care about my debt – I/we do. We’re paying our debt back. But I do not see my debt as the ‘be all and end all’ of life. We still have holidays (cheap ones!) and the kids don’t miss out on their clubs (most are free via school and I only have to do a few extra hours overtime a week to cover the other) because we won’t let them down the same way we let ourselves down.” ~ from the Money Saving Expert forums.

And, here’s a guy who owes money for his student loans:

“I’m in quite a bit of debt, but it doesn’t bother me. I know that I won’t be getting out any time soon, but I’m ok with it. I don’t need to worry, I don’t need to make drastic changes to my life, and I don’t need to take a second job. Why? Because I have a plan. I have a budget and I know that I’ll be paying off this pile of debt for the next few years, but my plan is to have a positive net income in 18 months. If I continue to save and pay off loans at my current rate, I’ll creep into positive territory this summer. I am responsible and know that I need to save before I spend, and this has allowed me to tackle my debt slowly but surely. I don’t feel overwhelmed because I know that I will eventually dig my way out of debt. If I stick to my plan, what do I have to be worried about?” ~ Daniel Packer in Why I Don’t Stress About My $23,000 Pile Of Debt.

If you owe money and don’t earn as much as you’d like, read 8 Ways to Pay Off Debt With a Low Income.

What do you think – does your financial debt increase your self-esteem? Comments welcome below…

Source of research about debt and self-esteem: What, Me Worry? Young Adults Get Self-Esteem Boost from Debt – Ohio State University Press Release.


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