Personal Finance

Are Young Americans Ashamed of Their Debt?

Two of five millennials would rather tell a potential partner about their STDs than their debt, a survey finds.
Photographer: Maria Pavlova/Getty Images

Financial services companies go into overdrive around Valentine's Day, along with florists, chocolate makers, and jewelers. Usually, it's surveys about love and money, with advice on avoiding financial conflict with a partner.

Student loan company SoFi has thrown its hat into the ring with that old standby of V-Day marketing: VD. 

Here's the pitch. It seems 39 percent of millennials would rather disclose a preexisting sexually transmitted disease to a potential partner than reveal their debt, according to a survey of 2,000 millennials SoFi conducted, using online poller Survey Monkey. 1 These are millennials in the general population, not just SoFi members.  In addition, the survey found that serious debt was the second-biggest romantic deal-breaker, after workaholism.

Both STDs and debt are epidemic in America. The Centers for Disease Control and Prevention announced late last year that STDs were at an "unprecedented high" in 2015. So is student loan debt, SoFi's bread and butter. Total student loan debt stood at $1.4 trillion as of September, double the amount in 2009. It makes sense that a potential partner's debt would play a bigger part in relationships today.

In fact, debt shame may be epidemic in itself.

Melanie Lockert, 32, remembers how she felt when—$81,000 in debt after getting her bachelor's as a theater major at California State University at Long Beach and a master's in performance studies at New York University—she couldn't find a job in her field. Six months after graduation, she was on food stamps and working for $10 an hour in Portland, Ore.

Her debt highlighted her mistakes and shortcomings and "made me feel guilty that I went to a crazy expensive school," Lockert said. "It represented a huge amount of shame for me, because I thought I'd done everything right. I'd worked hard in school, had a part-time job, did everything that I was supposed to."

Of the survey, she said, "I don't think anyone would actually want to disclose their STD status, either. But what it's saying is that debt and money still has very much of a taboo." Student loan debt is synonymous with the millennial generation, she said, "but no one wants to say, 'Hey, I graduated with $100,000 in debt, do you want to get married?'"   

A partner's significant debt "could delay the purchase of a first home, require cutting back on vacation or travel, reduce retirement contributions, along with plenty of other financial sacrifices that a debt-free partner wouldn't require," said financial planner Jon Powell, of Ferguson-Johnson Wealth Management, in Rockville, Md.

Here's the vicious circle. "The old adage 'out of sight, out of mind' is the solution for many people, and thus the problem," said financial planner David Mullins, of Mullins Wealth in Richlands, Va. Balances build, interest accrues, "and before too long, there is a four- or five-figure monster arriving in the mail each month to say hello," he said. "The problem is, the debt makes you feel bad, so to feel better, you spend more. The cycle can continue until a breaking point is reached." 

Mullins had one client who reached that point only after she had mortgaged her home, which had been mortgage-free for 20 years, to pay off her credit-card debt. Her mother had died and she had been doing what she described to Mullins as "retail therapy" to fill the void. When she realized she had cashed out the equity in her home, she was cured.

"Mortgaging her home literally made her sick of spending money," Mullins said. "This was her bottom that she needed to change her habits."

The key is to realize "it's OK to make mistakes, and it's how you learn from them that defines your character and builds your self-esteem," said Patrick Stark, director of financial planning at wealth management firm RS Crum, in Newport Beach, Calif. 

The lesson for you? Keep track of your spending. Write it down, Mullins advises, because "when it comes to keeping a budget, mental accounting just won't work, and a small vice can balloon into a big problem before you know it. Compounding interest works both ways."

Lockert compared getting out of debt to the five stages of grief. "I was angry, I got depressed, I felt overwhelmed. I went through all of those stages before accepting it and deciding I was going to get out of debt, no matter what," she said. "You're not ready to take action on that debt when you're in those stages." 

To turn her debt from a negative into a positive, Lockert started a blog, deardebt.com, in 2013, in which she encourages people to write breakup letters to their debt—Dear John letters, of a sort.

"I've heard from a lot of people that it's a way for them to take back ownership of their debt," she said. "You need to face the debt head-on and realize that you want this relationship to really be over and want to move on with your life."

Over about four years, Lockert dug herself out with a full-time job at $31,000 a year, plus part-time work in the mornings, evenings, and weekends, eventually leaving the job when she got higher-paying side hustles. She became debt-free on Dec. 10, 2015, she said. 

Relationships with humans can make it even more complicated. Nearly a quarter of respondents to the SoFi survey said they had been "lied to by a date or partner about how much debt they were in." For those who planned to give honesty a whirl, most said you should tell a partner about your debt only when things are getting serious between you, and you're considering sharing household expenses.

Just how much debt would it take to send a potential partner packing? A good chunk of the millennials surveyed were true romantics, saying they would never reject a partner because of debt, but 38 percent said it depends.

Lockert's best advice for people of any age who feel shame about debt is to remember they're not alone.

That's meant as reassurance—but it highlights an alarming reality, too. 

(Corrects last name of Patrick Stark in the 13th paragraph.)
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