Navigating the Depths of Debt: A Guide for Teens and Young Adults (Part Two)

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By: W. Kirk Taylor, CFP® & Gaby S. Dominguez

This article is Part Two in a two-part series for Confident Kids℠!

In the realm of personal finance, the concept of credit can be seen as both an opportunity and a risk. The first part of this series, “Unlocking the Mystery of Credit: A Guide for Teens and Young Adults (Part One)” highlighted the significance of understanding credit, shedding light on its distinctions and implications. However, as we embark on the second leg of our journey, we delve deeper into the sometimes darker side of finance where credit intersects with its gloomy counterpart – debt.

The Weight of Debt

In the vast expanse of the United States, a staggering $17.06 trillion in consumer debt balances loomed heavily as of 2023. A significant portion of this burden rests on the shoulders of individuals grappling with student loans and credit card debt. According to data from 2019, a startling 43% of Americans who pursued higher education found themselves intertwined in debt, a statistic that continues to climb. Among millennials, in particular, individuals are burdened by significant credit card debt, ranging from $10,000 to over $30,000.

The Toll of Indebtedness

Studies have revealed a stark correlation between mounting debt and diminished levels of financial well-being, coupled with adverse health behaviors and outcomes. Debt goes beyond finances, taking a toll on mental and physical well-being, while eroding community cohesion and life satisfaction. Financial obligations weigh heavily on the psyche, diminishing feelings of security and contentment.

Understanding Debt: A Primer

What, then, is debt? At its core, debt represents an obligation – a promise to repay borrowed funds. From credit cards to mortgages to student loans, debt invades our daily lives, assuming various forms and functions. Whether secured by collateral – i.e. when you borrow money to buy a car, the loan is collateralized by the car, which could be repossessed if you don’t pay on time – or unsecured, revolving or installment-based, each type of debt carries its own set of implications and risks.

The Double-Edged Sword of Debt

Debt, used wisely, can be a powerful tool for achieving progress and prosperity. Mortgages facilitate homeownership, auto loans enable mobility, and credit cards offer convenience and flexibility. Yet, the allure of easy credit often drags individuals into a risky balancing act with financial ruin. Excessive and unmanageable debt can threaten stability and success if your collateral is seized by creditors, or if your credit score is impaired.

Charting a Course to Financial Freedom

For those managing debt, a solid plan is essential. Start by controlling debt with smart spending habits and careful budgeting. Pay off high-interest debts first, gradually chipping away at the mountain of obligations. Remember, the road to financial freedom is paved with discipline and determination.

A Blueprint for the Next Generation

For teens and young adults embarking on their financial journey, the path to prosperity begins with a keen understanding of debt’s pitfalls and potential. Distinguish between good and bad debt (good debt = car or home; bad debt = credit cards), cultivate a habit of saving, and wield credit with caution. By honing these essential skills early on, young investors can chart a course towards a brighter, debt-free future.

In the world of personal finance, debt often clouds aspirations for prosperity, turning dreams of financial freedom into distant hopes. Yet, armed with knowledge and foresight, individuals can confidently navigate these challenges, ultimately achieving financial freedom.


(1) Financial debts and subjective well-being of young adults: An adaption of the stress process model, Lu Fan & Soomin Ryu, September, 26, 2023,

(2) 1 in 3 Americans maxing out credit cards because of inflation: survey, Nora Colomer, April 12, 2024,

(3) What is debt? Get to know the common types of loans, credit, Olivia Munson, March 4, 2024,

(4) Debt: What It Is, How It Works, Types, and Ways to Pay Back, James Chen, March 25, 2024,

(5) Teens’ Guide to Building a Strong Personal Finance Foundation, Nathan Paulus, December 8, 2023,

(6) Budgeting for Teens, Boys & Girls Clubs of America, May 13, 2022,

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