Sarah Kriekle’s Twitter profile describes her as law student, parent, feminist, and Métis. It also says she angry tweets a lot. It was an angry tweet from her on Sunday that caused a backlash when she tackled the negative rhetoric around debt.
It started with a personal finance blogger in the U.K. who goes by the name Adam, @moneysavvydaddy, who tweeted: “I’d rather the motivation to work harder/smarter than the easy option of a small loan. Earn the food on the table, not borrow for it & add repayments to an already tight budget.” That tweet has since been deleted.
In response, Kriekle tweeted: “[People] say debt is bad, but credit was huge for me getting out of poverty. It paid for emergencies that would have left me homeless without it… Used wisely, debt is a valuable tool.”
People jumped in and most of them sided with Kriekle. One said, referring to @moneysavvydaddy, “Dude has pure troglodytive ignorance.” Another said “Maybe it should be stated ‘Staying in debt’ is bad.”
But the U.K. blogger responded: “If from a young age people saved up emergency funds then they wouldn’t need debt. Most people in debt are wasting it on stuff they don’t need & over time become accustomed to life in debt and continue living above their means.”
He and Kriekle eventually agreed that some types of debt can be helpful. But on Wednesday @moneysavvydaddy was back to his old messaging, tweeting “Buying stuff you can’t afford & paying MORE for it. That’s one reason Debt is Dumb.”
Kriekle says the popular narrative that debt is something to be avoided at all costs is based on outdated thinking and is often preached by people for whom going into debt is a choice. Societal views about debt haven’t changed much in decades, although the cost of living in most major cities has risen much faster than incomes and interest rates are now ultra-low. In an interview with VICE, Kriekle said the view that all debt is bad puts the blame on people who are just doing the best they can.
“Social structures are keeping people stuck in the cycle of poverty but they can access credit as a means to increase their social mobility, like I did,” she said. “When we discourage people who are poor from accessing credit, we assume that they don’t know how to budget. I think that’s a really closed and privileged way of looking at things.”
Kriekle, 34, says that going into debt helped her claw her way out of poverty.
When she was 13, Kriekle says she was placed in a group home, followed by foster care. By age 16, she was a high school student living on her own on $850 a month ($650 from the government, $200 from her part-time jobs).
The first time she went into significant debt was for a $3,000 car loan to buy a used vehicle at age 17. With her 1992 Geo Tracker, “a little quad with a roof, on wheels” she moved from the small town of Lacombe, Alberta to Red Deer, a bigger city. In Lacombe she was making $5.90 an hour as a restaurant hostess and cashier at Dairy Queen, but at the sporting goods store in Red Deer’s mall, she made $11, nearly doubling her income. Kriekle said that meant she was no longer dependent on government subsidy.
The second time was to pay for her monthly living expenses when she started her law degree at the University of Alberta in 2018. All $10,000 of her yearly tuition for her three-year program is covered by scholarships, grants, and bursaries but she uses a low-interest line of credit to pay for food, clothing, and housing while she’s in school. During the summer, she works at a law firm where she will be articling once she graduates.
The third time debt was a lifesaver was in November, when the single mom had to make two big, unexpected purchases, which she put on her line of credit. “I’m a student so we’re on a pretty limited budget. My fridge and my furnace crapped out in the same month, so having access to credit has allowed me to spread out the cost of that so that it doesn’t have to significantly impact our household budget,” she said.
According to Tammy Laber, a psychotherapist based in Toronto, we get our views about money and debt from the people who raised us. “If your parents taught you that all debt is bad and going into debt is the worst thing you can possibly do… you’re going to be almost allergic to debt,” she said. “Chances are they weren’t sophisticated enough to make it clear to you the difference between good debt and bad debt; debt that is a good business decision versus debt that isn’t well thought-out.”
A recent study by the National Bureau of Economic Research in the U.S. shows that a parents’ attitude towards debt can significantly influence how their children feel about it and approach borrowing money as adults. Parents who are stressed out about debt or uncomfortable about it tend to have kids with similarly cautious views.
Laber says that these views are so ingrained that people have to make a conscious effort to go against what their parents teach them.
Good and bad debt
According to Bridget Casey, who founded the financial literacy site Money After Graduation, there is a “pretty toxic” prevailing view that debt is bad among money experts who make a living by teaching people how to slay their debt. And she says it persists among people who don’t understand the difference “good debt” that is an investment that pays off in the long run versus “bad debt” which doesn’t.
Last year, 140,858 people in Canada filed for bankruptcy or insolvency—the second-highest level on record in nearly a decade and the end of the Great Recession in 2009. Stories like these fuel the belief that debt is a gateway to a debt trap for life. While it’s true, for example, that only making the minimum payment on your credit card can lead to a kind of debt spiral that’s hard to get out of, Casey says most debt is a tool that isn’t intrinsically evil. It’s neutral.
Ideally, Casey would like to see some middle-ground in the way our society views debt—somewhere between being irrationally terrified of borrowing money and being overly complacent about it. A healthier reframing of debt is overdue according to Casey because incomes haven’t risen as rapidly as the cost of living in major cities, which has pushed millennials to carry bigger debt loads than previous generations. Things are different than during her parents’ time when interest rates were in the double-digits rather than at historical lows like they are today.
But a lot of people cling to that old mentality and she says viewing all debt as negative can be dangerous.
“When you are under financial stress you can’t really think past paying the next bill. That also translates to debt that you can’t even consider because it gives you so much anxiety that you’re not thinking further ahead. Everything is so short-term when you’re struggling financially,” said Casey.
Debt as a symptom of poverty, not the cause
Kriekle currently carries about $30,000 worth of debt, on a line of credit that she pays a prime interest rate on. She plans to be making enough money after graduation to pay that off in a few years.
“My feelings on borrowing when you’re in poverty are basically treating the symptoms of completely inadequate social programs. If we had the proper public services, we probably wouldn’t need to place the onus on people in poverty to get themselves out,” she said.
Kriekle also said there’s a need for better financial education.
“Deterring people from accessing debt as a means of them getting ahead is akin to preaching abstinence for safe sex. People are going to do it anyway. They’re just not going to be educated on doing it safely,” said Kriekle.
Follow Anne Gaviola on Twitter.