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Elizabeth Warren Saw the Millennial Debt Nightmare Coming

Now she's explaining what to do about a broken system.
Image by Lia Kantrowitz. Photo of Elizabeth Warren by by Scott Eisen/Getty Images. Social image split includes photo of Phil McGraw by Jerry Avenaim via Wikimedia Commons

Elizabeth Warren might not seem like the type to regularly appear on Dr. Phil. But even if that biographical tidbit is nowhere to be found on her Wikipedia page, in-between her appointment teaching at Harvard Law School and her election as a US Senator, the 2020 Democratic contender made a handful of appearances on the show that brought America Bhad Bhabie. I'm skipping over a lot of biography here, but what strikes me about this part of her story is that, like Donald Trump, Warren became publicly recognizable—at least in some corners—thanks to a trashy TV show.


Also like the guy she'll be running against if she gets her party's nomination, Warren knows what it means to be in debt.

Obviously, the two couldn't be more different in their backgrounds, and specifically their experiences of what we now call precarity. Warren comes from a middle-class family struggling to stay afloat in Oklahoma, and has focused much of her career on helping people ward off financial predators. Trump, meanwhile, grew his inherited millions—at least some of which were the product of tax evasion—by leveraging debt, like when he borrowed $425 million to buy the famed Plaza Hotel. Warren came up with the idea for the Consumer Financial Protection Bureau to look out for people getting preyed on by payday lenders and other shady debt dealers; Trump's cronies have been systematically dismantling it.

Still, even if Trump's has been an ugly, right-wing variety, the two both built their political careers on the back of economic populism. And like Trump, Warren has published her share of books full of basic advice about how to approach the world (if not how to mimic her own supposedly spectacular success). As POLITICO Magazine reported, rising academic star Warren got her start as Dr. Phil's financial guru thanks to her 2003 book The Two-Income Trap, co-written with her daughter, Amelia Warren Tyagi. But it was the duo's second book, All Your Worth, a more expansive and readable explainer on how to spend responsibly and sustainably, that seemed to set Warren on the path to real celebrity.


The book is a super breezy read based around the idea that 50 percent of your money show go to "needs," a.k.a. bills and rent, 30 percent should be for fun, and 20 percent should be stocked away as savings. But published in 2005, right before the financial crisis blew up the economy and doomed millennials even more than they were already, it also offered a startlingly prescient window into the relentless cycle of personal debt that has helped define what young people sometimes like to call late capitalism.

As one Amazon reviewer of All Your Worth put it in 2012: "Most of us know how bad debt can be, but this mother/daughter duo writes that debt is just plain dangerous." In fact, throughout the 276-book, Warren and her daughter call out cottage industry of financial self-help books for not providing info that normal people could actually use.

"She identified early on the growing gap between the haves and the have-nots," said Liz Weston, a certified financial planner who has interviewed Warren and also appeared on Dr. Phil. "She was kind of one of the first voices I remember raising that issue in the personal finance context. She's still saying you have a responsibility to take care of yourself, but she also pointed out that there are bigger economic forces at play here—a lot of personal finance gurus still don't acknowledge that."

Warren keeps the language simple and even has readers fill out worksheets as they go. The idea is that by getting you to understand that debt is just a missed opportunity for savings, by focusing on dollars rather than counting pennies, and by sticking to a few easy-to-understand ratios, you can spend less time panicking about money. The book did ultimately frighten me into re-thinking how I am going to finally address my student debt head-on, though my main takeaway from Worth was not just that that Elizabeth Warren gets debt, or how to get out of it—it's that she probably gets millennial debt better than anyone else, and certainly better than anyone who's ever run for president.


Warren's mantra is always: But the rules of the game have changed, which is perhaps even truer now that it was 14 years ago. As the POLITICO piece pointed out, she knows, for instance, that the overconsumption myth, or the idea that profligate spending is the reason so many people are in financial trouble is just that—a myth. Although she doesn't use this exact example, it's obvious that despite being 70 years old, Warren is not going to push the line that young people are sabotaging themselves with their fondness for avocado toast. She's definitely not Jason Chaffetz saying people should choose between iPhones and healthcare.

In Warren's vision back then, it was already no given that people would just "build wealth" by buying a normal house and car and working for a set number of years. "Back when your parents were young, it was a pretty reliable rule that if they held together regular jobs and lived regular lives, their money was pretty much in balance," she and her daughter write. This seems clear now, but in 2005, George W. Bush's "Ownership Society" was still fairly mainstream.

"People were not studying people who went bankrupt," Weston recalled about how many in her industry conceptualized debt before Worth's release. "They sort of just went, 'Well those people are deadbeats. Who wants to know anything about 'em? The idea that if you filed for bankruptcy you were a deadbeat was common."


And though the book predates the growing outcry about the student debt crisis by enough time that I can't fault her for not mentioning it very often, when Warren does, she notes the rules have changed since tuition at state college could be paid for with a part-time summer job flipping hamburgers. "Once someone found a job, if they worked hard, they could pretty much count on keeping that job until it was time to collect a gold watch at retirement," the pair write. "No one trembled in fear over the prospect of mass corporate layoffs that swept out even the hardest-working employees."

There are of course parts of the text that might seem a little hokey, or outdated. Warren at one point seems to suggest the reader put down the book and go cut up their credit and debit cards with a fervor that is more than a little odd in the age of rewards hacking and cash-free restaurants. (Then again, Millennials may have even more credit-card debt than they do student-loan debt.) But in other episodes, the text is almost bizarrely farsighted. Though the book came out some time before the financial crash, Warren warns people not to borrow on their home's equity, and argues deregulation of the credit card and home-loan industries has set up a ton of Americans to fail on purpose. "If your parents tried to buy a home that cost more than they could manage, the bank just wouldn't lend them the money," she and her daughter write. "Mom and Dad and their friends didn't have to worry too much about getting in trouble because it just wasn't possible to take on a mortgage that was more than they could afford."


Besides Barack Obama, who is now flush with Wall Street and Netflix money but was still paying off student loans as recently as 2004, very few presidents have visibly dealt with debt. Warren is obviously relatively wealthy now, too, but she at least understands the overconsumption myth and that deregulation has gutted the middle class and an entire generation of voters. In her book, the advice she gives to people in money trouble is pretty boilerplate: stay in control, react quickly, and start calling creditors to negotiate. But Warren's initial 2020 policy proposals, like a European-style wealth tax, could feasibly fund free public college in America. She's also the best positioned of any candidate—except maybe Bernie Sanders—to explain how corruption in the political system hurts regular people. To that end, even before she announced her bid, Warren was pushing major ethics legislation and for employees to have a spot on corporate boards. She's also outlined plans to provide federal money to help people put a down payment on a home in historically redlined neighborhoods; this speaks to communities of color in particular but also the larger millennial problem of feeling completely unable to contemplate home ownership.

What we're still waiting to see is how Warren translates the larger arc of her vision into more specific proposals that address people with, say, runaway existing debt, and how—besides beefing up regulators—she would address thorny questions like the gig economy.


If nothing else, though, young people angry at a system they feel screwed them are in for a show. A 2005 Senate hearing on bankruptcy reform in which Warren squared off with one of her potential rivals over debt provided a look at how she might challenge old myths about personal responsibility. When she seemed to be suggesting creditors were essentially legal loan sharks, Joe Biden—of the credit-card state, Delaware—bristled.

"Maybe we should talk about usury rates, then," he replied. "Maybe that is what we should be talking about, not bankruptcy."

"Senator, I will be the first," Warren responded. "Invite me."

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