The Case For Getting Into Credit Card Debt While Young To Live Better

College was a freaking blast. If I could do it over again, I would have taken five years instead of four if I knew I’d still be able to get a job upon graduation. Super seniors rock! Once you’re out, the endless summers are over and it’s into the salt mines for years until you finally retire a broken person.

When we are young we have all the time in the world but no money. When we are old we have more money but much less time. Part of the reason why I only took a backpack to Europe this summer was because I wanted to feel like a student again, but with a big bank account. It’s a trip to be treated much younger than you are while secretly being able to afford any experience.

Since I was 14 I’ve had a desire to be wealthy in order to be independent. As a result, I took on crappy jobs in high school that would allow me more freedom from my parents. In college, I took on a couple summer paid internships abroad but there was never enough money. I had a total of around $4,000 in my bank account when I graduated which is kind of pathetic after five years of part-time work.

I’m against revolving credit card debt given the average interest rate is roughly 13-14% or 4X the risk-free rate of return. But let’s play Devil’s advocate here. If I knew I was going to land a high paying job out of college I would have gone into credit card debt and lived it up a little. The problem is I didn’t know anything and I was very conservative with my finances due to my parents.


If you knew in five years you would win a $200,000 lottery ticket, would you still eat ramen noodles every day and not live it up a little? I doubt it. You’d rationally take on some credit card debt now while you are still in school or while you’re still earning a low wage because you’d easily pay your debt off in five years.

Debt is an amazing instrument if used properly. We can get rich off of debt through buying property on mortgages and purchasing stocks on margin. We can also blow ourselves up when the values of such assets goes down and we can no longer service the debt. Many folks in consumer debt have also told me that debt just creeps up on them if not properly monitored either.

But imagine a situation where you are completely rational about debt usage. Despite more than 30% of college students graduating from college with no job offers, 70% are still going to land some job that pays them a median $30,000 a year salary. Therefore, your calculations compute a $21,000 income stream (70% X $30,000) probability for your first year out.

If I knew I was going to be making at least $21,000 a year out of school or more, I would have absolutely no problem going into $2,000 in credit card debt while in college. $2,000 in college goes WAY FARTHER than $2,000 in the real world since all the money goes to extraneous things outside of room and board.

With a credit of $2,000, I could take dates out for sushi and steak dinners at least once every couple of weeks instead of always going to the $7.95 Indian buffet spots and pizza joints. Movies and drinks would be a breeze. I could easily fly or drive to another state to see my girl during summer vacations. Life would be so much easier!

Instead of living it up in college, I spent within my means. I drove an eight-year-old Toyota Corolla hatchback with one brightly painted door due to someone backing into my door by accident. The purchase price was $1,850 baby! I met girls for dinner at the University Center cafeteria where we’d go for shakes on our meal plans after. It was still a blast, but maybe it would have been more of a blast if I had more money.

When you’re 60 years old and driving a Porsche 911 CS with your 58-year-old wife to your favorite restaurant who cares? You deserve it. But if you’re 21 and revving a 5.0 Mustang with a hot sophomore, then you’re really living the good life!


I’m of the belief that most people who are well educated and financially responsible will die with more money than they need. Such unspent money will go towards family and good causes. We can say that leaving an inheritance was the intention all along, but I bet most people never intend to leave so much.

Instead, I think most people who die with too much money wish they had evened out their spending habits throughout their lives by spending more. For 13 years out of college, I only spent 30-50% of my after-tax income. Life was still pretty fun, but I do wonder whether I would have had more amazingness if I spent 90% of my after-tax income instead like normal people do.

What I’m trying to do now is to spend as close to 100% of my after-tax retirement income every month as possible since I’m retired. It’s very difficult to do, given my entrenched habit of saving. I’ve been eschewing credit card debt for so long, maybe I’ve been overly conservative in my thinking. If you can get a credit card company to allow you to spend $10,000 while in college, then maybe it’s not so bad if you are graduating summa cum laude from Harvard with a job lined up at a hedge fund paying $80,000+ the first year out. If you are a D student attending Chico State, then absolutely do not take out any debt before you get your mind on straight!

I don’t recommend anybody go overboard with credit card debt while in college or while they are working. I’m just saying that perhaps those of us who really take care of our personal finances are a little bit too conservative about our financial futures. I definitely don’t need as much money as I thought I would need in retirement for example. Furthermore, I’ve developed a livable passive income stream that doesn’t need me to make any money anymore. If I decide to continue saving such a large percentage of my money, I’ll be one of the many who die with too much!

Readers, if you knew you would make a lot more money right out of college, would you have taken on more credit card debt? Wouldn’t you get into some credit card debt and live it up a little if you knew a financial windfall was in the near future?


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  1. says

    For the responsible student with good study and work habits your article makes a lot of sense.

    I too, was frugal during college. I was able snag two credit cards but only used them sparingly. In my case I’m glad that I didn’t run up the balances on those cards because even though I got a job upon graduation, six months after ‘entering the workforce’ I was able to take the young dude’s risk of leaving my job and starting a small business by securing a small bank loan and maxing out those cards. If I had run up balances on those cards in college, it would’ve taken me longer to pay them off, and in my case I would’ve probably missed what was, in retrospect, a small window of opportunity to start that particular business.

    • says

      Fascinating story Chaz. Not many people would have had the guts to start a business at such a young age. That is fortunate you were able to get a loan then and utilize those credit cards.

  2. says

    Omg that picture is hilarious! I can’t believe that’s real lol. I remember when I first got a credit card in college. I felt like I had a new type of power, which I did but it’s not just power to purchase it’s also power to get into trouble. I was graduating into an uncertain time so I didn’t know how long it would take me to get a job. That helped me from going too crazy! It’s good they didn’t have all the reward programs they have now when I was in school or I would have spent a lot more just to get points.

  3. Bryce @ Save and Conquer says

    I wouldn’t have changed a thing. I never had debt in college, and I would not take on debt even if I knew I had a good job waiting when I finished. Why would I want to start my professional career with a lot of debt? I spent 4 years in the Air Force prior to college so that I could attend college without debt. I did have a blast in college. And the neatest thing about it, there was no need to spend more money than I did.

  4. says

    I did have a bit of credit card debt in college (just in my first year) because I was irresponsible with my card. I’m happy that I did what I did, because I learned my lesson early and before I had a higher credit limit. I lived it up after that, but just on a smaller budget :)

    • says

      Nice job paying for college on your own! I think that builds a lot of character and discipline. I paid for half of my tuition and it definitely made me motivated to work hard and get my money’s worth.

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