Is it okay to spend money on yourself if you are in debt?

Question

Rich Dad · Accepted Answer

If you’re in debt and still breathing, you’re already spending money on yourself — the question is whether it’s an investment or just expensive therapy.
Let’s get something straight: not all debt is equal, and not all spending is stupid. If you’re carrying 22% credit card debt and buying $400 sneakers to feel successful, that’s financial self-sabotage. But if you’re in $15,000 of student loan debt at 5% and you spend $2,000 on a certification that boosts your income by $10,000 per year, that’s not indulgence — that’s leverage.
The wealthy don’t ask, “Should I spend while in debt?” They ask, “Will this spending increase my future cash flow?” Big difference. If you owe $10,000 at 18% interest, that debt is costing you $1,800 per year. Any dollar you spend needs to outperform 18% guaranteed — which is hard. But let’s say you’re burnt out, exhausted, and one $150 therapy session helps you think clearly and negotiate a $5,000 raise. That’s a 3,233% return. Suddenly, that’s not spending — that’s strategy.
Here’s where most people mess up: they confuse comfort with growth. A $5 latte every day is $150 a month, $1,800 a year. Invested at 8% over 20 years? That’s roughly $82,000. That’s the opportunity cost of caffeine therapy. But a $300 course teaching you how to freelance, start a side hustle, or automate income? That could generate $1,000 a month within a year if you execute properly. One builds dependency. The other builds assets.
Now let’s talk psychology. If you deprive yourself completely while attacking debt, you risk burnout. I’ve seen people aggressively pay off $30,000 in 18 months — then binge-spend $8,000 out of frustration. Humans aren’t robots. Build a system: 80% toward debt, 20% toward sane, intentional enjoyment. Discipline without oxygen suffocates.
But here’s my hard line: don’t finance your lifestyle with consumer debt. If you’re buying vacations on credit cards at 24% interest, you’re renting memories at a premium. However, if you’re spending to improve health, skills, network, or earning capacity, that’s a calculated move.
Debt isn’t the villain. Stagnation is. If your “self-spending” makes you stronger, smarter, or wealthier, it’s fuel. If it just numbs discomfort, it’s poison.
Spend like an investor, not like a patient seeking emotional relief.

Poor Dad · Answer

If you’re in a hole, the first rule is simple: stop digging.
Debt is not just a number — it’s risk. It’s uncertainty. It’s stress. If you owe $20,000 on a credit card at 20% interest, that’s $4,000 per year in interest alone. Before you reward yourself, ask: would you deliberately sign up to lose $4,000 this year? Because that’s what high-interest debt does.
I understand the argument about investing in yourself. Education, health, career development — those are important. But be careful. Many people justify wants as “investments.” A $2,000 laptop “for business” ends up being used for Netflix. A $3,000 vacation becomes “mental health.” It’s very easy to rationalize spending when you’re tired of sacrifice.
Here’s a safer framework. Separate spending into three categories: essential, protective, and discretionary. Essential is rent, food, utilities. Protective is health insurance, basic medical care, necessary car repairs — things that prevent bigger disasters. Discretionary is dining out, gadgets, luxury clothing, non-essential travel. If you’re in debt, discretionary spending should be minimal until the balance is under control.
Think about opportunity cost in reverse. If you put $500 toward a 20% credit card, you’re getting a guaranteed 20% return by avoiding interest. That’s better than most stock market averages, which historically return about 7–10% annually. Paying off high-interest debt is the safest “investment” available.
Now, I’m not saying you must live miserably. Completely depriving yourself can backfire. A modest monthly allowance — say $50 or $100 — can keep morale steady while you aggressively repay debt. If you owe $15,000 and commit $1,000 per month, you’re debt-free in 15 months. That’s a short, defined sacrifice for long-term peace.
Also consider your emergency fund. If you’re in debt and have no savings, that’s dangerous. Even $1,000 set aside can prevent you from sliding deeper into debt when the car breaks down or a medical bill appears.
Be especially cautious if your job is unstable. In uncertain times, liquidity and stability matter more than lifestyle upgrades. A steady path — pay down debt, build savings, then reward yourself — protects your future self.
Freedom feels better when it’s fully paid for.

Is it okay to spend money on yourself if you are in debt?

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