Karis, a 33-year-old geographic information systems analyst from Waco, Texas embodies this trend. Before her recent raise, nearly 50% of her income was dedicated to rent. Now, it’s closer to 41% of $4,120 monthly take-home pay. However, that hasn’t stopped her from splurging online on clothes and makeup — made possible by multiple credit cards.
“[This] is one of the most insane things I've ever seen,” Caleb Hammer told her while reviewing her statements on a recent episode of his YouTube show Financial Audit. “Do not try to justify it because you know it’s bulls—. You did not need this many brand new pieces of clothes.”
Unfortunately, Karis isn’t alone in her bad habit. And untamed consumerism is pushing a growing number of Americans into a similar debt trap.
Consumer debt boom
American consumers added nearly $130 billion in credit card debt to their accounts in 2023. Overall, their credit card debt burden is now worth $1.13 trillion, according to the New York Federal Reserve’s latest Quarterly Report on Household Debt and Credit.
Nearly half (45%) of credit card users said they used their plastic more due to inflation, according to a recent survey by Debt.org, while 55% say a credit card helped them pay for a financial emergency. And a significant 35% say they’ve maxed out their credit card in recent years.
However, Karis seems to be using credit cards to fund unessential, non-emergency items such as clothes, weekly vapes, shoes, beauty products, eating out, lingerie and makeup. While this is clearly discretionary spending, Karis refuses to see it that way and justifies every item as necessary, a time-saver or essential for her work.
Given the fact that she works from home, Hammer is unconvinced by any of this. “I don’t think you know what essentials are,” he tells her.
In fairness to Karis, her compulsive behavior could be a sign of oniomania or a shopping addiction. Researchers estimate that approximately 5% of adults have some form of compulsive buying disorder. Although Karis denies having this disorder, her spending patterns have clearly put her in financial trouble.
In the previous month, Karis spent $2,115 on online shopping, more than her rent and nearly half (51%) of her monthly income. Her minimum monthly payments on all her debt is $768, according to Hammer’s estimates.
Fortunately, Hammer believes Karis has many levers at her disposal to shift her financial situation quickly.
