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Predatory practices and bad advice

Eve — who works remotely in tech support for a bank located in both Colorado and Nebraska — said she signed up for her first credit card through recruiters on a college campus. “They said ‘You want to make $11 an hour? Here, pay rent and groceries on this card.’” Bad advice from online forums later sent her further astray as she borrowed significantly more money from different sources.

Hammer estimated that she has 24 individual debts outstanding and she spends nearly $1,709 a month on total payments, which is 34% of her monthly budget. “You have every debt that’s ever been [invented],” he told Eve.

Gen Z Americans have been accumulating debt at an accelerated clip. According to data collected by Exprian, the average credit card balance for someone aged 18 to 26 surged 14.3% from 2021 to 2023. Given the higher interest rates, managing this debt burden is becoming increasingly difficult. The average American pays roughly $1,583 toward their debts each month.

However, Eve’s monthly payments are higher than average and more surprising given her lack of a mortgage. Unfortunately, part of the reason for her debt burden is a toxic relationship that recently broke down.

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History of abuse

Eve is in the process of divorcing her abusive husband. The relationship was so toxic that she has struggled with mental health issues and an addiction to alcohol.

These issues have spilled over into her finances. “I was kind of spiraling mentally and I was like, ‘Well, my life is over so who cares?’”

Nearly half of Americans (46%) who are struggling with bad debt also battle with their mental health, according to the Money and Mental Health Policy Institute. Meanwhile, substance abuse is expensive upfront because of the cost of alcohol and can have downstream impacts on employment, legal fees, and healthcare costs, according to the American Addiction Center.

Unfortunately, mental health was only part of the challenge for Eve. She said she was compelled to spend and borrow on behalf of family because she couldn’t rely on her abusive husband.

“I didn’t trust him,” she told Hammer. “When you’re in a two-person household and there’s a conflict about what’s the best way to [spend money] that’s where a lot of financial issues stem from and I stepped in and took over the finances.”

Now that the relationship has ended, she is left with all the family debt. Her roughly $60,000 annual income as a tech support agent for a bank isn’t enough to keep up with this burden.

A partner unwilling to share responsibility for family debt is another form of abuse. One in 10 women who were forced to put their name on a debt were afraid to say no, according to a study cited by Surviving Economic Abuse, a British nonprofit.

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About the Author

Vishesh Raisinghani

Vishesh Raisinghani

Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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