‘You can’t afford to live, why are you seeing the Olympics?’: Caleb Hammer slams debt-ridden 22-year-old who drained her savings on an expensive Paris trip — and offers a repayment plan

Big-ticket spending

Close to 25% of Americans say they make purchases they later regret when they’re already under significant financial stress according to a survey by Discover and Thrive Global. However, Eve appears to be more excited than stressed about her upcoming trip to Paris, which she admits is a “big purchase.”

Her return ticket alone costs $2,000, though her friend is covering the costs of the hotel they’ll be staying at. The rest, Eve says, will be covered with credit cards they got just for Europe. But believe it or not, a debt-fueled vacation isn’t unusual. A study by Bankrate in March found 36% of Americans would be taking on some debt this year for their summer vacation. Of those surveyed, 26% said a credit card was their primary source of borrowing, while others are borrowing from friends, taking out personal loans and using buy-now-pay-later services.

Unfortunately, Eve’s new credit card is the latest addition to an already sizable debt burden. Hammer’s analysis of her finances revealed that she has a whopping $21,568 in total debt and that an estimated 34% of her monthly spending is dedicated just to debt repayments.

As for assets, there isn’t much left to leverage. “When I went on my medical leave, I drained a lot of my savings,” she says. “All [of it is] pretty much gone.”

She does have some money in a 401(k) retirement account, but has three loans against it for amounts ranging from $600 to $1,000.

And she’s not alone. In the first quarter of 2024, 17.8% of workers with a 401(k) had an outstanding loan on their retirement account, according to Fidelity. Unfortunately, experts consider this an indicator of financial stress.

Given her income and debt burden, Eve has a long journey ahead to a less stressful financial situation.

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54 months to recovery (4.5 years)

Eve earns roughly $60,000 a year as a tech support worker after bonuses. By reigning in her spending habits and sticking to a tighter budget, Hammer believes she can set aside $300 a month to start repaying her debt. However, he estimates it would take 54 months or nearly four and a half years to be debt free at that pace.

But if Eve can get a second job or some gig work to set aside $500 a month instead, she could be debt-free in three years. An aggressive income boost coupled with a tighter budget could get her there even faster.

“I would rather you have no life for two years and have an amazing rest of your life because you have so much life to live,” says Hammer. “But if you keep kicking the can down the road, it’s going to be long, it’s going to be painful, it’s going to be stressful, it’s going to be bad for your mental health and you’re never going to have enough money to retire.”

“So right now,” he says, “sacrifice is the name of the game.”