While retail therapy can seem like a harmless way to blow off some steam after a long week at work, the urge to splurge has a dark side.
For some, it can become a full-blown addiction — complete with secrets, shame and a serious financial mess from which it may take years to recover.
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Take Bob’s wife, for example. Bob, who lives in New Hampshire, recently called The Ramsey Show seeking help from hosts Dave Ramsey and Rachel Cruze about his wife’s shopping addiction. The couple are both in their 70s and, as Bob explained, his wife regularly blows their entire $7,000 monthly income on shopping. (1)
“She just has this habit that when she walks in the store, she’s got to buy.”
Meanwhile, the couple owes $267,000 on a mortgage, $25,000 on a car loan and about $10,000 in credit card debt. With more than $300,000 in debt, this couple’s spending might be manageable if they were in their prime earning years. But seeing that they’re both well past retirement age, Bob and his wife’s financial struggles are quite shocking, especially since they have little savings to fall back on.
Here’s what Ramsey and Cruze recommended to Bob to help his wife curb her spending and get the couple’s finances back on track.
Shutting off the cash flow
Cruze immediately recommended that Bob cut his wife off from access to their credit cards and checking accounts.
Ramsey, on the other hand, softened this idea by recommending that Bob sit down with his wife and request that they track their spending for a month with the hope that his wife can curb her addiction. If not, then Bob would have to cut his wife off.
“We’re going to agree on a budget this month,” said Ramsey, taking the role of Bob in a hypothetical conversation with Bob’s wife. “You and I both have a vote. We’re going to spend $7,000 on the Every Dollar app and we’re going to have a plan, and we’re going to stick to that plan.
“You’re not going to go into a store and go out of control again. If you do, next month, you will have zero access to the money. I will shut everything down and put it in my name to protect me and our family from you.”
Ramsey noted that if Bob’s wife truly has a shopping addiction, tracking her spending for a month may prove to her that she has a problem with managing impulses. As Cruze said, “she needs to go get help for it, because she’s not a whole person … it’s eroding her quality of life, who she is as a person, and who she’s going to be as a wife.”
Read more: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
Shopping addictions explained
A shopping addiction — which is also referred to as a compulsive buying disorder — is not just about spending too much money.
It’s a behavioral addiction where compulsive purchasing can be used as a means to avoid negative feelings like depression and anxiety. It’s estimated that 5.8% of the U.S. population will experience compulsive buying disorder in their lifetimes. Compulsive shopping also tends to run in families that are prone to other addictive behaviors or mood disorders. (2)
While there are no standard treatments, there are many options for helping shopping addicts, including groups like Debtors Anonymous, psychological and financial counseling, and treating co-existing disorders like anxiety or depression. As with many addictions, there are signs that can help someone spot compulsive spending in themselves or others:
- Feeling a "high": Shopping addicts may feel a sense of euphoria or excitement when they buy things, which can be followed by feelings of regret or guilt
- Spending in spite of consequences: An addict will continue to shop even though they know it negatively affects their lives
- Lying about spending: Addicts will often hide their purchases or lie about how much money they have spent to their friends and/or family
- Neglecting responsibilities: Addicts may indulge in online shopping at work or school, or skip activities with their friends and family in order to shop
- Legal issues: Severe addicts have been known to shoplift or use family member’s names to open new credit cards when they run out of money
How to recover from a shopping addiction
Financial strain is one of the most immediate negative impacts of a shopping addiction, and this can become a serious issue in a marriage. If left untreated, compulsive spending can lead to severe consequences like maxed-out credit cards, unpaid bills and even repossession or foreclosure on a shared home.
If Bob wants to help his wife clean up their finances, they should start by addressing any emotional conflict in their marriage that may be causing her behavior. Bob’s wife’s addiction may be a symptom of a deeper issue with their marriage, and Bob may need to acknowledge his part in that issue in order for he and his wife to successfully address their finances.
Getting to the root of the issues that encourage Bob’s wife to compulsively shop could be the start of their journey to getting their finances back on track.
If Bob and his wife discover there is marital discord that has led to her shopping habits, the two could seek marriage counselling to get to the bottom of their issues. If her spending is not a symptom of marital issues, Bob’s wife may still benefit from seeing a therapist, who may be able to help her figure out what’s driving her spending.
Bob and his wife could also benefit from a meeting with a financial adviser, who can help them set a budget and make a plan for paying off debts and getting their savings back in order.
How to get their savings back on track
For Bob and his wife, their best earning years are well behind them, but that doesn’t mean they don’t have the means to clean up their financial mess.
For instance, if they can successfully address her compulsive spending, Bob and his wife have $7,000 in monthly income — which equals $84,000 for the year — that they can use to pay off their mortgage and any other debts.
A financial adviser can help them with creating a budget, but one budgeting rule they can use is the 50/30/20 rule. This technique would allow them to spend 50% of their monthly income on needs (like housing and food), 30% on wants (like shopping) and 20% on savings and paying off debts. (3)
With this technique, Bob and his wife could allocate $3,500 of their monthly income to their mortgage and $1,400 to savings and paying off debt. That would leave them with roughly $2,100 for wants, and if Bob’s wife has her spending in check, they could allocate even more to their savings and debts while leaving them with a little less money for wants.
If this kind of budgeting doesn’t do the trick, Bob and his wife could consider selling a valuable asset such as their house and downgrading to a smaller home. Depending on their profits, this route could significantly help them with paying off debts and saving money for the future. In fact, Bob and his wife might also consider moving to a state where the cost of living is cheaper, as New Hampshire is among the costliest areas in the country. (4)
Of course, a financial adviser can help them figure out the best way to make use of their monthy income. With a solid strategy, Bob and his wife can get their finances back on track, but they’ll need to solve her spending problem before they can do so.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Ramsey Show Highlights (1); PubMed Central (2); Wealthsimple (3); SoFi (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.