June 16, 2024

A 20-year-old model juggles between her extravagant spending habits, skyrocketing credit card debts with an interest rate of 30.49%, and her belief that purchasing groceries is a rip-off. Caleb Hammer, a personal finance YouTuber, steps in to comment on the issue.

When the voice of wisdom seems to come so slowly with age, what can a young individual turn to? For Paris – this story’s protagonist – the answer is in the form of an elucidating interaction with Caleb Hammer on his online show, Financial Audit.

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Paris, an Austin native and enthusiastic overspender, confesses her deleterious addiction to credit card spendings on Hammer’s show. As she explains to Hammer, she impulsively drains her income, misconstrues credit card expenditures as investments, and is highly skeptical about grocery shopping. While her current trajectory might indicate impending financial catastrophe, Hammer perceives potential salvation provided that she judiciously manages her resources.

Financial Outflow

Paris’s source of income, modeling, is regrettably insufficient to cover her expenses. Apart from limited earnings, she has to afford pricey apparel adhering to the stringent beauty pageant standards. Despite these financial grievances, she is enthusiastic about her full-time job as a dog kennel technician. Her monthly salary from this job ($3,120 pre-tax) combined with shared living expenses with a roommate – costing $848 and $180 for rent and utilities, respectively – is enough to maintain her.

However, with various expenses affiliated with her modeling work, she is often compelled to max her credit cards, the interest rates of which she was oblivious to until Hammer brought it to her notice.

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Generation Z and the Spending Spree

Poor credit management is a reality for most Gen Z individuals, asserts data from LendingTree, as this demographic has ratcheted up debts at a faster pace than its preceding generations. Paris, much in alignment with this trend, spends a considerable portion of her budget on fast food, dismissing the idea of grocery shopping (and home-cooking) as not economically viable.

The rising costs of grocery items have added fuel to this misconception, despite various media analyses confirming that home cooking is often more cost-effective than dining out or ordering food. Hammer is apprehensive about Paris’s financial future unless she curbs her instinctive overspending.

Warning Bells for the Future?

Paris confesses her limited prowess in financial matters, inherited from her less financially savvy mother. By her admission, she has adopted the same imprudent “spend as you earn” approach. Since her current credit card balance isn’t significant, to maintain a rosy financial future, Hammer advises Paris to thoroughly pay off her credit cards, minimize dining out, adopt home-cooked meals, explore additional income sources, and accrue an $11,000 emergency fund.

Adhering to this guidance could help Paris transform her financial habits and significantly improve her financial stability.

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Note: This article merely provides information and should not be mistaken for financial advice. It bears no warranty, explicit or implicit.