'This is not a joke': 20-year-old Texas woman spends 70% of her income on rent and has racked up $4,000 in credit card debt. She laughs it off as 'girl math — Caleb Hammer responds

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The bank of mom and dad is the de facto safety net for many young Americans. However, Rylie from San Antonio, Texas, doesn’t seem to realize just how much her parents clean up her bad financial decisions.

At 20 years old, Rylie has already managed to switch college majors several times and at one point accumulated $4,000 in credit card debt. She laughs off her reckless decisions as the consequence of “girl math” on a recent episode of Caleb Hammer’s show “Financial Audit” on YouTube.

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On top of managing hefty debt, she spends a ludicrous amount of her income on rent.

Rylie doesn’t seem to realize the impact of her personal spending habits. On top of managing hefty debt, she spends a ludicrous amount of her income on rent.

Reckless spending

Rylie’s a part-time student and a full-time receptionist at a local budget hotel. Her monthly income is around $2,000, which could be enough to live on if she didn’t have a budgeting problem.

Rylie spends $1,400 a month — 70% of her income — on rent. That’s above the average rent in San Antonio, which is $1,290 according to RentCafe. In fact, 24% of apartments in the city can be rented for $1,000 or less.

“You cannot afford it,” Hammer explained. General wisdom among finance experts is that housing costs should account for about 30% of a person’s income.

Overspending on housing leaves little room for Rylie’s other expenses. However, that hasn’t stopped her from frequently eating out and shopping online.

Cutting down on unnecessary spending could save Rylie a lot of grief and debt. She could also ensure that the spending she does make helps her build wealth for the future.

With Acorns—an automated saving and investing app —users can sock away spare change in a smart investing portfolio.

When you link your bank account to Acorns and spend as you normally would, they’ll round up each purchase you make to the nearest dollar and invest the remaining change in a diversified portfolio of ETFs where it can grow into some solid savings.

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Rylie’s expenses are funded by her credit cards. At its peak, her credit card debt was around $4,000.

By comparison, Gen Z Americans — aged 18 to 26 — have an average of $3,262 in credit card debt, according to Experian’s latest consumer debt report.

Tackling credit card debt before it becomes insurmountable can help you stave off years of grief. You can do this with a personal debt consolidation loan from Credible.

Credible’s online marketplace of vetted lenders lets you browse the best debt consolidation rates in your area so you can pay off your debt faster and at a more affordable rate. Plus, consolidating your debts into one means less bill-juggling.

Younger Americans might also have access to another source of credit: their parents.

Read more: Generating 'passive income' through real estate is the biggest myth in investing — but here's one surefire way to do it without breaking the bank

Bank of mom and dad

When Rylie’s parents realized her credit card balances were unsustainable, they stepped in and paid most of it off.

Hammer accuses her parents of serving as enablers and an invisible safety net. This isn’t unusual for someone her age. In fact, 61% of Gen Z say they are somewhat dependent on their parents for financial support, according to research from Experian. Around 37% of both (Gen Z and Millennials) say their parents did not teach them about personal finances.

Of course, it would be nice if Rylie’s parents could provide some personal finance guidance. But that’s why financial professionals—like the ones you can find through WiserAdvisor — exist.

WiserAdvisor is an online matching service that will match you with vetted financial advisors in your area based on your financial needs. When you get matched, you can book a free, no-obligation consultation before committing.

Hammer believes Rylie can manage the minimum monthly payments based on her current income.

As she tackles her credit card debt and relies less on the bank of mom and dad, Rylie can build up her own savings to fall back on with a high-yield account that offers rates starting an APY far higher than the national average of 0.47%.

We’ve compiled a list of the Best High-Yield Savings Accounts of 2024 so you can have a streamlined look at what high-yield savings account is best for your savings to grow over time.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.