A 30-year-old teacher wracked up $16K in credit card debt. How Canadians can stop retail therapy from draining their finances

Retail therapy might give you a quick mood boost, but it can also wreck your finances. For one woman, the stress of her job combined with her salary makes it difficult for her to stay within her budget.

Imagine Sophia, a 30-year-old teacher early in her career who makes $50,000 a year (after taxes) working at a public school in Toronto. Her rent is $1,500, car payment and insurance are $625, utilities run about $150 and she spends around $300 on groceries. Considering her take home pay is around $4,000 every month, she has about $1,425 to spend on entertainment, clothes and other nonessentials — but she says she’s drowning in credit card debt from impulsive shopping.

She owes $16,000 between two credit cards. Together, the minimum payments are $600 each month. She’s trying to bring down the balances by paying a total of $1,000 a month, but that leaves her with very little cash for any unexpected expenses.

The result? She’s trapped in a debt spiral. What should Sophia do?

The impact of compulsive shopping on finances

Unfortunately, Sophia’s not alone in her shopping habits. A recent Interac study found that 66% of Gen Z, 58% of millennials and 35% of boomers are more likely to make “feel-good” purchases now than before COVID — buying nonessentials to boost their mood (1).

Stores often encourage impulsive buying. Merchandisers place tempting items near the registers and at eye-level, like the candy bars at grocery store checkouts that attract children’s attention.

While the occasional Snickers bar is unlikely to tank your finances, compulsive shopping can quickly snowball, especially in times of high stress. Almost half of Canadians consider “retail therapy” a form of self-care, meaning they're likely to rely on spending money to make themselves feel better when stressed about work, family or finances (2).

Spending money to feel better might offer immediate and short-term relief, but the resulting guilt, debt and anxiety experienced afterward can make your emotional state even worse. For example, more than one-third of Canadians report feeling anxious or stressed about their financial situation, nearly 46% express regret for taking on the debt they have, while 44% are concerned about how they’re going to manage their current debt level according to MNP Debt (3).

“Most people live under a pretty tight budget, without a ton of wiggle room once their primary bills are paid. That’s especially true because of stubborn inflation and high interest rates. If you’re regularly overspending on anything, it can cause major issues,” says Matt Schulz, LendingTree chief consumer finance analyst (4).

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How to get compulsive shopping under control

It can be hard to rein in compulsive shopping — and stores aren’t exactly helping people avoid it. Financing options, such as buy-now-pay-later and store credit cards make spending more even easier.

Here are a few ways Sophia can get her spending habits under control, and learn to cope with her stress in healthier ways:

Find nonshopping hobbies

If shopping has become your go-to pastime, try replacing it with free or low-cost activities. Go for walks with a friend, visit a local museum, hike a new trail or grab coffee if it’s in your budget. If you miss the feeling of bringing something home, check out your library — in addition to books, you can borrow DVDs, magazines and access all kinds of digital content. You can also often sign up for free passes to local attractions with your library card.

Let items “simmer” for a week

If you struggle with online shopping, consider letting items “simmer.” Add items you think you want or need to your cart — but don’t check out. Giving yourself a week to reflect on whether the purchase is a need or a want can help you curb your compulsive shopping.

Earn that item

Time is money: when you consider buying an item, don’t look at just the price. Convert that cost to your hourly wage — or what your hourly rate would be if you are salaried — and consider how long you’d have to work to buy that item. For example, that $100 pair of jeans might look perfect on you — but assuming you make $25 an hour, is it worth four hours of your hard work? Reframing cost in terms of time instead of money might make it easier to say no.

Organize your home

Decluttering can help curb spending by reminding you of what you already own. Start with one closet or drawer. Donate what you don’t use, and organize the rest so you can find it easily. Taking stock of what you have can help you see the impact of compulsive shopping more clearly — and help you find things you already own so you don’t repurchase.

Make a plan to tackle your debt

If compulsive spending has left you with debt, the first step is to stop adding to it. From there, consider rolling balances to a 0% APR card — but only if you can pay it off before the promotional period ends. Or use the snowball method: pay off the smallest debt first, then roll that payment into the next. Seeing progress can boost your motivation.

The key is to recognize your compulsive shopping problem and take action. If these steps aren’t enough, consider talking to a financial counselor or therapist to address the emotional triggers behind your spending.

Article sources

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Interac (1); BMO (2); MNP Debt (3); LendingTree (4)