‘Uncle Sam is my favorite sugar daddy': This Las Vegas stripper makes $12K/month. But she owes the IRS $100K and has scary levels of debt — can she dig herself out?
For guests of Caleb Hammer’s Financial Audit, there are usually two inevitabilities: debt and taxes.
Christa, 33, recently joined Hammer on his YouTube show, where she shared her struggles with debt, her work as an exotic dancer, her reliance on her monthly Veterans Affairs (VA) disability payments — and her tax troubles.
Don’t miss
Anything can happen in 2024. Try these 5 easy money hacks to help you make and save thousands of dollars in the new year (they will only take seconds)
‘The biggest crash in history': Robert Kiyosaki warns that millions of 401(k)s and IRAs will be 'toast' — here's what he likes for protection
Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
“Uncle Sam is my favorite sugar daddy,” she told Hammer, while describing her fascinating journey from the Navy to the strip club. Hammer, who’s known for his big reactions to his guest’s situations, called it “one of the most wild situations I've seen, ever.”
But Christa’s not the only American falling behind on her monthly payments (or her taxes, to be fair). As of the end of 2023, U.S. household debt hit a new record of $1.13 trillion. And the Federal Reserve reports that credit card and auto loan delinquencies are on the rise — and have risen above pre-pandemic levels.
Meanwhile, the IRS has made it clear in recent months that it’s aware Americans aren’t forking over all they owe the tax agency — to the tune of some $688 billion in 2021 alone. Christa’s six-figure back taxes may be just a drop in the bucket, but she may qualify for some relief, according to a recent IRS release.
Here’s what’s amplifying these troubles for both Christa and the millions of other Americans like her.
Pushed to the edge
The rising cost of living is pushing more people into precarious or stressful employment. According to a recent report by PYMNTs, 23% of consumers have a side gig for supplemental income.
Income from side gigs can be unstable and unpredictable. It’s also much more complicated to deal with during tax season. Gig workers might not know what they owe in taxes throughout the year and are at higher risk of falling behind, according to H&R Block.
Christa’s tax problems stem from this lack of awareness. Her earnings are immensely volatile, fluctuating from just $4,000 to $5,000 a month in the summer to $13,000 in November. She isn’t sure about her tax burden but estimates that she owes $60,000 for a previous tax year and $40,000 for the current tax year, for a total of $100,000 owed to the tax agency.
“I’ve been avoiding them,” she told Hammer. “The accountant or the IRS?” he asked, to which she replied: “Both.”
Fortunately, Christa spent six years in the U.S. Navy, which entitles her to medical coverage and roughly $2,000 a month in disability payments. This would offer her some stability in monthly income, but her bad spending habits have pushed her into more debt.
Read more: Here's how you can invest in rental properties without the responsibility of being a landlord
Bad spending decisions
Christa’s penchant for spending has only amplified her financial troubles. She got breast enlargement surgery, which she isn’t sure can be written off for tax purposes. She purchased a property in Arizona, which is being refurbished to serve as a short-term rental. Her outstanding balance on this is $60,187.
The home was financed by the seller of the property at a 10% interest rate, although Christa believed the rate was just 5% when she bought the place.
“Did you not look at what you signed up for?” Hammer asked her.
Meanwhile, the renovations on the property were financed by her credit card. She’s very close to her $10,000 credit limit on that card. To make matters worse, Christa decided to apply for a personal loan at 15% interest to mitigate her monthly payments. “I used that to consolidate debt, but I didn't do a very good job because I still have that [debt],” she said.
That’s just the tip of the debt iceberg — altogether Christa owes $59,085 in consumer debt with $2,103 in monthly payments.
“You’ve dug yourself a hole beyond holes,” Hammer told her.
While the data shows many Americans are in a similar position, rising interest rates have only made it harder for borrowers like Christa to dig themselves out of this growing hole.
But you do have options to get out from under the pile of debt. Christa was on the right track with her instinct to consolidate her debt at a single, lower interest rate. However, you can’t simply take out another loan and hope for the best.
You can easily get stuck in a never-ending cycle of debt if you don’t also come up with (and follow) a household budget that includes debt repayment. If, like Christa, you’ve been putting off dealing with your financial mess, it might make sense to loop in a qualified financial professional to help get you on track. With a little guidance, you may find no hole is too deep to get yourself out of.
What to read next
Suze Orman: If you think you're ready for retirement, think again — 3 money moves to avoid being poor when you're retired
Car insurance rates have spiked in the US to a stunning $2,150/year — but you can be smarter than that. Here's how you can save yourself as much as $820 annually in minutes (it's 100% free)
Can I collect my dead spouse's Social Security and my own at the same time? Here are 5 secrets of 'survivors benefits' you need to know
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.