Debt addiction: Red is not the new black

"It's on sale." "I can't resist." "We can pay it off little by little on credit." It's the American way, right?

If you were to stand still in the middle of any popular department store and just listen to the voices all around, you are likely to hear these popular phrases. For some the urge to buy is an occasional impulse; for others this chatter might very well support a diagnosis of compulsive buying disorder.

Hidden among the throngs of shoppers are people who can't stop themselves—even if they want to. You hear the term shopaholic used all the time on sitcoms or on reality shows where men and women drop thousands of dollars on one item to keep up with what's trending. While this behavior may be funny or entertaining to watch, it's no joke: Shopaholics suffer from a compulsive disorder that results in major debt.

A search for the term "compulsive buying" in the PubMed/MEDLINE database maintained by the National Center for Biotechnology Information, U.S. National Library of Medicine shows there are 200-plus recently published journal works on the subject. One such article, cited in the "American Journal on Addictions," reveals that nearly 7 percent of Americans are categorized as compulsive buyers. That's roughly 20 million people.

One of the faces in that number is Andrea Gresser, a 45-year-old stay-at-home mom who said she has hit rock bottom. "Things are just coming to light," she said. "I was busted for shoplifting twice, and I'm working with a counselor."

Gresser also explained how difficult it is to stop. "I have been fighting this my whole adult life," she said. "It's like a death sentence—keeping secret [my] online shopping and trying to pay off thousands on credit cards."

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Gresser described her plight as a desperate cycle of euphoric buying followed by deep remorse. "I am constantly trying to fill a hole that I just can't fill," she said. "I literally have so much at home that I've forgotten what I've purchased, and there's jewelry that I've bought, then returned."

Gresser said she knows she's causing pain for her spouse but can't stop herself. "When your husband says he's worried about money and you know you're the cause of the problem but still go back out and shop again, well, it just stinks," she admitted.

Terrence Shulman, founder of the Shulman Center for Compulsive Theft, Spending and Hoarding and author of "Bought Out and $pent! Recovery from Compulsive $hopping and $pending," counsels people like Gresser, who struggle with impulse control, compulsive spending and debt addiction.

He attributes the increase in compulsive shopping to the ease of purchasing items via mobile and WiFi, and through TV shopping channels, where you can make a purchase with the click of your remote control. Gresser agreed: "Shopping is just in your face, with all of the advertising in stores, at the supermarket, even at garage sales."

So how do you know when loving to shop and treating yourself to a new pair of shoes has crossed the line to become a full-blown addiction that is wreaking havoc on your finances? Take a debt quiz, for starters. Debtors Anonymous (DA), a peer-based recovery program, outlines these key warning signs:

1. You have a "live for today, don't worry about tomorrow" attitude. In some ways, that may describe a free spirit, but not if the person is moving from aisle to aisle and store to store bagging up merchandise without worrying about personal finances—i.e. account balances, monthly expenses, loan interest rates, fees, fines and contractual obligations.
2. You frequently don't return borrowed items. This Debtors Anonymous warning sign may seem innocent enough: frequently borrowing items such as books, pens or small amounts of money from friends and co-workers and failing to return them. It is something everyone may have done once or twice before, but it, too, is a warning sign when the behavior is habitual.
3. It is hard for you to meet basic financial obligations. A shopaholic will hit the stores before sitting down to pay reoccurring expenses such as rent, utilities, childcare and food. A compulsive spender may knowingly skip paying any one of those items to purchase a desirable consumer good.
4. You love buying things on credit vs. cash. Debt addicts live in chaos and drama around money. Many use one credit card to pay another. They live from paycheck to paycheck, and they overwork, yet don't make enough to cover expenses. They also suffer from unwarranted inhibition and embarrassment in what should be normal discussions of money.
5. Your closet is full of new clothing with tags attached. This is a sure sign of compulsive shopping: Being unable to pass up a "good deal," making impulsive purchases and leaving the price tags on clothes so they can be returned, and not using the items you've purchased.
   

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So are some people more susceptible to compulsive spending than others? Research suggests that compulsive spending overlaps with other compulsive disorders, like hoarding, gambling and drinking. Shulman counsels people of all backgrounds on the topic, claiming that the issues driving compulsive behavior are complex.

"Some overshopping and overspending is connected to the need to compensate for some loss or lack in the life of the shopaholic." In other cases, he said, compulsive spenders have been overindulged or spoiled materially. Often, they had poor role models and this dynamic continued into their adulthood.

There are different patterns of overshopping and overspending. For example, there is bulimic shopping, described as excessive buying and returning; image shopping; bargain shopping; co-dependent shopping, defined as buying more for others than oneself; the uncontrollable urge to have the best item, which is called trophy shopping; and collector shopping. And then there are those who spend more on experiences—such as vacations, dining out and entertainment—than things.

Americans have been working harder for less money over the years, so many spend to justify the hard work but then they get into debt and have to work harder and so on, Shulman said. "The United States is a bad role model, carrying a national debt of 17 trillion dollars," he observed. "What are we to think? Well, maybe it's not that bad—everyone's doing it, everyone's taking on debt. Even defaulting on loans and mortgages doesn't seem that bad—even smart!"

According to Shulman, there will always be a certain segment of the population who are "bon vivants," able to shop, eat, gamble and drink a lot but not necessarily be addicted to those behaviors. But the hallmarks of addiction include a steady or sharp increase in the behavior over time, loss of control, increasing negative consequences and loss of jobs and relationships.

Dr. Kit Yarrow, a consumer psychologist and author of "Decoding the New Consumer Mind," said that people who overspend get a boost in mood and are using the compulsive behavior to feel less stressed. "It's served a purpose," she said. "But in the end, those boosts can push dependency, so people must find healthy ways to boost their moods—like exercise, good relationships and fun experiences—and they have to frequently remind themselves of the rewards."

So what should consumers do?

"Admitting you have a problem is the first step to recovery," said Shulman, adding that compulsive spending is "not unlike any other psychological disorder, [and] people can't just will themselves to stop." Once you've conquered that, he suggests the following:

• Seek out and read books on the topic of shopping addiction.
• Seek out professional help with a counselor or therapist who specializes in treating shopping addiction. Join and attend a support group (local, phone or online) such as Debtors Anonymous.
• Avoid stores, TV shopping and/or Internet shopping for the time being, and have others help you by holding your credit cards, blocking TV shopping channels and websites. Also avoid people who encourage you to shop.
• Fill time with healthy people and activities.

Debtors Anonymous utilizes tools—including meetings, sponsorships and pressure-relief action plans—to help members resolve debt and establish savings. But in order to seek insurance coverage, the patient must be diagnosed as having an underlying compulsive disorder.

Clinicians are quick to clarify that debt addiction isn't an illness recognized by "The Diagnostic and Statistical Manual of Mental Disorders," published by the American Psychiatric Association. That's an important distinction, because the insurance industry uses DSM as a claim qualifier.

Yarrow adds that "spending as a compulsion may not be a diagnostic category, but support groups and self-help programs are surfacing all across the country, and that's what most people need—support, reassurance, structure and a plan to follow."

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—By DaVida Plummer, special to CNBC.com