First, we understand that many sayings in the book of James are proverbial. He takes the stance of a prophet to make proverbial declarations. He is not claiming that all people who are rich are condemned. Rather, he is condemning rich Christians who are just being greedy with it and who are also ignoring people who are needy and poor (James 5.4). There's nothing wrong with having money; there's a lot wrong with hoarding money (James 5.3). The problem is not with wealth itself, but rather with dishonest and selfish wealth (James 5.5). Those whose wealth has led them into sin will face the judgment of God (5.5 - the day of "slaughter").

Is it legitimately condemning Christians who spend money on a lot of things? It surely could be. It's not wealth that God condemns, but (1) how one got it (honestly or dishonestly); (2) what one does with it (self-indulgence while ignoring the poor); and (3) what effect it's having on you.

Money isn't the problem; spending it is not a problem. It's someone's heart and mind that is the problem.

I've seen people try and use the verse to get on Christians who spend money on a lot of things and I wonder if it means what a lot people think it means.