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1.
Used to describe a very painful, (and sometimes embarrassing), situation that one cannot get out of immediately.

This could imply financial, social (where one gets mocked and doesn't have a come back) , physical (getting one's foot caught under a boulder); this could be used in all aspects of life.
Example one:

"Hey, did you want to come along on that three week expedition with us?"

"No, sorry dude, I'm tapped out. Fiscally, I'm hanging by a wedgie".

Example two:

"Dude, I just got pwned by Mike. There's no way I could top that comeback. He's got me hanging by a wedgie.
by boggler December 08, 2009
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