I said it was containment and spending the SU into debt, and she says it was completely different having nothing to do with America.

Sort of. There were a lot of different factors.

• Miiitary overspending - this one is true. The USSR spent about 15% of its GDP on defense in the 1980s; the USA spends about 3-5%.
• Containment was a costly ideological policy for the US, but it was about keeping allies in the third world, not the fitness of the USSR. As far as I know, the USSR had a pretty bad time with its third-world allies anyway, because it had to prop up their economies (see Cuba, North Korea) and was never able to extract much back in cash or resources.

Here's some other reasons:

• The Soviet economy by the 1980s was burdened with the worst inefficiencies of central planning. Because decisions were made at the top, the demand for consumer goods was ignored, and factories pumped out a lot of heavy goods and raw materials that didn't really have anywhere to go.
  
• Once a new enterprise was built, there was little reinvestment into modernizing its machinery after that, so by this time some of these raw goods were poor quality compared to ones sourced from the West.
• Factory managers were given productivity quotas instead of profit targets. Inefficient modes of production were kept as long as they met production quotas.
• As the central planners grew more unreliable, enterprises often hoarded the inputs they were able to acquire, and occasionally bartered them to other enterprises for the goods they had hoarded. Large-scale, necessary bartering is basically when you can start to call an economy failed.
• After decades of progress, Soviet health stalled in the 1970s and probably declined in the 1980s. Alcoholism keeps the male life expectancy around 60, and...
• 50+ years of gung-ho repetition of the industrial revolution (with socialist propaganda) turned the USSR into an ecological disaster zone.

All of this economic stagnation compounded with a few political factors:

• As others have said, the USSR was growing paranoid about US capabilities.
• They lost a decade-long war in Afghanistan which siphoned off thousands of lives and billions of dollars. This demoralized their military establishment.
• Eastern Europe began to rumble; having only ever been in the communist bloc since the late 1940s, the Warsaw Pact countries always required threats of force (with some bloody repression e.g. Hungary 1956) to keep them in line with the Kremlin's leadership. Notably in the early 1980s the USSR was unable to crush Solidarity (an oppositionist union in Poland) even though they instituted martial law.
• This coincided with the reformist Gorbachev taking power in the USSR: seeing that Soviet socialism was on the precipice, glasnost "openness" and perestroika "restructuring" were his two policies to decrease censorship and to encourage political debate and, to a tiny degree, a market economy.
• In 1985 the Kremlin told the puppet governments in Eastern Europe that it would no longer intervene militarily to save them from opposition. This policy, called the Sinatra Doctrine, is as good a "beginning of the end" point as any, since it was the first of many abdications of power by the USSR.

Long story short - the eventual collapse of the USSR was inevitable due to internal issues. Military overspending undoubtedly hastened the collapse, but how much is open to debate. The USSR had always overspent on defense, but it was only with these other problems cropping up in the 1970s and 1980s that their economy stalled and these internal problems became internal crises.