Other Voices

Think about giving some financial security this year

A loan store is photographed on South Cooper Street in Arlington.
A loan store is photographed on South Cooper Street in Arlington. Star-Telegram

When I was a kid, my banker grandfather used to give me government savings bonds for Christmas in a boring blue envelope.

I loved him, but privately I was pretty convinced he had forgotten what a present was.

The idea that Christmas is about overspending because overspending is love has become so ubiquitous we barely notice it anymore.

To add to the problem, we are told that going into debt to pay for Christmas is no big deal.

It is easy to find a lender, too.

A payday loan store near where I work offers a 14-day holiday loan with annual percentage rates up to 664.29 percent — a ridiculously high number that is not unusual.

At this APR, after two weeks a loan of $2,000 has to be paid back at around $2,510, and a $5,000 loan for a year means paying back $38,000.

Although some Texas cities such as Dallas, Houston and San Antonio have passed laws limiting predatory lending practices, it is still up to consumers to resist.

The lender marketing push is huge. One particularly embarrassing loan website told people, “In the end you would not want your kids to know too much about your poor financial situation, especially when their friends are to get lovely gifts.”

Credit cards also engage in heavy marketing and can lead down the same road, albeit more slowly.

According to Nerdwallet.com, U.S. households currently have a combined debt of $11.85 trillion.

Contrast these seductive messages with what it is actually like to be financially unstable. In short, it is as stressful as it gets.

We all know this, and we know that financial troubles tend to get worse over time.

There are ways to get and stay financially ahead, such as committing to save a little bit of each paycheck, to pay off the credit card bill every month, etc.

But it is much more common for people to commit to compounded debt interest that can drag on for years.

This holiday season, we need to look at spending differently. We need to look at financial security as a gift.

Either don’t spend any money if there is none to spend, or spend a little bit on something to make things financially better.

Investing in a 529 college savings plan, opening an index fund with automatic deposit every month, buying more life insurance — all of these are much more important and meaningful gifts than are more material things.

A paid-off credit card bill, tied up in a shiny bow, doesn’t sound very sexy, but it is a great present for a worried spouse.

When I think back to those savings bonds my grandfather gave me and how 10 years later I was able to cash them for double what he paid for them, I remember how I felt.

They let me know that someone was worrying about my future and wanting me to be safe, and the process of owning them showed me that security sometimes means choosing payoffs later instead of now.

As a marketing professor, I guiltily wonder about where the marketing to spend and borrow will lead us as a country.

So, I hope more consumers this year break out some comforting envelopes and fill their gifts with great financial investments.

Your kids might think you are crazy, but later they will know, as I did with my granddaddy, that you cared enough about them to make the year better financially. It will be a nice memory.

Julie Irwin is a professor of marketing in the McCombs School of Business at the University of Texas at Austin.

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