Are you keeping up with the Jones' debt load?

Last week I logged onto the website of my local credit union to check and see if my rent check had cleared yet. Upon arriving at their website I was greeted by a picture of a large TV with a football player jumping out of it to catch a football and text proclaiming “Buying a HDTV? Finance it with a low-rate [Credit Union] loan.” Now of course as a graduate student I’m probably not in the best position to be criticizing other people’s financial decisions. I’ve taken out student loans that paid for all sorts of stupid things (though mostly those things were food, rent, and car insurance). And I regularly end up carrying credit card debt for moderate periods of time (i.e. less than a year but more than a month). Again this is mostly for semi-necessary bills (arguably my cell phone isn’t necessary nor is a large chunk of my food expenditure) but there are certainly splurges that appear there. Nonetheless, despite not exactly being little Ms. Frugal myself, I am utterly and completely horrified by the mere idea of taking out a loan to buy a TV.

In the interest of full disclosure I should probably mention that I find this particularly horrific precisely because I don’t watch TV, and thus don’t understand the concept of high definition TV. But really, even if I loved TV, I think I’d be hard pressed to understand the concept of taking out a loan to buy one. Granted, loans in general are not my default mindset. I grew up in an essentially debt-free home. My parents rent and as far as I know they always paid for cars outright. My mother is a big believer in paying off credit cards every month. Given that, the fact that I have any debt at all is stressful for me (even though my student loan debt is minimal compared to how long I’ve been in school). But I understand the concept of debt. Mortgages seem an inevitable part of middle-class life. And I can see myself someday giving in to the idea of a car payment (if I’m really lucky my current car–which was bought new as a gift from a relative when I started graduate school–will last me long enough that I don’t have to contemplate the idea of student loan debt and car payments at the same time). But what mindset ends you up taking out a loan for a TV?

I’ve seen lots of figures (which I am currently too lazy to dig up) about Americans and their debt load. I think I’ve always sort of naively assumed that this was primarily credit card debt that built up over time and series of small purchases. Of course that sort of debt isn’t better in any sense and is almost certainly worse in the sense that it probably entails much higher interest rates. But, to me at least, it’s more understandable than debt incurred in one fell swoop for purely luxury items. I can understand how small purchases that “I’ll pay off next month, really” could aggregate and spiral into massive credit card debt. I can understand how living on credit cards for a couple of months while unemployed could have the same effect. The thought process that leads to “I need an HDTV and I think I’ll take out a line of credit from the credit union for it” is a bit beyond me. Presumably it’s somehow SuperBowl related. But that makes it even further beyond me (during my first year of college I fell in with a group of sports-lovers; they forbade me from joining them to watch the SuperBowl since I made it clear that really I only wanted to come watch the commercials).

I suppose what really perplexed me was the fact that this was on my credit union’s website. I tend to think of credit unions as more focused on their customer base and less on profit than a bank. Probably because I grew up in a small town with a very friendly, very grass roots feeling credit union where the tellers would actually recognize my mother and I when we would come in. So the thought of a credit union advertising loans for TVs just feels disappointing to me. It feels very much like “haha we’re going to make a profit off your idiocy” rather than “we are looking out for you and your money.” One could argue of course that this is looking out for people’s money if you assume that they’re going to buy the HDTV no matter what and their choice set is a) buy on store credit b) buy on credit card c) steal money to buy it or d) buy with credit union loan. Clearly if that is the situation, then the credit union is doing people a service by leading them to choice d. However, if the choice process is a) don’t by an expensive TV because I can’t afford it or b) go into debt for a TV then I think the credit union is doing their members a disservice in leading them toward b.

Meanwhile I wish I owned a home so that I could cash in the equity to pay for an extravagant vacation or a boat or something. At this point the Jones are going to get to their bankruptcy hearing way before I do.

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