Letters

Letters 07-25-2016

Remember Bush-Cheney Does anyone remember George W. Bush and Dick Cheney? They were president and vice president a mere eight years ago. Does anyone out there remember the way things were at the end of their duo? It was terrible...

Mass Shootings And Gun Control The largest mass shooting in U.S. history occurred December 29,1890, when 297 Sioux Indians at Wounded Knee in South Dakota were murdered by federal agents and members of the 7th Cavalry who had come to confiscate their firearms “for their own safety and protection.” The slaughter began after the majority of the Sioux had peacefully turned in their firearms...

Families Need Representation When one party dominates the Michigan administration and legislature, half of Michigan families are not represented on the important issues that face our state. When a policy affects the non-voting K-12 students, they too are left out, especially when it comes to graduation requirements...

Raise The Minimum Wage I wanted to offer a different perspective on the issue of raising the minimum wage. The argument that raising the minimum wage will result in job loss is a bogus scare tactic. The need for labor will not change, just the cost of it, which will be passed on to the consumer, as it always has...

Make Cherryland Respect Renewable Cherryland Electric is about to change their net metering policy. In a nutshell, they want to buy the electricity from those of us who produce clean renewable electric at a rate far below the rate they buy electricity from other sources. They believe very few people have an interest in renewable energy...

Settled Science Climate change science is based on the accumulated evidence gained from studying the greenhouse effect for 200 years. The greenhouse effect keeps our planet 50 degrees warmer due to heat-trapping gases in our atmosphere. Basic principles of physics and chemistry dictate that Earth will warm as concentrations of greenhouse gases increase...

Home · Articles · News · Features · Remember Christmas Clubs
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Remember Christmas Clubs

Harley Sachs - December 22nd, 2008
Some readers may remember Christmas Clubs -- a way to save for the holidays all through the year that has disappeared in recent years -- soon to become a forgotten tradition.
When I was a kid my mother set up a little account at our local bank which was called a Christmas Club. Starting in January, each week I made a small deposit of about 50 cents. When December came around I accumulated $25 I could spend on Christmas gifts.
Christmas Clubs have long since disappeared. Obviously, banks found the administrative costs of entering all those 50 cent deposits to be too expensive. Of course, as the year progressed, they had more and more money from savers like me that they could lend out at interest to cover the administrative costs.
Aside from being a method of providing us savers with money to spend come Christmas time, the real benefit was it encouraged us to save. A Christmas Club savings plan conditioned us to put money aside for the future. It reinforced the idea of postponing gratification, an essential discipline which has since been lost.

SCROOGED OUT
There are no Christmas Clubs now. They were done away with and replaced with credit cards and the fatal practice of demanding instant gratification. Instead of encouraging folks to save, which provided the bankers with money they could lend out at six percent for mortgages, they invited people to open credit card accounts which carried with them interest rates that began around 12 percent on the unpaid balance. The cards were soon available to more and more people as bankers persuaded the government to do away with usury laws.
Usury, for those who never knew or forgot, is the practice of charging exorbitant interest. States once set that limit, which was about eight percent. Now if you fail to pay your credit card on time or miss a payment entirely, the banks jack up that interest rate to as much as 30 percent -- as high or higher than the loan shark rates of gangsters.
With easy credit, people demanding instant gratification bought stuff on those cards. Estimates of the current average household credit card debt range from $10,000 to $40,000. My brother barely has enough left over from his meager income to pay the minimum balance each month. At that rate, he will never be out of debt. Never.
In the olden days, if you wanted to go to college, which in my time cost $800 a year, and you didn’t have the money, you got a part-time job or stayed out of school for a year while you saved for that tuition. To encourage more college attendance, the government set up a low-interest student loan program. Unfortunately, this has been handed over to banks and the interest is no longer low.

REVERSE DOWRY
My grandson’s girl friend, currently a junior in college, already owes $100,000 in student loans. Her estimated monthly payments when she graduates will be $800. I don’t have the amortization tables at hand, and don’t know the interest rate she’s being charged, but you can bet that if she lives long enough to pay off that student loan the final sum will be more like $150,000. This might be called a reverse dowry: marrying someone who brings with them a lifetime of debt.
Of course, college today costs roughly $40,000 a year, depending on the school. It’s an outrageous expense few families can afford.
No wonder our economic balloon has burst. Living on credit is unsustainable.
Imagine: saving up the money first before buying something! When I was writing for the trade journals in Europe I did a story about Moebelpfister in Switzerland. That company had a program by which an engaged couple would save up money in a joint account so that when they finally married they had built up a nest egg to furnish their first home with, of course, furniture from Moebelpfister. That was Switzerland, of course, where they had a different attitude toward money and savings. It’s going to take a huge attitude adjustment for us spend now, pay later Americans to return to the mental state we had in the days of the Christmas Club.

 
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