Study: Hidalgo County least financially responsible

There are some studies Hidalgo County leaders like to see — best place to buy for first-time homebuyers, lowest cost of living, etc. — and then there are some studies that area leaders hate to see.

For example, LendingTree, an online lending marketplace, now rates us as being the “least financially” place among the 100 largest MSAs (metropolitan statistical areas) in the U.S.

Case in point — approximately 36 percent of Hidalgo County residents have at least one maxed-out credit card. As a way of comparison, Madison, Wisc., had the lowest rate of cardholders with at least one maxed-out credit card — 16.3 percent.

Our local MSA — McAllen-Edinburg-Mission — is the one mentioned in the LendingTree report, but the MSA actually includes all of Hidalgo County, so it’s not limited to just a few cities.

To come up with its rankings, LendingTree used debt-to-income (DTI) ratios, credit inquiries, maxed-out credit cards, spending on housing costs, and low credit utilization rates (meaning, a large portion of residents are close to, or at, their credit limits).

Meanwhile, the cost of almost everything is headed in the wrong direction, up, not down. (Source: Bankrate.com.)

Hidalgo County isn’t the only one to come out of the July 7 LendingTree report with bad news on the financially responsible, or the lack thereof, front.

In fact, the entire state of Texas ranked dead last, with El Paso and SA joining the McAllen-Edinburg-Mission MSA on the top-10 worst list.

According to LendingTree’s chief consumer finance analyst, Matt Schulz, the reason, one of them anyway, that Hidalgo County residents (approximately 36 percent) have such a tough time managing their credit cards is based on low incomes: “That struggle is almost certainly made worse by the fact that McAllen residents tend to have lower incomes and lower credit scores than people in other big cities around the country. Lower credit scores make it harder to get credit, and lower income means that if you do qualify for a credit card, your credit limit probably won’t be very high. That makes for a challenging situation for McAllen residents, leaving them precious little wiggle room financially.”

New School Course

The fact that local residents struggle with personal finance isn’t something new. State elected officials have known about it for years.

Question is, how to improve the situation?

For decades, the majority party governing Texas has kicked the can down the road when it comes to implementing an improvement plan, so to speak, at the high school level. Too many high school seniors were graduating, are graduating, with no idea how to work up a simple budget for personal finance.

This is oddly reminiscent of the old bumper stickers seen on cars back in the day — “How can I be out of money? I still have checks on me.”

For years, high school seniors were required to take one semester of “government,” which basically broke down how our republic was set up by the founders, and one semester of “economics,” which basically taught economic theory.

You know, important info that high school seniors could use out in the real world.

No classes in personal finance.

After decades of talking about implementing a new course in personal finance for high school seniors, and why that was more important, at least from a practical standpoint, than learning about the Fed, etc., the Texas Legislature finally passed a bill this past session (House Bill 27), which will hopefully improve the situation, as spelled out in the recent LendingTree report.

The first high school seniors to take the new state mandatory personal finance course will be the Class of 2030.