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ENLARGE
By Rick Swart
Publisher
Boy, do I feel like a chump. I was doing my taxes the other day and feeling pretty good about the performance of my 401(k) plan last year - an amazing 10-percent gain, thanks to a bullish stock market over the past 10 to 12 months.
If my portfolio continues those kinds of gains I figure I might be able to retire by the time I'm 70 (I'm 49 now).
Yessir, only 21 years to go and I'll be sipping margaritas and fishing for yellow fin tuna in Cabo.
Then I started doing some research on the payday loan industry and started feeling, well, a little puny, a little foolish and ignorant, because as a "savvy" investor I missed what might be the opportunity of a lifetime until a speaker at a local gathering suggested returns of 36 percent or higher were possible in the payday loan business. So I decided to check it out and found out that returns of 36 percent are not only possible but at the low end of the scale.
One lady told me her company regularly makes annualized returns of 521 percent on the loans it makes. Another lady told me she gets $375 back in two weeks for each $300 loan she makes. That's a 25-percent return - not annually, mind you, but every two weeks. Phenomenal!
I'm not a mathematician, but I do have a calculator, and just for kicks I decided to see if I had $300 to loan out how many times I would have to roll it to make $1 million, which, in my mind is the price of a one-way ticket to fishing Mecca in Cabo San Lucas.
The answer is 37 times. If I could just turn that initial $300 investment over 37 times I'd have $1,155,557. Just think what a savvy businessman like me could do with $600 ... or $900 ... or $1,200.
All I need to do is find couple of suckers to borrow $300 that they can't repay when the loan is due in two weeks. They will have no choice but to file for an extension and, in another two weeks, another one ... and so on and so forth. According to my new business plan I'll be on easy street in 18 months, which sounds much better than slaving away at the newspaper for another 21 years. What was I thinking?
The key will be finding enough people who need $300 so badly they'll pay exponentially high rates of interest to get it. That is not as far-fetched as you might think, especially in a town where gambling is legal. As one of my banker friends advised, "Once you get 'em, you've got 'em for life."
"Getting them" can't be that difficult; otherwise why would there be 13 payday loan companies in little ol' Fallon, population 8,300? There are dozens in Reno and hundreds in Las Vegas. In fact, Nevada appears to be the payday loan capital of the world because the regulatory landscape is so loose. Got a pulse? If you answered "yes," you qualify. Apparently there is no end to the number of people looking for some fast cash or businesses willing to loan money to them.
I'll call my place Tricky Dick's Easy Money. I'll go down to Fallon Glass & Signs and get myself a piece of plywood with the words "Payday Loans" shellacked in bright red. Then I'll set up shop in a rented building across the street from one of the casinos. Office hours: 24/7.
Now before you go accusing me of being a loan shark who takes advantage of others' misfortune, I'll have you know that loan-sharking, er, payday lending is a legitimate business. As a matter of fact, you have to get a license to do this. You also need to understand that payday lenders are really the guys in the white hats, the heroes in this soap opera. They are the ones helping these people out when nobody else will touch them, not their momma, not their daddy and especially not those stuffed shirts like my friend at the bank who have all those ridiculous rules and regulations they invoke in the name of "consumer protection," as if not giving somebody money to pay their rent after they blew it at the blackjack table is "consumer protection."
My place will be called Easy Money for a reason ... because me and my partner, who just happens to be 6 feet 5 inches tall, 300 pounds and looks like a nose guard for the New York Giants, will make it easy for our customers to stick a couple hundred bucks in their pocket and be on their way, no questions asked. If they can't pay it back on time, no problem. My partner, Guido, will be happy to arrange an extension. He'll be the front man at Tricky Dick's. I'll just be the guy with the deep pockets and an unlisted phone number. Don't call me, call Guido.
Just so you know, we intend to tell our customers to "borrow responsibly" and not to blow their money at the casino or on drugs or excessive amounts of alcohol or other vices. We'll borrow a page out of Smirnoff's playbook - by all means drink our vodka, but drink responsibly. Smoke, but if you want to quit, go to the Phillip-Morris Web site to find out how.
My only regret is that Guido and I didn't think of this sooner. What a wonderful business.
Rick Swart is publisher of the LVN.
Publisher
Boy, do I feel like a chump. I was doing my taxes the other day and feeling pretty good about the performance of my 401(k) plan last year - an amazing 10-percent gain, thanks to a bullish stock market over the past 10 to 12 months.
If my portfolio continues those kinds of gains I figure I might be able to retire by the time I'm 70 (I'm 49 now).
Yessir, only 21 years to go and I'll be sipping margaritas and fishing for yellow fin tuna in Cabo.
Then I started doing some research on the payday loan industry and started feeling, well, a little puny, a little foolish and ignorant, because as a "savvy" investor I missed what might be the opportunity of a lifetime until a speaker at a local gathering suggested returns of 36 percent or higher were possible in the payday loan business. So I decided to check it out and found out that returns of 36 percent are not only possible but at the low end of the scale.
One lady told me her company regularly makes annualized returns of 521 percent on the loans it makes. Another lady told me she gets $375 back in two weeks for each $300 loan she makes. That's a 25-percent return - not annually, mind you, but every two weeks. Phenomenal!
I'm not a mathematician, but I do have a calculator, and just for kicks I decided to see if I had $300 to loan out how many times I would have to roll it to make $1 million, which, in my mind is the price of a one-way ticket to fishing Mecca in Cabo San Lucas.
The answer is 37 times. If I could just turn that initial $300 investment over 37 times I'd have $1,155,557. Just think what a savvy businessman like me could do with $600 ... or $900 ... or $1,200.
All I need to do is find couple of suckers to borrow $300 that they can't repay when the loan is due in two weeks. They will have no choice but to file for an extension and, in another two weeks, another one ... and so on and so forth. According to my new business plan I'll be on easy street in 18 months, which sounds much better than slaving away at the newspaper for another 21 years. What was I thinking?
The key will be finding enough people who need $300 so badly they'll pay exponentially high rates of interest to get it. That is not as far-fetched as you might think, especially in a town where gambling is legal. As one of my banker friends advised, "Once you get 'em, you've got 'em for life."
"Getting them" can't be that difficult; otherwise why would there be 13 payday loan companies in little ol' Fallon, population 8,300? There are dozens in Reno and hundreds in Las Vegas. In fact, Nevada appears to be the payday loan capital of the world because the regulatory landscape is so loose. Got a pulse? If you answered "yes," you qualify. Apparently there is no end to the number of people looking for some fast cash or businesses willing to loan money to them.
I'll call my place Tricky Dick's Easy Money. I'll go down to Fallon Glass & Signs and get myself a piece of plywood with the words "Payday Loans" shellacked in bright red. Then I'll set up shop in a rented building across the street from one of the casinos. Office hours: 24/7.
Now before you go accusing me of being a loan shark who takes advantage of others' misfortune, I'll have you know that loan-sharking, er, payday lending is a legitimate business. As a matter of fact, you have to get a license to do this. You also need to understand that payday lenders are really the guys in the white hats, the heroes in this soap opera. They are the ones helping these people out when nobody else will touch them, not their momma, not their daddy and especially not those stuffed shirts like my friend at the bank who have all those ridiculous rules and regulations they invoke in the name of "consumer protection," as if not giving somebody money to pay their rent after they blew it at the blackjack table is "consumer protection."
My place will be called Easy Money for a reason ... because me and my partner, who just happens to be 6 feet 5 inches tall, 300 pounds and looks like a nose guard for the New York Giants, will make it easy for our customers to stick a couple hundred bucks in their pocket and be on their way, no questions asked. If they can't pay it back on time, no problem. My partner, Guido, will be happy to arrange an extension. He'll be the front man at Tricky Dick's. I'll just be the guy with the deep pockets and an unlisted phone number. Don't call me, call Guido.
Just so you know, we intend to tell our customers to "borrow responsibly" and not to blow their money at the casino or on drugs or excessive amounts of alcohol or other vices. We'll borrow a page out of Smirnoff's playbook - by all means drink our vodka, but drink responsibly. Smoke, but if you want to quit, go to the Phillip-Morris Web site to find out how.
My only regret is that Guido and I didn't think of this sooner. What a wonderful business.
Rick Swart is publisher of the LVN.
