Now more than ever people need PayDayPlanRent.

I’m guessing the 1 is generally a person who rents. They don’t have money until payday.

Today’s headline:

‘Nearly 1 in 3 American workers run out of money before payday—even those earning over $100,000’

Not surprising. It ain't what you make, it's what you keep.

Many people don't understand the differences between wealth and income.

If I ever write a book about this business I think I will call it "The Tenants Buy Clorox." I'm kidding, of course, but the point is how people stupidly spend money.

In a survey, 60% of American can't come up with $1000 in an emergency, like tooth care, car repair or ER visit.

The real question here should be,.."Why are people broke?"

People are broke because wages haven't risen in decades, while everything else has.

People are broke because everything is a subscription service now. You can't just buy once and done with anything.

People are broke because cars cost more than some of the shacks we buy.

People are broke because health care has skyrocketed while the part covered by employers has dropped.

People are broke because taxes on the middle class have risen, including FICA.

People are broke because Boomers are leaving the workforce without sufficient retirement income.

et

People are broke because the sandwich generation is now responsible for taking care of their parents AND their children while holding down full-time jobs.

Credit cards are readily available and many people view them as an emergency fund. Of course their are many pitfalls when using this method.

Car dealers financing doesn't require cash down payments.

3% down payment home mortgages are now the norm.

WMH, almost every one one those is incorrect. You missed the boat.

It's safe to assume you never read "The Millionaire Next Door."

Most people are broke because they don't know how to manage money and spend too much. Period. It's not what you make, it's what you keep.

- No one has to buy a new car. I never have. (Everyone drives a used car).

- You have confused health care with health insurance. Health care is actually cheap if you take care of your health.

- Folks may be broke, but they always have plenty of money for restaurants, Starbucks, and the latest smartphone.

- They pop out kids without bothering to think about the cost.

- They keep electing tax-and-spend politicians and wonder why things are so expensive.

I agree with Jeff (CO) here. It is a money management problem. Doubling their wages would not solve the problem here but make it worse.

- It's safe to assume you never read "The Millionaire Next Door."

Yes I did.

- Most people are broke because they don't know how to manage money and spend too much. Period. It's not what you make, it's what you keep.

I will agree with that. It is aggravating as heck to interview a tenant that has thousands of dollars in tats and nails and not enough for a security deposit.

- No one has to buy a new car. I never have. (Everyone drives a used car).

New cars are often cheaper than used these days, if you take into financing. Used cars hold their value much more than in days of yore.

- You have confused health care with health insurance. Health care is actually cheap if you take care of your health.

Don't blame the victim. You can take care of your health and still get sick. You can still get a hernia or fall down, still might need an MRI or an XRay. I'm not talking people surprised they have cancer after smoking for decades, I'm talking just living your life.

- Folks may be broke, but they always have plenty of money for restaurants, Starbucks, and the latest smartphone.

- They pop out kids without bothering to think about the cost.

- They keep electing tax-and-spend politicians and wonder why things are so expensive.

- They have a SPENDING problem.

WMH, I seriously doubt you read that book. If you had, you wouldn't have written what you did.

Also, several famous doctors have said that up to 80% of health care costs could be eliminated or greatly reduced by good lifestyle choices.

Broad brush? Yup. One borne out by facts. Check Brad's headline: "Nearly 1 in 3 American workers run out of money before payday—even those earning over $100,000."

You can argue against facts all day long, but it never ends well.

Agreed, RB.

Roy made another good point. Doubling their wages would fix nothing. It's like the folly of adding highway capacity to reduce congestion. All you do is attract more traffic and development. This concept of induced demand also applies to spending for those who don't know any better. Double their income and they will double their spending (or, more likely, more).

Jeff,

You mean there is a cell phone that cost less than $30.00/month? I guess I am being fleeced and did not even realize it,..LOL.

Roy,

They are taking you to the cleaners. I don't know how you have anything left over to live on! :)

I use T-Mobile with an AT&T Samsung Rugby II (tough) flip phone. I can call to/from Canada and Mexico at no extra charge.

Here's the zinger: That $20 includes taxes and fees!

I stole this from a Rich Dad e-mail I received...

"The rich INVEST their money and spend what is left over.

The poor SPEND their money and invest what is left over."

The books you are quoting are a hundred years old, and yes, I get that there are folks out there, lots of them, that mismanage their money, can't hold on to a dollar to save themselves, etc. There have ALWAYS been people like that and people like most of us, who save and invest.

But for a growing number - a majority - of Americans to be in this situation means you have to take a harder look at the realities of today, not just smugly cling to what worked yesterday.

Jeff, for heathcare I included premium costs, because they are astronomical. Even if you don't get sick, you spend a considerable amount on premiums these day.

WMH, I agree with the what you said about health insurance costs. I pay that, too, and it's a lot.

Those books are from the '90s.

The principles described are just as applicable today as they were when they were written about in Rich Dad, Poor Dad, and The Millionaire Next Door.

They are sound and are not unlike the rules of math which always apply, no matter what.

Smug? yup! I don't have a lot of respect for people who foolishly and mindlessly waste money and then claim to not have any. As a landlord, though, I am grateful that they have chosen to not save up for a house and to pay me rent every month. I just want them to get THAT right!

It's all in the attitude. It's not how much you make. When you make more money, you buy nicer cars, bigger houses, more stuff. Basically bigger salaries convert to bigger payments. And Ally's right, people buy $5 coffee, fast food, prepared food, they eat out more, spend more and save either the same or less. Not many stockpile anymore.

People lack money mgmt skills. They aren't taught anymore. What's worse, is welfare. Everything is handed to them so they don't have to have a clue about money. It just falls from heaven as far as their concerned. I personally think the government should eliminate all welfare services (food stamps, housing, etc.) and give them a debit card with all of those aids converted into money, and force them to take money management classes. Make them manage it, pay their rent, buy their food, just like everyone else. If they blow it in the first day, they have a lot of time to learn their mistakes until the next lump of money comes. How will they every get off food stamps if they don't know how to manage money?

WMH - What is your solution to the fixing the "Broke Crowd"?

I agree with Roy - for most, not all, of the people In my neck of the woods doubling their wages would not solve their problems, But it would put a lot more money in the car dealers - high end carry out and fancy cloths businesses. Could throw in tats, nails and massages to.

Most, not all, of the people who are broke have no idea about how to purchase cars - smartphones - shoes - clothes - entertainment - things for the children for VALUE. Key word is value. Do you really need the latest iphone? Do you really need $200 snickers? - and the list goes on and on.

I have to agree with Jeff here. He may have generalized but generally speaking he’s right. My 29 year old daughter who was taught how to budget and invest and manages her money brilliantly would agree. She can see where her peers go wrong. Her twin brother being one of them. Guess he takes after his father.

She choose to live at home during college after deciding dorm room living was for the birds. This allowed her to save money and buy her first house when she turned 23. She bought a house beneath her means, paid 74k for it. It’s doubled in value since then and her mortgage payment is under $500 a month.

She’s chosen never to have a car payment. Instead chose to drive the old family minivan we gifted her for college. She eventually saved enough to pay cash for a newer car because she just pretended she had a car payment which she saved so she’d always have money for repairs or to use towards a new car. She was all ready to upgrade to a better used car and I told her to get a new one under 20k and I’d pay the difference. The girl saves probably a couple thousand a month living beneath her means. She’ll be 29 this month and is excited that her accounts are over 100k now. Her brother, who makes somewhat less than her but not outrageously less has saved pretty much nothing. But he dies have the latest iPhone, Apple Watch, eats out all the time, uses credit cards etc....she, like her Mom uses credit cards but wouldn’t think of not paying them off every month.

I am glad one of the two took the guidance they were given to heart. Sometimes they do know what they should do and would rather just live for today and not do it.

They don’t have student loan debt though. Many of their friends took on ridiculous amounts of debt. Their parents went along with it, often co-signing. It’s really not necessary. I went to a local college. Took out some small loan amounts but mostly paid as I went with a little parental help for the first two years. If you joined the military the loan was deferred for several years but if you paid it off during the deferment period there was no interest at all. So I made sure to do that because who wants to pay more for something than you have to.

If I wanted something I couldn’t afford there was a thing called lay-a-way. Do they have that anymore? Unless you are very low income it is possible to live beneath your means. The Chinese in general are poorer than the average American and yet manage to have a higher savings rate. It is doable.

We are spoiled. And some of us derive more satisfaction from saving than from spending. But those types are in the minority.

I agree with Lisa. Her examples spell it right out very clearly.

Lay-a-way? I haven't heard that term since I was a kid!

Off-subject, but they kind of did something like lay-a-way on "Nathan For You." He devised a scheme in which he could legally sell booze to kids. They would pay for it, but would have to wait until they were 21 to pick up the order! :)

I have/have had a lot of good tenants who work hard, drive old cars, live in our tiny cottages to save on rent, don't have tats, don't smoke, don't have cable TV (more younger people don't even HAVE TVs anymore except maybe for gaming.) They even cook at home.

BRAD 20,000 & S i d,

Sandy,

Monthly rent divided by 4, add $10.

$800/mo x 12 months = $9600year

$800 divided by 4 = $200, add $10 = $210/week.

$210 x 52 weeks per year = $10,920

= and $1320 /year increase, pure income,

WITHOUT spending a dime to improve the property!!

70% of our new leases sign up for this.

MANY prospects COME TO US for this plan.

Other LLs think we are crazy. Yes, we giggle all the way to the bank!

Oh, and here's the hard part for thrifty LLs to comprehend...

This HELPS them budget and keeps them on time.

Yes it costs more PER YEAR but the program helps the. MANY of their other payments are weekly. LLs have just been slow to realize what car, furniture, and appliance dealers have understood for years.

I'm shopping for a new iPhone 11. The dealers just talk about $XX per month. I might as well do their monthly plan because it is the same cost as paying cash. Again, they understand how people think in paycheck increments.

I know a lot of people my age (early to mid 30's) who are killing it financially. Paid off house, paid for cars, my buddy just said he had about $1m in him and his wife's retirement accounts.

Its just your demographic. Poor people spend paycheck to paycheck its been that way for ever and will never change.

Its how they think.

Didn't the Millionaire Next Door say that the most common vehicle was a used Ford Pick Up? That was because it was affordable

That ship has since sailed..........Trucks are expensive!

I thought it was crazy having apple put out a $1,000 cell phone last year, well now Samsung has multiple ones above $1,200.

Although I have a post graduate education and a graduate degree in business, one of the classes I can say that flat out changed me - were both at the 200 and 300 level. Advertising was the first one and the second one that every landlord should take is Consumer Behavior.

pmh

You and I can draw that distinction. For many people, needs and wants are the same.

My reference to needs are related to psychological needs. If your self esteem and feeling of self worth is low, your need to have these deficiencies sated is very high. Those with high needs in this regard have an almost insatiable desire for material things. What's a want for you and I becomes a need for them. Those who market consumer goods are very aware of this and exploit it. Drugs dull the pain of existence for some people, consumption does it for others.

Thanks Brad 20,000 for your expaination of the “payday-rent program”. It is a great win-win program for certain tenants. Those that can’t manage their money or spend it like GKARL has so well explained. I also noticed the effects of tv commercials and began opting out on it about 20 years ago now. Especially the news as well! It spreads fear and many other negative effects on our society. I finally got my parents to stop their cable service (which they watched a lot of the financial news shows like CNBC). After they stopped I saw them going out more, traveling etc... it’s been great.

It’s also an interesting connection when the big screen TVs came into fad, that the tenants were all over them, buying them,,, and many of us landlords didn’t. Makes an interesting visual. And we can sit back and take a look and learn something from it.

Ray-n-Pay & GKARL thanks for the interesting info on Edward Bernays and the consumer behavior class. I may research this some more as I’m interested in the marketing psychology.

I read where Facebook also employs tactics to keep you viewing their content through all these psychological studies. And successful people actively put time limiters (through chrome) to not allow themselves to be drawn in.

I think we as landlords of especially lower grade properties become very jaded about society because of the people we most often interact with - we see the worst in people at all times.

We also tend to be older and know what we know, dammit. New ideas are anathema to us. It takes repetition and also success of new ideas to convince us the old ways may not be the right way any more.