Scum-Sucking Bottom Feeders

A Twitter listener asks how payday loans work and why they're located in seedy areas or near military bases. Dave explains.

QUESTION: A Twitter listener asks how payday loans work and why they're located in seedy areas or near military bases. Dave explains.

ANSWER: Because they're an absolute rip-off. They're scum-sucking bottom feeders. These people are horrible. The average payday lender makes an annualized rate of return in excess of 700–-800% iterest. They do it in small quantities so people can swallow this stuff, but basically, they'll take something like a $200 advance and have you write them a check for $225. Two weeks later, they cash your check for $225. That's a payday lender. If you annualize a $25 interest rate over two weeks on $200, if you were to go back time and again and do this, you would be paying 800% o your money, and lots of people are serial payday lender customers. They get stuck in this horrible deal and can't get out.

Military bases are a little different because the federal government said that payday lenders were abusing the military and have limited them on what they can charge to the military. They can't make 800% o the military—only about 33% anually.

The bottom line is they're in poor areas of town because rich people would never allow themselves to get ripped off that far If you are broke, you will become rich when you do rich people stuff with your money. Find out what the habits of rich people are and do them, and you will become one of them. How do I know this? Seventy-eight percent of America's millionaires are first- generation rich. They started with nothing and became millionaires. If you do poor people stuff with your money, you will become poor people. If you are rich and you do poor people stuff with your money, you will become poor people. "Rich" isn't an amount of money; it's a mindset in how you live. I've been broke, but I've never been poor because when I was broke, I just had no money. It wasn't that I had no hope. It wasn't that I didn't believe I could win. It wasn't that I was unwilling to sacrifice. But if you will look around the poor ends of town, you will see some of the things that make people poor if you keep doing business with them. A payday lender is one of them. Title pawn shops are another. Rent-to-own is another. For goodness' sakes, the quarter laundry is one of them. Tote the note lots where you put almost as much down on the car as it's worth and they charge you almost double for the car plus the interest, which by the time all that's done is as much as triple. These are not things you see in the rich end of town for two reasons. Rich people would never do that kind of a thing because no matter how desperate they are, they know it would make them poor.

The vast majority of lottery tickets are sold in poor ZIP codes, the bad end of town. Rich people don't buy lottery tickets. The reason they don't buy lottery tickets is because it doesn't work, stupid! It's not any harder than that. The other reason you don't see these horrible businesses in the rich end of town is because the people that oppress the poor—take advantage of the poor—run those types of businesses. They tend to keep them poor. They know who they can feed on. The last reason is because they don't work and don't handle themselves. You get to make choices if you're poor and not be poor anymore in the United States. You do have that opportunity.