I’ve got this sweet plan. I’m not sure it’ll be as profitable as the lemonade stand I started in 3rd grade but it’s promising nonetheless. I haven’t contacted SCORE or written an official business plan yet so this blog post will act as my basic brainstorming.
Every couple of weeks I’m going to visit a few people and ask for a loan. Instead of targeting my closest friends and family members, I’m going to spread out my loan requests (a little bit from everybody).
The loan I ask for from each person will be approximately the same each month but the loan amount will obviously depend on how much the individual earns. I don’t want to take someone’s lunch money.
I’ll then take all of this money I’ve collected and invest it to my liking in different projects throughout the year. Once the project is completed I’ll calculate all of the incremental dollars I borrowed and repay them to each “investor” in bulk. Luckily for me, no interest will be credited to the investor.
What would you say to someone that proposed this plan to you? The natural question that immediately should come to mind would be: what kind of person would loan you money? What benefit is there to the investor?
The only benefit you could argue is that by taking the money from the investor you are safeguarding it from their irrational spending habits; but this would be an extremely hard sell.
Or would it?
Each and every year I hear people boast about the size of their tax refund. They wait anxiously for their W-2 or 1099 to arrive through the mail so they can file their taxes and receive a fat refund. Who doesn’t want to receive a random check between $1000-$5000? Of course everybody wants that.
But what if the choice were: do you want the extra money now or later? The answer should always be now but for some reason people consistently elect to receive the money later.
Are you really content giving the government an interest-free loan?
If you are then I want one too! I’ll gladly be your “forced savings plan.”