Fixed income got you in a fix??
Here’s a solution you can take to the bank
By Senior Writer Uncle Joe
There is nothing more American than baseball, hot dogs, apple pie or owning your own business to make money. This entire country has been built on the backs of those willing to open a small company, make money and enjoy the income. Well, unless you are already retired, living on a fixed income and being eaten up by inflation!

Today, the President said: “with oil being this low, it would be a good time to add a tax on it”. WHAT??  Do you know who is going to pay that tax? YOU! AT THE PUMP. What in the world do all the folks in Washington DC think that we are all made of money? Don’t they realize someone retired on a fixed income has the deck stacked against them already? Well until now. People looking to increase their income might finally stand a chance to do little and make a lot. If you need income from your stash you need to read on.

Most people don’t think of owning their own business for one simple reason. WHERE DO THEY FIND CUSTOMERS? Well, what if you had the customer first, and then made the company so you could serve the customer and make money? That is exactly what John G of Fenton did and now it is catching on like wild fire. And no, John still enjoys his retirement, travel and the things that a 70 year old man does each day. He does not work! His money does all the work for him. Here is what he did.

John created a company by simply going to the county courthouse and registering a DBA (doing business as) name. He called his company Visible Investments. It cost him $10.00 to register the company. The purpose of the company was to invest money to make money. The clerk at the court gave him the papers and off to his credit union he went. He then transferred $20,000 from his low interest rate savings to his new formed business. He was now capitalized $20,000.00.

Now, all he needed was someone to do business with that would let him make money on his money. This is where the American way now pays off. His small business now does business with a small company in Fenton called AutoPlus Financial. They are a state licensed bonded lending company that does business with other small business’s most of them Independent car dealerships. Here is what he does. Keep reading.

John loans APF money at a rate and a fee. The rate is a minimum of 9% and there is no maximum rate. He has made as much as 30% on his money. Here is how it works.

Of the $20,000.00, 65% of the money is put into what is called a “Fixed” long term investment. This investment pays him a flat 9% plus a fee of $300.00. The fee is paid to him up front in advance. John’s money is then used by APF who loans it to people needing a car at a dealership. The money loaned by APF is at a higher rate and fee than the money paid to John. They keep their share. Each month he gets his payments (Principal and Interest). At the beginning he got his $300 fee. This seemed somewhat complex, but then when we looked it was pretty simple. Here is the example on this one transaction.

APF bought a used car lease from a car dealer (in this case Cheryl Luttman owner of an Uncle Joe’s store in Howell). APF paid $5,000.00 to the dealer for the lease. APF borrowed the $5,000.00 from John’s company. John wrote a check to APF for $5,000.00. Now APF owes Visible Investments $5,000.00. But, at the same time he wrote his check, they (APF) wrote a check to John’s company for $300.00. So at this point he is only out $4,700.00. APF will still pay back $5,000.00 plus 9% to John’s company. We did the math. The payment to the leasing company from the customer was $218.65 a month. The payment from APF to John was $159.00 a month. The difference of $59.65 belonged to APF for them to collect and guarantee John his money. We kept the calculator turned on and here is what we found.

John would get $159.00 times 36 months or $5,724.00 over three years. But he got that check for $300 at the beginning. So he got $6,024.00 back on his investment of $5,000 or a profit of $1,024.00. Ok, so now off to the accountant we went. We gave them (Gwizdala and Associates in Highland) the numbers and it proved to be a Nominal Annual Percentage rate of return of 13.282%. Not bad for just writing a simple check.

We then questioned the fact that it took three years for him to get his full amount. His reply was unexpected. “Yes, but my bank took the same time and it was much less, but that is not my only income from APF” he said. We asked him to explain.

He said his business agreement with APF allowed him to help fund inventory for dealers referred to as “floor plan” using the other 35% of his money. He said “it’s a much shorter time period, one to six months, and it pays a lot more in interest and fees”. Ok, so how much more, we asked?

Mr. G went on to tell us the return on his investment on the short term floor planning could be substantial. He gave us an example of that.

Let’s say the dealer wants to buy a car for $5,000.00. Mr. G writes APF a check and they write the dealer a check for the same, $5,000.00. The dealer immediately starts paying APF 12% and they in turn pay John 12%. So each month John is going to get $50.00 in interest sent to him (actually his company). This continues until the car is sold. When it is sold, the dealer pays off the car ($5,000) plus gives APF a $300 fee of which both go to John. WHAT?? He went on to say, “I will get $100.00 in interest for two months, plus the $300 fee or I will make $400.00 on my $5,000 investment in just two months and I have my $5,000 back in my bank to do it again”. WHAT??? Off to the CPA we went. We gave him the numbers and could not believe what we were told. 47.304%. The CPA explained, the shorter the time the more you make on the ROI and the longer the time the less percentage you make. “But it will always be more than the bank or any credit union is paying you and the more times it turns with that $300 fee the more you can make” he said. We asked, “So if that same $5,000 is used four times in a year, John, gets $1,200.00 in fees and his 12% interest, right”? The accountant confirmed “yes”.

John said, he has a nice supplemental income from his company and the only thing he does is deposit and write checks. His lifestyle has not changed other than having more spendable cash each month.

Finally, something that allows someone on a fixed income to help make ends meet without breaking the bank. As the old saying goes, “it takes money to make money”. After all, it’s the American way.

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