The stimulus check is actually not a stimulus. A lot of us think, “Okay, I’m getting a stimulus check. That’s awesome. I can use that money and buy that amazing TV that I’ve always wanted.” Some of you might think, “Oh, I want to take all that money and save it. That way, I can have more money in order to either, reduce my debt, my student loan, my credit card debt, or take that money and hopefully save enough so that one day I can buy my first rental portfolio or my first rental property.” It sounds really great, but in essence, it’s not really what you think.
In terms of the quality of life for anyone, whether they receive the stimulus check or not, the quality of life actually goes down. Why is that? That actually has to do with inflation.
Independently, whether you actually get a stimulus check or not, that is actually related with inflation. Inflation is created. It impacts your daily activities. It impacts your purchasing power and how much you can actually acquire with the money that you have available.
Who gets the stimulus check?
We have three categories:
- Low-income families
- The middle class
- Rich people
What happens to anyone who falls under the low-income bracket? Those who are already low-income, they are already receiving assistance from the government. Whether they get one extra stimulus or one less, it doesn’t really make much of a difference because they will always be on government support.
Then, those in the middle class, their lifestyle starts to change. They’re either going to have to reduce the quality of their lifestyle. They are either going to have to reduce some expenses, perhaps go on a diet or something like that, or have the need to find an extra job in order to keep up with their expenses.
What happens if they get an extra job? That means they’re going to have to pay extra taxes, and their quality of life may or may not improve.
It may improve in the sense that maybe they could make more money, and they can continue to afford the same lifestyle they have, but perhaps they might not be able to. Why? Because now they have to work more hours in order to maintain that lifestyle.
In reality, that’s something that the government doesn’t tell you. That’s something that people typically do not look into because they’re so focused on the stimulus check itself.
In reality, you think that your life is actually changing for the better and that the government is actually helping you get there by providing you with some stimulus, but what truly is happening is that nothing changes in the low-income area, but then the quality of life of anyone who is in the middle class starts decreasing.
That’s when they say that the middle class becomes poorer and poorer, and the quality of life becomes lower.
Now, you have the low-income area people and the families who are in the middle-income class right around the same level. What they’re doing is that they’re lowering the quality of life so that it becomes something that’s flatter for everybody.
Rich people and the stimulus check
Of course, we have the rich people and nothing really changes for them, because the rich always get richer, because they’re always focused on education, financial education to be more specific.
At the same time, because they are educating themselves, they’ll survive any crisis that’s coming their way, and they get richer, just like Robert Kiyosaki’s book Why The Rich Becomes Richer says.
- “how exactly is that impacting me?”
It does impact you in many ways, if you’re looking to invest in real estate. Now you have to think about who will be your end market. Do you want to market your rentals or your properties, your investment portfolio to those who are on the rich side? Do you want to market that to those who are in the middle class, or do you want to target low-income areas? Because they’re always under the support of the government.
If you decide to invest in Section 8 rental, for example, then you know who to target, because these are the families who always get constant support.
If you choose to market to the middle income, then you will know that there will be some compromises that you’re going to have to make down the road. If everyone is doing great and the economy’s doing great, awesome.
You’re going to continue to collect your rent, but in the event that a crisis hits, they will be the first families who tend to go away first, or the first families who you’re going to have to negotiate with, and have to come up with some type of concessions in order to, either save your rental and save your property from going to foreclosure, or just simply providing or helping that tenant of yours to get a better quality of life.
What does it mean on the long-term? It can mean that perhaps you will reduce some of your cash flow in order to protect that relationship, in order to save that property from going to foreclosure. All of that, it’s something that you definitely have to take into account.
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