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Upstart Impresses, and Banks Get Creative Giving Credit



Lending-technology disruptor Upstart Holdings (NASDAQ:UPST) recently reported earnings that were extremely impressive, but will the company be able to replicate its success in the high-potential auto lending industry? Also, we recently learned that JPMorgan Chase (NYSE:JPM) and other major banks will start issuing credit cards to consumers without FICO scores.

Finally, in this episode of Industry Focus: Financials, Jason Moser and contributor Matt Frankel, CFP, discuss the wave of share buybacks so far in 2021, and discuss two stocks on their radar now.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on May 17, 2021.

Jason Moser: It’s Monday, May 17. I’m your host Jason Moser, and on this week’s financials show we’re going to dig into Upstart’s most recent quarterly results. We’ll talk a little bit more about what’s going on in the line of consumer credit that investors will want to be aware of. Apparently, companies are flush with cash and ready to buy back some shares. We’ll tackle a listener’s question. We’ll also have one to watch for you this week — so we’ve got a very, very full agenda. And when we have a really full agenda, there’s only one man with the ability to take on such a Fool agenda: It’s Certified Financial Planner, Mr. Matt Frankel. Matt, how’s everything going?

Matt Frankel: To be fair, I think there are others who could fill in, and they have. [laughs] But I’m always happy to be here.

Moser: No one reaches that level that you’ve set for us. You set the high bar here, Matt. [laughs] We’re always very proud of that.

Frankel: I’m still surprised every week when I’m asked to come back.

Moser: I’m grateful that you say yes. [laughs] Matt, we’ll still open at the show here this week and talk a little bit about another earnings report that just came out recently, a company that we talked about a little bit on the show here and one that you follow, Upstart. Tell us what stood out to you in their most recent quarter.

Frankel: Well, this is a stock that investors have pretty high hopes on. I mean, it’s doubled in the past few months, even before earnings. We did a Deep Dive into Upstart on the show. They’re primarily a personal lender. They use kind of proprietary technology. They focus on the subprime area of the market, trying to do a better job of underwriting loans for borrowers with lower traditional credit scores than most others do, and it’s been — the results have been pretty good so far. They’re just getting into the auto lending space now, so that’s their most promising area going forward.

But just [to] kinda recap this quarter, which was still primarily personal lending: Revenue was up 90% year over year — 90%. That’s during a pandemic with decreased loan demand that most banks are reporting. Remember, that was a big theme at our bank-earnings episode, was that loan demand has kind of shrunk. People had more cash and there’s less need to borrow, they’re doing less these days. The personal lending space has declined overall. That’s what makes it even more impressive. That was about $5 million above expectations.

Origination by Upstart’s lending partners — it partners with banks who make loans using its platform — more than doubled year over year to 170,000 loans on the platform, a total of about $1.7 billion borrowed.

Some really impressive stats from a long-term perspective here: Conversions on rate request, that means if you go to Upstart’s platform — you know, it’s as if you could check your rate without your credit score, things like that — conversions on those, the people who request a rate and actually become a customer and get a loan, have increased from 14% of the rate requests to 22% over the past year. That’s a big increase in conversion. That’s really impressive from a long-term perspective. Margins are better; adjusted EPS not only were positive, which — in the fintech world, just saying they’re profitable is usually enough qualifier. [laughs]

Moser: I was going to say, I was looking through their financials here and I did a double take; I was like, wait a minute, they’re actually profitable. It just seems like so many of these newfangled businesses haven’t quite gotten there yet. But it seems to me, Upstart, it seems they’re there and probably don’t have to worry about that going forward, I guess, right?

Frankel: They’re worrying about how to grow their profits, not just get a path to profitability.

Moser: That’s nice. [laughs]

Frankel: It is. In the second quarter, they’re expecting 28% growth. Not year over year — they’re expecting 28% quarterly growth, so compared to what they did in the first quarter. They increased their full-year guidance from $500 million in revenue to $600 million. That’s a big jump.

Moser: That is a big jump.

Frankel: Remember, this was primarily based on just personal lending. This does not really show that potential in their auto lending business. They’ve proven their concept, that they can do a better job than the traditional bank models of underwriting personal loans to the subprime borrowers.

Now they’re going to try to replicate that in the auto market, which — subprime auto loans are a big consumer issue these days. Last Week Tonight with John Oliver did a whole episode on it. [laughs] If you have a chance, go back, it’s worth a watch. There are people who are paying 20% to 25% for auto loans, because they can’t qualify through traditional bank lenders. This is a big addressable market that is really overpaying, being abused by lenders, quite frankly, that Upstart is trying to go after and just do a better job and give them competitive loan rates.

Now, someone in the subprime realm is going to pay more than someone with an 800 credit score; that’s a given. Does it need to be 20%, 25% if they’ve never defaulted on a loan before? No. So that’s something that Upstart really is trying to do better, and they’re doing a really good job of it so far.

Moser: It’s an interesting point you make on the subprime auto loans, and I wonder, because we’re in this period of time where the used-car market is really strong. With semiconductor shortage[s], there are automakers around the world who are witnessing supply-chain crunches. And that is translating into, ultimately, supply-chain crunches for the very cars that they produce, and that is ultimately reflected in a stronger used-car market.

Do you feel like that’s part of the calculus here? Is that part of what’s going on, or as you have folks going out there looking to buy used cars, it’s such a tight market, they are having to pay more to get those cars? And on top of that, then you feel like lenders out there feel like they can even just take a little bit more advantage of a situation — where Upstart perhaps sees that as an opportunity to do a little bit more right by the customer?

Frankel: Let me apologize from the start for whoever’s listening that’s a used-car dealer. [laughs] It’s tough to imagine the used-car industry being worse to subprime borrowers than they have been for the past 10, 20 years. In the Last Week Tonight show that I just mentioned, there was an example of the same car that had been sold and repossessed to three different subprime borrowers. [laughs]

Moser: Wow.

Frankel: The same car. They’re giving them these big loans that have, like I said, 20%, sometimes up to 30% interest rates. So people are paying the same debt that a regular borrower would on a $50,000 car to have these used lower-end cars. It’s killing them financially, and it just leads to the cycle of repossessions and bad credit. There’s a lot of room to do it, but it’s really tough to overstate how bad that market is.

We’ve talked about markets that have a lot of consumer pain points; life insurance is one that we’ve talked about on the show. The subprime auto lending market is one that just really needs a complete overhaul for the good of consumers, whatever company. Some have tried, there have been subprime lenders before that have tried to do a better job. No one has been able to succeed yet. If Upstart can — they have in the personal lending space — so if they can translate that to the auto lending space, I mean, subprime auto lending is a several-hundred-billion-dollar market. It is a big market we’re talking about.

Moser: It seems like basically a two-pronged strategy that could really help them succeed. No. 1, making sure that their AI [artificial intelligence] is providing them with the best data to help them make the best-informed decisions. Then also, it’s just having the desire to just do right by the customer, do a little bit better than perhaps what you’re seeing as the norm. Because I mean, for a lot of folks, they have limited resources, and then they’re going out to try to get a car; they just don’t have a lot of choices. When you don’t have a lot of choices, you become a desperate buyer, and you know how that goes.

Frankel: Right. To be fair, a lot of it’s not the lenders’ fault. There’s just no good way to underwrite that subset of the population, so they’re taking on risk they don’t have to. The idea with Upstart is if they can take the people with the sub-650 credit scores and narrow it down to the subset that isn’t going to default, then their customers — the banks they partner with — can make three, four times as many loans without increasing their loss rate. And meanwhile, pass that savings onto the customer by not charging them insane interest rates. It’s a win-win for the banks, it’s a win-win for Upstart, and the customers. So, it’s an industry that just really needs an overhaul. There’s just no good way to do it yet.

Moser: Well, speaking of overhauls in the credit industry, there’s another interesting headline that came out here recently. Some of the biggest banks out there, JPMorgan Chase, Wells Fargo, U.S. Bancorp, [and] more are looking at new ways to get consumers credit even though those consumers may not necessarily have a credit score to help guide that decision, and to guide limits and rates. These banks are looking at using other financial data to do that.

Now, I think this is something we talked about on the show a number of months back, when we saw that FICO was going to be revamping the way they calculate their scores. We’re looking at new ways credit is going to be offered. But this really does seem like these banks are very interested in leveraging a lot of the data that they already have in order to be able to make well-informed decisions.

Honestly, to me, this makes a lot of sense. I mean, if you’re going on data that you already have, if you’re going on history, in theory, these banks should have a lot of relevant data that should help them make well-informed decisions. I mean, I don’t know. I think this is one more way at least to help get people started that didn’t exist before.

I remember a time ago when I worked at the bank, I remember folks coming in and the only way they could even remotely have a chance at establishing a credit score was to get something like a secured credit card. Like, you’d have to put down a $250 or $500 deposit to get your credit card, essentially a secured loan. Folks like that, I mean, you didn’t have $250 or $500 just to drop at a whim; I don’t know. To me, this does seem like it has a lot of promise if it’s executed.

Frankel: For sure. The one you are referring to is called the UltraFICO Score.

Moser: Yeah.

Frankel: To be fair, that was kind of a flop. We learned that not only did very few lenders ever pick that up, no banks have embraced the UltraFICO model. It didn’t really work out the way the FICO people had planned it.

Having said that, a lot of Americans think that every adult in the U.S. has a credit score. I mean, I think I thought that until I became a financial planner. To get a credit score, you have to have at least one reporting account within the past six months to your credit file. You know how many people don’t have that?

Moser: I mean, I don’t know the number, but I would venture to say it’s probably a good half the population [laughs].

Frankel: Fifty-three million adults.

Moser: Well, that’s not far off.

Frankel: That’s a lot. That 53 million disproportionately includes minorities. That’s a big part of why the government is really backing this plan, to try to level the playing field a little bit.

As you mentioned, a bunch of banks have signed onto this plan, JPMorgan, Wells Fargo, etc. You want to reach consumers that don’t have traditional borrowing opportunities based on credit scoring, because if you don’t have a credit history, a lot of lenders won’t talk to you, unfortunately. Right now, it’s considering things like consumers’ savings accounts and balance history and overdraft history, a record of responsible behavior. This could eventually include things like rent payments, utilities. They’re trying to partner with a lot of different sources to come up with an alternate credit model, kind of what FICO was trying to do a few years ago but really wasn’t able to get traction on. If they could do that — I mean, you have to walk a tight line between that really effectively becoming a credit score and excluding people. Because in most cases, you need credit to get an apartment to have a rental history, for example. I needed to have my credit run when we established electric service here; I’m sure you guys did too.

You want to be able to get as much data to really give an accurate picture as possible without the unintended consequence of excluding even more people because they don’t have those things. But this is obviously a good thing. Democratizing the financial system is what we’ve been talking about with all these fintech disruptors on here. You want to bring inclusivity into the financial system. Anything that does that, I’m all in favor of.

Moser: I’m right there with you. I mean, to me, this feels like another avenue. What’s more, it feels like another avenue that’s actually pretty well-thought-out, because a lot of these big banks have a ton of data at their disposal. I mean, all relevant real-time, real-life data of bills paid and money going in and out. I feel like there’s a lot of potential with something like this.

To your point, with that large a percentage of the adult population here not even having that one asset, and I’ll call that an asset because I’ve taught our girls, my daughters, I’ve said: “Listen. One thing that’s going to come up as you get older, you’re going to get a credit score and you need to protect that thing with your life, because it opens up a lot of doors. It gives you a lot of opportunities that you might not have otherwise.” And it can be a little bit difficult to get started because as you said, in order to have a credit score, you have to have some history to go on. But you’ve got to get that history started and oftentimes, to get that history started, you need a credit score.

But this, to me, it does seem like it’s something right in line with the evolution of the finance space, the banking space, how money is moving from point A to point B. So hopefully, yeah, to your point, it’s a little bit more well-received than the, what was it, UltraFICO.

Frankel: Yeah. I mean, there’s a clear problem here. Have you ever gone to apply for a job and they said, “You need experience before we’ll hire you” — but how do you get experience if you don’t get a job? It’s kind of like that. It’s an unsolvable problem for a lot of people. I want to apply for a credit card: “Okay, but you don’t have any credit.” Well, that’s why I want a credit card, to get credit.

Moser: [laughs] Well, we’re sorry. We can’t help you.

Frankel: Right. It is just like, how do you get out of that loop?

Moser: Yeah, messed up.

Frankel: I mean, there’s secured credit cards, but even that is —

Moser: It’s a difficult hurdle.

Frankel: They’re good products if you can get one, and have the money to put up for one, but it’s not really democratizing the financial system; it’s creating an extra hurdle for a group of people. I used a secured credit card to establish credit years ago, and they’re great products. But I would have preferred if people would just take a look at my bank information and my rent history and see that I’m a pretty responsible individual.

Moser: It seems very logical, so hopefully, we’ll see some progress on this front, because I do believe that could open up a lot of doors for a lot of people who are deserving. Yeah, definitely something to pay attention to.

Another thing to pay attention to, and something that is really starting to gain some steam here after a year of playing defense: It does feel like a lot of these companies are seeing a little bit more light at the end of the tunnel, feeling like we’ve really turned a corner here.

As such, a lot of these companies are starting to spend more on dividends. And especially they’re really starting to buy back more of their stock than they have been over the last year or so. It feels like stock buybacks are neither right nor wrong, they just are, and we can just discuss whether you like them or hate them until the end of time. But what do you think when you see news like this? I don’t know. I mean, there’s one part of me that wishes companies would take this money that they’re using for buybacks and figure out new ways to invest that cash. But by the same token, those investment opportunities aren’t always so obvious. They don’t grow on trees.

Frankel: Yeah, I mean, theoretically, a buyback should be a great use of a company’s cash if they’re doing right by their shareholders. The idea is, you want to buy your shares back at a value that’s less than the intrinsic value of the business; this is what Warren Buffett always says. If they could do that, that’s great. I don’t want to get into a giant philosophical debate over whether buybacks are good or bad. [laughs] Because they can be good or bad.

If your only purpose with buybacks is to boost your share price, or to boost your earnings over time — which in a lot of cases, that’s what happens — then they’re bad. If you’re making a real effort to buy back more shares when your stock’s cheap and less when it’s expensive and really create shareholder value with it, from an investor’s point of view, it’s good. We are seeing a lot lately: Over half a trillion dollars in buybacks were authorized already in 2021.

Moser: Wow.

Frankel: That’s the most in 22 years.

Moser: Holy cow.

Frankel: A lot of it was Apple. Apple authorized a $90 billion increase to its buyback already this year. That was almost a fifth of it. A lot of companies are sitting on a lot of cash. And it’s not that they’ve been hoarding cash for a bad reason; a lot of them pumped the brakes on buybacks during COVID, a lot of them stopped acquiring new businesses, a lot of them stopped capital spending, and things like that.

[It’s] the same thing that’s happening with American consumers, if you remember from our bank earnings, that savings rates are through the roof as well. Same thing that consumers are doing. It was a responsible behavior at the time last year, given the uncertainty. But now, uncertainty, as we rambled on about at the beginning of the show with the face-mask things going away, uncertainty is declining. There’s really no way to dispute that.

Now companies are saying, “Hey, we don’t need these giant cash stockpiles, we can get back to business as usual and maintain a reasonable amount of cash to have a cushion. But we can put the rest of it to work, and shareholders want dividends, shareholders want buybacks. Of course, if there are better opportunities on the table, acquisitions can be a great way to spend money. But if not, shareholders want a lot of that capital returned. You see activist fights over lack of a dividend policy. [laughs] It’s not rare that big shareholders will step in and say, “Wait, you got to pay us now.”

Moser: To your point, dividends are lovely, because they’re cash in the pocket. That always seems to come at a little bit of a price. I look at two glaring examples — you and I were talking back and forth on Twitter earlier today about this. You look at companies like AT&T and Verizon over the last five years, two companies that are very well known for high and consistent dividend yields, right? They have that opportunity to be able to provide that high yield because they’ve been your utilities, essentially. They have a reliability in the business model that allows them to continue to pay those dividends, but that doesn’t necessarily translate into stellar returns for investors.

You look at, over the last five years between the S&P [500] and AT&T and Verizon — I mean, AT&T and Verizon, you’ve made money off of those investments. But the total return prices, so that incorporates dividends and everything, the total return price: Those two companies are well trailing the S&P, by a lot. The dividends are great, but you still probably would’ve been better off just being invested in the S&P.

And then conversely, when it comes to share repurchases, obviously, you want to make sure that those repurchases are actually bringing that share count down. I think in today’s day and age, with a lot of these new companies coming public, a lot of tech-based companies, they give out some of those shares as compensation early on because it’s a way to afford that work: Those repurchases don’t really have that impact on that share count.

You look at Apple, the example that you brought up earlier: Apple, with all of the repurchases that they’ve been making over the last several years, since 2016, their share count’s down better than 20%. That’s having a real impact on that outstanding share account, which would make everyone’s share a little bit more valuable at the end of the day. Just a couple of things to keep in mind there, in regard to share repurchases and dividends. Like you said, we could probably sit here and have a philosophical debate about it for an hour, and at the end of the day, never really come to [laughs] a firm conclusion, could we?

Frankel: Well, I’m glad you brought up AT&T for a second there.

Moser: [laughs] Okay.

Frankel: As you know, it’s one of my biggest stock holdings. I would go so far as to say buybacks have not been the problem. If they had taken the money they spent on DIRECTV and WarnerMedia, and had used that to buy back shares, I’d be in a much better position right now.

Moser: A little bit of a different situation now.

Frankel: With them, it’s been a capital spending problem, and not a buyback or dividend problem. Their buybacks and dividends have been great moves. I would’ve rather [had] them taking the $85 billion they spent on WarnerMedia, and giving it back to shareholders instead.

Moser: If it’s any help, I think in hindsight, they’re wishing that too, Matt. [laughs] Based on the news today, they’re going to be —

Frankel: Remember when the Trump administration was trying to block that merger?

Moser: Yes.

Frankel: They should have said thanks, and just walked away.

Moser: Yeah, that’s right. That one didn’t work out so well, but I guess we’ll see how that new combination fares. Ultimately, I do think, for you as an AT&T shareholder, hopefully, better days are yet to come. I think this gives them a chance to really get focused on what they know how to do well, and that is connect: connect people, and really more and more connect things.

Frankel: They certainly don’t need to be spending time on making acquisitions, I’ll tell you that.

Moser: Agreed.

Well, Matt, from time to time, we like to take listener questions, and we always get some really fun ones to discuss. We got a good question here on Twitter the other day. This comes from Preston, @10BaggerVance. Preston asks, “How do you measure valuation of a SPAC stock once the merger has been announced and it’s in the de-SPACing process?” As an example, he says, “I’m looking at IPOE [Social Capital Hedosophia Holdings Corp. V] with SoFi specifically.” Matt, we talked about SoFi here on the show. That’s a company now that you’re following. What do you think here about Preston’s question? How do you look? What’s your perspective on the valuation of SPACs once that merger has been announced?

Frankel: What SoFi does better than its competition — think of who its competition is: You have Robinhood on the investing side, you have the legacy lenders on the loan side, so what do they do better? With Robinhood, we’ve discussed many times that SoFi just does a better job of prioritizing, investing, and educating the consumer. They make the lending process a lot easier than their competitors on the loan side. They do the best job of any financial company I know of, creating a sense of community, of creating customer loyalty, if you will. That’s one of the big things I look at.

I look at the total market opportunity, which — investing is clearly a giant market opportunity, but they’re getting into some forms of lending, like auto lending. I’ve mentioned it’s an $800 billion market. Personal lending is about a $200 billion market at last count. There’s a bunch of big market opportunities there. I think they do things better than the competition. The current revenue — which is actual numbers, not their projections — the current revenue looks impressive, and their current growth numbers look impressive.

Another example, 23andMe, is one I’ve talked about on the show. They just do what they do better than the competition. They have a bigger collection of consumer genetic information than anyone else. They are partnering with one of the biggest names in the business that develop[s] therapeutics based on information — big competitive advantages like that. It’s like the Buffett model: When Warren Buffett describes why he likes a stock, he doesn’t go into a bunch of numbers; he describes the moat, the competitive advantages.

Moser: Yeah, why he likes the business.

Frankel: Right. That’s really what I look at when I’m valuating some of these SPACs, is what gives them the moat, and what will give them the moat, and what will be able to build a durable market share. Because a lot of them are small with very little revenue yet.

Moser: Yeah. You’re right.

Frankel: Hopefully, that was a decent answer.

Moser: Well, I think it was a decent answer. I think it’s about as fair as you can be, because it really is more art than science. We would say valuation is in many cases is as much art as it is science, and that’s when you’re dealing with something like Apple or Coca-Cola, right, something a little bit easier to grasp, because the numbers are there and you can make some reasonable projections.

But so many of these SPACs, I mean, these are businesses that are coming public far earlier than they ever did before, or they ever could have before. And that just makes it inherently more difficult to value, to be able to plug a number into a model with confidence. I think that just, to your point, it becomes really even that much more important to be able to get a grip on the business, to get a grasp on what they’re trying to do, what type of business this is, what are the advantages, is there a moat, what gives them that long-term opportunity at sustainability and growth. I think that was a good way to look at it.

Frankel: Yeah, and most of them are very speculative. I also look at them as things I’m going to put a tiny bit into now and see how it goes. I’m never going to really go all in on a SPAC before we really get to look at the numbers and how it’s doing as an actual public company.

Moser: Yeah. Did you see, real quickly, before we wrap up with ones to watch, did you see the news today? It sounds like Redbox is going to be going public via SPAC.

Frankel: Really?

Moser: Redbox, the DVD company, like a CVS or a Walgreens. Yeah. [laughs] apparently they’re going to go public.

Frankel: Is Blockbuster going public too? [laughs]

Moser: I’m not sure. I have to look that up after we get done taping.

Frankel: Sorry to any Redbox fans. [laughs] I mean, I like Redbox as a product. I would never want to invest in it. I wouldn’t buy one if it was like a franchise or anything.

Moser: I don’t think I would either. It just caught my attention this morning [laughs].

Frankel: I’d probably buy WeWork before Redbox.

Moser: Oh, man, have you seen that WeWork documentary on Hulu [Ed. note: Hulu is majority-owned and controlled by Walt Disney]?

Frankel: No, I haven’t.

Moser: Cannot recommend it highly enough. [laughs] It was so, so, so good. That goes for all listeners out there: If you have an investing bone in your body, then you will enjoy watching that documentary on Hulu. The WeWork documentary is just amazing, the stuff that went on there. What’s even more amazing is that they still have an opportunity to go public again, albeit under different leadership. But it was a very eye-opening documentary. I highly recommend it.

Matt, speaking of recommendations, well, we’re not going to make any formal recommendations here as far as stocks go. We do like to shine light on a couple of stocks we’re watching this week. What is your one to watch for this coming week?

Frankel: Well, if you remember, all of these mortgage companies that have gone public in the past year or so, and I’ve really had a skeptical tone about them. Everyone’s refinancing, of course, the numbers look great, things like that. Now, there’s one that just announced they’re going public through SPAC, of course, because it’s 2021, so that’s how you go public these days [laughs]. It’s called Better. It used to just be called Better Mortgage, now it’s just called Better. They’re going public through a merger with a company called Aurora Acquisition, ticker symbol is AURC.

Moser: Sounds cool.

Frankel: I used Better to refinance my home and couldn’t have had a better experience. That’s not why I am interested. Not because I’m a customer: They really deliver on their claims. They aim to take the whole mortgage process online. They close their average loan in 21 days; the industry average is 42. That’s pretty impressive. They close loans in as little as two weeks; they do everything online. I guess you can’t really put too much stock into their growth. Their loan volume grew 490% last year — that’s because everybody was refinancing, and they specialize in refinancing. I think I remember you said you refinanced, I refinanced, everybody refinanced.

Moser: Yeah, absolutely.

Frankel: They also provide services like title insurance, homeowners insurance. They aim to take everything into a one-stop portal. The word is really getting out on them. They do, as the name implies, they just do a better job. I did everything online; the only time I think I interacted with a person was when the closing attorney showed up at my house. It was such a smooth process. In my lifetime, including investment properties, I have obtained about a dozen mortgages. This was the smoothest process by far.

So, I’m watching them. They’re backed by SoftBank. They have some pretty impressive backing. The deal values them at $7.7 billion, which is toward the high end of mortgage originators, but not…I mean Rocket Mortgage is just a bigger company than they are. I think they have a big opportunity. Not just the online aspect that’s great for customers, it also means higher margins potentially. Same reason that online banks produce higher margins than a Wells Fargo or JPMorgan.

Recent SPAC IPO, they didn’t really pop that much after the announcement, probably on valuation concerns, if anything. But that’s one that I’m keeping an eye on, just because out of all the mortgage lenders that we talked about that have gone public, there has been Rocket, there has been United Wholesale, there’s been a bunch of them: This is by far the most disruptive of them. So that’s why I’m keeping an eye on it.

Moser: All right. Good deal. What’s the ticker for that again?

Frankel: It is AURC, Aurora Acquisition.

Moser: There you go. Okay.

Well, housing-related, I’m going to keep an eye on something that is housing-related, but a little bit differently. I’m going to be watching Home Depot, ticker HD; earnings are out tomorrow morning, Tuesday, May 18, they’ll be out. You look at Home Depot, it’s had a really good year-to-date thus far. I’m going to be very curious to hear their language on the call, though, regarding things like inflation, their take on the housing market, the state of the consumer. And honestly, lumber has really got my attention these days for a number of different reasons. We’ve seen this real pivot in lumber. They were noting, even management’s noting, in their third-quarter call, as they exited the third quarter, that lumber prices were falling sharply off historic highs.

But then in the fourth quarter, that pricing really reversed course, and then set new near-term highs. It does seem like that pressure has remained. Like, lumber prices right now are just through the roof. While that’s not something that’s going to be fatal for Home Depot, obviously, they sell a ton of stuff, and lumber is a big part of it, but it is worth noting. You were talking there earlier about margins. I mean, with Home Depot, that mixed pressure from lumber can impact their margins, and their near term a little bit, at least just something we’re keeping an eye on — if for some reason there were some margin concerns, that then impacted forecasting or estimates or whatnot.

I mean, maybe you see an opportunity to pick up shares of what is obviously a well-run business for a little bit cheaper, but it looks like less than 30 times earnings today, nice 2% dividend yield: It’s got a lot of different ways that it can win, I think. Seems to do well in good weather and bad, because they help us deal [laughs] with both good weather and bad. Looking forward to that report in the morning.

But Matt, I think that is going to do it for us this week. I appreciate you taking the time to jump on here and as always, be such a valuable part of the show for us.

Frankel: Always happy to be here.

Moser: Well, remember, folks, you can always reach out to us on Twitter, @MFindustryfocus, or you can drop us an email at [email protected]

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don’t buy yourselves stock based solely on what you hear. Thanks as always to Tim Sparks for putting the show together for us. For Matt Frankel, I’m Jason Moser. Thanks for listening and we’ll see you next week.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Bad Credit

Inside the Highly Profitable and Secretive World of Payday Lenders



Illustration by Sarah Maxwell, Folio Art

When Bridget Davis got started in the family’s payday lending business in 1996, there was just one Check ’n Go store in Cincinnati. She says she did it all: customer service, banking duties, even painting walls.

The company had been established two years earlier by her husband, Jared Davis, and was growing rapidly. There were 100 Check ’n Go locations by 1997, when Jared and Bridget (née Byrne) married and traveled the country together looking for more locations to open storefront outlets. They launched another 400 stores in 1998, mostly in strip malls and abandoned gas stations in low-income minority neighborhoods where the payday lending target market abounds. Bridget drove the supply truck and helped select locations and design the store layouts.

But Jared soon fired his wife for committing what may be the ultimate sin in the payday lending business: She forgave a customer’s debt. “A young woman came to pay her $20 interest payment,” Bridget wrote in court documents last year during divorce proceedings from Jared. “I pulled her file, calculated that she had already paid $320 to date on a principle [sic] loan of $100. I told her she was paid in full. [Jared] fired me, stating, ‘We are here to make money, not help customers manage theirs. If you can’t do that, you can’t work here.’ ”

Photograph by Brittany Dexter

It’s a business philosophy that pays well, especially if you’re charging fees and interest rates of 400 percent that can more than triple the amount of the loan in just five months—the typical time most payday borrowers need to repay their debt, says the Pew Charitable Trusts, a nonprofit organization focused on public policy. Cincinnati-based Check ’n Go now operates more than 1,100 locations in 25 states as well as an internet lending service with 24/7 access from the comfort of your own home, according to its website. Since its founding, the company has conducted more than 50 million transactions.

What the website doesn’t say is that many, if not most, of those transactions were for small loans of $50 to $500 to working people trying to scrape by and pay their bills. In most states—including Ohio, until it reformed its payday lending laws in 2019—borrowers typically fork over more than one-third of their paycheck to meet the deadline for repayment, usually in two weeks. To help guarantee repayment, borrowers turn over access to their checking account or deposit a check with the lender. In states that don’t offer protection, customers go back again and again to borrow more money from the same payday lender, typically up to 10 times, driving themselves into a debt trap that can lead to bankruptcy.

Jared and Bridget Davis are embroiled in a nasty court battle related to his 2019 divorce filing in Hamilton County Domestic Relations Court. Thousands of pages of filings and 433 docket entries by April 26 offer the public a rare glimpse into the business operations of Check ’n Go, one of Cincinnati’s largest privately-owned companies, as well as personal lifestyles funded by payday lending.

The company cleared $77 million in profit in 2018, a figure that dipped the following year to $55 million, according to an audit by Deloitte. That drop in revenue may have something to do with the payday lending reform laws and interest rate caps passed recently in Ohio as well as a growing number of other states.

The day-to-day business transactions that provide such profit are a depressing window into how those who live on the edge of financial security are often stuck with few options for improving their situations. If a borrower doesn’t repay or refinance his or her original loan, a lender like Check ’n Go deposits the guarantee check and lets it bounce, causing the borrower to incur charges for the bounced check and eventually lose his or her checking account, says Nick DiNardo, an attorney for the Legal Aid Society of Greater Cincinnati. After two missed payments, payday lenders usually turn over the debt to a collection agency. If the collection agency fails to collect the full amount of the original loan as well as all fees and interest, it goes to court to garnish the borrower’s wages.

That devastating experience is all too familiar to Anthony Smith, a 60-year-old Wyoming resident who says he was laid off from several management positions over a 20-year period. He turned to payday lenders as his credit rating dropped and soon found himself caught in a debt trap that took him years to escape.

Two things happened in 2019, Smith says, that turned around his financial fortunes. First, he found a stable manufacturing job with the Formica Company locally, and then he took his mother’s advice and opened a credit union account. GE Credit Union not only gave him a reasonable loan to pay off his $2,500 debt but also issued him his first credit card in a decade. “I had been a member [of the credit union] for just two months, and I had a credit rating of 520. Can you imagine?” he says. Smith says he is now debt-free for the first time in 10 years.

Consumer advocates say Check ’n Go is one of the biggest payday lending operations in the nation. But knowing its exact ranking is difficult because most payday lending companies, including Check ’n Go and its parent company CNG Holdings, are privately held and reluctant to disclose their finances.

Brothers Jared and David Davis own the majority of the company’s privately held stock. David bought into the company in 1995, but CNG got its game-changing infusion of capital from the brothers’ father, Allen Davis, who retired as CEO of then-Provident Bank in 1998. Allen sold off $37 million in stock options and essentially became CNG’s bank and consultant.

By 2005, however, the sons were part of a public court battle against their father. Allen accused Jared and David of treating his millions in CNG stock as compensation instead of a transfer from his ex-wife (and the brothers’ mother), sticking him with a $13 million tax bill. In turn, the brothers accused Allen of putting his mistress and his yacht captain on the company payroll, taking $1.2 million in fees without board approval, and leading the company into ventures that lost Check ’n Go a lot of money. Several years of legal fighting later, the IRS was still demanding its $13 million. CNG officials did not respond to requests for comment for this story.

Jared and David split $22 million in profit from CNG in 2018 and, according to the Deloitte audit, CNG’s balance sheet showed another $42 million that could be split between the two brothers in 2019. Jared, however, elected not to receive his $21 million distribution “in order to create this artificial financial crisis and shelter millions of dollars from an equitable split between us,” according to Bridget’s divorce filing.

Worse, she claims, Jared said they would be responsible for paying taxes out of their personal accounts rather than from CNG’s company earnings, making her personally responsible for half of the $5.5 million in taxes for 2019. She believes it wasn’t happenstance that $5.5 million was wired to Jared’s private bank account in December of that same year. Bridget has refused to sign the joint tax return, and Jared filed a complaint with the court saying a late tax filing would cost them $1 million in penalties and missed tax opportunities.

“For the duration of our marriage and to the present, Jared has full and complete control of all money paid to us from various investments we have made in addition to our main source of income, CNG,” Bridget wrote in her motion. She suspects that Jared, without her knowledge or consent, plowed the money for their taxes and from other sources of income into Black Diamond Group, the fund that invests in the Agave & Rye restaurant chain. Beyond the original restaurant opened in Covington in 2018, “they have opened four other locations in one year,” she wrote, including Louisville and Lexington. (The ninth location opened in Hamilton this spring.) Agave & Rye’s website touts its Mexican fare as “a chef-inspired take on the standard taco, elevating this simple food into something epic!”

In his response, Jared wrote, “We have very limited regular sources of income.” He says he isn’t receiving any additional distributions from CNG, the couple’s primary source of income, “and this is not within my control. The company has declared that we would not make any further distributions in 2020 given economic circumstances. This decision is based on a formula and is not discretionary.” Agave & Rye helped produce $645,000 in income for Black Diamond in 2020 but has paid out $890,000 in loans, he says. Through August 31, 2020, he wrote, the couple’s “expenses have exceeded income from all sources.”

The divorce case filings start slinging mud when the couple accuses each other of breaking up their 22-year marriage and finding new partners. Jared claims Bridget began an affair during their marriage with Brian Duncan, a contractor she employed through her house flipping business. Bridget, he says, paid Duncan’s company $75,000 in 2018 as well as giving him a personal gift of $70,000 that same year. Jared says she also bought Duncan at least one car and purchased a house for him near hers on Shawnee Run Road for $289,000, then loaned money to Duncan. Jared says Duncan has been late in repaying the note.

While Bridget says Duncan has been drug-free for several years, he has a rap sheet with Hamilton County courts from 2000 to 2017 that runs five pages long. It lists a half-dozen counts of drug abuse and drug possession, including heroin and possession of illegal drug paraphernalia; assaulting a police officer; stealing a Taser from a police officer; criminal damaging while being treated at UC Health; more than a dozen speeding and traffic violations; a half-dozen counts of driving with a suspended license; receiving stolen property; twice fleeing and resisting arrest; three counts of theft; two counts of forgery; and one count for passing bad checks.

Bridget has fired back that Jared not only is hiding his money from her but spending it lavishly on vacations, resorts, and high-end restaurants with his new girlfriend, Susanne Warner. Bridget says Jared gifted Warner with $40,000 without Bridget’s knowledge, then declared it on their joint tax return as a “contribution.” Bridget’s court filings include photocopies of social media posts of Jared and Warner globetrotting from summer 2019 to summer 2020: vacation at Beaver Creek Village in Avon, Colorado; cocktails at High Cotton in Charleston, South Carolina, and dinner at Melvyn’s Restaurant and Lounge in Palm Springs, California; getaways at resorts in Nashville and at a lakefront rental on Norris Lake ($600 per night); in the Bahamas at a Musha Cay private residence ($57,000 per night), at South Beach in Miami, and at a private beach at Fisher Island; in Mexico at Cabo San Lucas; in the U.S. Virgin Islands at Magen’s Bay and on a private yacht ($4,500 per night); in California at Desert Hot Springs, the Ritz-Carlton in Rancho Mirage, and Montage at Laguna Beach; and in the Bahamas at South Cottage ($2,175 per night).

For her part, Bridget has gone through some of the top lawyers in town faster than President Trump during an impeachment—six in all, two of whom she’s sued for malpractice. She sent four binders of evidence to the Ohio Supreme Court, asking for the recusal of Hamilton County Judge Amy Searcy and claiming Searcy was biased because of campaign donations from Jared and his companies. Rather than deal with the list of questions sent to her by Chief Justice Maureen O’Connor, Searcy stepped down. Two other judges have since stepped into the fray, and in March Bridget filed for a change of venue outside of Hamilton County, arguing she can’t get a fair trial in her hometown. At press time, a trial date had been set for June 28 in Hamilton County.

The poor-mouthing in the divorce case has reached heights of comic absurdity. Jared claims he’s “illiquid” because he didn’t get his distribution from CNG in 2019. Bridget has received debt collection notices for the nearly $21,000 owed on her American Express card and a $735 bill from Jewish Hospital. There’s no sign yet that anyone is coming to repossess her Porsche, which according to her filings has a $5,000 monthly payment. Each party has received $25,000 a month in living expenses, an amount later reduced to $15,000 under a temporary legal agreement while the divorce case is being sorted out. Court filings show that Jared’s net worth is almost $206 million and Bridget’s is $22.5 million.

In the early 1990s, Allen Davis was raising eyebrows at Provident Bank (later bought by National City), and not only because of his very unbanker-like look of beard, ponytail, and casual golf wear. He was leading the company into questionable subprime home loans for people with bad credit and a frequent-shopper program for merchants, though the bank’s charter barred him from getting involved in full-blown predatory lending practices. With guidance and funding from his father, Jared, at age 26, launched Check ’n Go in 1994 and became a pioneer in the payday lending industry. Jared and his family saw there were millions of Americans who didn’t have checking or savings accounts (“unbanked”) or an adequate credit rating (“underbanked”) but still needed loans to meet their everyday expenses. What those potential customers did have was a steady paycheck.

Conventional banks share a big part of the blame for the nation’s army of unbanked borrowers by imposing checking account fees and onerous penalties for bounced checks. In 2019, the Federal Deposit Insurance Corporation estimated there were 7.1 million U.S. households without a checking or savings account.

The Davises launched Check ’n Go on the pretext that it would “fill the gap” for people who occasionally needed to borrow money in a hurry—a service for those who couldn’t get a loan any other way. But consumer advocates say the real business model for payday lending isn’t a service at all. The majority of the industry’s revenue comes from repeat business by customers trapped in debt, not from borrowers looking for a quick, one-time fix for their financial troubles.

Ohio’s payday lending lobbyists got a strong hold on the state legislature in the late 1990s, and by 2018 Democratic gubernatorial candidate Richard Cordray could rightfully claim in a campaign ad that “Ohio’s [payday lending] laws are now the worst in the nation. Things have gotten so bad that it is legal to charge 594 percent interest on loans.” His statement was based on a 2014 study by the Pew Charitable Trusts.

The frustration for consumer advocates was that Ohioans had been trying to reform those laws since 2008, when voters overwhelmingly approved a ballot initiative placing a 28 percent cap on the interest of payday loans. But—surprise!—lenders simply registered as mortgage brokers, which enabled them to charge unlimited fees.

The Davis family and five other payday lending companies controlled 90 percent of the market back then, an express gravy train ripping through the poorest communities in Ohio. The predatory feeding frenzy, especially in Ohio’s hard-hit Rust Belt communities, prompted a 2017 column at The Daily Beast titled, “America’s Worst Subprime Lender: Jared Davis vs. Allan Jones?” (Jones is founder and CEO of Tennessee-based Check Into Cash.) In 2016 and 2017, consumer advocates mustered their forces again, and this time they weren’t allowing for loopholes. The Pew Charitable Trusts joined efforts with bipartisan lawmakers and Ohioans for Payday Loan Reform, a statewide coalition of faith, business, local government, and nonprofit organizations. Consumer advocates found a legislative champion in State Rep. Kyle Koehler, a Republican from Springfield.

It no doubt helped reform efforts that former Ohio Speaker of the House Cliff Rosenberger resigned in spring 2018 amid an FBI investigation into his cozy relationship with payday lenders. Rosenberger had taken frequent overseas trips—to destinations including France, Italy, Israel, and China—in the company of payday lending lobbyists. In April 2019, Ohio’s new lending law took effect and, since then, has been called a national model for payday lending reform that balances protections for borrowers, profits for lenders, and access to credit for the poor, according to the Pew Charitable Trusts. New prices in Ohio are three to four times lower for payday loans than before the law. Borrowers now have up to three months to repay their loans with no more than 6 percent of their paycheck. Pew estimates that the cost of borrowing $400 for three months dropped from $450 to $109, saving Ohioans at least $75 million a year. And despite claims that the reforms would eliminate access to credit, lenders currently operate in communities across the state and online. “The bipartisan success shows that if you set fair rules and enforce them, lenders play by them and there’s widespread access to credit,” says Gabe Kravitz, a consumer finance officer at the Pew Charitable Trusts.

Other states like Virginia, Kansas, and Michigan are following Ohio’s lead, Kravitz says. Some states, such as Nebraska, have even capped annual interest on payday loans. As a result, Pew researchers have seen a reduction in the number of storefront lending op­erations across the country. Even better, Kravitz says, there’s no evidence that borrowers are turning instead to online payday lending operations.

Cincinnati is one of five cities chosen for a grant to replicate the success of Boston Builds Credit, an ambitious effort that city launched in 2017 to provide credit counseling in poor and minority communities by training specialists at existing social service agencies. The program also encourages consumer partnerships with credit unions, banks, and insurance companies to offer small, manageable loans that can help the unbanked and underbanked improve their credit ratings. “Right now, local organizations are all kind of working in silos on the problem in Cincinnati,” says Todd Moore of the nonprofit credit counseling agency Trinity Debt Relief. Moore, who applied for the Boston grant, says he’s looking for an agency like United Way or Strive Cincinnati to lead the effort here.

Anthony Smith is thankful that he’s escaped the downward spiral of his payday loans, especially during the pandemic’s economic turmoil. “I’m blessed for every day I can get paid and have a job during these difficult times, just to be able to pay my bills and meet my responsibilities,” he says. “I’ve always kept a job, but until now I’ve had crappy credit. That doesn’t mean I’m a bad guy.”

Can others worth millions of dollars say the same?

Inside the Highly Profitable and Secretive World of Payday Lenders Source link Inside the Highly Profitable and Secretive World of Payday Lenders

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Bad Credit

What’s Questionable Credit and Can I Get a Car Loan With It?



Questionable’s definition means that something’s quality is up for debate. If a lender says that your credit score is questionable, it’s likely that they mean it’s poor, or at the very least, they’re hesitant to approve you for vehicle financing. Here’s what most lenders consider questionable credit, and what auto loan options you may have.

Questionable Credit and Auto Lenders

Many auto lenders may consider questionable credit as a borrower with a credit score below 660. The credit score tiers as sorted by Experian the national credit bureau, are:

  • Super prime: 850 to 781
  • Prime: 780 to 661
  • Nonprime: 660 to 601
  • Subprime: 600 to 501
  • Deep subprime: 500 to 300

The nonprime credit tiers and below is when you start to get into bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.

This is because lenders are looking at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where the items in your credit reports are what’s making a lender question whether you’re a good candidate for an auto loan. These can include:

  • A past or active bankruptcy
  • A past or recent vehicle repossession
  • Recent missed/late payments
  • High credit card balances
  • No credit history

There are ways to get into an auto loan with questionable credit. Your options can change depending on what’s making your credit history questionable, though.

Questionable Credit Auto Loans

If your credit score is less than stellar, it may be time to look at these two lending options:

  • What Is Questionable Credit and Can I Get a Car Loan With It?Subprime financing – Done through special finance dealerships by third-party subprime lenders. These lenders can often assist with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with thin files, situational bad credit, or consumers with older negative marks.
  • In-house financing – May not require a credit check, and is done through buy here pay here (BHPH) dealers. Typically, your income and down payment amount are the most important parts of eligibility. Auto loans without a credit check may not allow for credit repair and may come with a higher-than-average interest rate.

Both of these car loan options are typically available to borrowers with credit challenges. However, if you have more recent, serious delinquencies on your credit reports, a BHPH dealer may be for you. Most traditional and subprime lenders typically don’t approve financing for borrowers with a dismissed bankruptcy, a repossession less than a year old, or borrowers with multiple, recent missed/late payments.

Requirements of Bad Credit Car Loans

In many cases, your income and down payment size are the biggest factors in your overall eligibility for bad credit auto loans. Expect to need:

  • 30 days of recent computer-generated check stubs to prove you have around $1,500 to $2,500 of monthly gross income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
  • A down payment of at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price.
  • Proof of residency in the form of a recent utility bill in your name.
  • Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
  • A list of five to eight personal references with name, phone number, and address.
  • Valid driver’s license with the correct address, can’t be revoked, expired, or suspended.

Depending on your individual situation, you may need fewer or more items to apply for a bad credit auto loan. However, preparing these documents before you head to a dealership can speed up the process!

Ready to Get on the Road?

With questionable credit, finding a dealership that’s able to assist you with an auto loan is easier said than done. Here at Auto Credit Express, we want to get that done for you with our coast-to-coast network of special finance dealerships.

Complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that can assist with many tough credit situations.

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Bad Credit

Entrepreneur Tae Lee Finds Her Fortune



By Jasmine Shaw
For The Birmingham Times

Birmingham native Tae Lee had plans last year to visit the continent of Africa, the South American country of Columbia, and the U.S. state of Texas.

“I was going to stay in each place for like four to six weeks, and then COVID-19 happened,” she said. “So, I just was like, ‘You know what, I’m just gonna go to Mexico and stay for six months.’”

Once home from Playa Del Carmen, located on Mexico’s Yucatán Peninsula, the 33-year-old entrepreneur put the final touches on “Game of Fortune: Win in Wealth or Lose in Debt,” a financial literacy card game for ages 10 and up.

“We created ‘Game of Fortune’ because we realized there was a gap in learning the fundamentals of money,” said Lee. “We go through life not knowing anything about money and then—‘Bam!’—real life hits. Credit, debt, and bills come at us quick!”

Lee believes the game “gives players a glimpse of real life” by using everyday scenarios to teach them how to make wiser financial decisions without having to waste their own money.

“I feel like [financial literacy] can be learned in ways other than somebody standing up and preaching it to you over and over again,” she said. “You can learn it in ways that are considered fun, as well.”

Which is why “we want the schools to buy it, so we can give students a fun way to learn about financial literacy,” she added.

Lee, also called the “Money Maximizer,” is an international best-selling financial author, speaker, coach, and trainer who is known for her financial literacy books, including “Never Go Broke (NGB): An Entrepreneur’s Guide to Money and Freedom” and the “NGB Money Success Planner High School Edition.” The Birmingham-based financial guru focuses on creating diverse streams of income in the tax, real estate, insurance, and finance industries.

For Lee, it’s about building generational wealth, not debt.

Indispensable Lessons

Lee got her first glance at entrepreneurial life as a child watching her mother, Valeria Robinson, run her commercial cleaning company, V’s Cleaning. Robinson retired in 2019.

“My grandmother had a cleaning service, too,” said Lee. “So, even though I didn’t start out as an entrepreneur, watching my mom and grandma do it taught me a lot.”

Lee grew up in Birmingham and attended Riley Elementary School, Midfield Middle School, and Huffman High School. She then went on to Jacksonville State University, in Jacksonville, Alabama, where she earned bachelor’s degree in physical education. She struggled to find a career in her field and became overwhelmed by student loans.

“My credit and stuff didn’t get bad until after college,” she said. “I was going through school and taking money, but nobody told me, ‘Oh, you’re gonna have to pay all of this back.’”

Before embarking on her extensive career in money management, Lee had not learned the indispensable lessons that she now shares with clients.

“‘Don’t have bad credit.’ That’s all I learned,” she remembers. “Financial literacy just wasn’t taught much. I learned the majority of my lessons as I aged.”

In an effort to ward off collection calls and raise her credit score, Lee researched tactics to strategically eliminate her debt.

“I knew I had to pay bills on time, and I couldn’t be late with payments,” she said.

Lee eventually began helping friends revamp their finances and opened NGB Inc. in 2017 to share fun, educational methods to help her clients build solid financial foundations.

“People were always coming to me like, ‘How do I invest in this?’ and ‘How do I do that?’ So, I said to myself, ‘You know what, people should be paying to pick your brain.’”

Legacy Building

While Lee enjoyed watching her clients reach milestones, like buying a new car with cash or making their first stock market investment, she was also designing “Game of Fortune” to teach the value of legacy building.

“The game gives players the knowledge to build generational wealth, not generational debt,” she said. “It gives you a glimpse of life, money, and what can truly happen if you mismanage your coins.”

Using index cards to create her first “Game of Fortune” sample deck, Lee filled each card with pertinent terms related to debt elimination and credit and wealth building. She then called on a few friends to help her work through the kinks.

Three of her good friends—Barbara Bratton, Daña Brown, and Sha Cannon—were just a few of the people that gave feedback on the sample deck.

“From there I met with Brandon Brooks, [owner of the Birmingham-based Brooks Realty Investments LLC], and four other financial advisors to fine-tune the definitions and game logistics,” Lee said.

Though Lee was unable to land a job in physical education after graduating from college, she now sees her career with NGB Inc. as life’s unexpected opportunity to teach on her own terms.

“Bartending and waitressing taught me that working for someone else was not for me,” she replied. “In order to get the life I always wanted, I had to create my own business.”

In her entrepreneurial pursuits, Lee strives to be an open-minded leader who embraces the need for flexibility.

“COVID-19 has shown me that in entrepreneurship you have to maneuver,” she said. “When life changes, sometimes your business will, too. You may have to change the path, but your ending goal can be the same.”

“Game of Fortune: Win in Wealth or Lose in Debt” is available and sold only on the “Game of Fortune” website: To learn more about Tae Lee and Never Go Broke Inc., visit and or email [email protected]; you also can follow her on Facebook ( and Instagram (@nevergobrokeinc).

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