Have you ever noticed that some people seem to spend years and waste thousands of dollars trying to make there home business “work” while others seem to just hit the ground running? Do you ever wonder why some people seem to have a sort a magical Midas touch when it comes to making money while others don’t?
I’ll tell you exactly why. Are you ready? Those that make money know that time is money and those that don’t make money have not realized this. That’s really all there is to it.
Let me explain, all business really is is the act of you trading your time for your customers money. If you are effective at doing the tasks that make this transaction happen as efficiently as possibly then you will be perceived as one of those with the mythical Midas touch. If not, then you’re just like most of us. That is, most of us will do the exact opposite.
It seems sort of paradoxical. Why would we spend so much time doing things that aren’t going to help us make money?
Honestly, it’s human nature that holds us back. We don’t know that we’re not doing the tasks that are going to make us money, because we think we are. In essence, we trick ourselves.
Let me explain what the typical online home business entrepreneur does. First, He’ll see an enticing eBook that seems to show some promise then he’ll buy and read it. After that, he’ll try to put some of the theory he’s learned into action.
This my friends, is where he messes up.
He’ll try to put what he’s learned in the book into action without research and without proper preparation. Then when things don’t turn out correct he’ll get discouraged and quit until he finds a next hot eBook title that arouses his interest. Then he buys that one and the whole process cycles again. A year passes and all this guy knows is that he’s spent thousands of dollars and effectively learned nothing concrete.
You see, the typical home business entrepreneur thinks he is doing what’s most effective and will lead to earning the most money by dropping what didn’t work and shifting his resources to the next idea. He thinks eventually he’s going to hit the jackpot and find the diamond in the rough. Ironically, it’s this exact attitude that will ensure that he’ll never find that diamond in rough. You see, in actuality, there is no diamond in the rough.
This is an important point so pay attention, EVERY eBook and every article our typical home business entrepreneur has read had been sold to him in the SAME WAY! He didn’t even notice it! He was too busy learning all his cool new business strategies. Let me repeat the last point for you, all the information that he had learned was different, but the median for its distribution was always the same.
That’s the secret the guru’s don’t tell you. The sales model is ALWAYS the same.
So, here’s the difference between the average home business entrepreneur and the home business entrepreneur with the Midas touch. Those that seem to hit the ground running learn the fundamentals first. They learn basic marketing principle then find something to market and then lastly try all the fancy stuff the guru’s tell them. And well, we already know what average home based business opportunity seeker does.
The gurus are masters of basic marketing principles. So, the most effective use of your time and money from the outset if you’re serious about becoming a successful home business entrepreneur is to master the basics of marketing.
It’s all marketing! Nothing more and nothing less…
Tuesday, July 22, 2008
Some Fast ways to lose money online quickly
Most people online are searching for the quick and easy way to make money online. But most people who are looking for quick fixes also find that their money also is lost in an equally quick manner. Get rich quick scams abound on the internet and this article highlights a few of the most common get rich quick scams online.
The $5 email work at home scam
Ever so often one of my newsletter readers will tell me about the latest work at home scam that they have found. This email or letter just tells you that someone got a whole bunch of $5 notes coming in via the mail and that if you did so you will make money online. The letter usually has 3 names in the list and the subsequent person is supposed to add your name in the list and slowly move up the email. The reason why this is a scam and does not work is that most people will just delete the top name and replace it with theirs so that they get paid first.
The Nigerian Scam
Most people online now know of the traditional Nigerian Scam where people in Nigeria refuse to find proper jobs and spend their time sending emails to people promising them great riches in exchange for certain fees. Never listen to any of these scams, people who went to Nigeria to get their money back have been said to be killed while over in Nigeria. For more information on this type of money making scam a good resource website would be http://home.rica.net/alphae/419coal/
High Yield Investment Programs and other ponzi scams
These programs are usually ponzi in nature meaning that the owners will take money from later investors to pay the earlier investors and then run off with the money once they cannot pay out later in the scheme or if they find that the amount of money with them is large enough. A quite survey of the websites in the area are all very well designed as they usually use the same template in all their websites. Treat all claims to legitimate trading with great suspicion as no one really can verify that they are actually making money in commodity or forex trading online.
In conclusion, if you want to make money fast online, be prepared to lose it fast as well. When dealing with questionable investment type programs online, put a little money inside to test. You might want to spend some time reading up online before plunging your hard earned money in any money making activity online.
The $5 email work at home scam
Ever so often one of my newsletter readers will tell me about the latest work at home scam that they have found. This email or letter just tells you that someone got a whole bunch of $5 notes coming in via the mail and that if you did so you will make money online. The letter usually has 3 names in the list and the subsequent person is supposed to add your name in the list and slowly move up the email. The reason why this is a scam and does not work is that most people will just delete the top name and replace it with theirs so that they get paid first.
The Nigerian Scam
Most people online now know of the traditional Nigerian Scam where people in Nigeria refuse to find proper jobs and spend their time sending emails to people promising them great riches in exchange for certain fees. Never listen to any of these scams, people who went to Nigeria to get their money back have been said to be killed while over in Nigeria. For more information on this type of money making scam a good resource website would be http://home.rica.net/alphae/419coal/
High Yield Investment Programs and other ponzi scams
These programs are usually ponzi in nature meaning that the owners will take money from later investors to pay the earlier investors and then run off with the money once they cannot pay out later in the scheme or if they find that the amount of money with them is large enough. A quite survey of the websites in the area are all very well designed as they usually use the same template in all their websites. Treat all claims to legitimate trading with great suspicion as no one really can verify that they are actually making money in commodity or forex trading online.
In conclusion, if you want to make money fast online, be prepared to lose it fast as well. When dealing with questionable investment type programs online, put a little money inside to test. You might want to spend some time reading up online before plunging your hard earned money in any money making activity online.
Tips to Obtain Credit for Small Businesses
As many small business owners know, financing is crucial to the financial health of their enterprise. While some small business owners have the resources to launch their business, most look to the credit market for financial help. Indeed, the banking industry is an important source to gain necessary capital. However, many entrepreneurs may not realize that that applying for commercial credit requires a great deal of preparation. Here are five tips to assist entrepreneurs in improving their chances of getting credit approval.
Tip #1: Decide on the type of commercial loan that is needed. Loan options include short-term loans, intermediate loans, long-term loans, and lines of credit.
Short-term loans are usually for less than a year. They typically provide interim working capital for a business temporarily in need of cash.
Intermediate loans are often used for business set-up, the purchase of new equipment, expansion, or an increase in working capital. This loan can be anywhere from 1-3 years.
Long-term loans are for major capital improvements, acquiring fixed assists, and business start-ups. The loan term is usually from 3-5 years and repayment installments are on a monthly or quarterly basis.
A line of credit gives a small business the ability to borrow money repeatedly, up to the credit limit. The lender will usually perform a review once a year, at which time the borrower is asked to update financial statements.
Tip #2: Make sure all paper work is in order. Applying for commercial loans can be very tedious and requires much more documentation than applying for consumer credit. So, the key is to be prepared. In addition, entrepreneurs who have carefully put together the needed paperwork to include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal will be viewed more favorably by many lenders.
Tip #3: Develop a well thought out proposal. The proposal should include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal. Points to include are the business description that tells the nature of the business, product and service, a personal profile, and a business plan that outlines the corporate strategy for the next three to five years. Additional points to add are supporting documentation that supports the information outlined in the proposal, and collateral that will be used to secure the loan. Financial statements, both personal and for the business, are important as well.
Tip #4: Seek advice! It is important for entrepreneurs to talk with someone who has gone through the process of obtaining commercial credit before a lender is approached. This is especially important for the first time buyer. Entrepreneurs can approach mentors, qualified business counselors, business support groups, and the U.S. Small Business Administration. This step will increase the chances of getting a favorable credit decision.
Tip #5: Be prepared to pursue various options. Sometimes, financial institutions will say no. Once again, obtaining credit can be difficult, especially for entrepreneurs who are first-time borrowers. However, since financial institutions have different standards, an inability to meet the standard of one lender does not mean one fails the standards of all. It is highly possible that credit approvals can be gained with another lender. So, it is important to keep seeking until a lender is found.
Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institution. Now, put these five tips into practice and be on your way to getting the credit you need for your business venture.
Tip #1: Decide on the type of commercial loan that is needed. Loan options include short-term loans, intermediate loans, long-term loans, and lines of credit.
Short-term loans are usually for less than a year. They typically provide interim working capital for a business temporarily in need of cash.
Intermediate loans are often used for business set-up, the purchase of new equipment, expansion, or an increase in working capital. This loan can be anywhere from 1-3 years.
Long-term loans are for major capital improvements, acquiring fixed assists, and business start-ups. The loan term is usually from 3-5 years and repayment installments are on a monthly or quarterly basis.
A line of credit gives a small business the ability to borrow money repeatedly, up to the credit limit. The lender will usually perform a review once a year, at which time the borrower is asked to update financial statements.
Tip #2: Make sure all paper work is in order. Applying for commercial loans can be very tedious and requires much more documentation than applying for consumer credit. So, the key is to be prepared. In addition, entrepreneurs who have carefully put together the needed paperwork to include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal will be viewed more favorably by many lenders.
Tip #3: Develop a well thought out proposal. The proposal should include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal. Points to include are the business description that tells the nature of the business, product and service, a personal profile, and a business plan that outlines the corporate strategy for the next three to five years. Additional points to add are supporting documentation that supports the information outlined in the proposal, and collateral that will be used to secure the loan. Financial statements, both personal and for the business, are important as well.
Tip #4: Seek advice! It is important for entrepreneurs to talk with someone who has gone through the process of obtaining commercial credit before a lender is approached. This is especially important for the first time buyer. Entrepreneurs can approach mentors, qualified business counselors, business support groups, and the U.S. Small Business Administration. This step will increase the chances of getting a favorable credit decision.
Tip #5: Be prepared to pursue various options. Sometimes, financial institutions will say no. Once again, obtaining credit can be difficult, especially for entrepreneurs who are first-time borrowers. However, since financial institutions have different standards, an inability to meet the standard of one lender does not mean one fails the standards of all. It is highly possible that credit approvals can be gained with another lender. So, it is important to keep seeking until a lender is found.
Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institution. Now, put these five tips into practice and be on your way to getting the credit you need for your business venture.
Original Ways To Make Money With No Money - a Short Education
An opportunity should never be bought into. By definition, an opportunity is something that people will never sell you. From franchises to swamp land in Florida, to patents and inventions, it makes no difference. Theres nothing wrong with any of the things mentioned, however if somebody is trying to sell you these things, then they are not opportunities by definition.
An opportunity is an advantage that you can see that others cannot. I dont care about the dictionary definition, this is the real world definition. Opportunities are free. They dont cost money to observe. Of course I dont mean they wont cost you money, you may need some money to act on it. But if you are paying money so somebody can sell it to you (a sales commission) You should run for the hills.
So, getting back to my definition of an opportunity.
"Its an advantage that you can see that others cannot"
So what that means is that you have vision while others do not. We are awash with money around us. Money or "value" is everywhere. As "Hayden Muller" says, "it permeates our lives like oxygen" The difficulty is not finding opportunity. It is literally everywhere all the time. We are suffering from snow blindness if we still work for a living when such abundance is around us in our every day lives.
The difficulty is not money either. Having access to a few hundred dollars is all you need to take advantage of a million daily opportunities that present themselves in our daily lives. Anyone with some determination can find that much.
No, the real difficulty is knowledge, or education. Its what seperates action from indifference. The question becomes, "so what?" "so what if I took this opportunity and made a few dollars, what next?" You see, without education, opportunities are meaningless. They lead now-where because we lack vision. Don't worry, I lacked plenty of vision myself.
Today you could drop me out of the sky into any free city on the Planet with nothing but the shirt on my back and I would be living well within 3 months and be financially secure within 2-4 years. I know I can do that because my vision tells me I easily could.
Put me in the middle of New York, I would immediately find markets to deal in. Even before I found a place to sleep, I would begin learning about what free markets are available and what they most want and need. I would quickly establish contacts with suppliers and retailers to become the "middle man" my favourite place to be.
Within a week, I would have a few hundred dollars saved. I would use those funds and pyramid my purchases for faster and faster turn over until I had enough to buy small assets that are in high demand. Cars, boats, anything that was being sold that I could find really cheaply. My charm and good looks would make sure I got the best deals and sold them for the highest price (winks)
Charm and good looks aside, the one thing you need is a clarion plan. A master plan that gets you from A to B
Making money with no money is easy and rudimentry. Its the opportunities you spot that makes the real difference. But really its the propensity to take action that delivers the results. Before you can take that action, you need to know where you are going.
Your situation is alot better then the scenario I presented above. You live in a place where you know. You have intimate knowledge of the markets available already present. You have skills and have contacts already that can be of use.
Get a quick short education and go to it. Your first million is not as difficult as you may imagine.
May success find you fast and knowledge find you sooner.
An opportunity is an advantage that you can see that others cannot. I dont care about the dictionary definition, this is the real world definition. Opportunities are free. They dont cost money to observe. Of course I dont mean they wont cost you money, you may need some money to act on it. But if you are paying money so somebody can sell it to you (a sales commission) You should run for the hills.
So, getting back to my definition of an opportunity.
"Its an advantage that you can see that others cannot"
So what that means is that you have vision while others do not. We are awash with money around us. Money or "value" is everywhere. As "Hayden Muller" says, "it permeates our lives like oxygen" The difficulty is not finding opportunity. It is literally everywhere all the time. We are suffering from snow blindness if we still work for a living when such abundance is around us in our every day lives.
The difficulty is not money either. Having access to a few hundred dollars is all you need to take advantage of a million daily opportunities that present themselves in our daily lives. Anyone with some determination can find that much.
No, the real difficulty is knowledge, or education. Its what seperates action from indifference. The question becomes, "so what?" "so what if I took this opportunity and made a few dollars, what next?" You see, without education, opportunities are meaningless. They lead now-where because we lack vision. Don't worry, I lacked plenty of vision myself.
Today you could drop me out of the sky into any free city on the Planet with nothing but the shirt on my back and I would be living well within 3 months and be financially secure within 2-4 years. I know I can do that because my vision tells me I easily could.
Put me in the middle of New York, I would immediately find markets to deal in. Even before I found a place to sleep, I would begin learning about what free markets are available and what they most want and need. I would quickly establish contacts with suppliers and retailers to become the "middle man" my favourite place to be.
Within a week, I would have a few hundred dollars saved. I would use those funds and pyramid my purchases for faster and faster turn over until I had enough to buy small assets that are in high demand. Cars, boats, anything that was being sold that I could find really cheaply. My charm and good looks would make sure I got the best deals and sold them for the highest price (winks)
Charm and good looks aside, the one thing you need is a clarion plan. A master plan that gets you from A to B
Making money with no money is easy and rudimentry. Its the opportunities you spot that makes the real difference. But really its the propensity to take action that delivers the results. Before you can take that action, you need to know where you are going.
Your situation is alot better then the scenario I presented above. You live in a place where you know. You have intimate knowledge of the markets available already present. You have skills and have contacts already that can be of use.
Get a quick short education and go to it. Your first million is not as difficult as you may imagine.
May success find you fast and knowledge find you sooner.
Don't Waste Your Money on Real Estate Investment Schemes
You've seen the real estate guru advertisements for books, DVDs, programs, seminars, and mentoring coaches promoting no-money-down deals. Perhaps you've watched the infomercial on TV with the people telling their stories of how they made millions investing in real estate with no-money-down and cash back to the buyers.
Maybe you, like me and many others, have purchased books or expensive systems based on these no-money-down and lease-option investing schemes. Here's the rest of the story.
Perhaps you've seen an ad in your local newspaper offering a home with 100% financing from the seller or a lease option. You should know that the investor offering these types of deals makes money by purchasing the property at a discount and selling the property for an inflated price.
Lease-option real estate investors play the odds. They bet that most people won't be in a position to purchase the lease-option home in a year. So the investor seeks a hopeful tenant to make higher than average rental payments, pay more move-in cash, and make the investor's mortgage payment. Those tenants who do eventually purchase the home paid much more for the home than the investor. Many tenants never come up with a new mortgage loan to purchase the property when the time runs out. Either way, the real estate investor makes money.
First-Time Home Buyers
If you need to buy your first home to live in, these home-purchase methods may help you if you have terrible credit and can clean it up in time to finalize the purchase in a year. Just understand that you're paying too much for the property and may not make any money on appreciation. On the other hand, if you have strong credit, you can purchase a bargain house with no money down legitimately.
Tips for Beginning Real Estate Investors
Don't buy overpriced property! Avoid 100% investor-financed "deals." You will have to wait too long to make any money. Plus, the rental income most likely won't come close to making the mortgage payment for you.
Don't waste your money buying real estate guru books, DVDs, programs, seminars and mentor-coach promoting no-money-down deals. Would you buy a book on how to make a fortune on the Internet that was written in 1995?
These out-of-date, no-money down schemes, tell you to look for home sellers in distress who will let you buy their home for no-money down with the seller financing the property for you. This system worked last century. Today's home sellers know that they can get a buyer who can get their own financing.
Plus, today's home sellers know that other sellers have lost money selling with no-money down. They've heard the stories where home sellers didn't get paid and had to foreclose on a property. They've heard the stories where the investor-buyer rented the house to tenants who trashed the property. They've heard the stories where the investor-buyer collected the rent and didn't pay the home seller.
To get started building wealth in real estate today:
1. Get your credit ready for mortgage financing. (Mortgage credit differs from consumer credit.)
2. Buy right. Don't overpay for deals that sound too good to be true. These schemes are too good to be true!
3. Guard your money. Don't get yourself in over your head with high mortgages on rental properties that cause you negative cash flow and jeopardize your financial well-being. The best way to do this is to make sure you get the best mortgage rates on a bargain-priced property.
You can buy investment property for little -- or even no-money down. Get started by buying your home or a second home. Real estate investing offers you the most tried and true way to build wealth when you avoid investing schemes.
Maybe you, like me and many others, have purchased books or expensive systems based on these no-money-down and lease-option investing schemes. Here's the rest of the story.
Perhaps you've seen an ad in your local newspaper offering a home with 100% financing from the seller or a lease option. You should know that the investor offering these types of deals makes money by purchasing the property at a discount and selling the property for an inflated price.
Lease-option real estate investors play the odds. They bet that most people won't be in a position to purchase the lease-option home in a year. So the investor seeks a hopeful tenant to make higher than average rental payments, pay more move-in cash, and make the investor's mortgage payment. Those tenants who do eventually purchase the home paid much more for the home than the investor. Many tenants never come up with a new mortgage loan to purchase the property when the time runs out. Either way, the real estate investor makes money.
First-Time Home Buyers
If you need to buy your first home to live in, these home-purchase methods may help you if you have terrible credit and can clean it up in time to finalize the purchase in a year. Just understand that you're paying too much for the property and may not make any money on appreciation. On the other hand, if you have strong credit, you can purchase a bargain house with no money down legitimately.
Tips for Beginning Real Estate Investors
Don't buy overpriced property! Avoid 100% investor-financed "deals." You will have to wait too long to make any money. Plus, the rental income most likely won't come close to making the mortgage payment for you.
Don't waste your money buying real estate guru books, DVDs, programs, seminars and mentor-coach promoting no-money-down deals. Would you buy a book on how to make a fortune on the Internet that was written in 1995?
These out-of-date, no-money down schemes, tell you to look for home sellers in distress who will let you buy their home for no-money down with the seller financing the property for you. This system worked last century. Today's home sellers know that they can get a buyer who can get their own financing.
Plus, today's home sellers know that other sellers have lost money selling with no-money down. They've heard the stories where home sellers didn't get paid and had to foreclose on a property. They've heard the stories where the investor-buyer rented the house to tenants who trashed the property. They've heard the stories where the investor-buyer collected the rent and didn't pay the home seller.
To get started building wealth in real estate today:
1. Get your credit ready for mortgage financing. (Mortgage credit differs from consumer credit.)
2. Buy right. Don't overpay for deals that sound too good to be true. These schemes are too good to be true!
3. Guard your money. Don't get yourself in over your head with high mortgages on rental properties that cause you negative cash flow and jeopardize your financial well-being. The best way to do this is to make sure you get the best mortgage rates on a bargain-priced property.
You can buy investment property for little -- or even no-money down. Get started by buying your home or a second home. Real estate investing offers you the most tried and true way to build wealth when you avoid investing schemes.
Are You Wealthy Yet?
Here's a real simple way to become wealthy.
Marty and his wife live at home with their 2 children. They own
a 3 bedroom house in a middle class neighborhood and try to live
within their means. Marty works full time in the Printing
Industry, while his wife is in charge of the home and looking
after the children.
They've accumulated some credit card debt and have 2 years left
on a car loan. They try to stay out of debt as much as possible
and together they've managed to contribute a total of $32,000 to
their own Retirement Fund. It is kept in term deposits receiving
5% interest annually.
Two years prior, the couple bought an older house that they
fixed-up and rent out for $850 a month. After paying the
mortgage and taxes $300 is left over each month. This goes into
their savings account each month.
At Christmas, the family bought themselves a new computer and
decided to start a home-based business. Things started out
fairly slowly but after 8 months they were receiving a steady
check of $400 a month which also goes into their savings
account. This part-time business will continue to grow with the
effort they dedicate to it.
This business also offers them some very lucrative tax savings.
By taking advantage of these Tax Strategies they are able to
save an additional $300 a month on tax that was normally
deducted from Marty's paycheck at work. This monthly income is
also added to the couple's savings.
Marty has just begun writing an E-book about his "production
expertise" at work. His plan is to market this book on the
internet for profit
Every Sunday the couple takes a drive to stay familiar with the
Real Estate market in their area. They're looking for another
property, a "handyman's special" to fix-up and rent out. They
have saved enough for a down payment and their credit with the
bank is well established.
The family's total monthly expenses are $2000. Now, here's the
question:
Does Marty's family have Wealth yet?
To answer this question properly you first have to understand
exactly what "wealth" means.You achieve wealth when: *Your
Passive Income is the same or greater than your Expenses.* So
what does this mean?
First, what is Passive Income?
Passive Income is money that you are paid over and over again
for work that you only do once. (This excludes using a gun or
finding cash on the street) Some examples of this would be
royalties for writing a book or a song, commissions that you
receive for sales that others make and interest from bank
savings or dividends on stocks/options that you own.
Second, what Expenses are we talking about? This one's a little
easier to understand. Expenses are the total amount it takes to
run your household and your life. This includes, rent, mortgage
payments, car insurance, food, credit card and loan payments,
etc………
Let's look at Marty's family a little closer…………. Does Marty
have any Passive Income? Yes he does. Marty's salary is not
considered Passive Income. That's because he has to work 40
hours a week just to get the basic amount. If Marty doesn't go
to work then he doesn't get paid. His overtime also doesn't
count as Passive Income.
The interest from their Retirement Fund does though. It's paid
to him month after month as long as it's left in that account.
So, $32,000 at 5% is $1600 a year. Divided by 12 months equals
$133 a month in interest. Ok…..what else?
After the mortgage and expenses are paid with the rent money
they receive on their rental property they are left with $300
every month. This is Passive Income. Just as long as the tenant
stays and pays his monthly rent.
How bout that $400 from the home-based business and the Tax
savings. Is this Passive Income? Well, Marty's wife made sure
that she chose a company where she could sign new business
accounts and get paid commissions on those accounts over and
over again. They've made a 5 year commitment to build this
business part-time. So yes, both the $400 and the $300 in Tax
Savings would apply as Passive Income. Let's add up Marty's
total Passive Income.
Interest $166.00 Rental Income $300.00 Home Based
Business$400.00 Tax Savings $300.00 Total $1166.00
Not including Marty's salary from work, his family's Passive
Income is $1166.00. Not bad. Every month this amount flows into
the family's bank account, regardless of anything else they do.
We said that Marty's monthly expenses total $2000.00 a month.
And we also said………… You have Wealth when: *Your Passive Income
is the same or greater than your Expenses.*
$2000 Expenses subtract $1166 Passive Income = $834 monthly
balance needed to have Wealth.
Marty's Expenses are still more than their Passive Income so
they're not wealthy just yet. But they're well over half-way
there. With this kind of knowledge a family can know exactly
where to focus their financial attention.
Maybe when Marty writes that ebook he could get some sales and
royalties from it. Also the new Real Estate and more work on
their Home-based business would certainly help them to attain
more Passive Income. Once Marty's Passive Income is more than
the family's Expenses then Marty could start to have much more
freedom. He may even choose to quit his job and continue
developing his Passive Income streams.
Take a look at your own finances. What are your monthly
expenses? Do you have more Passive Income than your Expenses? If
you do Congratulations. You're Wealthy!!! If you don't. It's
time to get started and start adding Passive Income from other
areas as soon as possible.
When you truly understand this principle, you'll be well on your
way to becoming wealthy
Marty and his wife live at home with their 2 children. They own
a 3 bedroom house in a middle class neighborhood and try to live
within their means. Marty works full time in the Printing
Industry, while his wife is in charge of the home and looking
after the children.
They've accumulated some credit card debt and have 2 years left
on a car loan. They try to stay out of debt as much as possible
and together they've managed to contribute a total of $32,000 to
their own Retirement Fund. It is kept in term deposits receiving
5% interest annually.
Two years prior, the couple bought an older house that they
fixed-up and rent out for $850 a month. After paying the
mortgage and taxes $300 is left over each month. This goes into
their savings account each month.
At Christmas, the family bought themselves a new computer and
decided to start a home-based business. Things started out
fairly slowly but after 8 months they were receiving a steady
check of $400 a month which also goes into their savings
account. This part-time business will continue to grow with the
effort they dedicate to it.
This business also offers them some very lucrative tax savings.
By taking advantage of these Tax Strategies they are able to
save an additional $300 a month on tax that was normally
deducted from Marty's paycheck at work. This monthly income is
also added to the couple's savings.
Marty has just begun writing an E-book about his "production
expertise" at work. His plan is to market this book on the
internet for profit
Every Sunday the couple takes a drive to stay familiar with the
Real Estate market in their area. They're looking for another
property, a "handyman's special" to fix-up and rent out. They
have saved enough for a down payment and their credit with the
bank is well established.
The family's total monthly expenses are $2000. Now, here's the
question:
Does Marty's family have Wealth yet?
To answer this question properly you first have to understand
exactly what "wealth" means.You achieve wealth when: *Your
Passive Income is the same or greater than your Expenses.* So
what does this mean?
First, what is Passive Income?
Passive Income is money that you are paid over and over again
for work that you only do once. (This excludes using a gun or
finding cash on the street) Some examples of this would be
royalties for writing a book or a song, commissions that you
receive for sales that others make and interest from bank
savings or dividends on stocks/options that you own.
Second, what Expenses are we talking about? This one's a little
easier to understand. Expenses are the total amount it takes to
run your household and your life. This includes, rent, mortgage
payments, car insurance, food, credit card and loan payments,
etc………
Let's look at Marty's family a little closer…………. Does Marty
have any Passive Income? Yes he does. Marty's salary is not
considered Passive Income. That's because he has to work 40
hours a week just to get the basic amount. If Marty doesn't go
to work then he doesn't get paid. His overtime also doesn't
count as Passive Income.
The interest from their Retirement Fund does though. It's paid
to him month after month as long as it's left in that account.
So, $32,000 at 5% is $1600 a year. Divided by 12 months equals
$133 a month in interest. Ok…..what else?
After the mortgage and expenses are paid with the rent money
they receive on their rental property they are left with $300
every month. This is Passive Income. Just as long as the tenant
stays and pays his monthly rent.
How bout that $400 from the home-based business and the Tax
savings. Is this Passive Income? Well, Marty's wife made sure
that she chose a company where she could sign new business
accounts and get paid commissions on those accounts over and
over again. They've made a 5 year commitment to build this
business part-time. So yes, both the $400 and the $300 in Tax
Savings would apply as Passive Income. Let's add up Marty's
total Passive Income.
Interest $166.00 Rental Income $300.00 Home Based
Business$400.00 Tax Savings $300.00 Total $1166.00
Not including Marty's salary from work, his family's Passive
Income is $1166.00. Not bad. Every month this amount flows into
the family's bank account, regardless of anything else they do.
We said that Marty's monthly expenses total $2000.00 a month.
And we also said………… You have Wealth when: *Your Passive Income
is the same or greater than your Expenses.*
$2000 Expenses subtract $1166 Passive Income = $834 monthly
balance needed to have Wealth.
Marty's Expenses are still more than their Passive Income so
they're not wealthy just yet. But they're well over half-way
there. With this kind of knowledge a family can know exactly
where to focus their financial attention.
Maybe when Marty writes that ebook he could get some sales and
royalties from it. Also the new Real Estate and more work on
their Home-based business would certainly help them to attain
more Passive Income. Once Marty's Passive Income is more than
the family's Expenses then Marty could start to have much more
freedom. He may even choose to quit his job and continue
developing his Passive Income streams.
Take a look at your own finances. What are your monthly
expenses? Do you have more Passive Income than your Expenses? If
you do Congratulations. You're Wealthy!!! If you don't. It's
time to get started and start adding Passive Income from other
areas as soon as possible.
When you truly understand this principle, you'll be well on your
way to becoming wealthy
Construction Loan "Inside Secrets" To Building Your New Home.
1. Which construction loans are available and which one should you apply for?
Home loan banking and the internet has changed the mortgage and construction loan industry forever. Today's construction loan choices include the 30 year fixed, 15 year fixed, 1 year ARM, 3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM and don’t forget the popular interest only loans.
The construction loan of the past was a short term 1 year loan that the customer would have to refinance into a new loan once the construction was completed.
This two time process cost the customer two sets of closing costs and you would have to re-qualify for the new loan once the home was completed.
The most popular construction loan today is the "One Time Close" but not all are created equal. Just like any product there are the best loans, good loans and downright bad loans.
With today's technology you now have the ability to obtain a construction loan from the best banks in the country and sign your loan documents at your local title company or escrow office. This benefit allows you to have the most competitive construction loan available.
The loan that you should apply for is simple; ask for the lowest rate, one time close for a specific period of time that you think you'll be living there.
2. Which lenders/banks have the best construction loans and what do you need to apply?
There are plenty of banks willing to lend money for mortgages, refinancing, home equity loans and every other type of loan. But if you're planning on building a new home, where do you get the best construction loan with the most competitive pricing?
More importantly what is a good construction loan?
A typical construction loan nowadays is a construction to permanent loan that may or may not allow you to lock-in today's low interest rates until the home is completed. If you choose a loan that does not allow you to lock in upfront, the interest rate may end up higher along with your monthly payment.
The most important thing when searching for a good construction loan is to find an experienced construction loan specialist that knows which banks are the best.
The best banks can offer you a low rate now, upfront, before you start building your new home.
3. Should you go directly to your local bank or to a loan broker for your loan?
Most banks offer loans, and going to them is like shopping at a Ford dealer. The only thing you can get at the Ford dealer is a Ford. But what if you want choices?
One way to get different choices is to go shopping to every bank in town. Or you can call an experienced construction loan broker who has done all of the homework for you and has direct access to hundreds of banks nationwide.
A broker is a representative for hundreds of banks. Although the broker serves as middle-man, his or her services will not cost you anything extra. That's because brokers get loans at wholesale rates, and pass them along to their clients at retail prices, just like any other business.
The difference between wholesale and retail is how brokers make money. Therefore, you get the same rate from a broker as if you went directly to the lender yourself.
In Fact, because or their volume, many brokers are able to offer their clients better deals than you can get by talking to the banks on you own.
With an experienced construction loan broker you can shop dozens of the most competitive banks nationwide, work with wholesale pricing and can negotiate on rates and pricing.
4. Should you lock in your construction loan before you start building or let the interest rate float?
If the rates are heading upward, lock. If the rates are stable, relax. If the rates are headed downward, float.
Right now interest rates are at an all time low and can only go up in the near future so make sure your construction loan is locked into today's best interest rates with the ability to float downward.
Inexperienced loan officers will offer their customers an enticing low adjustable rate during construction without an upfront lock-in and the customer may end up having to lock into higher interest rates when the home is completed.
Or the customer is sold on a higher rate during construction with a float down option after the home is built. Again, the rate could be much higher when the home is completed.
Meanwhile the loan officer has been paid and has moved on to the next loan. The only time you want this type of loan is if it’s the only loan you qualify for.
Most loan officers do not explain this to their customers until it's too late (Closing).
Always ask. Is the construction loan rate locked upfront or floating during the construction loan period? Then ask, is the rate during the construction loan the same rate when the loan converts into the mortgage period.
5. What experience does your construction loan officer have and does it matter?
When it comes to money its amazing how fast any loan officer becomes an instant expert at construction loans. You must keep in mind that all loan officers are salespeople. Yes, I know they have fancy titles like loan officer or vice president but the title is nothing but a fancy name for loan salesperson.
Loan salespeople usually have one main goal in mind when helping you with your loan request and that is the commission. By the way, the fancy name for commission in the loan business is called a loan fee, points or yield spread premium (YSP).
Now don't get me wrong, there are a lot of good honest sales people (loan officers) that work very hard at providing you the best service and rates. What’s important is distinguishing the good from the bad.
The following questions allow you to quickly find out if your loan officer is experienced at construction loans.
1. How long have you been doing construction loans? 5 years or more is best.
2. What is the loan to cost (LTC) required for construction loans? This is cash equity such as down payment on land. This can range from 5 to 20%.
3. What is better? The voucher or draw disbursement system and why? Draw is now the most popular because the customer has the control of the money.
If the loan officer (sales person) can answer these questions with no problem then they have passed a pretty good litmus test.
If you really want to throw a curve at them, ask the loan officer if they have ever built a home themselves and what type of construction loan did they get.
If you find a loan officer that has gone through the experience of building a home themselves then the odds are you have found an experienced loan officer.
6. Qualifying for your construction loan, exactly how is it done?
The first thing your loan officer wants to see is your completed loan application. The loan application called the (1003) will tell a story of your financial picture.
The completed loan application will tell the loan officer many things including,
1. What type of loan you want.
2. How much money you need.
3. Your social security number.
4. Your current employers.
5. A list of all you assets (money) and liabilities (bills).
6. How much money you make.
7. How much real estate you own.
Once the loan officer has your loan application in hand they can determine whether you can qualify for a loan.
One of the first items pulled is your credit report. The credit report is going to tell 3 main important things.
1. Show your current credit score. The credit score can range from 500 to 800.
2. Show a complete list of all your monthly liabilities (bills).
3. Show all past credit problems including bankruptcies, foreclosures and late payments.
With this information the loan officer will do an analysis to determine if you can qualify for the loan amount that you’re looking for.
This analysis determines a ratio called the (income to debt ratio) and depending on the banks underwriting guidelines this ratio will usually range from 36% to 45%.
The income to debt ratio is the percentage of monthly debt payments (including your new mortgage payment, taxes and insurance). This ratio should not exceed 36% to 45% of your monthly income.
Some banks will allow you to exceed this ratio if you have an excellent credit history and excellent credit score.
The current and the most popular method of qualifying for a loan today is the stated income loan.
Stated income allows you to qualify without verifying your income on your tax returns, W 2's or pay stubs. The only thing the bank verifies when applying for a stated income loan is your credit score, liquid assets and that you're employed.
7. How not to be taken by the oldest trick in the book "Bait and Switch"?
The mortgage lending business is notorious for baiting and switching.
Baiting and Switching is when a loan officer or advertisement offers you one thing and then tries to sells you something else.
Typical signs of baiting and switching are obvious, some basic examples are:
1. Over the phone, you are offered a much lower rate than any other quote and once you've sent in your application the rate you were quoted has all of a sudden vanished.
2. You are offered a construction loan with no points and no loan fee's. What you are not told is that you are paying for it with a higher interest rate and the costs are built into the loan.
3. You are told that you will not have any payments while you're building. What you're not told is that all construction loans have this option and it's called "interest reserves" and the payments are added to the loan amount.
Remember three important facts and you will always be in good shape.
1. If it sounds too good to be true there's usually a reason.
2. Always get your quote in writing, (ask for a good faith estimate).
3. If you are satisfied with the rate and construction loan program that you are quoted, ask to lock it in upfront.
On the flipside, it is very important to realize that most loan products typically go hand in hand with banking guidelines. These guidelines are provided to loan officers to coincide with the customer's qualifications.
For example, if you have a very high (FICO) credit score with land free and clear, you have more loan options than the person with a very low (FICO) score and no land equity.
8. Now for the biggest secret of all, ready? All banks have access to the same rates and the only reason everyone ends up with a different rate is directly related to how much your loan officer and bank is going to profit from you.
You should probably read that one again.
Your loan officer gets paid like all sales people either by:
1. Salary plus commission
2. Commission only.
It doesn't matter if you walk directly into a bank or work with a broker, basically everyone gets paid the same.
If you walk directly into a bank the loan officer most likely gets a basic salary and a percentage of the loan origination fee (points and yield spread premiums). If you work with a broker the broker usually works on a straight commission (points and yield spread premiums).
Becoming a broker allows the loan officer the ability to offer their customers the best loans with the most options.
It always amazes me when I see TV commercials or hear radio commercials advertising $395, zero closing costs. I always wonder if people understand how they can do that.
Ok, here is how it is done.
The inside secret is that in exchange for these low or zero closing costs the lenders will make their profits and cover the costs of the loan by charging you a higher interest rate.
This higher interest rate pays what they call in our industry a (YSP) yield spread premium.
By charging you a higher interest rate over the life of the loan the bank can easily afford the commercials, commissions, payroll, and cover the costs of the loan while still making a profit. Also the service is usually very poor and impersonal.
So the next time you see advertising with no closing costs you will know exactly how they are doing it.
So please remember that there is no such thing as a free lunch in any business. Business wouldn't be business if there were no profits. The most important thing is that you want the best loan available at a fair price with an experienced loan officer.
9. What are interest reserves and contingency funds doing in your closing costs?
The two things most customers do not factor into the cost of the building their new home are interest reserves and contingency funds.
Interest reserves are added to your loan amount to make the monthly payment on your loan. Yes, you read that correctly, you will not have to make a monthly construction loan payment while your home is being built.
The payments are made from this interest reserve account and no, it’s not free. This reserve is added to your construction loan amount.
Interest reserves were designed for the benefit of the customer. Most people building a new home are either paying rent or have an existing mortgage payment while their home is being built.
The last thing a customer needs is another monthly payment while building. So, banks created the interest reserve account by adding up the estimated interest payments over a 12 month period and add this to the loan amount.
If you do not want interest reserves added to your construction loan amount you can ask to make your own monthly construction loan payment.
Contingency funds are added to the loan amount just in case you need more money to build your new home.
With all good intentions construction loans tend to have cost over runs. The bank adds 5% to 10% of the cost breakdown and adds this amount to the loan amount just in case you have cost over runs or need better appliances.
If you don’t need or use this extra contingency fund then it will not be added to your mortgage upon completion of your new home.
So when you apply for a construction loan ask your loan officer to provide you a copy of the estimated construction loan budget.
The budget is created from your costs and includes every cost within the loan including land balances, closing costs, interest reserves, contingency and bank fees.
10. What is loan to value (LTV) and loan to cost (LTC)? Why it’s probably the most important factor in getting approved for a construction loan besides your income and credit.
Initially most banks are concerned with loan to appraised value (LTV) but banks are really more concerned with how much cash you have in the project (LTC).
If you were buying a home instead of building you would normally have to put 20% of the purchase price as a down payment.
Since you’re building a home your cash equity usually comes in the form of how much cash you put down on your land.
Cash equity is king when applying for a construction loan.
For example, if you bought a $200,000 piece of land and the land is owned free and clear you have a lot of cash equity.
With this much cash equity you will most likely not have to bring in any additional cash.
Or if you bought a piece of land over 12 months ago for $100,000 and its now worth $200,000 the bank will use the current value because you bought it over 12 months ago.
In both cases you have brought $200,000 cash equity to the table.
Now if you just bought a piece of land for $200,000 and you only put down $20,000 most banks will want to see 10% to 20% cash into the total project.
Other qualifying cash equity that can be counted are any pre-paid’s such as plans, grading, permits etc. These pre-paid's can be used for cash equity or you can be reimbursed from the construction loan at closing.
11. Should you hire a builder or be an owner builder?
Do you really want to be an owner-builder? The goal of being an owner builder is mainly to save money. Some people can save quite a bit of money if done correctly.
Some people are not meant to be owner builder.
Possible problems when acting as owner builder are:
1. Construction cost over runs.
2. The best banks with the best rates require a builder or supervisor.
3. Managing contractors to finish on time or to show up for work.
4. Depleting your personal savings.
5. The need to borrow more money.
6. Loan extension penalties.
7. Being taken by unscrupulous contractors.
8. The need to refinance your construction loan.
9. Foreclosure.
I could go on and on about the horror stories I hear from Owner Builders that did not get a construction loan and acted as their owner builder.
If you have never built a home before and absolutely need to act as owner builder please take my advice and hire a reputable builder to supervise you and the building of your new home, for a much smaller fee than their normal fee.
The builder/supervisor will help you with the cost breakdown and manage the subcontracting on an as needed basis. If one of your contractors gets out of hand or you need help of any kind, you can call the supervisor for assistance.
Your job is to make sure you are hiring the right people to complete your home. It can make the difference between happiness and misery.
For those of you that have experience at building homes but do not have a license ask about our owner builder program. To qualify you will need a resume showing your experience.
If you decide on hiring a builder to do everything make sure you hire a reputable builder or supervisor with a good reputation and plenty of references.
Ask your friends if they know a good builder and when you start to hear the same name over and over you know you've found a good one. Ask the building inspector for a list of reputable builders.
The most important point is shop around until you find a builder with the most reputable and honest background.
If you pay a little more for an honest and reputable builder or supervisor you will be very thankful before, during and after your home is completed
12. How does your builder determine how much your home will cost to build?
The Estimated Cost Breakdown of your home is probably one of the most important forms in the construction loan package. This is the breakdown of each particular cost of construction of the home. The foundation, lumber, framing, plumbing, heating, electrical, painting, and builder's profit, etc.
The builder usually completes this form to show you exactly what it will cost to build your new home. The most important thing to remember here is that you do not want to underbid any line item and you do not want to overbid any line item. You want accurate numbers from real bids (not guesses) and a 5% contingency for cost overruns.
Good builders will send out the house plans to their contractors for specific bidding on each main item or can estimate the home themselves. The builder will send one set of plans to the foundation contractor, one set of plans to the framer, one set of plans to the plumber, etc, etc.
When all the numbers come in, the builder will fill out the cost breakdown and come up with a total cost to build your new home.
Bad builders will use the WAG method of estimating the cost of building your new home. The WAG method stands for "Wild Ass Guesses". This method is the most dangerous since it can lead to under and over bidding.
The last method of bidding is simply to over inflate every single line item on the cost breakdown. This is the most profitable method for the builder and the most expensive to the customer.
This is why you want to find an honest, reputable builder with a good reputation in your community. Once the cost breakdown is completed and you plan on hiring this builder to build you new home you will need to type up a contract. The contract needs to equal the added total of the cost breakdown.
Most builders will provide the contract but make sure you read it carefully and that you add your requirements as well. There are two types of contracts
1. Fixed Contract: This contract is simple and straightforward. Take the total of the cost breakdown and put that fixed number into the contract. The builder will provide a list of responsibilities.
2. Cost plus Contract. This type of contract is usually for large construction loan projects.
A. The customer wants to make a lot of changes to their home as its being built.
B. The construction loan period to build the home is 18 months so construction costs can change drastically. The builder prefers this contract to protect the costs and profits.
13. How does your builder get paid while your home is being built?
There are two methods that banks use to make sure your builder gets paid while building your home.
The Voucher Reimbursement system has been around for quite a while. As usual you'll have some builders that are very familiar with this method of payment and do not like change.
Most builders are really only concerned with how fast they can be paid and how often they can be paid.
Most banks find that the voucher system is simply too much paperwork to deal with anymore. The builder is given a big book of vouchers that looks like a check book and when they want to get paid or need to pay a contractor they need to fill out a voucher form. This voucher form is a request for payment and as long as the contractor has signed the lien release the bank will pay the amount requested.
The bank will also request an inspection throughout the construction loan to make sure that the work is completed.
The Draw Reimbursement system is becoming the standard for construction loan funding for most banks.
The main difference is that the bank puts the accounting responsibility on you or your contractor. The bank uses your cost breakdown as the guide for the draws. Some banks use specific schedules of 4 to 7 draws based on completed construction milestones, such as foundation or framing.
The draw systems also allow the choice of taking draws on a monthly basis, collecting partial payment for work and material items that have been completed.
I personally prefer the draw reimbursement system because:
1. It requires less work.
2. Provides more control for both the customer and the builder.
3. The funds are wired directly into your bank account.
3. It's easier to use than the voucher system.
4. Some banks now have online draw requests.
14. What type of construction loan insurance is required and who is required to get it?
The reality of construction loan insurance. There are three types of insurance needed to build. All banks require the first two insurances, course of construction and general liability. Workman's compensation is only required if your builder has employees.
1. Course of Construction Insurance. This policy is an all risk policy to include, fire, extended coverage, builder's risk, replacement cost, vandalism and malicious mischief insurance coverage.
2. General Liability Insurance. You or your builder can provide this policy. This policy is a comprehensive general policy or a broad form liability endorsement. The minimum amount of $300,000 for each occurrence is required. If the builder provides the insurance a general policy of $1,000,000 or a broad form liability endorsement is required.
3. Workman's Compensation Insurance. If your builder owns his own company and has employees that are helping to build your home, workman's compensation is required.
If the builder simply subcontracts out the work and does not have employees per se, they will need to write a letter acknowledging that they do not have employees and are not required to have WCI.
15. Has your loan officer structured your construction loan properly and why it's so important?
I get loans all the time from customers that went to another lender or broker and were either turned down or were offered a below average construction loan.
The reason was because the loan was not structured properly before it was sent into the bank. Structuring a loan properly is simply making sure that you match the customer’s loan request to the banks underwriting guidelines.
Recently I received a construction loan request from a customer that was turned down by a large national bank. The loan officer had calculated the income incorrectly and submitted the loan as full documentation.
The customer owned his own business and had a lot of tax deductions on his tax returns. The way banks qualify customers as full documentation is very conservative and the loan was turned down.
We took the loan, found the problems upfront and submitted the loan as stated income.
The customer was approved and built a beautiful home in Rancho Santa Fe CA.
Structuring construction loans for approval is vitally important and is the last thing on most customers’ minds. Each and every time I receive a loan from a customer with a bad loan experience it is always because the loan officer did not specialize in construction loans and did not structure the loan accordingly.
Other common mis-structured loan scenarios include:
1. Low cash equity.
2. Improperly completed appraisal.
3. Unexplained credit derogatory.
4. Income incorrectly calculated.
5. Mismatch of customer loan request to the correct lender.
6. Plain and simple incompetence
The old saying “you get what you pay for” is especially true when obtaining financing in building your new home.
Home loan banking and the internet has changed the mortgage and construction loan industry forever. Today's construction loan choices include the 30 year fixed, 15 year fixed, 1 year ARM, 3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM and don’t forget the popular interest only loans.
The construction loan of the past was a short term 1 year loan that the customer would have to refinance into a new loan once the construction was completed.
This two time process cost the customer two sets of closing costs and you would have to re-qualify for the new loan once the home was completed.
The most popular construction loan today is the "One Time Close" but not all are created equal. Just like any product there are the best loans, good loans and downright bad loans.
With today's technology you now have the ability to obtain a construction loan from the best banks in the country and sign your loan documents at your local title company or escrow office. This benefit allows you to have the most competitive construction loan available.
The loan that you should apply for is simple; ask for the lowest rate, one time close for a specific period of time that you think you'll be living there.
2. Which lenders/banks have the best construction loans and what do you need to apply?
There are plenty of banks willing to lend money for mortgages, refinancing, home equity loans and every other type of loan. But if you're planning on building a new home, where do you get the best construction loan with the most competitive pricing?
More importantly what is a good construction loan?
A typical construction loan nowadays is a construction to permanent loan that may or may not allow you to lock-in today's low interest rates until the home is completed. If you choose a loan that does not allow you to lock in upfront, the interest rate may end up higher along with your monthly payment.
The most important thing when searching for a good construction loan is to find an experienced construction loan specialist that knows which banks are the best.
The best banks can offer you a low rate now, upfront, before you start building your new home.
3. Should you go directly to your local bank or to a loan broker for your loan?
Most banks offer loans, and going to them is like shopping at a Ford dealer. The only thing you can get at the Ford dealer is a Ford. But what if you want choices?
One way to get different choices is to go shopping to every bank in town. Or you can call an experienced construction loan broker who has done all of the homework for you and has direct access to hundreds of banks nationwide.
A broker is a representative for hundreds of banks. Although the broker serves as middle-man, his or her services will not cost you anything extra. That's because brokers get loans at wholesale rates, and pass them along to their clients at retail prices, just like any other business.
The difference between wholesale and retail is how brokers make money. Therefore, you get the same rate from a broker as if you went directly to the lender yourself.
In Fact, because or their volume, many brokers are able to offer their clients better deals than you can get by talking to the banks on you own.
With an experienced construction loan broker you can shop dozens of the most competitive banks nationwide, work with wholesale pricing and can negotiate on rates and pricing.
4. Should you lock in your construction loan before you start building or let the interest rate float?
If the rates are heading upward, lock. If the rates are stable, relax. If the rates are headed downward, float.
Right now interest rates are at an all time low and can only go up in the near future so make sure your construction loan is locked into today's best interest rates with the ability to float downward.
Inexperienced loan officers will offer their customers an enticing low adjustable rate during construction without an upfront lock-in and the customer may end up having to lock into higher interest rates when the home is completed.
Or the customer is sold on a higher rate during construction with a float down option after the home is built. Again, the rate could be much higher when the home is completed.
Meanwhile the loan officer has been paid and has moved on to the next loan. The only time you want this type of loan is if it’s the only loan you qualify for.
Most loan officers do not explain this to their customers until it's too late (Closing).
Always ask. Is the construction loan rate locked upfront or floating during the construction loan period? Then ask, is the rate during the construction loan the same rate when the loan converts into the mortgage period.
5. What experience does your construction loan officer have and does it matter?
When it comes to money its amazing how fast any loan officer becomes an instant expert at construction loans. You must keep in mind that all loan officers are salespeople. Yes, I know they have fancy titles like loan officer or vice president but the title is nothing but a fancy name for loan salesperson.
Loan salespeople usually have one main goal in mind when helping you with your loan request and that is the commission. By the way, the fancy name for commission in the loan business is called a loan fee, points or yield spread premium (YSP).
Now don't get me wrong, there are a lot of good honest sales people (loan officers) that work very hard at providing you the best service and rates. What’s important is distinguishing the good from the bad.
The following questions allow you to quickly find out if your loan officer is experienced at construction loans.
1. How long have you been doing construction loans? 5 years or more is best.
2. What is the loan to cost (LTC) required for construction loans? This is cash equity such as down payment on land. This can range from 5 to 20%.
3. What is better? The voucher or draw disbursement system and why? Draw is now the most popular because the customer has the control of the money.
If the loan officer (sales person) can answer these questions with no problem then they have passed a pretty good litmus test.
If you really want to throw a curve at them, ask the loan officer if they have ever built a home themselves and what type of construction loan did they get.
If you find a loan officer that has gone through the experience of building a home themselves then the odds are you have found an experienced loan officer.
6. Qualifying for your construction loan, exactly how is it done?
The first thing your loan officer wants to see is your completed loan application. The loan application called the (1003) will tell a story of your financial picture.
The completed loan application will tell the loan officer many things including,
1. What type of loan you want.
2. How much money you need.
3. Your social security number.
4. Your current employers.
5. A list of all you assets (money) and liabilities (bills).
6. How much money you make.
7. How much real estate you own.
Once the loan officer has your loan application in hand they can determine whether you can qualify for a loan.
One of the first items pulled is your credit report. The credit report is going to tell 3 main important things.
1. Show your current credit score. The credit score can range from 500 to 800.
2. Show a complete list of all your monthly liabilities (bills).
3. Show all past credit problems including bankruptcies, foreclosures and late payments.
With this information the loan officer will do an analysis to determine if you can qualify for the loan amount that you’re looking for.
This analysis determines a ratio called the (income to debt ratio) and depending on the banks underwriting guidelines this ratio will usually range from 36% to 45%.
The income to debt ratio is the percentage of monthly debt payments (including your new mortgage payment, taxes and insurance). This ratio should not exceed 36% to 45% of your monthly income.
Some banks will allow you to exceed this ratio if you have an excellent credit history and excellent credit score.
The current and the most popular method of qualifying for a loan today is the stated income loan.
Stated income allows you to qualify without verifying your income on your tax returns, W 2's or pay stubs. The only thing the bank verifies when applying for a stated income loan is your credit score, liquid assets and that you're employed.
7. How not to be taken by the oldest trick in the book "Bait and Switch"?
The mortgage lending business is notorious for baiting and switching.
Baiting and Switching is when a loan officer or advertisement offers you one thing and then tries to sells you something else.
Typical signs of baiting and switching are obvious, some basic examples are:
1. Over the phone, you are offered a much lower rate than any other quote and once you've sent in your application the rate you were quoted has all of a sudden vanished.
2. You are offered a construction loan with no points and no loan fee's. What you are not told is that you are paying for it with a higher interest rate and the costs are built into the loan.
3. You are told that you will not have any payments while you're building. What you're not told is that all construction loans have this option and it's called "interest reserves" and the payments are added to the loan amount.
Remember three important facts and you will always be in good shape.
1. If it sounds too good to be true there's usually a reason.
2. Always get your quote in writing, (ask for a good faith estimate).
3. If you are satisfied with the rate and construction loan program that you are quoted, ask to lock it in upfront.
On the flipside, it is very important to realize that most loan products typically go hand in hand with banking guidelines. These guidelines are provided to loan officers to coincide with the customer's qualifications.
For example, if you have a very high (FICO) credit score with land free and clear, you have more loan options than the person with a very low (FICO) score and no land equity.
8. Now for the biggest secret of all, ready? All banks have access to the same rates and the only reason everyone ends up with a different rate is directly related to how much your loan officer and bank is going to profit from you.
You should probably read that one again.
Your loan officer gets paid like all sales people either by:
1. Salary plus commission
2. Commission only.
It doesn't matter if you walk directly into a bank or work with a broker, basically everyone gets paid the same.
If you walk directly into a bank the loan officer most likely gets a basic salary and a percentage of the loan origination fee (points and yield spread premiums). If you work with a broker the broker usually works on a straight commission (points and yield spread premiums).
Becoming a broker allows the loan officer the ability to offer their customers the best loans with the most options.
It always amazes me when I see TV commercials or hear radio commercials advertising $395, zero closing costs. I always wonder if people understand how they can do that.
Ok, here is how it is done.
The inside secret is that in exchange for these low or zero closing costs the lenders will make their profits and cover the costs of the loan by charging you a higher interest rate.
This higher interest rate pays what they call in our industry a (YSP) yield spread premium.
By charging you a higher interest rate over the life of the loan the bank can easily afford the commercials, commissions, payroll, and cover the costs of the loan while still making a profit. Also the service is usually very poor and impersonal.
So the next time you see advertising with no closing costs you will know exactly how they are doing it.
So please remember that there is no such thing as a free lunch in any business. Business wouldn't be business if there were no profits. The most important thing is that you want the best loan available at a fair price with an experienced loan officer.
9. What are interest reserves and contingency funds doing in your closing costs?
The two things most customers do not factor into the cost of the building their new home are interest reserves and contingency funds.
Interest reserves are added to your loan amount to make the monthly payment on your loan. Yes, you read that correctly, you will not have to make a monthly construction loan payment while your home is being built.
The payments are made from this interest reserve account and no, it’s not free. This reserve is added to your construction loan amount.
Interest reserves were designed for the benefit of the customer. Most people building a new home are either paying rent or have an existing mortgage payment while their home is being built.
The last thing a customer needs is another monthly payment while building. So, banks created the interest reserve account by adding up the estimated interest payments over a 12 month period and add this to the loan amount.
If you do not want interest reserves added to your construction loan amount you can ask to make your own monthly construction loan payment.
Contingency funds are added to the loan amount just in case you need more money to build your new home.
With all good intentions construction loans tend to have cost over runs. The bank adds 5% to 10% of the cost breakdown and adds this amount to the loan amount just in case you have cost over runs or need better appliances.
If you don’t need or use this extra contingency fund then it will not be added to your mortgage upon completion of your new home.
So when you apply for a construction loan ask your loan officer to provide you a copy of the estimated construction loan budget.
The budget is created from your costs and includes every cost within the loan including land balances, closing costs, interest reserves, contingency and bank fees.
10. What is loan to value (LTV) and loan to cost (LTC)? Why it’s probably the most important factor in getting approved for a construction loan besides your income and credit.
Initially most banks are concerned with loan to appraised value (LTV) but banks are really more concerned with how much cash you have in the project (LTC).
If you were buying a home instead of building you would normally have to put 20% of the purchase price as a down payment.
Since you’re building a home your cash equity usually comes in the form of how much cash you put down on your land.
Cash equity is king when applying for a construction loan.
For example, if you bought a $200,000 piece of land and the land is owned free and clear you have a lot of cash equity.
With this much cash equity you will most likely not have to bring in any additional cash.
Or if you bought a piece of land over 12 months ago for $100,000 and its now worth $200,000 the bank will use the current value because you bought it over 12 months ago.
In both cases you have brought $200,000 cash equity to the table.
Now if you just bought a piece of land for $200,000 and you only put down $20,000 most banks will want to see 10% to 20% cash into the total project.
Other qualifying cash equity that can be counted are any pre-paid’s such as plans, grading, permits etc. These pre-paid's can be used for cash equity or you can be reimbursed from the construction loan at closing.
11. Should you hire a builder or be an owner builder?
Do you really want to be an owner-builder? The goal of being an owner builder is mainly to save money. Some people can save quite a bit of money if done correctly.
Some people are not meant to be owner builder.
Possible problems when acting as owner builder are:
1. Construction cost over runs.
2. The best banks with the best rates require a builder or supervisor.
3. Managing contractors to finish on time or to show up for work.
4. Depleting your personal savings.
5. The need to borrow more money.
6. Loan extension penalties.
7. Being taken by unscrupulous contractors.
8. The need to refinance your construction loan.
9. Foreclosure.
I could go on and on about the horror stories I hear from Owner Builders that did not get a construction loan and acted as their owner builder.
If you have never built a home before and absolutely need to act as owner builder please take my advice and hire a reputable builder to supervise you and the building of your new home, for a much smaller fee than their normal fee.
The builder/supervisor will help you with the cost breakdown and manage the subcontracting on an as needed basis. If one of your contractors gets out of hand or you need help of any kind, you can call the supervisor for assistance.
Your job is to make sure you are hiring the right people to complete your home. It can make the difference between happiness and misery.
For those of you that have experience at building homes but do not have a license ask about our owner builder program. To qualify you will need a resume showing your experience.
If you decide on hiring a builder to do everything make sure you hire a reputable builder or supervisor with a good reputation and plenty of references.
Ask your friends if they know a good builder and when you start to hear the same name over and over you know you've found a good one. Ask the building inspector for a list of reputable builders.
The most important point is shop around until you find a builder with the most reputable and honest background.
If you pay a little more for an honest and reputable builder or supervisor you will be very thankful before, during and after your home is completed
12. How does your builder determine how much your home will cost to build?
The Estimated Cost Breakdown of your home is probably one of the most important forms in the construction loan package. This is the breakdown of each particular cost of construction of the home. The foundation, lumber, framing, plumbing, heating, electrical, painting, and builder's profit, etc.
The builder usually completes this form to show you exactly what it will cost to build your new home. The most important thing to remember here is that you do not want to underbid any line item and you do not want to overbid any line item. You want accurate numbers from real bids (not guesses) and a 5% contingency for cost overruns.
Good builders will send out the house plans to their contractors for specific bidding on each main item or can estimate the home themselves. The builder will send one set of plans to the foundation contractor, one set of plans to the framer, one set of plans to the plumber, etc, etc.
When all the numbers come in, the builder will fill out the cost breakdown and come up with a total cost to build your new home.
Bad builders will use the WAG method of estimating the cost of building your new home. The WAG method stands for "Wild Ass Guesses". This method is the most dangerous since it can lead to under and over bidding.
The last method of bidding is simply to over inflate every single line item on the cost breakdown. This is the most profitable method for the builder and the most expensive to the customer.
This is why you want to find an honest, reputable builder with a good reputation in your community. Once the cost breakdown is completed and you plan on hiring this builder to build you new home you will need to type up a contract. The contract needs to equal the added total of the cost breakdown.
Most builders will provide the contract but make sure you read it carefully and that you add your requirements as well. There are two types of contracts
1. Fixed Contract: This contract is simple and straightforward. Take the total of the cost breakdown and put that fixed number into the contract. The builder will provide a list of responsibilities.
2. Cost plus Contract. This type of contract is usually for large construction loan projects.
A. The customer wants to make a lot of changes to their home as its being built.
B. The construction loan period to build the home is 18 months so construction costs can change drastically. The builder prefers this contract to protect the costs and profits.
13. How does your builder get paid while your home is being built?
There are two methods that banks use to make sure your builder gets paid while building your home.
The Voucher Reimbursement system has been around for quite a while. As usual you'll have some builders that are very familiar with this method of payment and do not like change.
Most builders are really only concerned with how fast they can be paid and how often they can be paid.
Most banks find that the voucher system is simply too much paperwork to deal with anymore. The builder is given a big book of vouchers that looks like a check book and when they want to get paid or need to pay a contractor they need to fill out a voucher form. This voucher form is a request for payment and as long as the contractor has signed the lien release the bank will pay the amount requested.
The bank will also request an inspection throughout the construction loan to make sure that the work is completed.
The Draw Reimbursement system is becoming the standard for construction loan funding for most banks.
The main difference is that the bank puts the accounting responsibility on you or your contractor. The bank uses your cost breakdown as the guide for the draws. Some banks use specific schedules of 4 to 7 draws based on completed construction milestones, such as foundation or framing.
The draw systems also allow the choice of taking draws on a monthly basis, collecting partial payment for work and material items that have been completed.
I personally prefer the draw reimbursement system because:
1. It requires less work.
2. Provides more control for both the customer and the builder.
3. The funds are wired directly into your bank account.
3. It's easier to use than the voucher system.
4. Some banks now have online draw requests.
14. What type of construction loan insurance is required and who is required to get it?
The reality of construction loan insurance. There are three types of insurance needed to build. All banks require the first two insurances, course of construction and general liability. Workman's compensation is only required if your builder has employees.
1. Course of Construction Insurance. This policy is an all risk policy to include, fire, extended coverage, builder's risk, replacement cost, vandalism and malicious mischief insurance coverage.
2. General Liability Insurance. You or your builder can provide this policy. This policy is a comprehensive general policy or a broad form liability endorsement. The minimum amount of $300,000 for each occurrence is required. If the builder provides the insurance a general policy of $1,000,000 or a broad form liability endorsement is required.
3. Workman's Compensation Insurance. If your builder owns his own company and has employees that are helping to build your home, workman's compensation is required.
If the builder simply subcontracts out the work and does not have employees per se, they will need to write a letter acknowledging that they do not have employees and are not required to have WCI.
15. Has your loan officer structured your construction loan properly and why it's so important?
I get loans all the time from customers that went to another lender or broker and were either turned down or were offered a below average construction loan.
The reason was because the loan was not structured properly before it was sent into the bank. Structuring a loan properly is simply making sure that you match the customer’s loan request to the banks underwriting guidelines.
Recently I received a construction loan request from a customer that was turned down by a large national bank. The loan officer had calculated the income incorrectly and submitted the loan as full documentation.
The customer owned his own business and had a lot of tax deductions on his tax returns. The way banks qualify customers as full documentation is very conservative and the loan was turned down.
We took the loan, found the problems upfront and submitted the loan as stated income.
The customer was approved and built a beautiful home in Rancho Santa Fe CA.
Structuring construction loans for approval is vitally important and is the last thing on most customers’ minds. Each and every time I receive a loan from a customer with a bad loan experience it is always because the loan officer did not specialize in construction loans and did not structure the loan accordingly.
Other common mis-structured loan scenarios include:
1. Low cash equity.
2. Improperly completed appraisal.
3. Unexplained credit derogatory.
4. Income incorrectly calculated.
5. Mismatch of customer loan request to the correct lender.
6. Plain and simple incompetence
The old saying “you get what you pay for” is especially true when obtaining financing in building your new home.
Forex Trading: Great Opportunity or Scam?
A lot of interest has been generated recently in FOREX trading, hailed by some as the great new investment opportunity. There are even companies running TV infomercials, offering sure fire systems that will bring massive profits in an easy fashion.
So what is forex? Is it something new? The exchange of currencies is said by some to be the world's second oldest profession and as long as there have been two sovereign states that have issued their own currencies, there has been foreign exchange as a facilitator for trade.
Forex, as foreign exchange has been abbreviated to, has been conducted for centuries and has become a global market with a daily turnover according to a recent Bank for International Settlements survey of $1.9 trillion (billion, billion) per day. Essentially it is a global market place with no physical exchange building where all claims on foreign currencies are settled - between governments, corporations, investors and speculators among others. Banks have traditionally been the middlemen who provide the liquidity to this gigantic market, which incidentally is traded on an almost continuous 24-hour basis.
Then came the Internet and suddenly it became possible for everyone to get a piece of the speculative action. Brokers sprouted up with their electronic trading platforms and high 'leverage'. Essentially the brokers lend clients funds to speculate with, 100:1 or in some cases up to 400:1 ratio, or leverage. This means that $10,000 can 'control' up to $4,000,000 in the market. This is far higher than is possible in the stock market.
Many people have been attracted to the possibilities of earning fast profits from forex. There are often sharp movements that can turn your $10,000 to $20,000 in a matter of minutes. You can also get wiped out, but the lure of a fast buck has turned would-be speculators into out-and-out gamblers.
The Internet has also made it possible for the individual to obtain so-called 'charts', that allow them to do 'technical analysis' on their own PCs. The theory is that price movement patterns repeat themselves, so if you have a system of analysis, you can predict a future move in the market.
This may well be the case, but it does not address the problems of the psychology of trading - the fear and greed that drives many to irrational behaviour. People are often taken in by the seller of a system, often paying $5,000 for a piece of software that shows a green light to buy and a red light to sell. However, they don't tell you how to manage your money.
So speculators lose. It has been estimated that 90% of new investors in forex lose their capital in the first year - an appalling figure. What can one do to avoid being a victim? Well, forex is a business like any other business and planning is required. It is also a profession and as such, adequate training is necessary so that you understand fully what forex trading is all about.
Many are prepared to invest thousands in forex trading without really knowing what it is all about. Just think if franchises were offered in a major hamburger chain without the franchisees having a clue how to run a restaurant or even make the burgers. The failure rate would also probably be 90%!
As with all investing, it is all a matter of risk and reward. Investing in Government securities is considered low risk, therefore they carry the lowest return. Increase the risk (the probability of loss on the investment), the higher an investor is rewarded in terms of return. An individual trading forex decides his own level of risk, which should dictate the level of reward. However, in the hands of an inexperienced trader, the two factors are impossible to reconcile, meaning in stark terms that traders cannot control the risk or the reward levels.
People attracted to forex trading often have an unrealistic expectation of what can be earned. To start with an investment of $5,000 and expect to be making $100,000 a year after the first year is unrealistic. It is not impossible; then again, neither is winning the lottery.
If the parameters for trading are laid down and adhered to combined with knowledge of forex trading, success is possible. It does not take much in the way of 'enhanced' returns to be able to double an investment. 26% per annum is required to double your investment within 3 years.
Who is going to teach you? There are some very good courses available, but these will only give you the theory, in itself very important. The ideal way is to have a mentor, or guide to show you the way.
Getting mentored is a wise move because it makes it possible to draw on the experience of a veteran expert and avoid making the common mistakes that cause the unwary to suffer catastrophic losses. After a while under guidance, a forex trader will gain the experience
The bottom line is that forex is not in itself a scam. There are for sure scam artists who prey on individuals' greed as there are in any other business. If it is approached in a sensible and realistic manner and the trader is prepared to work hard, forex can provide a good living both financially and materially.
So what is forex? Is it something new? The exchange of currencies is said by some to be the world's second oldest profession and as long as there have been two sovereign states that have issued their own currencies, there has been foreign exchange as a facilitator for trade.
Forex, as foreign exchange has been abbreviated to, has been conducted for centuries and has become a global market with a daily turnover according to a recent Bank for International Settlements survey of $1.9 trillion (billion, billion) per day. Essentially it is a global market place with no physical exchange building where all claims on foreign currencies are settled - between governments, corporations, investors and speculators among others. Banks have traditionally been the middlemen who provide the liquidity to this gigantic market, which incidentally is traded on an almost continuous 24-hour basis.
Then came the Internet and suddenly it became possible for everyone to get a piece of the speculative action. Brokers sprouted up with their electronic trading platforms and high 'leverage'. Essentially the brokers lend clients funds to speculate with, 100:1 or in some cases up to 400:1 ratio, or leverage. This means that $10,000 can 'control' up to $4,000,000 in the market. This is far higher than is possible in the stock market.
Many people have been attracted to the possibilities of earning fast profits from forex. There are often sharp movements that can turn your $10,000 to $20,000 in a matter of minutes. You can also get wiped out, but the lure of a fast buck has turned would-be speculators into out-and-out gamblers.
The Internet has also made it possible for the individual to obtain so-called 'charts', that allow them to do 'technical analysis' on their own PCs. The theory is that price movement patterns repeat themselves, so if you have a system of analysis, you can predict a future move in the market.
This may well be the case, but it does not address the problems of the psychology of trading - the fear and greed that drives many to irrational behaviour. People are often taken in by the seller of a system, often paying $5,000 for a piece of software that shows a green light to buy and a red light to sell. However, they don't tell you how to manage your money.
So speculators lose. It has been estimated that 90% of new investors in forex lose their capital in the first year - an appalling figure. What can one do to avoid being a victim? Well, forex is a business like any other business and planning is required. It is also a profession and as such, adequate training is necessary so that you understand fully what forex trading is all about.
Many are prepared to invest thousands in forex trading without really knowing what it is all about. Just think if franchises were offered in a major hamburger chain without the franchisees having a clue how to run a restaurant or even make the burgers. The failure rate would also probably be 90%!
As with all investing, it is all a matter of risk and reward. Investing in Government securities is considered low risk, therefore they carry the lowest return. Increase the risk (the probability of loss on the investment), the higher an investor is rewarded in terms of return. An individual trading forex decides his own level of risk, which should dictate the level of reward. However, in the hands of an inexperienced trader, the two factors are impossible to reconcile, meaning in stark terms that traders cannot control the risk or the reward levels.
People attracted to forex trading often have an unrealistic expectation of what can be earned. To start with an investment of $5,000 and expect to be making $100,000 a year after the first year is unrealistic. It is not impossible; then again, neither is winning the lottery.
If the parameters for trading are laid down and adhered to combined with knowledge of forex trading, success is possible. It does not take much in the way of 'enhanced' returns to be able to double an investment. 26% per annum is required to double your investment within 3 years.
Who is going to teach you? There are some very good courses available, but these will only give you the theory, in itself very important. The ideal way is to have a mentor, or guide to show you the way.
Getting mentored is a wise move because it makes it possible to draw on the experience of a veteran expert and avoid making the common mistakes that cause the unwary to suffer catastrophic losses. After a while under guidance, a forex trader will gain the experience
The bottom line is that forex is not in itself a scam. There are for sure scam artists who prey on individuals' greed as there are in any other business. If it is approached in a sensible and realistic manner and the trader is prepared to work hard, forex can provide a good living both financially and materially.
Are You One of the New Disposable Workers?
At the beginning of the 1900’s the industrial revolution was the new engine of the american economy and workers were a disposable commodity. The typical worker lined up at the factory door each morning before dawn hoping to hired on the for the day. Only a few skilled workers (tool and die makers and machine set-up specialists) were “full-time”, and there were no regular raises, holidays, vacations, or benefits. Corporations and “trusts” called the shots and workers took what they could get.
Part of our barbaric “Robber Baron” past you say? Think again. Fast forward 100 years and the working world is beginning to look very much the same. Approximately 25% of our workforce is comprised of temporary workers and that number is projected to grow to 40% by the year 2010! The largest employer in the U.S. is Manpower Inc., a huge “temp” agency trading the latest commodity...your labor. The difference between now and 100 years ago is that its not just the labor of muscle and sweat, it is the labor of skill and specialized knowledge, and includes attorneys, accountants, college professors, scientists, software engineers, and business executives. This growing army of “contingent workers” typically works for 8 to 40% less than their “full-time” counterparts, without benefits, and on an as-needed “just-in-time” basis.
Is this new employment model an evil plot by corporate america to suppress the american worker? Not really. Corporations just do what they are structured to do. They minimize costs (including labor) and maximize profits for their shareholders within the boundaries of the market place and the market for labor is now global. During the last 20 years or so the american corporation has quietly evolved and restructured. In large part they have just adapted to a new global and digital economy. It would not be a stretch to say that we are in the middle of a “new economy” revolution every bit as disruptive as the industrial revolution a hundred years ago and that labor (skilled and professional), especially american labor, is at the short end of the stick.
The old corporate model was rigid and highly structured. It was one of high vertical and horizontal integration, somewhat slow to make and implement decisions, highly controlled, and formally structured. It was also highly unionized with a relatively permanent workforce that enjoyed high wages, pensions, and health insurance (i.e. General Motors and U.S. Steel). This model dominated after WWII when the U.S. dominated the world economy and U.S. corporations faced very little global competition.
However, global competition, free trade, and a digital age required a new model capable of rapid change and maximum flexibility. As corporate america evolved into this new model, american workers experienced “re-engineering”, downsizing, “rightsizing” (after mergers), off-shoring, outsourcing, the death of pensions and the birth of 401K’s, shared healthcare costs, and the rapid rise in population of the just-in-time or “contingent” worker. At the extreme the “new” corporation is “virtual”, with a few key employees and executives at the core and a network partner companies and contingent employees always in flux to meet the demands of a rapidly changing global market.
This new trend of contingent labor has also spread to the public sector and shows no sign of slowing down or stabilizing. Many highly skilled and educated workers have been turned into reluctant “free agents” whose value has been bid down by a global labor market. These workers may think they are entrepreneurs, but they are really just employees without health benefits, no different than the factory worker of a 100 years ago lining up at dawn and hoping to be hired on for the day.
Part of our barbaric “Robber Baron” past you say? Think again. Fast forward 100 years and the working world is beginning to look very much the same. Approximately 25% of our workforce is comprised of temporary workers and that number is projected to grow to 40% by the year 2010! The largest employer in the U.S. is Manpower Inc., a huge “temp” agency trading the latest commodity...your labor. The difference between now and 100 years ago is that its not just the labor of muscle and sweat, it is the labor of skill and specialized knowledge, and includes attorneys, accountants, college professors, scientists, software engineers, and business executives. This growing army of “contingent workers” typically works for 8 to 40% less than their “full-time” counterparts, without benefits, and on an as-needed “just-in-time” basis.
Is this new employment model an evil plot by corporate america to suppress the american worker? Not really. Corporations just do what they are structured to do. They minimize costs (including labor) and maximize profits for their shareholders within the boundaries of the market place and the market for labor is now global. During the last 20 years or so the american corporation has quietly evolved and restructured. In large part they have just adapted to a new global and digital economy. It would not be a stretch to say that we are in the middle of a “new economy” revolution every bit as disruptive as the industrial revolution a hundred years ago and that labor (skilled and professional), especially american labor, is at the short end of the stick.
The old corporate model was rigid and highly structured. It was one of high vertical and horizontal integration, somewhat slow to make and implement decisions, highly controlled, and formally structured. It was also highly unionized with a relatively permanent workforce that enjoyed high wages, pensions, and health insurance (i.e. General Motors and U.S. Steel). This model dominated after WWII when the U.S. dominated the world economy and U.S. corporations faced very little global competition.
However, global competition, free trade, and a digital age required a new model capable of rapid change and maximum flexibility. As corporate america evolved into this new model, american workers experienced “re-engineering”, downsizing, “rightsizing” (after mergers), off-shoring, outsourcing, the death of pensions and the birth of 401K’s, shared healthcare costs, and the rapid rise in population of the just-in-time or “contingent” worker. At the extreme the “new” corporation is “virtual”, with a few key employees and executives at the core and a network partner companies and contingent employees always in flux to meet the demands of a rapidly changing global market.
This new trend of contingent labor has also spread to the public sector and shows no sign of slowing down or stabilizing. Many highly skilled and educated workers have been turned into reluctant “free agents” whose value has been bid down by a global labor market. These workers may think they are entrepreneurs, but they are really just employees without health benefits, no different than the factory worker of a 100 years ago lining up at dawn and hoping to be hired on for the day.
Deadly Mistakes of the Stock Trader
The following are a list of nine things you want to avoid at all costs. Anyone of them can literally destroy your financial dreams and goals!
1. Trading with money you can't afford to lose.
One of the greatest obstacles to successful trading is using money that you really can’t afford to lose. Examples of this would be money that is supposed to be used to pay the mortgage, bills or your child’s college tuition. This is sometimes referred to as “trading with scared money” and there is a very good reason for that. Ultimately what happens is that when someone knows in the back of their mind that they are risking the rent money, they trade out of fear and emotion versus logic and no emotion. If you are in this situation I highly recommend that you stop trading until you earn enough to put into an account that you truly can afford to lose without causing major financial setbacks. You can start with as little as $2000 and trade stocks under $30.
2. The need to be "certain".
We all have the need to make sure that the trade we want to make is going to be a good one. Therefore we look for signs that will give us a confirmation to enter. This can come in several forms, for example… Tuning into CNBC or the Wall Street Journal to give us news that our stock is on the move or waiting for a couple of extra days to make sure that the stock is really flying and just not on a false breakout. Other traders will get opinions from friends, family or broker. Others will wait for ten technical indicators to line up and give the “green light”.
All of these are okay to a point, however the big mistake to avoid is taking so much time that you let the trade take off without you. Interestingly, what ends up happening as a result of waiting too long is that you actually increase your risk. This is because as a stock moves higher and higher there are fewer buyers left in the market and it can come tumbling down until more buyers step in. It is like a game of musical chairs; eventually someone gets caught without a chair.
Traders who wait and wait and wait to make extra sure are usually the ones buying the top tick just before the stocks sells off. They then beat themselves up thinking they picked the wrong stock. Odds are it had nothing to do with their selection, just bad timing.
The thing to keep in mind is that there can be no absolute certainty in any given trade. All we ever can do is take a very educated risk along with a leap of faith!
3. Spending profits before you make them.
Nothing is more exciting then getting into a trade that blasts off and puts you into a highly profitable situation. This can cause major problems however, because this type of trade puts you in a highly euphoric state and leads to daydreaming about the huge profits still to come. You say “Wow I’m already up 15% in two days; I’ll be up 50% in a week and probably double my money in no time!” Then the next thing that happens is you are deciding on the great new car you are going to buy or perhaps telling your boss that he can stick it… Well you get the idea!
The real problem occurs as you get caught up in the daydream and expectations. This causes you to not be prepared to get out as the market sells off and eats up your profits because you have convinced yourself of the eventual outcome and will deny the reality of the situation.
The simple remedy for this is to know where and how you will take profits once you enter the trade. Also, realize that the market will only go up as long as it wants and not how high you think it should go.
4. Forming an opinion.
I’m here to tell you that the market does not give a damn about you or your opinions. Even if they are based on painstaking research or from a “Wall Street Guru”, it doesn’t matter!
5. Three 4-letter words that will kill you! HOPE---WISH---PRAY
If you ever find yourself doing one or more of the above while in a trade then you are in big trouble! As I have already said, the market doesn’t give a damn. All the hoping, wishing and praying in the world is not going to turn a losing trade into a winning one.
When you are wrong just use a simple 4-letter word to correct the situation-SELL!
6. Not sticking to your plan
A big source of trouble arises when a trader starts to deviate from their strategy. Maybe for a week they will trade according to one set of rules and the next use something entirely different.
This flying by the seat of the pants always ends up backfiring. This is because the trader can never be certain what is working and what is not.
You must never deviate from your methodology once you start. As long as it is a good one statistically there is absolutely no reason to change it. The way to make money from it is to trade it over and over again to exploit the edge it gives you.
One thing to also be aware of is that a trader is most vulnerable to switching approaches after a few loses. So, pay special attention at these times.
7. Not knowing how to get out of a losing trade.
It’s amazing how many people I have talked to who don’t have any clear escape plan for getting out of a bad trade. Once again they hope, pray wish and rationalize their position. As I keep saying the market does not care what you think. It does what it does and when you are wrong you are wrong!
The easiest way to keep a bad trade from going really bad is to determine before you get in, where you will get out. You can use a dollar amount or at some target point such as the low of the previous 15-minute bar.
***Make sure you don’t get the “stunned deer in the headlights syndrome”. This is where you see the stock fall to your stop loss point, but you are unable to take action. Maybe this is due to fear or disbelief that you are wrong, but unless you get out ASAP you could end up I major financial trouble!
8. Having an ego.
I have seen a number of individuals enter the trading game that were extremely successful in other business ventures. Because of this they had a fairly big ego and thought they couldn’t fail. Their egos became their downfall because they couldn’t except that they were wrong and refused to bail out of bad trades.
Once again, whoever or wherever you came from does not concern the markets. All the charm, powers of persuasion, number of diplomas on the wall or business savvy will not budge the market when you are wrong.
9. Falling in love with a stock or trade.
Let me give you an example of what I mean. Back in the spring of 1999 EFAX was a really hot stock. I waited to buy it on a dip and did so at $19/share. It started to move up strongly and life was great!
After a while though, it started to come back to my entry point and then below it. Here’s the problem. For some reason I really liked EFAX and sort of became attached to it. Ultimately I couldn’t let go of it even though I knew I should. I justified and rationalized why my dear friend should bounce back, but it never did. I finally had to break off my love affair when the stock hit $9. (Ouch!)
The moral of this story is never fall in love, let alone get married to any stock. It can cost you dearly!
1. Trading with money you can't afford to lose.
One of the greatest obstacles to successful trading is using money that you really can’t afford to lose. Examples of this would be money that is supposed to be used to pay the mortgage, bills or your child’s college tuition. This is sometimes referred to as “trading with scared money” and there is a very good reason for that. Ultimately what happens is that when someone knows in the back of their mind that they are risking the rent money, they trade out of fear and emotion versus logic and no emotion. If you are in this situation I highly recommend that you stop trading until you earn enough to put into an account that you truly can afford to lose without causing major financial setbacks. You can start with as little as $2000 and trade stocks under $30.
2. The need to be "certain".
We all have the need to make sure that the trade we want to make is going to be a good one. Therefore we look for signs that will give us a confirmation to enter. This can come in several forms, for example… Tuning into CNBC or the Wall Street Journal to give us news that our stock is on the move or waiting for a couple of extra days to make sure that the stock is really flying and just not on a false breakout. Other traders will get opinions from friends, family or broker. Others will wait for ten technical indicators to line up and give the “green light”.
All of these are okay to a point, however the big mistake to avoid is taking so much time that you let the trade take off without you. Interestingly, what ends up happening as a result of waiting too long is that you actually increase your risk. This is because as a stock moves higher and higher there are fewer buyers left in the market and it can come tumbling down until more buyers step in. It is like a game of musical chairs; eventually someone gets caught without a chair.
Traders who wait and wait and wait to make extra sure are usually the ones buying the top tick just before the stocks sells off. They then beat themselves up thinking they picked the wrong stock. Odds are it had nothing to do with their selection, just bad timing.
The thing to keep in mind is that there can be no absolute certainty in any given trade. All we ever can do is take a very educated risk along with a leap of faith!
3. Spending profits before you make them.
Nothing is more exciting then getting into a trade that blasts off and puts you into a highly profitable situation. This can cause major problems however, because this type of trade puts you in a highly euphoric state and leads to daydreaming about the huge profits still to come. You say “Wow I’m already up 15% in two days; I’ll be up 50% in a week and probably double my money in no time!” Then the next thing that happens is you are deciding on the great new car you are going to buy or perhaps telling your boss that he can stick it… Well you get the idea!
The real problem occurs as you get caught up in the daydream and expectations. This causes you to not be prepared to get out as the market sells off and eats up your profits because you have convinced yourself of the eventual outcome and will deny the reality of the situation.
The simple remedy for this is to know where and how you will take profits once you enter the trade. Also, realize that the market will only go up as long as it wants and not how high you think it should go.
4. Forming an opinion.
I’m here to tell you that the market does not give a damn about you or your opinions. Even if they are based on painstaking research or from a “Wall Street Guru”, it doesn’t matter!
5. Three 4-letter words that will kill you! HOPE---WISH---PRAY
If you ever find yourself doing one or more of the above while in a trade then you are in big trouble! As I have already said, the market doesn’t give a damn. All the hoping, wishing and praying in the world is not going to turn a losing trade into a winning one.
When you are wrong just use a simple 4-letter word to correct the situation-SELL!
6. Not sticking to your plan
A big source of trouble arises when a trader starts to deviate from their strategy. Maybe for a week they will trade according to one set of rules and the next use something entirely different.
This flying by the seat of the pants always ends up backfiring. This is because the trader can never be certain what is working and what is not.
You must never deviate from your methodology once you start. As long as it is a good one statistically there is absolutely no reason to change it. The way to make money from it is to trade it over and over again to exploit the edge it gives you.
One thing to also be aware of is that a trader is most vulnerable to switching approaches after a few loses. So, pay special attention at these times.
7. Not knowing how to get out of a losing trade.
It’s amazing how many people I have talked to who don’t have any clear escape plan for getting out of a bad trade. Once again they hope, pray wish and rationalize their position. As I keep saying the market does not care what you think. It does what it does and when you are wrong you are wrong!
The easiest way to keep a bad trade from going really bad is to determine before you get in, where you will get out. You can use a dollar amount or at some target point such as the low of the previous 15-minute bar.
***Make sure you don’t get the “stunned deer in the headlights syndrome”. This is where you see the stock fall to your stop loss point, but you are unable to take action. Maybe this is due to fear or disbelief that you are wrong, but unless you get out ASAP you could end up I major financial trouble!
8. Having an ego.
I have seen a number of individuals enter the trading game that were extremely successful in other business ventures. Because of this they had a fairly big ego and thought they couldn’t fail. Their egos became their downfall because they couldn’t except that they were wrong and refused to bail out of bad trades.
Once again, whoever or wherever you came from does not concern the markets. All the charm, powers of persuasion, number of diplomas on the wall or business savvy will not budge the market when you are wrong.
9. Falling in love with a stock or trade.
Let me give you an example of what I mean. Back in the spring of 1999 EFAX was a really hot stock. I waited to buy it on a dip and did so at $19/share. It started to move up strongly and life was great!
After a while though, it started to come back to my entry point and then below it. Here’s the problem. For some reason I really liked EFAX and sort of became attached to it. Ultimately I couldn’t let go of it even though I knew I should. I justified and rationalized why my dear friend should bounce back, but it never did. I finally had to break off my love affair when the stock hit $9. (Ouch!)
The moral of this story is never fall in love, let alone get married to any stock. It can cost you dearly!
Job Tips For The Frustrated Job Seeker
There is nothing more frustrating and depressing when you are out of work and trying to find a job and your job search is going no where. Don't feel bad, you are not alone and there is a good reason why searching for a new job can be so difficult. There is no doubt the job market has changed. 30 years ago when I applied for my first job I remember answering an ad in the paper, calling and speaking to a real person, going in for the interview, filling out a application, had the interview and was offered the $3.75 and hour shipping job. Things are not that simple today. Back then there was no voice mail, no email, you mailed in a typed resume, who had a fax at home? You called and talked to a real person. You may of filled out a application but not the dozen forms you need to today. And you never had to prove you were legally allowed to work in the United States.
Today if you are looking for a job how to you stand out in the impersonal hiring environment that exists in most companies. If you apply online you are competing against dozens if not hundreds of others. Competition is stiff for a most jobs and a human may never even see your resume. Are there steps you can follow that will improve your chances? After being unemployed for several months after 3 years of self employment and becoming more depressed and frustrated in not finding a job, I took my job search to a new level which finally paid off in a new job.
I had been self employed for 3 years but after a divorce and starting life over, my self employment was no longer working. I had to bite the bullet and start looking for a job. The first mistake I realized was my resume was not working. I had updated it to reflect my self employment which was not related to my previous career. I was trying to find a position similar to my previous career in the graphics and computer support industry. By starting my work history with my self employment it made it look like I had been out of the industry even longer and my skills even more outdated. I was just shooting myself in the foot. I changed my self employment to reflect my computer skills so while I had been out of the industry for awhile I wasn't out of touch. Some employers have doubts about people who have been self employed. They think they are going to go back to their own business or worse they only want a job so they can use company resources for their own gain. In my case I was able to explain that I had an opportunity to work at home and spend time with my preschool son, it had been for family reasons. Most employers respect that.
To begin with you really need to take a hard look at your resume. If you have always worked in one area and are applying for a position similar to those you have had in the past then your resume may just need some updating and polish. There are a number of good books and websites on resume writing. If you really need help then a resume service may be money well spent.
How many resumes do you have? There is no reason you can't have several. I was applying for a variety of unrelated positions. I would of looked "over qualified" or my experience would of been too unrelated for the position if I stuck with just one standard resume. I created a "general" resume that listed a variety of skills that could fit any number of non specific jobs. You can have one that is very specific for the industry you are applying for and there is no reason you can't change it to a specific company especially if it will be scanned in and checked for "keywords" Some companies scan for keywords or buzzwords related to the position, their company or industry. Even if you are the most qualified person for that position, if your resume doesn't have those keywords, it will never get seen.
In addition to having a few different resumes you should have it in several different formats also. If you need to mail it in then a nice easy to read printed resume is in order. Same if you will be faxing it in. If you email your resume then your cover letter will be the body of your email and your resume will be attached. Most employers request it be in a word .doc format or text but you can also use a pdf format. If you have your own website why not post it online with a link in your email. That way if your attachment can't be read they can print it off the internet. For example the link could be http://www.yourwebsite.com/yourresume.html. You should also have a unformatted text only resume for uploading to online job sites.
Be sure to include several ways to contact you. Home phone, cell phone, email. I had the unfortunate luck of having my cell phone and my home phone cut off for non payment within a few days of each other. As luck would have it someone I sent a resume to tried to contact me and couldn't get through. They did send me a email saying they couldn't reach me. I was able to call them and get a interview. Don't leave anything to chance. And if they leave you a message get back to them ASAP while your resume is still on their desk. When you get a interview, be on time, be prepared, do your research about the company you are interviewing with. You can usually find most everything you need off their company website. Come prepared with extra resumes, helpful if you have to fill out a application. Also have copies of your updated references. It is best to have more than 3. Some companies want professional references including past employers, others want personal references of persons not related to you. Be prepared for both.
Where to find a job? Dig! And keep digging! You may never know where one will show up. In some ways the internet has made job searches easier with a variety of job sites to search. You should probably set up accounts at the large sites like hotjobs and monster which will allow you to post your resume and apply directly to postings Also take a look at sites like indeed.com. They are a search engine of sorts for jobs. They search several jobs sites at once. Saves time from going to each site. Post your resume so employers can find you. ASK! Don't be afraid to let everyone you know that you are looking for a job. Drop a email to anyone who might know someone who might have a job opening. You might be surprised how many people really do want to help you. Network your pants off! If you don't ask no one can help you. Search everyday. Try and send out at least one resume a day if not more. Pick up the early edition of the Sunday paper. Send out 5-10 at a time. And keep sending them even after you have interviews set up. You can easily fall behind two or three weeks if you stop sending resumes in hopes of that job offer coming through. Nothing better than telling someone, "I'm sorry I accepted another position" Apply for every job you are remotely interested in even if you don't think you are qualified. Every job listed always has a laundry list of qualifications and requirements. In a perfect world they would find the perfect person that would match every requirement. But employers know that person doesn't exist and they are looking for someone who closely matches and they feel will be a good fit. At the worst you will never hear from them. At the best they will offer you a job or maybe something different within their company. You can always turn it down. Even if it turns out to be something you really don't want to do, it might help you get by for awhile until a better position comes along. Never be afraid to apply to any job!
Most of all don't give up hope, the right job will happen at the right time. Remember to take care of yourself. Go for a walk, get plenty of rest, do something you enjoy just for yourself. As long as you keep moving in a forward direction, if someone asks you what you have been doing to find a job you can proudly say "this is what I have been doing" Persistence will pay off. Good luck.
Today if you are looking for a job how to you stand out in the impersonal hiring environment that exists in most companies. If you apply online you are competing against dozens if not hundreds of others. Competition is stiff for a most jobs and a human may never even see your resume. Are there steps you can follow that will improve your chances? After being unemployed for several months after 3 years of self employment and becoming more depressed and frustrated in not finding a job, I took my job search to a new level which finally paid off in a new job.
I had been self employed for 3 years but after a divorce and starting life over, my self employment was no longer working. I had to bite the bullet and start looking for a job. The first mistake I realized was my resume was not working. I had updated it to reflect my self employment which was not related to my previous career. I was trying to find a position similar to my previous career in the graphics and computer support industry. By starting my work history with my self employment it made it look like I had been out of the industry even longer and my skills even more outdated. I was just shooting myself in the foot. I changed my self employment to reflect my computer skills so while I had been out of the industry for awhile I wasn't out of touch. Some employers have doubts about people who have been self employed. They think they are going to go back to their own business or worse they only want a job so they can use company resources for their own gain. In my case I was able to explain that I had an opportunity to work at home and spend time with my preschool son, it had been for family reasons. Most employers respect that.
To begin with you really need to take a hard look at your resume. If you have always worked in one area and are applying for a position similar to those you have had in the past then your resume may just need some updating and polish. There are a number of good books and websites on resume writing. If you really need help then a resume service may be money well spent.
How many resumes do you have? There is no reason you can't have several. I was applying for a variety of unrelated positions. I would of looked "over qualified" or my experience would of been too unrelated for the position if I stuck with just one standard resume. I created a "general" resume that listed a variety of skills that could fit any number of non specific jobs. You can have one that is very specific for the industry you are applying for and there is no reason you can't change it to a specific company especially if it will be scanned in and checked for "keywords" Some companies scan for keywords or buzzwords related to the position, their company or industry. Even if you are the most qualified person for that position, if your resume doesn't have those keywords, it will never get seen.
In addition to having a few different resumes you should have it in several different formats also. If you need to mail it in then a nice easy to read printed resume is in order. Same if you will be faxing it in. If you email your resume then your cover letter will be the body of your email and your resume will be attached. Most employers request it be in a word .doc format or text but you can also use a pdf format. If you have your own website why not post it online with a link in your email. That way if your attachment can't be read they can print it off the internet. For example the link could be http://www.yourwebsite.com/yourresume.html. You should also have a unformatted text only resume for uploading to online job sites.
Be sure to include several ways to contact you. Home phone, cell phone, email. I had the unfortunate luck of having my cell phone and my home phone cut off for non payment within a few days of each other. As luck would have it someone I sent a resume to tried to contact me and couldn't get through. They did send me a email saying they couldn't reach me. I was able to call them and get a interview. Don't leave anything to chance. And if they leave you a message get back to them ASAP while your resume is still on their desk. When you get a interview, be on time, be prepared, do your research about the company you are interviewing with. You can usually find most everything you need off their company website. Come prepared with extra resumes, helpful if you have to fill out a application. Also have copies of your updated references. It is best to have more than 3. Some companies want professional references including past employers, others want personal references of persons not related to you. Be prepared for both.
Where to find a job? Dig! And keep digging! You may never know where one will show up. In some ways the internet has made job searches easier with a variety of job sites to search. You should probably set up accounts at the large sites like hotjobs and monster which will allow you to post your resume and apply directly to postings Also take a look at sites like indeed.com. They are a search engine of sorts for jobs. They search several jobs sites at once. Saves time from going to each site. Post your resume so employers can find you. ASK! Don't be afraid to let everyone you know that you are looking for a job. Drop a email to anyone who might know someone who might have a job opening. You might be surprised how many people really do want to help you. Network your pants off! If you don't ask no one can help you. Search everyday. Try and send out at least one resume a day if not more. Pick up the early edition of the Sunday paper. Send out 5-10 at a time. And keep sending them even after you have interviews set up. You can easily fall behind two or three weeks if you stop sending resumes in hopes of that job offer coming through. Nothing better than telling someone, "I'm sorry I accepted another position" Apply for every job you are remotely interested in even if you don't think you are qualified. Every job listed always has a laundry list of qualifications and requirements. In a perfect world they would find the perfect person that would match every requirement. But employers know that person doesn't exist and they are looking for someone who closely matches and they feel will be a good fit. At the worst you will never hear from them. At the best they will offer you a job or maybe something different within their company. You can always turn it down. Even if it turns out to be something you really don't want to do, it might help you get by for awhile until a better position comes along. Never be afraid to apply to any job!
Most of all don't give up hope, the right job will happen at the right time. Remember to take care of yourself. Go for a walk, get plenty of rest, do something you enjoy just for yourself. As long as you keep moving in a forward direction, if someone asks you what you have been doing to find a job you can proudly say "this is what I have been doing" Persistence will pay off. Good luck.
Car Insurance Estimate
Shopping around for a car insurance estimate is not something most people look forward to. It is one of the least exciting chores that is required in order to have a car on the road, but it is worth seeking out the most competitive car insurance estimate available. Although getting a car insurance estimate from a number of companies isn’t a desirable task; many people spend far more than they absolutely have to each year on their auto insurance because they simply haven’t taken the time to compare rates and policies with other auto insurance companies. It would be hard to find someone who would walk into an appliance store and decide to spend $200.00 more on a washer that offers the same exact quality and features as the one next to it that costs far less. It doesn’t make too much sense to do the same thing with car insurance.
Most of the time, a car insurance estimate will include collision, liability and comprehensive coverage on a vehicle. Most households have two or more vehicles and every car should be included when seeking out a car insurance estimate. There are a few things that can be done to make getting a car insurance estimate easier and more accurate especially when dealing with more than one car insurance company.
One of the best things to do before looking for a car insurance estimate is to see exactly what the state requirements are as far as what the necessary minimum coverage is in order to have adequate coverage. This is something that might be better to do without the assistance of an insurance agency if possible because their job is to sell insurance and they make more money with the more coverage they are able to sell.
In order to spend less time on the phone when looking for a car insurance estimate, it is a good idea to have a number of items handy including a driver’s license, vehicle identification numbers, make, model and year of each car and even the name and contact information for the company that is financing all vehicles if applicable. There are also a number of factors that can be taken into consideration when seeking a car insurance estimate that may mean additional savings per year. Features on each auto including airbags, auto alarms, anti-lock brakes and other things may mean discounts on auto insurance. Some insurance companies will even offer discounts for having more than one policy with their company as well as insuring multiple cars through with their coverage. Additional discounts may be found through other things like accident-free driving record, defensive driving course incentives and other discounts.
Other circumstances may cost a driver more with certain companies when looking for a car insurance estimate. Men under the age of 25, single drivers, younger drivers under the age of 21, the number of miles driven per day and even the kind of car that is driven can cost a person more money on car insurance when shopping around. The best part about this is that not one car insurance will probably charge the same amount of money for the same coverage so shopping around will prove that there are better choices available.
Most of the time, a car insurance estimate will include collision, liability and comprehensive coverage on a vehicle. Most households have two or more vehicles and every car should be included when seeking out a car insurance estimate. There are a few things that can be done to make getting a car insurance estimate easier and more accurate especially when dealing with more than one car insurance company.
One of the best things to do before looking for a car insurance estimate is to see exactly what the state requirements are as far as what the necessary minimum coverage is in order to have adequate coverage. This is something that might be better to do without the assistance of an insurance agency if possible because their job is to sell insurance and they make more money with the more coverage they are able to sell.
In order to spend less time on the phone when looking for a car insurance estimate, it is a good idea to have a number of items handy including a driver’s license, vehicle identification numbers, make, model and year of each car and even the name and contact information for the company that is financing all vehicles if applicable. There are also a number of factors that can be taken into consideration when seeking a car insurance estimate that may mean additional savings per year. Features on each auto including airbags, auto alarms, anti-lock brakes and other things may mean discounts on auto insurance. Some insurance companies will even offer discounts for having more than one policy with their company as well as insuring multiple cars through with their coverage. Additional discounts may be found through other things like accident-free driving record, defensive driving course incentives and other discounts.
Other circumstances may cost a driver more with certain companies when looking for a car insurance estimate. Men under the age of 25, single drivers, younger drivers under the age of 21, the number of miles driven per day and even the kind of car that is driven can cost a person more money on car insurance when shopping around. The best part about this is that not one car insurance will probably charge the same amount of money for the same coverage so shopping around will prove that there are better choices available.
Auto Insurance Rates
Auto Insurance Rates will vary depending on the insurance agency, your driving record, and the type of insurance you are looking to purchase. I you are looking for affordable car insurance or truck insurance then read on.
There are ways to reduce your premiums without giving up coverage. One of the easiest things to do is get auto insurance rate quotes online. This will allow you to comparative shop stress free.
Raising your deductibles is the easiest way to reduce your rates. The higher the deductible, the lower the premium will be. The deductible is the portion you will have to pay in the event of accident, before your insurance coverage steps in. It’s important not to carry a deductible that’s more than what you are able to pay. Your insurance company will not honor its portion of the claim until you’ve paid your deductible. However, the higher your deductible the lower your premium cost will be, so you need to find a
Always remember to ask your insurance broker for any available discounts. Quite often we forget to ask and they don’t seem to volunteer the information. A clean record on the current policy for a certain period of time, having your homeowner's coverage with the same insurer, taking a defensive driving course, having an accident free driving record, and having an approved anti-theft device will reduce your auto insurance rates.
The type of car you drive can also reduce your rates. Stay away from cars that have a high class rating. Rates vary among the different makes and models of vehicles. The different rates are based on the risk of accident, cost to repair, higher theft rates for a particular model and replacement costs such as with a new vehicle. So be sure your vehicle isn’t going to be in a category that increases your rates too much.
A safe driving record consisting of no accidents and no traffic violations will get you the most substantial discount. Most insurance companies are very good at recognizing good driving habits. These are the drivers they want to insure because their risk is much lower.
If the car is old and not very valuable, comprehensive insurance is probably not worth buying as it can quickly add up to more than you’d ever receive in the event of an accident. You can save up to 20% by eliminating collision insurance. You may want to opt not to carry collision insurance as well which can save you and additional 20%.
Check around to make sure you are getting the best auto rates you can. Online auto insurance shopping has taken the guess work out of buying insurance and you can very quickly see if you are being hosed. So if your insurance is coming due now is the time to start shopping!.
There are ways to reduce your premiums without giving up coverage. One of the easiest things to do is get auto insurance rate quotes online. This will allow you to comparative shop stress free.
Raising your deductibles is the easiest way to reduce your rates. The higher the deductible, the lower the premium will be. The deductible is the portion you will have to pay in the event of accident, before your insurance coverage steps in. It’s important not to carry a deductible that’s more than what you are able to pay. Your insurance company will not honor its portion of the claim until you’ve paid your deductible. However, the higher your deductible the lower your premium cost will be, so you need to find a
Always remember to ask your insurance broker for any available discounts. Quite often we forget to ask and they don’t seem to volunteer the information. A clean record on the current policy for a certain period of time, having your homeowner's coverage with the same insurer, taking a defensive driving course, having an accident free driving record, and having an approved anti-theft device will reduce your auto insurance rates.
The type of car you drive can also reduce your rates. Stay away from cars that have a high class rating. Rates vary among the different makes and models of vehicles. The different rates are based on the risk of accident, cost to repair, higher theft rates for a particular model and replacement costs such as with a new vehicle. So be sure your vehicle isn’t going to be in a category that increases your rates too much.
A safe driving record consisting of no accidents and no traffic violations will get you the most substantial discount. Most insurance companies are very good at recognizing good driving habits. These are the drivers they want to insure because their risk is much lower.
If the car is old and not very valuable, comprehensive insurance is probably not worth buying as it can quickly add up to more than you’d ever receive in the event of an accident. You can save up to 20% by eliminating collision insurance. You may want to opt not to carry collision insurance as well which can save you and additional 20%.
Check around to make sure you are getting the best auto rates you can. Online auto insurance shopping has taken the guess work out of buying insurance and you can very quickly see if you are being hosed. So if your insurance is coming due now is the time to start shopping!.
Tips for Saving Money on Car Insurance
Car insurance is required by all licensed drivers but many of them don’t know how to find the best rates available. Being complacent and purchasing car insurance without carefully investigating your options or maintaining the same car insurance for the remainder of your life could mean that you are paying too much for your car insurance. Comparison shopping, ensuring that you are receiving all the discounts you qualify for and maintaining a clean driving record are just a few of the money saving tips that can save you a fortune on car insurance.
Comparison shopping for car insurance, even after you are already insured, cannot be underestimated. It is critical that you investigate all of your options before choosing an insurance provider to ensure that you are getting the best possible rate on your car insurance. There are so many factors considered in car insurance policies such as where you live, your driving record, your age and the type of car you drive just to name a few. With all of these factors to consider, it is very possible that you will find that there is a car insurance provider who will offer you a considerably lower rate than other providers.
Even after you have secured insurance for your car, it is wise to periodically check the rates that other providers will offer you. Car insurance as well as your circumstances are perpetually changing and you may find that the provider who is willing to offer you the best car insurance rate varies periodically. Many car insurance providers offer a host of discounts to their clients who qualify for these discounts. These discounts can relate to your driving record, safety features of your car, your age or other factors.
These discounts can result in a tremendous cost savings on your car insurance policy but while many insurance providers offer these discounts, they don’t always advertise them. This means that you may have to do research to determine what type of discounts you may qualify to receive. Carefully, review your car insurance policy to determine which discounts you are already receiving and then contact your car insurance provider to inquire about other discounts that may be available. For example if your driving record is devoid of accidents or tickets, you may qualify for a good driver discount.
Also, if your car has certain safety features such as daytime running lights, you may also qualify for car insurance discounts. Your age can also qualify you for certain car insurance discounts. Some insurance providers also offer discounts to those who insure their house with the same company as they insure their car. Taking advantage of this type of discount can save you money on both your car and home insurance. Being aware of the discounts that are available and ensuring that you are receiving these discounts, can save you a great deal of money on your car insurance.
Finally, maintaining a clean driving record is very important to receiving the best available car insurance rate. While it is true that each car insurance provider is unique in the factors that contribute to lower rates, the one factor that is consistent among all providers of car insurance is that a clean driving record is critical to your rate. Although accidents are sometimes unavoidable, it is imperative that you adhere to all traffic regulations and that you drive safely at all times. This will reduce the number of traffic violations that you incur as well as the number of accidents that you cause. Following these tips will help you to maintain a clean driving record that will keep the cost of your car insurance low.
Many drivers lament paying their monthly car insurance bill because they feel as though the insurance isn’t necessary. Although car insurance is a financial burden that seems superfluous, it does pay off if you are ever in a serious car accident that has significant financial ramifications. For this reason, you should never consider allowing your car insurance to lapse and it is recommended that you search diligently to find the best available rate on your car insurance.
Comparison shopping for car insurance, even after you are already insured, cannot be underestimated. It is critical that you investigate all of your options before choosing an insurance provider to ensure that you are getting the best possible rate on your car insurance. There are so many factors considered in car insurance policies such as where you live, your driving record, your age and the type of car you drive just to name a few. With all of these factors to consider, it is very possible that you will find that there is a car insurance provider who will offer you a considerably lower rate than other providers.
Even after you have secured insurance for your car, it is wise to periodically check the rates that other providers will offer you. Car insurance as well as your circumstances are perpetually changing and you may find that the provider who is willing to offer you the best car insurance rate varies periodically. Many car insurance providers offer a host of discounts to their clients who qualify for these discounts. These discounts can relate to your driving record, safety features of your car, your age or other factors.
These discounts can result in a tremendous cost savings on your car insurance policy but while many insurance providers offer these discounts, they don’t always advertise them. This means that you may have to do research to determine what type of discounts you may qualify to receive. Carefully, review your car insurance policy to determine which discounts you are already receiving and then contact your car insurance provider to inquire about other discounts that may be available. For example if your driving record is devoid of accidents or tickets, you may qualify for a good driver discount.
Also, if your car has certain safety features such as daytime running lights, you may also qualify for car insurance discounts. Your age can also qualify you for certain car insurance discounts. Some insurance providers also offer discounts to those who insure their house with the same company as they insure their car. Taking advantage of this type of discount can save you money on both your car and home insurance. Being aware of the discounts that are available and ensuring that you are receiving these discounts, can save you a great deal of money on your car insurance.
Finally, maintaining a clean driving record is very important to receiving the best available car insurance rate. While it is true that each car insurance provider is unique in the factors that contribute to lower rates, the one factor that is consistent among all providers of car insurance is that a clean driving record is critical to your rate. Although accidents are sometimes unavoidable, it is imperative that you adhere to all traffic regulations and that you drive safely at all times. This will reduce the number of traffic violations that you incur as well as the number of accidents that you cause. Following these tips will help you to maintain a clean driving record that will keep the cost of your car insurance low.
Many drivers lament paying their monthly car insurance bill because they feel as though the insurance isn’t necessary. Although car insurance is a financial burden that seems superfluous, it does pay off if you are ever in a serious car accident that has significant financial ramifications. For this reason, you should never consider allowing your car insurance to lapse and it is recommended that you search diligently to find the best available rate on your car insurance.
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