The Insurance Agent’s Guide To Success

The successful insurance agent always stays informed on how he or she can improve themselves both personally and professionally. In these days of fast paced lifestyles and the quickly disappearing face-to-face communication styles of doing business, the professional has to adapt. First, your personal good health is an important component to the success of your business. Second, I’ll present some proven business and customer satisfaction strategies that will guarantee you a thriving business and continued success for the future.

Taking care of your personal health is very often overlooked. The daily life of the professional is fraught with burnout and responsibilities. Many of us juggle on a daily basis the demands of family, parenting and other essential duties. Even the regular duties of getting the dog to the vet, grocery shopping and paying the bills, to name a few, can become dreaded tasks. Eventually, we’re going to get burned out and possibly ill. There are strategies to keeping a healthy mind and body.

Start having a social life outside of work. Just like your daily “to-do” lists at work, start planning a social “to-do” list. In other words, don’t forget to have some fun. Listen to your favorite music for a few minutes each day. Take in a concert or musical affair. Go out to dinner occasionally.

Exercise. Start going to the gym or fitness club. A healthy physical body will give the hard working professional the energy needed to be both highly productive and active socially. Go for a short walk in your neighborhood. Get some fresh air and breath.

Manage your time wisely. Poor time management can be costly. Missing appointments or being late NEVER looks good. The client’s time is just as valuable as yours.

Aside from these tips to stay healthy physically, don’t forget your mental health. Be sure to take regular breaks away from your desk, the phone, the laptop or anything else keeping you chained to your desk.

So, you might ask, what does this mean for me? Many studies have shown that productivity levels significantly decrease for the professional that doesn’t take time for fun, a social life, rest and exercise. If you become both physically and mentally weary, your customers are going to notice.

Many professionals are keenly aware of the saying “presentation is everything”. When you present yourself to a potential client, be it on the phone or in person, it is important to be at your best. I don’t know about you but I would definitely re-think associating with any professional that was unkempt in appearance or tired and sluggish in communications with me. It is very difficult to convince your potential clients to accept your advice to stay healthy when you appear physically ill yourself. Be a role model of what you’re trying to sell. Now that you have some vital information to help you stay personally healthy, let’s examine some strategies to keep your business thriving and profitable.

Continuing Education

Many professional associations offer continuing education workshops, seminars or classes. If you are not a member of a group or organization in your field, then look into classes at an institution of higher learning. It is imperative that you keep up to date on the latest news or information regarding the type of insurance you provide. Don’t forget—classes in human psychology can go a long way in providing you an advantage to understanding your customers better.

Network! Network! Network! Experienced agents know that aligning themselves with a company that will appreciate their skills is a must. Building a customer base with a reliable and strong company that can bring the clients to you is valuable. Your reputation as an experienced, reliant and self-assured insurance agent will guarantee a successful business and many good leads for clients.

The Psychology Of It All

Building a relationship with your customer(s) is integral to your success as an insurance professional. People want quality service. They rely on you to guide them into making the best decisions around their insurance coverage needs. If they don’t trust that you know what you are doing (remember the continuing education and how you present yourself?), they will not buy anything you have to offer. How can we gain their trust?

First and foremost, if you have been informed of a potential client looking for insurance, contact them immediately. As mentioned earlier, people want quality service. A quickly returned phone call sets a good first impression. This action alone tells your customer you care about their needs and are interested in their inquiry.

Next, follow through with what you promised in a timely manner. For example, if you stated you would get back to them in 48 hours on a matter, then return your call within that time.

Be sure you are giving them the appropriate and best advice you can. Obviously, I can’t stress the “educational” component enough in this article. None of us knows the answer to everything and it is acceptable to say I don’t know to a client’s question. Let them know that you will find the answer.

A healthy, informed and experienced insurance agent that is genuinely attentive to their client’s best interests and communicates that effectively will have a successful business.

Fraud. Beware Of The Fraudsters

According to Which, the consumer watchdog, about 5 million of us have been targeted by fraudsters and have lost money as a result. Fraudsters are clearly finding rich pickings!

So what are the most widespread scams and how do you steer clear of them? Here are six scams to be aware of.

You've won a lottery prize

Here you receive a letter, or e-mail telling you that you've won a big prize on some lottery you've never heard of. All you have to do is pay an administration fee to claim your prize. The alternative approach is to get you to call a premium phone number to claim.

Guess what – there's no big win and there never was! This scam catches out tens of thousands of people every week.

The “My money is frozen in an overseas account” scam.

It normally starts with an e mail giving a long and involved sob story about someone or some business, which has a very large amount of money tied up in an account and, through the most unfortunate of circumstances, they cannot get the money out. To do so, they need a UK bank account to have the money paid into. Of course, if you help them they will give you a big slice of the money. And the money is always held in a some obscure country, often in Africa.

Another really common fraud. It starts with an e-mail giving a long sob story about someone or some business, which has a large amount of money, often $ millions, tied up in a overseas bank account. Through the most unfortunate circumstances, the money is frozen and they can't withdraw the money. To do so, they must have a UK bank account to pay the money into. Naturally, if you help them, they'll give you a good slice of the money and you'll be rich!

Invariably the money is always held in a some obscure country, often in Africa. Then, once you've taken the bait, they come up with stage two of the scam. They say that for the money to be transferred to your account, you need to send a payment, often thousands, to cover the administration or legal costs of facilitating the money transfer. The actual details always change, but the bones of the story remain remarkably consistent.

Will the payment arrive? Will you ever get your money back? Of course not! In fact, after you've made a payment, they'll ask for more! The up-front money has to be increased and, unless the extra is sent, the money you've already sent will be lost. It puts you in a classic catch 22 situation. But not really - either way, you'll never see any of your money again!

Millions receive these e-mails every month, so if you get one, delete it.

Boiler Room scams

This is a hard-selling technique often targeting middle aged professional people with some but limited investment experience. The fraudsters often trace their targets by searching for small shareholders in the share registers of UK quoted companies.

They then contact their victims by phone or e-mail to persuade them to buy shares in obscure companies on the promise of great returns - all turn out to be worthless. Sometimes they even try to sell shares in companies that don't even exist. Similar versions of the same basic scam involve currency investment, futures or stock options.

If you receive an approach from an organisation trying to sell you investments, ask for their Financial Services Authority (FSA) registration number. Under the UK's regulations everyone promoting investments must be regulated by the FSA. If they won't or can't supply the number, put the phone down. If they do give you a registration number, don't agree to anything until you've phoned the FSA's help line. There you can check out that the firm is indeed genuine. (call 0845 606 1234). Remember, never commit yourself until you are absolutely sure that the company is reputable. 9 times out of 10 it won't be – you have been warned!

Credit Card Fraud

The introduction of PIN numbers has greatly reduced credit card fraud. But purchases through the Internet use the “card holder not present” system, not PIN numbers.

This means that if a fraudster can get hold of your credit card details he'll happily use it to buy on the Internet. Then he fades into the mist with the spoils, often to sell them for cash.

To reduce your chances of being caught by credit card fraud, you should sign up to “Verified by Visa” or “Mastercard Secure Code”. You'll find further advice about credit card fraud on www.getsafeonline.org and www.cardwatch.org.uk.

Phishing

Fraudsters are also highly active on the Internet persuading bank account holders to disclose their banking details, security codes and PIN numbers.

The fraud kicks off with a bogus e-mail apparently from your Bank. The e-mail always explains that for security reasons, it needs you to confirm your account details. Often it says that unless you complete the security confirmation, your account will be frozen. But security is the least of their concerns – once the fraudsters have your bank details, they'll simply empty your account!

You should be aware that Banks never ask you to send them confidential security details by e-mail or by any other method. If the Bank does need to confirm some confidential information, they'll usually ask you to visit a Branch.

Identity Theft

Every four minutes an identity theft takes place in the UK.

If fraudsters can get your personal details, they can apply for credit and open bank accounts in your name. This inexorably leaves a trail of criminal activity and debt - all conducted in your name.

All the fraudster needs is a utility bill in your name and a credit card or bank statement. So watch out for unauthorised bin men! Better still, shred any personal letters, bills and documents you need to dispose of.

Forex And Commodities Futures And Options. What To Know Before You Trade.

The popularity of trading futures and options has been growly rapidly for several years. The ease of accessing constantly updated data online has prompted an increased fever by day traders to attempt to be successful and make money in this risky investment area. Individuals can now trade these markets with the same ease and speed as large companies.

Trading forex ( foreign exchange ) and commodity futures and options is not for everyone. It is a complex and risky business that experiences volatile price and value swings. Before you invest any money in forex, commodities futures or option contracts, you should:

• Consider your financial trading experience, goals, and financial resources and know how much you can afford to lose above and beyond your initial payment.

• Understand commodity futures and option contracts and your obligations before commiting your finances into trade contracts.

• Understand your risk exposure and aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.

• Know who to contact if you have a problem or question.

• Ask more questions and gather more information before you open an account.

Commodity futures and option contracts:

A futures contract is a legally binding agreement between two parties to buy or sell a specific financial product or commodity in the future, on a designated exchange, for a specific quantity of a commodity at a specific price. The buyer and seller of a futures contract will agree now on a price for a product to be delivered, or paid, for at a specifically set date and time in the future, which is known as the "settlement date." Actual delivery of the commodity can take place in fulfillment of the contract, but most futures contracts are actually closed out or "offset" prior to delivery.

An option on a commodity futures contract is a legally binding agreement between two parties that gives the buyer, who pays a market determined price known as a "premium," the right (but not the obligation), within a specific time period, to exercise his option. Exercise of the option will result in the person being deemed to have entered into a futures contract at a specified price known as the "strike price." In some cases, an option may confer the right to buy or sell the underlying asset directly, and these options are known as options on the physical asset.

In the United States, an individual, cannot trade futures contracts and options on futures contracts directly on an exchange. A person or firm must trade on your behalf. People and firms who trade on your behalf as a customer generally must be registered with the Commodity Futures Trading Commission.

Two general categories of trading accounts:

• Individual Account. In an individual account, trading is done only for you. An individual account may be setup as either a "non-discretionary" or a "discretionary" account. A "non-discretionary" account, means that you will make all of the trading decisions and the broker may not execute any transactions without your prior approval and consent. A "discretionary" individual account, means that you give permission to the broker firm carrying your account or some third party to make trading decisions on your behalf.

You may open an individual account with a registered Futures Commission Merchant or through an Introducing Broker. An Introducing Broker may accept your orders and transmit them for execution to a Futures Commission Merchant with which the Introducing Broker has a relationship. You deposit funds directly with the Futures Commission Merchant. In an individual discretionary account, you grant power-of-attorney to a Futures Commission Merchant, an Introducing Broker, one of their Associated Persons, or a Commodity Trading Advisor to make trading decisions on your behalf.

Commodity Pool. You may also trade commodities through a "commodity pool." This means you are purchasing a share or interest in the pool, and trades are executed for the pool as a whole, rather than for the individuals who have interests in the pool. Pool participants share in any gains or losses.

If you have a dispute or a problem arises out of your commodity futures or option account, first try to resolve the problem with your broker. If that is not successful, then you have options for resolving disputes: (1) the CFTC Reparations program; (2) industry sponsored arbitration; or (3) court litigation. In selecting a particular approach, you may want to consider the cost, length of time involved and whether or not the assistance of an attorney is required. More information on dispute resolution is available from the CFTC's Office of Proceedings (202-418-5250).

A Checklist "Before You Trade":

Make sure you have:

• Clearly identified your financial goals, including the amount of risk and loss you can handle?
• Determined how much assistance and help you may want from a trading advisor in making trading decisions?
• Checked the registration status and disciplinary history of the advisor or pool you select with the National Futures Association?
• Received and thoroughly reviewed the disclosure document -- before you open an account?
• Clearly understood the disclosure document, including the statement of fees, the potential for loss, your right to withdraw your funds and the "break-even analysis?"

Make sure you ask questions for anything that you do not understand. Remember, it is your money, make sure you know where it is going.

An Analysis Of The Journal Register Company (JRC)

Let me begin with some of the eye – catching metrics that might lead an investor to consider purchasing shares of the Journal Register Company (JRC). This newspaper company has a price – to – earnings ratio of 11.3, a price – to – sales ratio of 0.93, a 5 year average return on capital of 17.6%, and a five year average pre-tax profit margin of 27.4%.

Now, for the bad news. The Journal Register Company has an enterprise value – to – EBITDA ratio of 9.07 and an enterprise value – to – revenue ratio of 2.24. Obviously, this company is carrying a lot of debt. So, perhaps the multiples on the common stock price are deceptive.

Before I go any further, let me take a moment to point out the fact that, in the case of Journal Register, the shares you buy are literally common stock; that is, the security is common to all owners. This is a rarity in the publishing business, where families often maintain control of their newspapers via ownership of a class of stock with (much) greater voting rights.

So, how should an investor value the Journal Register Company? Should he use JRC’s market cap or its enterprise value? I have usually encouraged a full and careful consideration of all debt when making any investment. In the case of JRC, such debt makes up a large portion of the company’s enterprise value. Is it really best to lump the debt and equity together to determine the true price Journal Register is selling for?

I think it is.

There are situations in which the leverage inherent in a debt – heavy capital structure works to the benefit of the common stock holder. The most obvious example is a highly leveraged, growing company selling at a bargain price. The increase in earnings is amplified by the fixed debt, because the debt creates a sort of break even point, much like a traditional fixed cost. Just as greater production can give tremendous benefits to the owner of a large plant, or greater sales can give tremendous benefits to the owner of a large store, greater pre-tax earnings before interest charges can give tremendous benefits to the owners of common stock.

Does this scenario apply to Journal Register? Perhaps, but I don’t think so. Long – term, the economics of the newspaper business will likely be quite poor. Even for Journal Register’s properties, I am projecting a fall in circulation with no end in sight. Some may disagree with this assessment. However, I believe they are being overly optimistic. Past performance is only a good estimate of future performance insofar as the future resembles the past. I believe the future of newspaper publishing will be sufficiently different from the past to render any estimate of Journal Register’s future performance based solely on its past performance quite inaccurate. So, for the most part, the leverage inherent to Journal Register’s capital structure will likely be working against the long – term investor.

Economically, Journal Register’s assets are encumbered. The legal reality is immaterial to the shareholder. The company can not sell of its assets without either paying off its debt or maintaining control over sufficient free cash flow to meet its obligations. Today, money is cheap. It may not be so cheap in the future. Journal Register is insulated from interest rate changes on its current borrowings. However, the company can not guarantee that, if it were refinance its debt as it came due, interest charges would remain as low as they are today. This is true for every business, but it takes on greater importance in the case of the Journal Register Company, because of the company’s debt heavy capital structure, today’s historically low interest rates, and the likely future trend of newspaper circulation.

Together, these three factors form a kind of perfect storm. But, it is important that the facts be assessed calmly. There is no need for exaggeration. The Journal Register Company is not in any grave peril. There would be no risk of insolvency, if the company did not borrow further, and committed its substantial free cash flow to paying down its debt. A look to the recent past suggests the company is unlikely to follow such a conservative course. That is not necessarily a bad thing.

There may be value in future acquisitions. In fact, the current climate is perfect for making acquisitions that truly add value to the company. But, other companies with operations capable of regularly generating lots of free cash flow have sometimes found themselves in financial difficulties, because of an overly ambitious capital structure and reduced profitability within their chosen industry. I am not suggesting the Journal Register Company will find itself in such a position. If it is well – managed, there is no reason for Journal Register to face such peril. But, it is rarely wise to assume a company will be well – managed.

The problem with the Journal Register Company as an investment is not the risk created by its debt. It is easy to overstate that risk. The problem is the price. The Journal Register Company is not as cheap as it appears to be. Newspapers will not be going the way of the Dodo anytime soon, but they are already in decline. This decline will not be reversed.

Investors need to remember the importance of growth. Newspapers are not growing. There is no need to chase stocks with lofty multiples merely to acquire some short – lived hyper growth. But, there is a need to avoid companies that will not grow their earnings. There are many stocks trading at higher P/E ratios than JRC that are, in fact, better bargains.

Playing Both Directions for Better Trades

When I first began trading back in the '90's, I was very fortunate. I had begun trading at  time when the market was headed almost straight up. My first strategy was writing covered  calls which blended with a rising market in such a way that I almost never lost. Think about  it ... When most stocks are rising and the options are rich with premium, it's very easy to  buy a stock at $9, sell a $10 call for $1.50, then just sit back and allow your stock to be  called away from you for some very nice profits, indeed!

Now, that was a good thing, because I had burned my bridges I HAD to make a go of it! As I  reflect on those times, I'm really thankful for my very good run of LUCK! This could have  turned out disastrously! The perspective of time (not to mention some unforgettable  experiences) has allowed me to learn that no market, good or bad lasts forever and the only  constant is change. Under such I conditions, I learned to 'roll with the flow', adjusting my  strategies to match market conditions

Changing Markets

One of my greatest concerns has been how to deal with a changing market insofar as the  strategies are concerned. Which ones work in a rising market ... What do you choose when the  market turns down? I'm sure there are several books in THAT area, so I want to focus on  something we trade in the AfterHours Trading Lab. If you're not familiar with that, understand  that in the evenings, I meet with other traders and we set up trades we will put into play the  next morning on their way to work. The AfterHours Lab concentrates on both medium term (30-90  days) and long term (over 90 days) trades. These trades provide stability for our daily cash  flow (from the trades done in the morning Short Term Trading Lab), and Net Worth Growth, our  "getting rich' account, respectively. I want to look for a moment at the medium term trades.

Medium Term Trades

As I explained earlier, my favorite medium term strategy has long been the covered call. This  strategy enabled me to manage my fiscal affairs by setting up trades designed specifically to  'mature' at a predetermined date 30, 60 or 90 days out into the future, giving me cash I could  count on to help overcome any slow periods of daily cash flow. As the premium began to dry up,  I found writing covered calls more and more difficult. I began to look specifically for those  stocks which were volatile, yet more or less predictable which could be used to temporarily  replace covered calls as my medium term strategy of choice. Let me share with you what I've  started to do.

Stock Movement

Let's look for a stock which moves a lot. I have my Chart Navigator system provide this by  automatically calculating the average daily range of stock for the last month or so. I will  then look only at the stocks which have at least $1.50 or more movement each day. In the  trading labs, we've become so familiar with this concept of ADR that we find it 2nd nature to  just toss the ones with small daily movements on most of our strategies. But its not enough to  simply recognize stocks that move a lot. You have to have some idea of WHICH way they're most  likely to move and THAT is the 'fly in the ointment', especially in an uncertain market! So we  further narrow this search of high volatility stock to only those stocks which move within a  somewhat predictable range, much as a 'channeling' stock. Here, for example, you see a stock  trading between $32 and $42, presently resting in the middle of the channel. The average daily  movement of the stock is around $2.40 or so.


Given these facts, let's look for a few more characteristics. First, notice that the stock has  remained close to or within this range for several months. Additionally, each 'oscillation  takes about a month, moving from the top of the channel to the bottom bottom. Bottom line,  this stock is moving a lot but going basically sideways. Now ... let's trade this one ..  medium term. If we can do that regularly, then perhaps we can stop worrying about the  availability of covered call trades!

The Trade

Before you trade a stock, it's generally a good idea to know which way it's going. That's the  challenge! Unless you're in to predicting the future (crystal ball) or using technicals  (highly detailed crystal ball) or have highly placed friends within the company to help  (illegal), you're just guessing! Maybe up... Maybe down ... We KNOW it moves a lot, so it's  probably NOT going to be the same price tomorrow! Hmm... It moves a lot - it MIGHT go up - it  MIGHT go down - it probably WON'T go sideways from $35 ... Eureka! That's it! Trade it BOTH up  AND down. Those are the only two ways it's likely to go (remember the high daily movement).

We know we can't buy the stock AND short the stock (at least not in the same account), so why  not buy a put AND a call?! In this case we might consider buying the $35 put and the $35 call.  Typically referred to as a 'long straddle', the position allows us to profit no matter WHICH  way the stock moves, usually dumping the losing side of the straddle when the movement  direction becomes evident. Not a new idea by any means, the straddle can provide an  opportunity to remove the 'crystal ball' requirement from your trading.

Five Steps to Trading for a Living

For the past five years my sole source of income has been profits made from trading on the forex market.  Over that time period, many people, perhaps somewhat envious of my ability to earn money from home without having to report to a boss, have asked me what it takes to trade for a living.  How can one arrive at a point where one feels confident enough to leave ones regular employment, strike off on ones own with no guarantee of a regular paycheck, and put what might conceivably be ones entire savings up to that point at risk in the markets?

While I unfortunately cant actually give you confidence in your ability to make it on your own, nor the stomach to risk your hard earned savings, I can tell you the practical steps that I took to get where I am today.  These steps do not include the obvious ¨learn of the existence of the forex market¨, as presumably you already know something about forex trading, or you wouldnt be reading this article.
Furthermore, while these steps have been applicable to trading the forex market in my case, one could easily apply the same principles to becoming a professional trader in the equities markets, derivative markets, etc.

Step 1)  Start saving your money.  To trade professionally you need a bankroll, and one that is large enough to withstand the ups and downs that are a natural part of trading.  For me, this was easy.  I had been putting money aside ever since I started working.  Those like me that have been raised to understand and appreciate the value of saving, will accomplish this quite naturally.  However, if you are a habitual spender and are accustomed to living paycheck to paycheck without putting anything extra aside, be prepared to expend some serious effort curbing your habits and learning to save instead of spend.  How much money will you need?  Unfortunately I cant answer that specifically because it will depend on the trading strategy that you use, the amount of leverage you
plan on trading with, and the amount of money that you need to take out in profits.  You should count on having a bare minimum though, of a full six months salary saved up before beginning full time trading.  One years salary would be still better.  Keep in mind that the larger your bankroll, the more money you can earn without risking an unnecessarily large percentage of your bankroll.

Step 2)  Get an education.  You cant start trading before you know something about the market you are trading in.  This education does not have to be formal (as in University classes), and you do not have to understand economic forces as well as Alan Greenspan prior to getting started.  You should, however, have a basic understanding of why the market that you are trading in exists, how buying and selling on that market works, and the strategy that you are going to employ to take your profits out of the market.  There are a lot of totally free resources on the internet that are worth your time to read (and there are a lot of opinions and ideas that are NOT worth your time, but reading some of those that are not worthwhile is part of the process of developing
discernment about what is and is not a good resource). 
There are also some inexpensive trading courses on the internet that are useful.  Part of the education process is coming up with a trading strategy that you are comfortable with, as well as a money management strategy to ensure the long term viability of the trading strategy.  There are many good trading strategies out there, but regardless of which one you choose, you must understand that the traders that are successful cut their losses early and let their winning trades run.  This can be somewhat more difficult than it sounds, but is really the key to making money trading.

Step 3)  Sign up for a demo trading account and start practicing while you are not at your regular job (or, if you have free time and internet access at your job, WHILE you are at your regular job).  We list some good forex brokers at forex-rates, so if you are planning to trade currencies, be sure and sign up for a demo account with one of the listed brokers. In order to get a real feel for the trading strategy that you have chosen, you will have to do a lot of practice, so take your time with this step.  Dont start trading with real money until you have an actual
history of successful demo trading

Step 4)  If you are making money trading on paper and are comfortable with your trading strategy, go ahead and get started trading for real on a part time basis.  Dont include all of your savings as part of your trading bankroll yet.  Start slowly and gain a comfort level.  As your confidence builds, move money from your savings to increase the size of your bankroll.

Step 5)  When you can estimate that your average gains from real trading (from step 4) are at a level where, if you were to trade full time using your current bankroll, you would be making profits that slightly exceed your current employment salary, you are ready to quit your job and trade full time.  Remember, you want your trading profits to exceed your present salary.  This will give you the opportunity to maintain your current financial level, but at the same time continue to increase your trading bankroll, which will enable you to earn more and more money as the size of your available funds grows larger.

It is important to have patience with yourself at each of the steps mentioned.  Maintain emotional equanimity and understand that fear and greed are a traders most dangerous nemesis.  If you can keep these emotions under control and maintain the discipline established while following these steps, you can look forward to making it as a professional trader.

asic Financial Information Tips (Part I)

Savings.  Pay yourself first. Start now stashing 10% of your income in an “Emergency” savings. Don’t use it for anything but real emergencies. Keep a “For Sure” savings account for yearly expenses you know are coming and you can estimate (e.g. Christmas, insurance, taxes, etc.). Also have a “Buy Stuff” account. If you do, you’ll be able to avoid many financial disasters which will face you, and you can avoid borrowing money from high-rate lenders.

Borrowing.  Don’t borrow money unless you are willing and able to pay it back. Failure to pay debts – on time – causes severe financial, emotional, and family problems. Experts recommend you don’t borrow for wants, only for needs, or for things that increase in value. Many lenders will loan you money you can’t afford to pay back, especially high-rate lenders.

Co-signing.  Don’t co-sign on a loan unless you are willing and able to pay it back. Often, co-signers end up paying off loans they are unprepared for, and financial hardships follow. Numerous co-signors now have negative credit ratings because a primary borrower paid late. Many lenders do not notify the co-signor before reporting delinquencies or repossessions to the credit bureau.

Compare.  Before you decide who to borrow from, compare! Find out who is offering the best deal at that time – look for the loan with the lowest rate (APR).

APR.  The Annual Percentage Rate (APR). It is the standard rate, so we may compare the cost of borrowing. It is the cost of credit expressed as a yearly rate. When you borrow, always beat 13% APR (consider “13” to be unlucky when it comes to borrowing). Some have been illegally stating other rates such as weekly or monthly rates. Compare APR to APR. If you pay your bills on time, and you aren’t over-extended, you can nearly always find loans or financing arrangements at rates lower than 13%. Beware though, because beating 13% does not always mean you are getting a good deal. For instance: the difference in total interest paid on an 11% versus an 8% 30-year, $100,000 mortgage loan is $64,283 (assuming all payments are made as agreed).

Consolidation Loans.  A consolidation loan can result in great savings to borrowers if the new interest rate is significantly lower, and if you don’t run-up debt similar to what was just consolidated. But beware, because consolidation loans usually result in substantially more money out of your pocket into the lenders’. For instance, mortgage loans usually involve closing costs. They increase the total debt. Many refinances involve reducing the monthly payment, but increasing the length of payback, which substantially increases the total interest paid. Borrowers, who refinance unsecured debt (e.g. credit cards) into a home mortgage, also increase their risk of losing their homes. Also, remember to keep all of your payments current until the old debt is paid off. Too many people have damaged credit ratings, and are in bad financial condition because they counted on money which didn’t come when they expected it. Expect delays when applying for loans, especially consolidation loans. Don’t spend money before you get it.

Desperation.  Don’t get desperate for money. The more desperate you are, the less likely you are to get a good loan.

Auto insurance.  Keep your auto insurance current. If you fail to keep your insurance up-to-date, you could end up making loan payments for years after your car has been totaled.