A Walkthrough of Buying Commercial Loans

If you’ve never had to borrow money for your business, you may find yourself frustrated at what it takes to be approved for and receive financing. No matter what kind of commercial loan you need, the process is quite different from getting a personal loan or line of credit. Learn more about the process of buying commercial loans to prepare yourself and your business for success.

The Basics

The first thing you need to know about commercial loans is that a great deal of commercial lenders are adverse to risk, which is why they usually charge borrowers more in interest. You also shouldn’t be surprised if your business and business property are placed under a microscope throughout the course of securing funding. Be sure your commercial property is ready to be put up as collateral for your loan.

How Much Should You Borrow?

While trying to decide how much you should borrow, it’s best that you determine how much you need to meet your current business needs or how much you need to leverage your commercial real estate investments. You should also have anywhere between 20 and 25% for your down payment, but there are some non-traditional loans that allow for a smaller down payment.

Paperwork

Before approving you for a loan, commercial lenders often need between three and five years’ worth of:

  • Income tax returns
  • Asset statements
  • Leases
  • Financial statements
  • Your personal financial records

Ask potential lenders what specific documentation they need and how long the loan approval and funding process will take.

Receiving Your Funding

Once you turn in your paperwork and start the loan approval process, expect to wait several weeks before you receive a commitment letter. You should also know there’s a chance the bank’s credit committee may veto your loan even after you’ve received your letter, so it’s always best to have a backup plan.

Before you sign papers for a commercial loan, make sure you understand exactly what you’re agreeing to, ask if there are any hidden costs, and learn the loan’s conditions and covenants. Most important of all, give yourself plenty of time to secure funding.

How Do You Budget For Spontaneity?

Unexpected events will happen in life and sometimes you can be prepared and sometimes you need to roll with the punches. If there is a large unexpected event we’re covered by an emergency fund (to which I am thankful for and sleep better at night because of it) but sometimes you’ll end up in a non-budgeted for situation and you need to make some decisions. This past weekend was one of these situations for us.

There is a well-known farmer’s market about an hour away from us. After some discussion with my in-laws, it was decided we all wanted to make the trek up this weekend and check things out. We love little road trips with them and it was an excuse to get out of the city for the day.

Given that it was quasi-impromptu, I didn’t have time to budget anything for it but we (as a family) really wanted to go and experience it all together for the day so choices had to be made. Some people have separate categories within their budget to deal with events just as such, we do not. Nor will I create one anytime soon. Events like this happen so infrequently I’m not interested in tying money up every month, we need as much money as possible funneling into debt repayment! We have more of a roll-with-the-punches sort of budgeting system. If we really want something we figure it out at the time.

Sunday morning we piled into our vehicles and caravanned up to the market. We had a lot of fun walking through and picking up a few yummy treats to take home. We all had lunch at the market and it was d-e-l-i-c-i-o-u-s. None of this matters though since we didn’t budget a single penny for any of it. So how can we deal with these unexpected expenditures?

Earn More

This is likely the easiest for us. One thing I do like about an hourly rate vs. salary is that it’s easy to work a bit more for a larger paycheque. This goes for both of us. If we really want something (an unbudgeted daytrip or new patio furniture-both of which we’ve done recently) we can earn more at our 9-5’s to offset the increased cost.

Budget ”better”

I admit that we’re loose budgeters. We’re more money trackers than strict budgeters but it works for us. I could throw an extra category in the spreadsheet to set aside a bit more every week but quite honestly I don’t want to. That doesn’t mean it won’t work for someone else though. I think Cat calls the ”Gremlins” :)

Cut, cut, cut

This is my least favorite option but we always have the option of cutting from other categories. Our self-imposed ”minimum” debt payment is much more than the actual minimum so if we had to ”take” from here we could though we haven’t yet and would rather not. I’m also stashing a little extra away for our getaway next year, a target we’re actually ahead of saving schedule on thanks to a tax refund. There are overestimated categories in our budget that we could pull if we decided something was ”worth it”.

Luckily this little trip didn’t take too much of a dent out of our budget- a little added gas, the cost of some farmers market treats and a cheap but oh-so-delicious lunch. All of it 100% worth it!

How do you deal with unexpected or spontaneous un-budgeted things in your life?

Ways You Can Be Held Accountable for Your Savings

Planning to save money is a great initiative. The problem is that planning is the easy part; sticking to your budget and saving money consistently over time is a lot more difficult. While some people have an inherent ability to strive confidently towards their financial goals without any external support, the majority of us aren’t quite so self-motivated. As much as we tell ourselves how important it is to put money away, we still over-spend. Though we scold ourselves for purchasing those unnecessary items, we still do it. If this sounds like you, it may be time to look for other ways to be held accountable for your savings. Here are some ideas.

Friends and Family

Do you have a family member or friend you trust enough to share your financial circumstances with? If so, this person could act as a great motivator to help you keep on track with your savings. Share your goals and hopes with them and ask them to regularly check in to ask how you’re progressing with it all. Simply knowing someone else is emotionally invested in your saving success will help motivate you to take it seriously and avoid lapses. Encourage your trusted person to react harshly if you do stray from your savings; their sympathy isn’t going to do your bank balance any favours.

Financial Professionals

Having someone on your side who really knows their stuff when it comes to finances is hugely beneficial. There are many agencies and institutes which can provide you with one-on-one coaching and useful resources to help you stay accountable with your savings. Experts from companies like Debt Rescue are especially helpful if you are really struggling to make regular repayments and are falling behind with your debts. If you have big investments or loans you’re aiming to save up for, it can also be extremely advantageous to consult regularly with a contact from your bank. Even the occasional meeting or phone call with your current or future lender/financer can give you the reminder you need to stay focused on your savings.

Limits and Accounts

If credit card spending is the biggest hurdle to overcome in reaching your savings goals, it might be a good idea to call your bank and lower your limit. Knowing you have less money to draw on will help you make the right decisions when it comes to frivolous spending.

Similarly, you might want to consider opening a savings account that has restrictions on when you can access your funds (and how much you can withdraw). Not only will this help to curb your spending sprees, but it will also likely come with an attractive interest rate to help you achieve financial milestones faster.

Combining any or all three of the above tips with some of your own determination will make it easier for you to stick to the path of substantial saving without straying – at least, without straying too often. In the end, though, the main person you’ll be held accountable by is your future self; think about the lifestyle you envision for yourself in the coming years and you’ll find the motivation you need to stick to your budget.

Would You Marry Someone With A Lot of Debt?

weddingdressYesterday a patient of mine came in to see me who I haven’t seen in 18 months. She is one of my favorites so I was excited to have the time to catch up a little. When she mentioned she was moving to the UK at the end of the year to do a short term work term over there I asked if her boyfriend was going with her.

There was no longer a boyfriend. Opps.

As long as I’ve known her she was vomit-worthy, head-over-heels in love with this dude so I was a little taken aback when she told me they split. She explained that while they were dating (four years) he managed to accumulate almost $40,000 in debt from pursuing his Master’s degree (she didn’t say what in), and once he finished he had a hard time finding work.

According to her, she couldn’t be with a man long-term, and eventually marry, who had debt. Plain and simple. If he wasn’t working in his field and paying off his debt before they wed, she simply couldn’t be with him.

{Let’s assume there really was nothing else wrong in this relationship, because there likely was, and run with what she so point-blankly said to me. She refused to marry a man who had debt.}

Everyone is individual, I get that, but debt from pursuing higher education is no-go? Really?!

I would totally understand if she got spooked because she found out he racked up 40k in credit card debt from frivolous spending and uncontrolled gambling, but he didn’t. It was debt he took on for education. Yes, debt is debt, but how one accumulates it should be taken into consideration shouldn’t it?

I came into our marriage with a TON of debt. Mike had very little before he married my deficit bank account. Since we’ve been together since we were 16 my debt was never a secret, he knew every penny I took on when it happened, so transparency was never an issue with us. I don’t think he ever considered not marrying me because of this debtload though.

We were in love (still are!) and wanted to get married. We’re proponents of 100% combined finances so our money goes towards our life and goals. One of those goals being paying debt off-together (though I’m not suggesting method this works for all couples).

Though Mike and I are pretty much even in terms of income there were times it was lopsided one way or the other but we still never thought about it as more or less per person. It was total coming in for our household. If Mike made 110k per year and I managed the other 20k it wouldn’t matter to us. This mentality from the get-go has made our lives much easier. I don’t think I realize or appreciate how many arguments we’ve managed to avoid in our marriage because of this.

While I could pay this debt off on my own if I needed to, working towards such a huge goal with my spouse is sort of nice. Though I was the one who took the debt on, we both reap the benefits of my well-paying job- possible because of this debt and what it signifies (two university degrees).

When it comes to relationships and bringing debt into the equation I really think it needs to be looked at as an individual basis and not a black and white scenario as my patient was making it out to me during our conversation but everyone is different… How about you, would you/have you marry someone with a lot of debt?

How to Graduate Debt Free-For Real!

Source: Free Digital Photos

Source: Free Digital Photos

As someone who finished university with a mountain of debt, it’s funny for me to discuss such a topic but it can be argued that graduating with debt makes it clear to see what I could have done to avoid it.

First, I do believe it is possible to graduate from post secondary debt free (without help from your parents!). Though I didn’t believe this for a second when the responsibility was on me, I now know I could have (easily) avoided a massive amount of the debt I’m currently carrying. Not only could I have avoided a bunch of debt, I could have still maintained a social life and time for my studies. I know this because I was once in the position to do so but ignored it.

Do well in school.

The easiest way to get financial help is to do well in school and be competitive to get bursaries and scholarships. Though I had a few scholarships, I had the mentality that unless it was enough to pay for ”it all” it was useless. The reality is that every few hundred dollars helps and is money you won’t have to pay back so apply, apply, APPLY!

Get a job.

Obviously if you’re going to save for post secondary getting a job would be the first step. Assuming you get a job when you turn 16, that gives you two full years of saving ability before you start post secondary. Had I saved every penny I earned from the time I was 16 until the day I started university (working 10-20 hours per week while in school and 25-30hr per week during summer and breaks) I could have easily had enough for my first year of university (books, tuition and transit). Even if I had saved 50% of what I earned I would have had enough for my books and probably one semester of school. With a budget it’s possible. Don’t blow your paycheque, save a minimum of half for school (ideally more) and you’ll thank yourself.

Work hard in the summer.

Though I was tempted to drop life and hang at the beach all day in the summer I didn’t. I would always work more during the summer months picking up extra shifts at my job working in a pharmacy and look for more opportunities to get a second job. Because my primary job had really inconsistent shift work (shifts ranged anywhere between 9am-10pm, sometimes a full 13 hour shift) it made getting a second job hard but not impossible. One summer I was able to help a new doctor in town and nanny for her as her family got settled in and she adapted to the new ER with two young kids. Her erratic schedule worked fine with my shifts. Though it sucked that it was summer and I was working 70-80 hour weeks, the pay between the two jobs was nice. I have no idea where most of that money went to be honest. I bought my text books for the semester and had a lot of fun during my time off…Had I saved my money appropriately, again I could have easily had one full year paid for and still have had spending money in the summer.

Maintain a job in school.

It can be hard, downright near impossible but it is possible, trust me. I’ve been in a demanding program that had me enrolled in 13 credit hours in one semester, in school 12 hour days but still managed to make money during some evenings and weekends. I became good at scheduling and prioritizing my time well.

Take time off.

After my first semester of year one in my undergraduate degree, I told my mom I wanted to take some time off. My plans were changing and I wasn’t totally sure what I wanted to do anymore. She strongly discouraged this plan and it’s a regret I still have. Though I have no regrets about my current career, had I taken some time off to work and figure things out I’m sure things may have been different and I likely wouldn’t have had the same debt I do. Some of my most successful peers are ones who took time off, traveled/worked/volunteered for a year then went back to school.

Budget.

As I learned the hard way, it doesn’t mater how much money you have coming in, if you know how to budget the money will likely vanish. You need to establish your priorities why are you working?- and stick to your goals!

Did you pay your way through school and graduate debt free? How did you manage?

March 2014 Debt Repayment Updates

I’m in complete denial that it’s April. I feel like I should be writing an update for February with the weather we’re still experiencing! This week it will turn though, I can feel it (or maybe that’s more denial setting in…).

March was a decent month for us. I finished our taxes which I talked about and it wasn’t as scary as I was expecting which was nice. I’ve decided to hold onto the money I had set aside though…just in case I was wrong about something and it comes back to hunt me. I mentioned earlier this year that we were planning on purchasing and installing a heatpump in our home which we have since decided to forgo. There are many other things that need the financial attention. If we planned on living here more than three to four more years it would be a no-brainer but after looking at things, we’ve changed our minds.

I also mentioned that I had a secret savings goal earlier this year and the secret is now out (my rubber arm was twisted). Mike and I, along with our four best friends, are heading to Florida next year for a long weekend hockey trip! Mike’s 30th birthday is in January and his favorite team is the Columbus Blue Jackets (long story.) so we plan on flying to Florida in Jan/Feb for Columbus’ road trip to see them play in Florida for an adults weekend. I was trying to keep this a secret from Mike as long as possible but then I realized he’d definitely need to know ASAP for his work plans and he’s excited to help plan with the rest of us. I am so excited to getaway for four nights (read: sleep), enjoy some wicked company, eat an actual uninterrupted meal, and catch an NHL game. It will be a good time :)

Back to debt repayment…In March we managed to put $2,299 towards debt. I’m just realizing right now that we were $1.00 off an even $2,300- how annoying. To remind our monthly target is $2068 which we beat by $231. This thanks to me working an extra shift at my job. My hope is to keep up with increased amounts and hope to make an average contribution of $2,300 going forward. We’ll see how things go I guess :) For different reasons 2.5 of my writing jobs ended in March which stinks (one is on hold not ended for certain) so if anyone is looking for a writer shoot me an email, I have big goals to meet!

How did everyone else do with goals in March?

 

Taxes Are Done. How Did We Spend Our Money in 2014?

wpid-20150403_134058.jpgI hope everyone had a great Easter. We had a great weekend though it went too fast! Maria was really into Easter this year which was fun to watch. Though I spent most of the weekend with our family, I did find some time to pretty much finish our taxes up (I’m waiting on confirmation for one payment amount before I submit).

I have a love/hate relationship with taxes. I sort of love doing them but really hate it at the same time. Though I keep a lot of lists and notes in my head, I’m actually a terrible record keeper on paper which isn’t the best thing come tax time. I miss the good ‘ol days when I was working one part-time job with minimal income and loads of rebates. Now things are complicated with full-time job, a child, freelance writing to claim (a headache of its own)…it’s slightly more involved now!

I’m happy to report that if my numbers are correct, I overestimated how much I’ll need to pay-in and can adjust accordingly for next year. I expect everything to remain about the same in the coming year so I’m pretty confident in making the changes. Given that we have more in ”tax payment savings” than we require, I’m sort of excited to get my notice of assessment and move the money out of this account.

I won’t be doing anything too exciting with these extra funds though. Adding more to our ER fund and maybe a little bit to our upcoming trip account (more on that later). Basically moving from one savings account to another.

Doing taxes reminded me, again, that I really need to be a better record keeper. I’m pretty good with receipts and keep track of important documents but paying attention to online fees and alike stuff always gets the best of me and I need to pay better attention.

I also admit that there are likely deductions I am entitled to which I have missed because of my lack of record keeping…my loss. I vow to be better for the upcoming year and I’m starting with paying more attention to my online accounting software so I can calculate things like paypal fees paid more than once a year!

I have been audited almost every year of my tax-paying years so you’d think I’d learn my lesson…

In terms of how I actually filed the taxes, I played around with every tax software available and in the end UFile won out for many reasons. I like to play around with different programs and see what’s changed from year to year. H&R Block was working ok in the beginning but then started giving me an error message that even the tech support didn’t know how to fix. I found TurboTax to be messy and was giving me inconsistent refund/balance owing amounts (I swear every time I logged in there was a different amount) and in the end trusty UFile won my heart. I’ve used all three programs for different years. When I was on maternity leave for instance, H&R Block was the only program that would allow me to correctly add my government maternity leave tax papers, though I noticed all three programs had it this year. Going forward I’ll probably stick to UFile since I like the layout the best.

It’s never fun to do but taxes certainly go give clarity on our spending. Our snapshot looks like this (all very approximate % of our gross income):

  • 35% went towards taxes.
  • 20% went towards debt payments.
  • 11% went towards mortgage and property tax payments.
  • 5%  went towards daycare costs.
  • 5% went towards housing utilities (everything from power to cell phones).
  • 2% went towards hobbies (blogging mostly)
  • 1% went into savings (topping up ER fund)
  • 0.75% went towards work expenses (licensing fees)
  • 0.25% went towards investments (small sum for kiddo every year until debt is paid off).

That leave approximately 20% of our gross income which is what we lived off. With this 20% we bought groceries, clothes, had birthday parties, Christmas gifts, paid for prescriptions, basically everything else you could possible think of. When I think about it this way, living off 20% of one’s gross income is a number I’m happy with. It also shows me that when this debt is paid off we have approximately 20% of our gross income to reallocate (most of which will become retirement savings).

How did everyone else fair with their taxes? Any big refunds coming your way??

Family Fun Texas Hold Em’ Style

Who doesn’t love to play a friendly game of Texas Hold Em’ now and then? I sure do and in fact, Texas Hold Em’ is the first type of poker I learned to play.

Each year during Christmas time, when all my cousins are back in town, my extended family gets together at my aunt and uncle’s house and has a game night. Between all of my aunts and uncles, cousins and their husbands, we have around 35-40 people that get together for an epic all-night event. In fact, our family game night is one of my favorite childhood memories. As a kid I couldn’t wait to spend time playing with my cousins and getting to stay up much later than my normal bedtime.

My mom and all my aunts cook up a feast of finger foods and snacks. My uncles and dad usually make sure we don’t run out of drinks, we all wear our pajamas and get down to business (and by business, I mean playing games).

There are plenty of games to choose from at our game night. Because there are people of all ages and interests, we usually have different games going on in different rooms. For instance, some people like to play games like Cranium, some like to play Charades, and others participate in our poker tournament.

While my family only plays Texas Hold Em’, there are actually about a dozen different poker games you can play.

Luckily, no one in my family is much of a card shark. There’s usually lots of laughter, fun, and even some “illegal” table talk during our poker tournament. But by the end of the night, it all gets narrowed down to one winner.

As you might have guessed, after all that work the winner gets something even better than money from winning our family poker tournament, bragging rights.

Even though it’s all fun and games, everyone in my family is actually quite competitive. When playing games with my immediate family, it has been known to end in a fist fight when someone was suspected of cheating.

Our family game night is a very fun and frugal event that we all look forward to each year. In fact, it’s not uncommon for many of us to get new board games and card games when we do our big family gift exchange. After all, there aren’t many things that are more fun than trying out a new game with your family and friends.

Does your family do a game night? What are your favorite games to play? Have you ever punched anyone over a game? I have!

Set Your Alarm Five Miutes Earlier (and Other Simple Tasks to Make Your Day Run Better!)

My husband thinks I’m crazy.  I complain all day about how tired I am but instead of relaxing when Maria goes to bed, I immediately go into overdrive. I clean the kitchen, I make lunch, I vacuum (which drives him especially crazy), I start laundry, the list goes on. While he’s trying to get me to sit down for two seconds, I’m buzzing around the house, but I have to.

I cannot go to bed with a dirty kitchen. If we throw an event at our house and I know I’ll be home the following day, I might allow it but that is the only time. Waking up to chaos sets my entire day off. This past Monday was one of those chaotic mornings and it sat with me all day. If I don’t get on top of my day it ruins my mood. Setting your morning off right will give you a sense of peace and allow you to actually focus on your day rather than a to-do list at home.

Here are simple tasks you can do every day to make the following day run as smooth as possible.

Make sure the kitchen counter is clean, every night. I don’t know why the kitchen area is a dropping zone for families but it seems to be a common trend, I know I’m not alone. Waking up and having everything put away and counters cleared off gives me a huge sense of calm when I wake up. I know I won’t have to waste my time looking for anything in there since it’s all away.

Tidy. Goes with clean kitchen but if you wake up and step on something like Lego- game over, your day is done. You don’t have deep clean but make sure there is a clear path through the house.

Do laundry and actually put it away. I struggle with this but I’m trying to get better. For me it helps if I fold it as I’m taking it out of the dryer (or off the line in summer). This way I can carry the basket and just put things away. There is nothing worse than finding out the laundry you thought was done is actually still sitting  in a dirty pile as you’re looking for work outfit, or you can’t find your kids pink underwear which she insists on wearing. If things are put away immediately it answers all questions and saves major time.

Make your lunch the night before. You are bringing lunch to work/school right? If not start, your wallet will thank you. I can’t imagine trying to do this in the morning. Having it packed and ready to grab is a huge lifesaver for me.

Have your daily things in order. For me I have mine and kiddos bags packed and ready to throw lunch into and go. Mike puts his wallet and keys in the same spot every night so we don’t waste time looking. It takes time to get into the habit but huge timesaver.

Set your alarm five minutes earlier. It may seem like five minutes is no big deal but trust me it is. When used effectively, the added five minutes can give you much needed breathing room in your morning routine and commute. It might mean actually getting a coffee- huge bonus!

These are the things that help me and my chaotic mornings, what sort of thing help you get out the door stress free?

Teaching Kids Financial Responsibility

wpid-img_20140521_215019.jpg

The contents of my daughter’s purse. I don’t think I have to worry about a spending spree anytime soon.

Last week I ended my work week with a 16-year-old patient. She came in to see me for the first time in almost two years. I was honestly shocked at the state of her teeth (something that is hard to do to me). The few areas we had been keeping a close eye on in the previous few years, we’re now massive cavities. Cavities so large that even a root canal treatment wouldn’t save them. At 16 she was looking at heavy dose of antibiotics, two to three extractions (major sad face) and nine fillings. All of these, 100% preventable.

I couldn’t be nice to her anymore. I needed to be firm and have her understand how serious this was and for me to figure out how, and why, this happened.

Teeth don’t die a natural death, we kill them.

I took time to explain, in a lot of detail, what’s going on, why it’s going on, and stress the gravity of it all. I then look to her for a mature series of answers. I get nothing.

She immediately places blame on us (the dental office) for not getting her in sooner (we’ve called her 11 times in last 18 months), then tells us it’s not her fault because it’s her moms responsibility to get her to her appointments (she lives within walking distance to the office) and continues on with a line of answers that leave me frustrated and deflated. She took zero ownership for what was going on in her mouth. Every issue was someone else’s fault and her lack of maturity left me with no option but to call her mom, give her the detail and let her deal with it since I was at my limit for what I could do for her.

At 16 she should, 100% be taking responsibility for her own actions especially when it comes to something like her body and heath. This situation scares me for how much lack of responsibility if actually out there in our young kids.

I think financial responsibility is one of the most important nuggets of knowledge we can teach our kids. I honestly think if I can raise my daughter to be confident, polite and responsible for her actions in life, I will have succeeded as a parent. With responsibility in life, financial responsibility is a major factor.

Whether we like it or not, money rules the world. We rely on it to live and when not used responsibly it gets us in big trouble. We as parents have a major responsibility to teach our kids how to handle all sorts of different financial situations. I tell my patients all the time it’s my job to give them the information, it’s up to them to do with it as they please. Same with lessons I teach my daughter. When it comes to money I will do my best to show her the way, teach her lessons and give her all the information I have. It will be 100% her responsibility to use this information properly.

I expect mistakes. I expect financial mishaps, this is how we learn but I hope she does it while living in the comfort and protection of our home. It’s never too early to start. At the age of three, we’re already trying to have her understand money. We’re starting with basic concepts right now- what money is and why we need it. Every day she asks why we need to go to work and we explain one of the main reasons is that mommy and daddy need to earn money. When she gets into my purse and pulls my wallet out- she always asks if she can ”have some monies for her piggy bank” to which I usually give her. I hand over a few small coins and tell her what they are.

I find sometimes we’re too quick to bombard our kids with info and in turn they ignore what we’re trying to teach them. If we start slow and build a foundation they will be much more receptive of information. Money isn’t a topic that can be taken lightly. We as parents worry about so much: sex, drugs, social media, avoid strangers that money often fails as a topic but don’t let it! Your kids will thank you.

How do/will you teach your kids about money?