New Project? Start Thinking About Financing

If you’re in the lump sum buyout boat, now may be a good time to think about getting a loan for your next project.

Most banks are going to want to see a couple years of tax returns when you apply for a loan. If 2007 is going to be a huge year thanks to your buyout, you may want to file your tax return as soon as possible for 2007 so that you can use those inflated earning amounts to get the most leverage in 2008.

If you wait until 2009 and have little or any income in 2008, you may have trouble getting enough money as you need.

Got a Credit Line? Think Again

Several banks (Countrywide, BoA, Wachovia, etc.) have pulled or are pulling unused credit lines.

Maybe you’re sitting on a house paid in full and are planning on using that oh-so-sweet $200,000 or even $500,000 credit line you’re sitting on to finance your new project or just keep you afloat until you find your next project. Better think again or move immediately.

If you absolutely know you’re going to need that money, you may consider drawing down your lines just so you know you have the funds available. Yes, you’ll be paying interest but having a huge chunk of money in your pocket may be worth the 4.375-6% interest rate. This is especially true if you toss it into short term CDs or a MMA while you’re waiting to use the money. That’ll bring your carry costs down to a much more reasonable rate. (Anything over 6% and you really have to ask yourself if it is worth drawing it down.)

Now, not tomorrow, is the time to figure out what you’re going to do next. Once you know what you’re going to do next, please take the steps necessary to make sure you have the tools to get there.

Banks Ain’t Doing So Good

Have you been watching WaMu’s stock price? Nearly $40 a year ago. About $4 today. Yipes! Wachovia had $39 billion dollars of institutional assets last year. Now they have under $2 billion.

The SEC issued an emergency order in July that protected 19 key financial firms from short sales. Unless that SEC order is renewed, the order will be lifted on Monday. Prediction: all hell is about to break loose.

Some of you will be getting checks in excess of the FDIC limits. Some of you already have money socked away in excess of FDIC limits. Please make sure you don’t put all your eggs in one basket.

It’s Not the End of the World

It really isn’t that bad, of course. The way to keep it from becoming that bad is to plan ahead.

Make small, smart steps now and you’ll be just fine. Find people who know stuff and listen to what they have to say. If you’re not a money person, find a trustworthy money person now.