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“7 Little Known Secrets the Banker Won’t Tell You!”

The following is an excerpt from the author's book, "7 Little Known Secrets the Banker Won't Tell You!"

Secret #1: Banks will start lending you money, making you feel special and entitled, then give you more than you can handle!

Never borrow more than what you can budget for. Never forsake your retirement savings or children’s education fund just to make payments on worn-out ‘Goodies.’ If borrowing for business purposes, have a detailed business plan ready, specifically detailing your exact spending requirements. Remember: All profits should be re-invested in your business for marketing and capital expenditure requirements to help you grow.

Secret #2: Bankers will never give you good interest on your savings, but will lend it back to you at a good rate!

Get 18 – 30% return on your money; pay off each credit card in full every month without fail. Shorten dramatically the term and interest you pay on your mortgage by increasing payments to bi-weekly and/or making an extra payment every year instead of a fancy vacation. Build cash liquidity, not paper debt, by using borrowed funds/ savings for retirement funds (401Ks), savings bonds, and Certificates of Deposit. (CDs) Your first rule to borrow should be to get back more in returns than what you pay in interest to borrow the money. Set up ‘forced’ savings plans with your bank, and open new and multiple savings accounts whenever possible. If you are young and new to banking and financing, or re-establishing credit, use the Loan-Go-Round system to build a credit report.

Secret #3: Nothing personal, but to the banks, you are just a number!

If you are not getting service or being overcharged bank fees, drop that banker and go to a smaller regional or community banks and/or credit unions. Online virtual savings accounts are excellent ways to ‘save a bit’ every week. What I do is spread myself around to more branches, look for reduce banking costs, and get more personal attention. Get more personally involved at your branch, ensuring both more participation in the community, and lowering the chances the branch will be slated for closure. Find out everything you can about personal security, such as changing pin numbers regularly and tips on avoiding identity theft. When banking at ABMs, avoid excess fees by taking out larger amounts of money weekly/bi-weekly, instead of multiple daily withdrawals. Use the cash back option at the cashier when making purchases with your debit card and save part or the entire transaction fee. Always strive to make interest WORK for you, not compound AGAINST you.

Secret #4: Banks know the power of advertising will keep you coming back!

Resist the many advertising ‘hooks’ to get you to buy, and finance, yet one more purchase from the bank. They’ll make it look easy, but it is not THEM who will have ‘buyer’s remorse.’ Don’t fall for emotional advertising appeals when shopping for real estate or any ‘big ticket’ purchases, and DO NOT go for zero or low down payment deals. They will ‘saddle’ you with a huge mortgage, credit payments, and blow your budget when you have to pay off larger ‘chunks’ of the principal or rates ‘creep higher.’ If you buy commercial or industrial property for cash flow, check out every aspect of the deal to avoid ‘heartaches.’ Perform your ‘due diligence’ on ANY deal! Keep emotions out of it. Checking tax liens, locations, neighbors, and using a good building inspector should be on your TO DO list well BEFORE signing any closing agreement.

Secret #5: Bankers know your mortgage is the biggest purchase you will ever make, and their biggest profit maker!

Beware the pressures to buy a residence; it is everybody’s opinion that you should ‘own’ a home not be throwing your money away for rent. Move at your own speed and don’t feel obligated to do anything your emotions (or emotional spouse) are telling you. Leave them out. Search out and get all the information when YOU are ready, particularly info about pre-saving for your down payment so you have a larger amount to put down. Save on the purchase price, interest and principle by checking out ‘all in one’ lines of credit, tax lien sales, power of sales, and private sales. (For Sale by Owner) Those deals can sometimes offer more ‘creative’ financing terms by having the owner ‘take back the mortgage’ on a trustworthy, workable deal you have done your due diligence on. This can save you on closing costs, realtor commissions, and mortgage paperwork fees. If using a broker or a third party mortgage arranger check them out with the Better Business Bureau, beware of mortgage fraud and “Zero Down” deals. Contact previous clients of brokers and agents to ensure satisfaction was achieved.

Secret #6: Advertisers set up the ‘need’ for what you will purchase, then the Banker offers the ‘means’ by which to attain it! At a price of course!

Recognize your ‘hot button.’ Everyone has ‘needs’ and ‘wants,’ but only something reasonable is worth taking out credit for. Know yourself, what you can budget for, and what often tips you over into quick buying decisions. Do not be pressured into making major purchases just because you have been told it may have profit potential, or happens to be the ‘flavor of the week.’ Ask yourself this question when weighing your decision: Is the advice or sales ‘pitch’ you are getting an opinion or a fact? YOU be the judge!

Secret #7: Bankers always follow their “Golden Rule;” Those who make up the gold, make the rules!

Start a business outside of your regular income and start to look for profit opportunities like the bank does. Like the wealthy, think return on investment (ROI) and the tax benefits of running something from home. Venture your capital (Safely), collaborate, or just keep looking for something YOU feel passionate about doing. Do not do it if it does not feel right. Use your own good intuition. Make up YOUR OWN GOLD and the rules you will live by. Use all possible safe investment vehicles to invest pre-tax, which is before the deductions come off your paycheck. Keep trying and don’t give up until you find something to add extra income.

*Darrel R. Walrod is the author of “7 Little Known Secrets the Banker Won’t Tell You!” He currently resides in Toronto, Canada. To contact him, send an email to drwalrod@sympatico.ca.