As an employer and owner of a growing small business, good communication between yourself and your employees is of utmost importance. As you are growing, and hiring employees to accommodate your growth, you’ll want to take steps to ensure that everyone is on the same page concerning company policies. Providing your employees with an employee handbook is an excellent way to accomplish this goal. The purpose of an employment handbook is to provide clear details on the way things work at your company. This should include the expectations you have of your employees, and what they can expect from you as well. There are no hard-and-fast rules for employee handbooks, but here are a few suggestions to help you get started. Things to Include in Your Employee Handbook First, you should decide what you want to include in your employee handbook. The U.S. Small Business Administration suggests most employers include the following topics: Style Tips for Your Employee Handbook Next, employers should format their handbook in a clear and concise manner. As you compile your employee handbook, keep in mind that your goal is for your employees to read and understand all the information provided to them. Create a table of contents in the front of the handbook as a resource for quickly finding the various topics covered. Additionally, organize the handbook with subheadings and bullet points, increasing the readability of the content. You may choose to use bolded or underlined text to place emphasis on important information. Using correct grammar and spelling throughout the handbook will establish it as a professional and important document. If you feel you need assistance with writing the handbook, you may choose to take advantage of online grammar guides, or hire someone to proofread and edit the content. Final Tip Many employers find it beneficial to present their employee handbook in orientation or a staff meeting. This provides employers with the opportunity to point out the most important information and answer any questions their new employees may have. A well-compiled employee handbook is not only essential to managing the workplace; it is one of the best ways to assist employees in starting on the right foot in their new position.

Creating an Employee Handbook

View Resource Creating an Employee Handbook
In 1977, Congress enacted the Fair Debt Collection Practices Act (FDCPA) as a way to protect consumers from harassment, deceit, and unfair tactics by debt collectors. The FDCPA applies to personal and household debts collected by third parties, which happens when the lender you owe either sells the debt to another company or hires another individual or company to collect the debt from you on their behalf. It’s important for you to understand your rights under the FDCPA and know what to do if a collector has violated your rights. Consumer Rights Under the Fair Debt Collection Practices Act Confidentiality: Debt collectors are not allowed to discuss your debt with anybody else, except your spouse, your parents if you are a minor, and your attorney if you have one who is representing you. While debt collectors can provide information about debts to credit bureaus, they cannot publish names of people who owe debts. All mail you receive about debts must be in envelopes that do not state they are from a debt collector. Debt collectors are allowed to contact other people to ask for your address, home phone number, or place of employment, but they cannot discuss your debt with these people. Verification: All debt collectors must send you a validation notice within five days of when they first contact you, and this notice must state the amount of the debt and the name of the original lender. After you receive this validation notice, you have the right to request verification that a debt belongs to you, but you must request this verification within 30 days. If you do not request verification, this is an automatic acknowledgment that the debt is valid. Limit communication: Debt collectors are never allowed to contact you between 9 pm and 8 am unless you agree to contact during these times. If you tell them not to contact you at work, they must stop contacting you at work. Also, they are not allowed to harass you by making excessive phone calls. Once you tell them that an attorney is representing you concerning this debt, they must only communicate with your attorney. End communication: At any time, you can request that a debt collector ceases all forms of communication with you. To do this, you must send a letter to the debt collector telling them not to contact you at all about this debt. Send it through certified mail with a return receipt so you have proof the collector received the letter. After receiving the letter, the only reasons a debt collector can contact you again are to acknowledge receipt of the letter or to inform you that they are going to take a specific action, such as filing a lawsuit against you. Honesty: Debt collectors are never allowed to provide false, deceitful, or misleading information in their communication with you. They can’t pose as government officials or people who work at the companies that originally lent you the money. They must not threaten you with actions they cannot take or do not intend to take, such as arresting you, selling your property, or causing physical harm to you or your family. Debt collectors are also not allowed to claim that documents they send are legal court documents if they are not. What to Do if a Debt Collector is Violating Your Consumer Rights Because of the Fair Debt Collection Practices Act, you have several courses of action you can take if a debt collector is using unfair practices or is harassing you. If the debt collector violates any of the rights outlined above, you can take one or more of three potential actions:
  1. Send a cease communication letter to end all forms of harassment by the debt collector. In this letter, specify that you would like the debt collector to stop contacting you by any method, including home phone, cell phone, work phone, text message, postal mail, and in person. As soon as the debt collector receives this letter, they are not legally allowed to contact you except to acknowledge receipt of the letter or to inform you about specific action they will be taking.

  2. File complaints with your state Attorney General’s office and the Consumer Financial Protection Bureau. In your complaint, specify who the debt collector is, which of your consumer rights were violated, and what the debt collector did that violated your rights. These groups can help follow up to resolve the issues on your behalf, and can also pass along the information you provide to law enforcement agencies that may take direct action against the debt collector.

  3. Bring a lawsuit against the debt collector. Monetary compensation can be awarded for lost wages or medical bills that result from the debt collector’s behaviors, in addition to money to cover your court costs and attorney fees and up to $1,000 in cash for general damages. If you are planning to file a lawsuit, you need to document the specific ways in which your rights under the FDCPA were violated. Save copies of all the mail you have received from the debt collector and sent to the debt collector. Also, log the date, time, and content of all phone communication.

The Fair Debt Collection Practices Act

View Resource The Fair Debt Collection Practices Act
Employers are frequently filling jobs and finding the right person for each job is essential whether that person be an employee or a contractor. There are various advantages to hiring independent contractors (ICs). However, before you make the decision on how you plan on staffing a specific job, you should know some advantages of each to help with the decision-making process. According to the Small Business Administration (SBA), employees and independent contractors are not the same, and it is essential that you learn and understand the difference. Understanding the distinction between the two will help you decide how you are going to hire and how you plan on withholding various taxes and avoiding costly legal consequences for doing it incorrectly. Advantages of Contractors Money Saving Potential Although many employers pay more per hour for ICs over employees for the same work, hiring ICs can end up as the most cost-efficient option for the employer. There are some expenses that come with hiring an employee, which you would not necessarily incur for ICs including employer-provided benefits, contributions and payments on your employees’ behalf, office space, and equipment. Staff Flexibility Employers have greater leeway when working with ICs when it comes to hiring workers and letting them go. This is particularly beneficial for employers who have fluctuating workloads. The employer can hire an IC for a specific project or task and know that once the job is finished, the expense will not continue. With this type of flexibility, you would not have to face expense, trauma, or potential legal issues that can come with layoffs and firings. Since independent contractors typically come with specialized expertise for the specific job, they may be more productive right from the starting gate, which eliminates the cost and time of training. Reduced Exposure to Lawsuits Under federal and state law, employees are protected by a wide range of rights. This puts employers at risk of having a variety of legal claims brought against them by an employee who feels their rights were violated. Independent contractors are not protected by most of these laws because they are independent businesspeople. Some of the rights that ICs are not protected by (but employees are) include:
Advantages of Employees Certain businesses like restaurants and retail stores do not have the option of working with contractors; at least not for their primary employees like waiters, cooks and floor salespeople. Most if not all businesses deal with confidential information that they would not want leaked outside of the company. Employees can bring talent to the table inside the organization and, therefore, could take on higher level roles like management and such. Employees typically do a variety of different jobs which makes them better suited for growing with your company. Ways to Decide Which is the Best Choice You should keep a small budget to be able to hire independent contractors when needed. Some indications that an IC would be best for your task or project include: Keep in mind consequences can occur for misclassifying workers. Companies are often guilty of misclassifying independent contractors, which can translate into billions of unpaid tax dollars. The IRS is now cracking down on this. If your company is found to have misclassified workers, this could result in interest, stiff penalties and back payroll taxes. According to the IRS, “In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.” Final Thoughts It is fine to scale a business by utilizing independent contractors when needed. Typically your customers will not care as long as they know that your company still has responsibility for the quality of the work being done. Because of this, it is a good idea that if you are going to build up a network of contractors, make sure they are trustworthy and that you follow all legal regulations.

Using Contractors Instead of Employees

View Resource Using Contractors Instead of Employees
As the owner of a small business, you know the importance of avoiding unnecessary costs. Because of this, you may have chosen to operate your business on your own during the beginning stages. However, now that your business is growing, you may be feeling the workload has become too great to manage without the help of an employee. Before getting started, there are a few things you should know about the legal rules, required documentation, and administrative duties associated with hiring your first employee. Legal Rules First, educate yourself on the regulations that are relevant to the hiring of your first employee. Here is a quick look at the important laws you should know about as an employer:
Required Documentation Next, small business owners will want to make sure they are keeping the appropriate documentation as is required by law. This information concerning employees is to be kept for up to three years. The United States Department of Labor clearly outlines all required documentation which must be obtained from new employees:
  • Full name, sex, and birth date.
  • Social Security Number
  • Address
  • Occupation
  • Beginning time and day of employee’s workweek.
  • Daily hours worked.
  • Weekly hours worked.
  • Basis of wage payment and regularly hour pay rate.
  • Overtime earnings for each workweek.
  • Total daily or weekly straight-time earnings.
  • Any changes in employees wages.
  • Total earnings paid each pay period.
  • Payment date and dates covered by the payment.

    • Administrative Duties Lastly, know that once you have hired your first employee, your administrative duties are not complete. It is true that the bulk of the paperwork is completed during the hiring process. However, there are administrative duties which must be completed regularly. Creating a system for these records and tasks is helpful to staying organized and ensuring that nothing is missed. First, the Internal Revenue Service requires employers to keep detail records of income, expense, and taxes paid and provides many resources for doing so on the small business portion of their website. Secondly, the Occupational Safety & Health Administration requires regular reporting concerning employee safety practices, employee injuries and illnesses. Thirdly, regular records should be kept concerning both voluntary and required employment benefits and worker’s compensation insurance. Lastly, creating and maintaining an up-to-date Employee Handbook helps employers to ensure they are following fair employment practices, maintaining a safe and fair workplace, and properly informing employees of policies and employee rights. Hiring your first employee is a big next step for small business owners, but it is also evidence of success in running your business. Educating yourself on employment rules and regulations is an essential aspect of becoming an employer for the first time. Additionally, creating a system for collecting and maintaining employee records is helpful in remaining organized throughout the process. The organization methods used during the hiring process can be carried out in day-to-day operations, simplifying the regular administrative duties required of a small business owner and employer.

    Hiring Your First Employee

    View Resource Hiring Your First Employee
    Although running a startup business can be exciting, there is much strategic planning involved to get customers without breaking your spending budget. By using minimal resources for optimal impact, you can market your startup in affordable ways. Below are some strategies to help market your startup effectively and gain a loyal customer base eager to share it with friends and family. Targeted Marketing When first starting out marketing your small business, it is easy to be impulsive and attempt to reach everyone all at once. However, it is essential to keep your focus on reaching only highly-targeted customers who are more likely to do business with you. Instead of just trying to attract any customer possible, focus on a target audience that will help with achieving your short-term goals. Social Media A popular and very effective tool for online marketing is social media. It is a simple way to reach a large audience without necessarily having to dip into your spending budget. When marketing on social media sites, you need to choose wisely which platforms you are going to use. You do not have to market your products or company on all social channels. Incentivizing social media followers to share is another strategic marketing technique. It involves offering discounts on products or services in exchange for Likes or Facebook or retweeting tweets, for example. Be sure to post content that is engaging and post consistently. Eventually, your brand will become known and counted on by your audience through the content, videos, pictures, and status updates you post. Public Relations When using public relations as a marketing strategy, there are some things you need to think about to set your startup apart from the competition. First, figure out what will set you apart and learn how to express it productively. Second, show, don’t tell. It can be instinctive to talk about why your business is different, innovative, important, and newsworthy; however, words can only go so far. Instead, you can generate real traction by supporting your words with facts, examples, numbers, and visuals. Of course, if you won a business award, feel free to shout that to the world. Reach out to your local community. Car washes, banners at fairs, and sponsoring local events are all great ways to increase brand awareness in your community. Last, look beyond press releases. Although they certainly have their place in the whole public relations scheme, you should not base your entire public relations strategy on press releases alone. Other Marketing Tips Facebook Sponsored Posts Due to the change in Facebook’s EdgeRank, your posts are now being shown to only a fraction of your followers. Sponsored posts allow you to get your posts in front of a larger audience. Videos Studies show that the use of videos helps to push an existing site up the ranks of Google, often to the first page, within 30 minutes of publishing it. After a day or two, it can even reach the top two positions. Having videos online helps your business even after potential customers find it. In fact, a study found that consumers who watch a video explaining a product or service are 73 percent more likely to make a purchase. Content marketing Combine your social media presence with high-quality content. Place a blog on your website and update it regularly. When you post a new blog, share it on Facebook and Twitter. Use your blog not only to share news and updates about your business, but also to provide informational articles relevant to your product and industry. This helps to position you as a thought leader in your niche. If you have case studies to share, be sure to place them on your website as well. Remember, not all marketing strategies are going to work for every business. However, by combining a few of them, it will help to grow your business. If you make your marketing engaging, interesting, and fun, it will amaze you how enthusiastic people can be to support and share your startup.

    Affordable Marketing Strategies for Startups

    View Resource Affordable Marketing Strategies for Startups
    An effective branding strategy makes your business stand out in a competitive marketplace. Online, it helps you cut through all the competing hoopla to get attention from your audience. Without a brand, you can easily get lost in the crowd. With one, all shoppers have to do is simply see your emblem to know who you are and the type of selling experience they can expect. To them, your brand means a solution to the problem they are trying to solve. What It Is and Isn’t The official definition of a brand, from the American Marketing Association, is “a name term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers.” However, most experienced marketers see it as more nuanced. To them, your brand is the story of your company that you present to the world. It is your essential truth and the value you provide. Branding is different from ads and marketing. Marketing is promoting your product using specific strategies. However, branding is what underpins and supports your marketing efforts. If marketing is tactics, then branding is the strategy. Strategy Basics Your strategy is everything you want to communicate about your business to your target audience. This includes the what, where, how of your products and services, in a way that is meaningful to your potential customers. The more effective you are conveying the message of your value, the more equity you build in your brand. With consistent effort and uniform branding across all platforms, your target consumer will start seeking you out. In time, your brand will allow you to charge more than unbranded products and services. Coca-Cola costs more than store-labeled sodas, though it is questionable how much difference there is in the actual taste. But the difference is perceived, and the consumer is willing to pay more based on that perception. In time, shoppers develop an emotional connection with a brand. This increases its worth it in their eyes. The process might start with a celebrity endorsement. Gradually, the customer’s warm feelings for the athlete or actress transfer over to your product. Definition Basics It takes effort to define your brand in a way that reaches your audience. Here are four questions to answer in defining your brand: The more you know about your ideal customer, the person you are marketing to, the easier it is to develop a brand. What are their needs, problems, habits, lifestyle, and goals? It takes time and effort to come up with useful answers. Ask other members of the company, your friends, and anyone you know who has used your service or product. Consider getting shoppers to answer a survey in return for a reward. You need the best possible range of answers to come up with an effective brand. Execution Basics Things get easier from here. Getting the word out is still time-intensive, but by this time, you should already have all of the information you need to create the brand that will engage the customers you are seeking. You need to start with a logo that is eye-catching and concise. Then, put it on everything that connects with the public. This includes stationery, business cards, promotional pieces, email, social media, website, and print and online ads. Come up with a message that communicates the essence of your company and product. Make sure every employee understands this message and passes it on. This might even influence how you answer the phone and what your salespeople wear when meeting with customers. If your brand is upscale, convey your essence formally. If it is friendly and casual, then be conversational and low key. Be consistent with your brand and how you present the message. Consistency is the only way shoppers will come to know your brand. Without consistency you risk wasting your time and money. That means following a template across all mediums and platforms for all marketing materials. Everything must have the same look and feel, including the color scheme, typefaces, and how the logo and graphics are presented. Most importantly, deliver on the promises implied in your message and overall branding. It will attract shoppers again and again only if they have a good experience with your service and product. Brand recognition will give your business repeat sales and a strong bottom line. Take the time to figure out the best one for your business and use it consistently.

    Branding Your Business

    View Resource Branding Your Business
    A marketing plan is a roadmap to get your product into the hands of the customers who want or need it. It provides an analysis of your product, your customer, and what sets you apart from the competition and in the mind of your target customer. In its simplest form, it provides a guide on how best to get the word out about your products and services. Your marketing plan can be short or highly detailed. The important thing is to spend the time researching, analyzing, strategizing, and getting it down on paper. It will make your marketing more effective and make the best use of your advertising dollars. Do You Really Need One? There is a cliché about the driver who will not stop to ask directions, driving around and around, lost for hours, failing to ask for directions. Likewise in business, having directions is critical if you want to mount a successful campaign to get your product in front of your target market. Without one, you will waste time, energy and money. Here is a look at the basic steps of a marketing plan for your small business. Step One: Create an Executive Summary This represents a few short and sweet sentences that provide a high-level overview of your marketing plan. Think of it as your “elevator pitch”. Step Two: Identify the Challenges Here, provide a description of the products or services (and product and service lines) your company offers. While keeping the information concise and measurable, identify the goals you want to set for each product or service you plan to sell. Step Three: Perform a Situation Analysis This meaty section, known as the situation analysis, involves several key parts consisting of company analysis, competitor analysis, collaborator identification, climate identification, and a SWOT analysis. Here are each explained in further detail. Company Analysis: First, you need to know who is in the marketplace, starting with your company. Write down an overview of the purpose of your business and a list of its products and services. Check data on the growth rate of your industry, how much market share you can reasonably expect to obtain, and current trends for marketing for your type of product. Customer Analysis: Next, think about your ideal customer and target audience. Who needs your product or service? You need to nail this so you can market to them. You will waste money if you advertise indiscriminately. Think in term of your buyer’s demographics: Knowing this information, you’ll have a much better chance of accurately pinpointing the best media to use when you start placing ads and writing content. Competitor Analysis: You also need to get a good idea who is your nearest competitor. List the names of competing online, local, and national businesses. Make a thorough list of the types of products and services they are offering to the same customer you are targeting. Investigate how they are doing, the methods they use in advertising, how they get customers to buy, and how they keep them coming back for repeat sales. With this data in hand, you need to pull it together into a USP or unique selling proposition. Why should customers buy from you and not the business down the street? What do you have that no one else offers your target audience? Collaborator Identification: Who will help your business thrive? It could be suppliers, distributors, partners, or subsidiaries, for instance. Climate Identification: Are there any laws or regulations that govern your products or services? Are technological advances integral to your business? How does the cultural, social, and economic environment impact your selling of your products or services? These are some of the questions and answers to include in your climate identification section. SWOT Analysis: This handy acronym is your guide: It includes documenting: Step Four: Market Segmentation and Strategy Selection For each market segment, include a description of the segment, along with several key components of the segment. Factors to include are the estimated percent of overall sales the segment represents, the price sensitivity of this segment, and the best ways to advertise for this segment. After taking into account alternative marketing strategies, such as changing a price point or eliminating a particular product or service line, choose a marketing strategy. Step Five: Establish Short and Long-Term Forecasts. This section of your marketing plan includes projections of not only revenue and costs, but also your break-even analysis. Step Six: End with a Concluding Summary This is similar to the Executive Summary at the beginning of your marketing plan, but it is more in-depth. It includes specific goals and figures, such as projected revenues, expenses, and profits. Ongoing: Monitor Results Once you put your marketing plan into action, you need to figure out if it is working. There are a variety of ways to monitor whether or not your efforts are succeeding. Decide how you will measure your results and how you will tweak your strategy. In conclusion, a good marketing plan gives you peace of mind. It gives you a strategy to start with and a plan of attack to get your product into the hands of your buyers. It is an ongoing process. You will learn from each step, helping you improve, sell more, and grow your business.

    Creating a Marketing Plan

    View Resource Creating a Marketing Plan
    Your auto loan is likely to be your biggest monthly payment other than your mortgage or rent payment. Because of this, you should make sure you have the best possible loan terms for your financial situation. Decreasing your interest rate by just one percentage point can save you a thousand dollars, or more, as you repay the auto loan. In many cases, refinancing is a simple process that is well worth your while. When to refinance an auto loan Decrease in market interest rates: If interest rates on auto loans, in general, have gone down since you took out your loan, refinancing can be a wise choice for you. You can lock in today’s lower interest rate and stop paying the higher rate you had agreed to when you initially bought your car. Increased credit score: Borrowing money is tough when you have a low credit score. If you manage to qualify, lenders will charge you higher interest rates on credit cards, mortgages, and auto loans. If you got your auto loan several years ago when your credit score was low but you have been making all the payments on time, you may be surprised to learn how much your score has improved. You can use your new and improved credit score to qualify for lower interest rates on a refinanced auto loan. Barely making payments: Refinancing can sometimes be a good idea if your financial situation has deteriorated since you bought the car. If you find you are barely making the monthly payments, refinancing with a longer loan term can decrease the monthly payment amount. This gives you some wiggle room in your budget to help you stay on track with making each payment on time and protecting your credit score. However, be aware that a longer loan term typically means you will pay more in total interest over the life of the loan. Lease purchase conversion: Many leases have the option to convert to purchase agreements when the lease expires. However, the terms on these loans may not be the best, especially because you got your lease several years ago. It may pay to refinance the amount you need to borrow to purchase your car after the lease expires. Tips for a smooth auto loan refinance You should always check to make sure your current auto loan does not have a prepayment penalty. If it does, you will only want to refinance if you are going to save more money than you pay in the penalty. Even worse than a prepayment penalty is a precomputed loan, where you are obligated to pay the full interest amount even if you pay off the loan early. In this situation, you will never save money by refinancing. Once you have decided you are going to refinance, start by shopping for interest rates. Your local bank and credit union often provide competitive rates, especially if you already have accounts open with them. Don’t forget to also call your current lender to ask if they can lower your interest rate. When you are ready to refinance with a particular lender, make sure you understand all the terms of your loan agreement. You should know what your monthly payment amount is, what day of the month it is due, how to make your payment, and when your auto loan will be completely paid off. Once you are comfortable with all of those details, it is time to sign the paperwork and finish the process of refinancing your auto loan.

    Refinancing an Auto Loan

    View Resource Refinancing an Auto Loan
    Whether your goal is to refinance your home or you are trying to sell it, a high appraisal is the desired outcome. While there are some things related to your appraisal that are beyond your control, there are a few things you can do to help the appraiser see a higher value in your home. However, first, you need to understand a little more about the appraisal process. How the Appraisal Process Works An appraisal can be quite disconcerting. You are essentially paying someone to come into your home and tell you how much they believe your home is worth. You love your home and have made great improvements over the years. However, it is important to keep the emotional connection you have with your home out of the picture and approach your home appraisal objectively. These are a few of the things appraisers are looking at that will impact the appraised value. Part of the process of standardizing the process involves a checklist appraisers use to help determine values. This creates a level playing field for all homeowners with some things that are assigned specific values. This does not mean that there is no room left for interpretation by appraisers, which is why it is important to make sure your home is presented in its best possible light to boost the appraisal value. Top Factors Driving Value There remain many aspects that are still somewhat subjective. With that in mind, these are a few things you can do to help the appraisal see added value in your home. Improve its curb appeal. First impressions matter in both selling your home and appraising it. You want to present the best possible image of your home to the appraiser. Spruce up the lawn. Make sure you cut the grass, trim the trees and properly prune shrubbery, so the property presents an optimal first impression. Choose updates wisely. When updating your home with an appraisal in mind, experts recommend choosing projects that offer the best return on investment. These includes projects like the following: If you have plans to update a kitchen or bathroom, go small with these for maximum impact on a small budget. Another area of concern for updates involved the location of the updates. Updates to the basement of the home have a lesser impact on appraisers than updates to the attic. Finishing a basement does not increase the overall square footage of your home while converting an attic into a bedroom does. The difference in the numbers is that attic renovations recover 73 percent of the costs in the appraisal while basement renovations only recover 66 percent of the costs on average. Document updates. This is more important than you may realize since some updates have a more visual effect than others. Updates like new roofs, electric system upgrades, and even updates to the heating or air conditioning in the home are not aesthetic improvements, but can offer significant increases in appraisal values. Offer the appraiser before and after photographs along with copies of receipts and other documentation regarding the upgrades. Clean everything. Consider a professional cleaning of the home, carpets, and everything in between. You want to make sure the house looks and smells clean, and a little extra help never hurts – especially for pet owners. Carpet and upholstery cleaning can help clear the air of pet smells you do not even notice in your home. Consider kenneling your pets. You want the appraiser as calm and comfortable in your home as possible. If he is nervous around dogs or allergic to cats, it is best if they are not there while he is working on your home appraisal. Handling a Low Appraisal While you’ve put much blood, sweat, tears, elbow grease, and love into your home, those things do not always translate into dollars and cents for appraisers. They have a cold, unfeeling checklist to guide them. If you get a lower than hoped for, or necessary, appraisal, you do have a few options ahead of you. If you are selling your home, you can work with the buyer by lowering your asking price, or having them increase the cash component of their offer. You might have to split the difference and meet in the middle. If your goal is to refinance your home, you’ll have to do one of three things.
    1. Accept the presented offer even though it is less than you would have liked.

    2. Point out potential errors in the appraisal in hopes of raising the proposed value. Bring facts, figures, and comparable home values in the neighborhood to the table when doing so and present a compelling argument.

    3. Make further changes to your home and get another appraisal.
    A low appraisal is not the end of the world, and the advice above can help you have a better than average appraisal experience, though there are no guarantees when it comes to the business of home appraisals.

    Maximizing a Home Appraisal

    View Resource Maximizing a Home Appraisal
    In some cases, your son or daughter, relative or friend may have difficulty obtaining a car or student loan or apartment rental because they lack sufficient credit history or have had credit troubles in the past. They may come to you and request that you cosign their loan or rental application, guaranteeing the lender or renter that you will repay the loan if the primary borrower is unable to do so. As a cosigner, you will be asked to complete all of the loan paperwork alongside the primary borrower. As part of the process, the lender will likely check your credit history as well and approve you as a cosigner. When you are asked to cosign a loan, you should understand the risks that you are taking. Questions to ask as you decide whether or not to cosign
    1. How financially trustworthy is the primary borrower? Perhaps the person asking you to cosign is a young adult with no prior credit history, but who has a good job and is financially responsible. Cosigning with this borrower can be a great way to help him or her get their first loan and start building positive credit history. On the other extreme, the person asking you to cosign may be behind on all her debt payments and is trying to get a debt consolidation loan. In this situation, remember that the primary borrower’s past financial difficulties are likely to continue into the future.

    2. Can I afford to pay this loan in full? If the primary borrower stops making payments, the lender will try to collect from you. In most cases, you will still be legally responsible for paying the loan even if the primary borrower declares bankruptcy, is permanently disabled, or dies. Do not cosign unless you are able and willing to take over the payments for the loan.

    3. How important is my credit score to my financial future? All account activity from a cosigned loan appears on your credit report, just as if you were the one who took out the loan. If the primary borrower misses a payment, this missed payment will decrease your credit score. Also, lenders include the loan’s monthly payment when calculating your debt-to-income ratio for a mortgage. If you plan to get a new loan yourself in the future, cosigning can be risky.

    4. How does this particular lender communicate with cosigners? Often you will not learn that the primary borrower is late on payments until the lender calls you to collect a big debt. However, some lenders are willing to be in closer communication. For example, they may agree to notify you whenever the primary borrower is late on a payment. This allows you to contact the primary borrower yourself, learn what is going on, and make a plan to get back on track.
    Handling a default on a cosigned loan If you discover the loan you cosigned is in default, which is when the primary borrower is not making payments, first contact the borrower and ask what is going on. Perhaps they forgot to make payments, so your call can provide a quick fix. Often, though, the borrower is having financial difficulties and is not able to make payments. In this case, you need to take action to protect your credit score from further damage. Contact the lender to learn how far behind the primary borrower is and what the lender can do to help. Some lenders will issue a forbearance, which allows the borrower to temporarily stop making payments, especially when dealing with major setbacks like unemployment. Other lenders will forgive late fees if you immediately pay the missed payments. It is difficult to get out from a cosigned loan once it is in default. Consider asking the primary borrower to refinance the debt on her own or with a different cosigner. If the cosigned loan is for a car, another option is to have the primary borrower sell the car to repay the loan. Consider bankruptcy only as a last resort, and be aware that both you and the primary borrower would need to separately declare bankruptcy to get you both out from under the loan.

    Cosigning a Loan

    View Resource Cosigning a Loan