Tips for Payday

JUL 17, 2012 4:26pm ET

Things are busy and many loan officers are going to be getting a nice paycheck. Perhaps a few nice, plump ones over the next month or two. I hope this is you and hope you will bear with me (or you can just stop reading) as I do a little mothering.

I've been in this business long enough to see a few refi booms, boom-lets, min-booms etc. I've also been around long enough to see a lot of loan officers' crash and burn after a refi boom, usually because of poor planning. Everything is great when you are getting a healthy paycheck, but life can become quite stressful if you don't plan for the day when loans will slow down. And they will slow down!

Here are my tips to help you make your future a little less stressful:

• Take a look at your closed loans last month. How many were purchases? Can you live on the income from just those loans? If not you have a PROBLEM. You absolutely need to pick up your marketing and deepen your referral relationships. Even if it means working more hours to get it done. Your future pipeline will thank you.

• Make sure you have a six-month cushion. One of the questions on my coaching paperwork is "Do you have a six month reserve?" The answer is usually no and that concerns me. Having a cushion makes living on an income that can fluctuate much easier. When you get a nice big paycheck, it is tempting to go on a trip, buy some new toy or even chunk down on debt (all good things) but I am begging you to not do anything until you have six months of living expenses in a saving account. I personally use smartypig.com because it is a little more difficult to withdraw so I am less tempted.

• Do not change your spending habits long-term. What do I mean by this? Well, if you can't pay cash for it, don't buy it; unless you can qualify for it based on your purchase business only. I know one loan officer that purchased a big house and fancy truck during one refi boom. Financed as much as he could and then almost lost everything when business slowed down. Do NOT take on more debt based on your current ability to repay!

Lecture done—thanks for listening. Have a nice day.


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