Seeking to take emotion out of investing, stock analysts have invented many systems of technical analysis. Technical analysts look only at numbers.

Most believe a thorough study of stock price and volume patterns alone should allow the prediction of future prices. Some technical analysts study more factors than price and volume. All build elaborate charts and read them for clues to the future. Often, extensive computer modeling and game playing systems are employed. Economic factors, stockbroker pressure, the brother-in-law’s inside information, the CEO’s cold, and other factors are ignored.

Technical analysis is great for number people. You can play with endless formulas to analyze past trends hoping to predict the future. However, technical analysis is best employed on other people’s money. Then you can remain objective and emotionless. All the studies of technical analysis show that it is ineffective. Used on your own money, you are likely to have strong feelings as losses mount.

The principal tax-related issue normally affecting the lenders in debt for equity swap transactions is the treatment of any loss suffered as a result of exchanging debt for shares which are likely to be worth considerably less than the debt’s face value. To maximise tax efficiency, such ‘loss’ should be available as a tax shelter at the time of the transaction. In certain jurisdictions, however, losses arising from such exchanges may not be recognised for tax purposes until the disposal of the shares.

To create a structure that will secure tax relief at the time of the debt for equity swap transaction, the following factors may need to be addressed:

The reorganisation must not be structured such that the company ‘repays’ the outstanding debt and the lenders use the notional proceeds of the repayment to subscribe for the company’s shares. Instead, the transaction needs to be an ‘exchange’ of debt for shares.

If a proportion of the shares allocated to lenders relates to rolled-up interest, a further advance may need to be made to the company to notionally repay the interest, with this new ‘debt’ then being exchanged for shares. The direct exchange of accrued interest for shares is often tax inefficient.

The tax efficiency of the transaction, both in the company’s and lenders’ interests, is a key consideration in structuring debt for equity swap transactions. Often considerable value can be released from the company’s accumulated losses by structuring the transaction effectively.

There are two principal methods of accounting for equity acquired in exchange for debt:

Writing-off, or fully providing against the value of the equity. This is clearly the most prudent approach and is required under the internal regulations of many banks. However, this policy may not always accurately reflect the underlying commercial substance of a debt for equity swap transaction. This is particularly so if the principal objective of a transaction is to restore some value to the company’s equity. The risk is that this accounting approach acts as a disincentive for banks to convert the necessary level of debt into equity, and thereby fail to agree to a robust financial restructuring. There is also a possibility that once fully provided, there would be little incentive for lenders to take a proactive role in maximising the value of their equity holdings.

Valuing the shares at the lower of cost and net realisable value. For this purpose, cost is the face value of debt converted and net realisable value is assumed to be the estimated realisation at the proposed exit date. The reporting accountants’ valuation of the company’s equity is usually used for this purpose. For short-term holdings, say, realisable within one year, the market value (if any) of the shares is likely to be the
appropriate indicator of their realisable value. This is providing the market for the company’s shares is relatively liquid. The risk associated with this approach is that there is pressure to take an optimistic view on realisable value and hence use a debt for equity swap transaction to delay making necessary provisions against problem loans.

The lender’s host country or internal regulations will often restrict the options available for the accounting treatment of shares acquired in distressed clients. It is important, however, to ensure that the accounting method adopted does not distort the substance of the transaction. A swap based on the fundamental financial and business issues will ultimately benefit all the parties involved.

Research options to reduce the total amount repaidon yourstudent loan.
- Ask if your loan holder offers benefits for automatic payments debited directly from your checking or savings account.
- Consider making payments during your grace period (Stafford loan) or post-enrollment deferment period (Grad PLUS loan), which will save you interest expenses over the life of the loan.
- If possible, pay more than the required monthly payment. Any additional amount you pay will reduce your outstanding principal balance, resulting in earlier payoff and lower interest costs over the life of your loan.
- Get organized. Carefully read all of your student loan-related correspondence and create a “my student loan” file to hold statements, notices and other important loan documents.
- Keep a phone log. Take notes when talking to your loan holder, including the date of each conversation, the name of the customer service representative who assisted you and a brief description of the conversation.

A student loan is the first credit management experience for many students and can significantly affect your credit history. To establish and maintain a good credit history, it’s important to take proactive steps to repay your student loan successfully.

Develop a monthly budget. Creating a budget – also known as a spending plan – helps you decide where to spend your money. If you already have a budget, adapt your current plan to include your monthly student loan payment before the grace period (for a Stafford loan) or post-enrollment deferment period (for a Grad PLUS loan) ends. Repaying your student loan is not optional; your loan payments are just as important as any other fixed monthly expense, like rent or car payments.