MAKE MONEY ONLINE POSTS: 03/27/19

الأربعاء، 27 مارس 2019

Copywriting

Copywriting may be the most important and foundational skill in all of marketing.

Every ad campaign requires it and it’s used across every single marketing channel.

As a marketer, I’m so thankful that I spend some of my early years improving my own copywriting skills. That time continues to pay massive dividends in my career and across my businesses.

When folks ask me what areas to focus on in order to become a great marketer, my answer is always copywriting.

On Quick Sprout, we’ve put together the best practices and resources to learn copywriting. There’s no need to dig through arhiac tombs of copywriting legend, we’ve found the best tips and tricks for you.

Start here to learn the basics of copywriting:

In copywriting, one item matters more than everything else put together.

Headlines.

That’s right, get the headline perfect and your job is basically done. A common rule is to spend 50% of your time on just the headline and the other 50% on all the other copy that you need for your campaign. I used to think that rule was hyperbolic in order to prove a point, now I believe it’s not aggressive enough. I’d rather spend 70 or 80% of my time getting the right headline.

Many of the biggest wins of my career have been from finding a better headline that instantly increased lead flow by 30%. I’ve run hundreds of A/B tests, no other element carries as much weight as a headline.

After you’ve got the basics of copywriting down, spend the bulk of your time learning how to write better headlines:

Once you have a got handle on how to write headlines, it’s time to learn the tricks and hacks of copywriting. There are quite a few out there. All these little tricks will add up and give you a huge edge in persuasion.

When learning how to be a better copywriter, it’s tough to know how much copy to write. Does short copy or long copy convert better? Some expert copywriter’s will answer this question with: “The copy should be as long as it needs to be and no longer.” They may be right but that answer is unsatisfying. We break down a better answer in Long vs. Short Copy – Which is Better?

People also love to argue over what matters more: design or copywriting. Designers love design. Copywriters love copy. I believe that it matters how design and copy blend together, we go into detail in How to Combine Copy and Design for Optimum Results.

While I love tricks and best practices, all of my major wins have come from deep research and nonstop testing of ideas. During my A/B testing programs, I’d only see 20% of my tests become winners even when I was completely convinced that each test was a brilliant idea. These days, I start by doing deep copywriting research to understand my market as much as possible, then I jump into back-to-back copywriting testing until I find the option that works the best. Then whenever I’m stuck, I go back to the research, brainstorm some more tests, and keep cycling through. Sooner or later, I find the next big winner.

Finally, it’s time to close the sale and convert your prospect into a customer. Lots of folks hesitate here, it can feel sleazy to ask for the sale. There are lots of ways on how to go for the sale in an authentic, genuine way that also works. Check out How to Close the Deal with Your Copy to see how.

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TotalProtect Home Warranty Review | Insuring Your Home Essentials

Every day, we make decisions which help to protect our homes and properties. We insure our vehicles, take out homeowners insurance, and make sure we sign up for the warranties on our items to ensure they are safe and covered for longer.

A home protection plan allows you to protect the essentials in your home in case of malfunction or breakdown.

TotalProtect can help you out by providing a plan which is designed to cover the expense of replacing or repairing your appliances if they go wrong—a fact which is inevitable over time following the general wear and tear of everyday life.

A home warranty means you are fully prepared for whatever life throws at you, and saves you from spending massive amounts on replacing your appliances.

About Home Warranties

TotalProtect Logo A home warranty acts in a similar way to taking out an insurance policy on your home or vehicle.

Most homeowners have home insurance—a requirement for many mortgages—but this is limited to scenarios such as theft or damage to your property from fire or other disasters.

Any mechanical aspects of your home, from garage doors to dryers, will not be included, meaning you will be left with the headache of sourcing a repair person and facing a hefty bill if anything goes wrong.

What Home Warranties Cover

A home warranty, on the other hand, is designed to cover these appliances, as well as heating and cooling systems, plumbing, electricals, and more.

You pay a monthly sum and are fully covered for any repairs, replacements or breakdowns which occur during the life of the product.

In return for this regular payment, the company will provide technicians who can repair, replace or, in rare circumstances, offer a cash substitute for any items which have malfunctioned.

How Claims Are Processed

In the event of a claim, you can contact the customer services team by phone or email, and this resource is available 24/7, even during national and public holidays.

Upon receiving this call, the handler will be able to schedule a technician to visit your home and assess the situation, as well as carry out any repairs or replacements which are needed.

With over 40,000 pre-screened technicians, this is a fast and easy way to deal with the problem quickly.

What TotalProtect Has to Offer

TotalProtect is among our top picks for home warranties. A plan from TotalProtect is ideal for busy homeowners who do not want to be calling a technician every time something breaks down.

This takes up precious time and often proves more expensive. Instead, a single call to your provider will take care of everything for you.

One key bonus is the ability to pick and choose your plans—we will discuss these in more detail later—and this allows you to adapt your policy to your lifestyle and needs, ensuring that you are not paying for anything unnecessary.

You can select the items, systems, and appliances which you require cover for, and tailor your plan to suit you.

TotalProtect Plans

TotalProtect offers three plans. These are:

Appliances Plan

This plan covers all appliances in your home, with a particular emphasis on kitchen and laundry appliances. Items covered include:

Stoves, ranges, and ovens, including wall ovens
Range exhaust hood
Refrigerators
Washers and dryers
Dishwashers
Built-in ice and water dispensers
Built-in microwave
Integrated trash compactor
Built-in dishwasher
Garbage disposal

Systems Plan

As the name suggests, the systems plan is designed to cover all critical systems within your home, such as:

Heating and air conditioning systems
Gas and electrical systems
Interior plumbing
Water heaters
Toilets
Plumbing lines
Plumbing stoppages
Sump pump
Whirlpool bath
Central vacuum
All doorbells and chimes
Garage door opener
Smoke detectors
Interior electrical lines
Interior gas lines
Attic or whole house exhaust fan

Combo Plan

The combo plan allows you to pick and choose the elements of the systems and appliances plans, to create the perfect combination for your needs and requirements.

It also comes with additional benefits, including:

Homeowners insurance discounts
Unknown pre-existing condition coverage
No inspections required before taking out the policy
Coverage for rust and corrosion
No annual aggregate caps
Coverage for your pool or spa

Exclusions

As with any policy, there are certain exceptions and exclusion which cannot be claimed.

Unlike some of their competitors, TotalProtect will cover a pre-existing condition which you were previously unaware of.

That means you will not be abandoned without support if one of your systems or appliances suddenly develops a fault.

There is typically a price cap of around $1,000 per item, which may leave some homeowners out of pocket if you have invested in a particularly pricey product.

Should You Get a TotalProtect Home Warranty?

Pros

Work guarantee: 180-day guarantee on all work, repairs, and replacements, which usually far exceeds the warranty you may get from sourcing an independent technician or service
Customer service: 27/7 access to customer support, allowing you to make a claim at a time which is most convenient to you and your schedule
Flexible payments: Monthly repayments make this an affordable option, and it can work out as being better value than sourcing your own contractors and replacements, particularly if you are required to replace more than one item.
Easy booking: TotalProtect will provide the technician, saving you time and effort
Versatile plans: A range of plans, including the option to create your own providing flexibility and ensures that you are not paying for anything you don’t want or need

Cons

Limited selection: You are restricted to using the technicians and contractors supplied by TotalProtect. There is no option to choose your own supplier, even if you have a preference
Vague exclusions: TotalProtect is not clear on the exclusions from the policy. It is essential to be fully aware of any exceptions before agreeing to sign up
Low maximum: Price cap of around $1,000 per product for a repair or replacement, which could leave homeowners with more expensive items out of pocket

In Conclusion

A home warranty plan is an ideal way for busy and time-poor homeowners to ensure that every aspect of their home, systems, and appliances are fully covered.

It offers an affordable way to repair and replace any aspects which begin to malfunction and has the bonus of coming with a team of qualified technicians who can diagnose and address the problem in no time.

The option of low monthly repayments is also an appealing alternative to the cost of a new air conditioning system or refrigerator.

As with any policy or warranty, it is crucial to read the small print and be confident that you have all of the facts and information you need to make an informed decision. It is particularly important to consider the exclusions to the policy.

Make sure that this information is available to you at the start of the process to reduce the risk of any unpleasant surprises when you come to make a claim.

If you are looking for a convenient solution to take care of your appliances and home systems, a home protection warranty could be precisely what you need.

The post TotalProtect Home Warranty Review | Insuring Your Home Essentials appeared first on Good Financial Cents®.

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First American Home Warranty Review

If you’re thinking about buying a home warranty, you may be considering First American Home Warranty, a leader in the industry.

Home warranties like First American’s can feel like a gamble. Will the warranty pay when you need it to? Or will you find out the hard way your warranty doesn’t cover the repair you need?

You may not know unless you comb through a warranty contract line by line looking for exceptions, conditions, and requirements of you, the homeowner. So let’s take a close look at First American Home Warranty.

About First American Home Warranty

First American Logo First American Home Warranty has been in business for more than 35 years and currently serves about 450,000 clients in 38 states.

That’s a substantial amount of customers and a wide range of coverage. Paired with more than three decades of service, the numbers speak highly for First American’s reputation. It’s one of the leading home warranty companies today.

But you also need to assess the terms of their home warranty policies and the types of claims they actually cover to make an informed decision.

Let’s go through the company’s warranties element by element:

What Does First American Home Warranty Cover?

First American has two plan categories: Basic and Premier. Any prices quoted in this section could change without notice.

First American typically raises its premiums every few years. The company sells annual contracts but allows monthly payments.

Basic Plan

The Basic Plan ($28 a month) covers:

Refrigerator
Dishwasher
Range/oven or cooktop
Microwave
Garbage Disposer
Trash compactor
Washer and dryer

Premier Plan

The Premier Plan ($44.50 a month) covers everything in the Basic Plan, plus:

Electrical system
Plumbing system
Water heater
Central heating
Garage door opener
Ductwork
Central vacuum system

Upgrades

Additional available upgrades to either plan include:

Air conditioning service ($9 extra per month)
Coverage for additional refrigerators ($4 extra per month)
Pool and pool equipment ($15 extra per month)
Well and well pump ($9 extra per month)

How Much Will First American Home Warranty Pay?

To understand how much a warranty could pay, you have to consider payout caps and service fees.

When you contact your warranty company for service, the company will typically send out a technician to assess the situation. You’ll pay a service fee for this initial step, and you can think of the fee as a deductible.

With First American Home Warranty, the fee is $75 in most states, but it could be as high as $100. We looked at a contract from Texas, where customers currently would pay $75 per visit from a technician.

Assuming the repair or replacement you need will be covered by the warranty, your next concern will be the warranty’s payout cap. Again, these can vary from state to state.

Expense Caps

The contract for Texas is fairly typical for First American, and it caps payouts like this:

Plumbing: $500 maximum per year for repairs to the pipes in your home.
Water heater: $1,500 maximum per year, excluding flues and vents and fuel storage areas.
Kitchen appliances: Limited to $3,500 per covered appliance.
Heating system: Limited to $1,500 per year.
Central air conditioning (optional add-on): limited to $1,500 per year.

Other systems in the First American Home Warranty contract do not cap expenses, but they have specific limits on what parts of the system the warranty will repair or replace.

Limitations

In these cases, the fine print can go on for a while, so the following lists aren’t all-inclusive. If you’d like to fully assess the details of a contract, you’ll need to go through the quote process and ask for a sample contract.

The following examples should give you a better idea what to look for when you’re investigating a contract’s limitations:

Electrical system: No expense cap, but the plan won’t pay for door bells, alarm systems, intercoms, audio or video recording devices, damages due to power surges or inadequate wiring capacity.
Garage door openers: No expense cap, but the plan won’t pay for remote controllers, gate motors, hinges and springs, side rails.
Laundry appliances: No expense cap, but the plan won’t pay for repairs to filter and lint screens, knobs and dials, venting, or damage to clothing.

These limitations are typical for a home warranty, and you’ll want to study the details carefully before signing up. If you think the contract won’t provide services you anticipate needing, don’t sign the contract.

Filing Warranty Claims

You will have to wait 30 days after signing the First American warranty contract before you’re eligible to file a claim.

After the waiting period, you can contact First American’s customer service staff any time of the day or night, either via phone or online to start a claim.

How to File a Claim

Starting the claims process online has the advantage of documenting your claim from the outset in case you need to dispute the company’s decision later.

If the customer service staff is certain your problem won’t be covered, the claims process can end immediately. But in most cases, the company will send out a home repair technician who will charge you the service fee we discussed earlier. The service charge is typically $75.

After you pay the service fee, the warranty’s technician should fix or arrange a replacement at no charge, up to the annual limits of the warranty. At this point, your warranty will either seem like a great idea or a waste of money, depending on the outcome of your claim.

Often, when a warranty does not pay a claim, the homeowner feels cheated, and understandably so. However, warranty companies like First American generally do not breach their own contracts, so knowing the intricacies of your contract can help you dispute an unpaid claim.

Common Reasons for Claims Denials

Here are some common and legitimate reasons a warranty could deny your claim for service:

System not covered: When you buy a warranty and then renew it a couple of times, it’s easier than you might think to forget what coverage you bought, especially if your real estate agent helped purchase the initial warranty. A Basic Plan from American Home won’t cover your plumbing, for example, so if you filed a claim to fix a frozen pipe, you’d get an automatic denial. I know this is kind of like asking whether your computer’s plugged in when you call tech support. But there’s a reason people ask.
Bill not paid: Sometimes customers fall behind on their monthly bills and decide to skip a few warranty payments. If that happens and you need to file a claim, you’re giving the warranty company a reason to deny service.
Contract caps met: American Home has more relaxed payout maximums than most other companies, but on many systems, the company still sets an annual maximum. This makes sense: A company wouldn’t stay in business if it regularly paid out more than you’re paying in premiums.
Maintenance standards not met: Again, American Home’s standards aren’t as high as many other companies, some of which require proof you’ve performed regular maintenance on your covered systems in order to get coverage. American Home will often require regular maintenance on larger items such as your central heat and air (if you opt into AC coverage). The company typically doesn’t require its own initial home inspection before you sign the contract.

How to Avoid Denied Claims

Getting a claim denial can be infuriating. You feel cheated, and you still have to figure out how to pay for the repair you need. Reading your contract carefully, line by line, will help you know whether the warranty provider is living up to its agreement or whether you should file a claim.

Believe it or not, a denial may not be the worst experience you can have with a warranty company. You could get approved for service only to experience delays in service making you feel stuck in-between.

Or, you could get stuck in another in-between: a repair you’re not happy with that the warranty company insists has been completed.

Who Will First American Send to Help?

First American has its own staff of home repair technicians. If the company’s technicians need more expert help, they can bring in specialists of their choosing. Customers have little control over who comes out to repair your home system.

Although First American serves nearly half a million customers around the country, the company usually sends technicians from your general area.

This reduces waiting times, and it also helps the company adhere to your local codes.

However, the company will not send help specifically to get a system up to code. A warranty exists to replace or repair systems in your home, not to maintain them.

Grading First American Home Warranty

If you’re trying to decide whether to buy a warranty from First American Home Warranty, you’ll quickly discover it’s a tough question to answer.

First American Pros

Simple contracts: Compared to many other companies, First American’s contracts can be easier to understand.
Lower premiums: The company is on the lower end of the cost spectrum.
Complaint resolution: The company has the customer service staff in place to help resolve customer complaints.
Reasonable caps: On the surface, none of First American’s annual caps on repairs seem prohibitively low.

First American Cons

Lack of clarity: Though the contracts are easy to understand, they don’t always answer every question you may have. You may need to call for clarification.
Lack of flexibility: Some warranties allow you to customize your coverage to meet your home’s needs. For example, you could pick 10 systems to cover. First American offers only specific coverage plans.
Closed service network: First American sends its own specialists and technicians, meaning you have less control over the repair process.

What Customers Say

In many ways, the First American’s customer service rates better than other warranty companies:

The Better Business Bureau gives the company a B+.
TrustPilot, which compiles customer reviews, give it 4 out of 5 stars.

These ratings result, in part, from First American’s commitment to dealing with complaints. But, individual customer reviews tell a different tale. Customers express frustration, annoyance, and disgust in review after review.

Of course, customer reviews tend to lean toward the negative. Happy customers are generally less compelled to share their feelings online. Still, this preponderance of frustration can’t be simply ignored.

Truth be told, it’s unfair to single out First American. Just about any home warranty company can inspire these feelings when the warranty doesn’t pay as the customer expected.

Do You Need a Home Warranty?

A warranty works kind of like home insurance, but instead of protecting you against loss of value from disasters such as fires and hurricanes, a warranty can shield you from out-of-control home repair costs.

When to Avoid a Home Warranty

You have a healthy savings account: When you could afford to repair or replace major appliances or home systems if needed, you could have less need for a warranty.
You can borrow money easily: When you have great credit and a low debt-to-income ratio, you can usually find no-interest loan offers for big repairs like HVAC systems or electrical wiring repairs.
You have a brand new home: The protection a warranty can provide makes the most sense with older homes which could require expensive repairs at any point.
You have other protections in place: Maybe most of your home’s systems already have manufacturer’s warranties or service contracts from the installation company.
You’re good at fixing things: Some people have the gift of fixing just about anything that breaks, meaning they’d be on the hook only for parts and their own time.

If any one of the above scenarios describes your life, you could possibly get by without buying a warranty.

When to Buy a Home Warranty

On the other hand, if the following conditions describe your home and your financial life, you may want to consider a warranty more seriously:

Several major systems in your home are old: An HVAC system will typically last 20 to 25 years. Smaller systems such as dishwashers, clothes washers and dryers, garage door openers, and stoves may last a decade or so. If you buy an older home with aging systems, a warranty can seem more appealing.
Your mortgage payment stretches your budget: If your house payment already takes 35 percent or more of your monthly income, a huge repair bill could spell financial disaster. A warranty may seem like a sensible precaution.
You don’t have much in savings or solid credit: If you couldn’t spend or borrow your way out of a tight spot, a warranty can provide some extra peace of mind.

Someone with all of these limitations may be the most ideal candidate for a home warranty. But someone with a tight budget also has the most to lose by getting a warranty that doesn’t pay.

Bottom Line: Become an Expert on Your Contract

Here’s the number one rule if you’re shopping for a home warranty: Read and understand every last word of the contract before signing up.

If you don’t understand part of the contract, get in touch with the company’s customer service staff to get answers to your questions.

Becoming an expert on your warranty’s contract will help prevent you from being surprised when the warranty won’t cover a repair you need.

Becoming an expert on the contract can also prevent you from buying a plan that doesn’t meet your home’s specific needs.

Home warranties like First American sell peace of mind. It’s up to you to find out whether the warranty would actually provide it.

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Using Your True Hourly Discretionary Income to Make Smarter Purchases

One of my favorite personal finance ideas is the true hourly wage.

Your true hourly wage is an easy concept to understand. Basically, you add up all of the hours you either work or devote to work-related tasks in a year (this includes things like your commute or working at home), then you add up all extra expenses that you incur due to work in a year (taxes, clothing, commuting costs, fuel, and so on). Take your annual salary, subtract all of the extra work-related expenses, and then divide that resulting number by the total number of hours devoted to work, and you get your true hourly wage.

So, for example, let’s say I make $50,000 a year. I work 40 hours a week for 50 weeks a year, but I have to spend one hour commuting each day, I spend about 10 hours a month working at home, I spend about five hours a month at work related dinners, and I spend another 30 hours a month traveling. That adds up to 2,740 hours in a year.

At the same time, I pay about $8,000 in income taxes, about $5,000 in fuel costs and car depreciation, and about $3,000 in travel costs and entertaining people and going out for meals. So, my total income that I actually keep is $34,000.

If I just divide $50,000 by the 2,000 hours I’m actually at work, my hourly wage is $25. However, if I divide my real income of $34,000 by the 2,740 hours I actually devote to my job, my true hourly wage is $12.41.

I like to use the true hourly wage to consider non-essential purchases. If I want to buy a new $50 board game, that means that I’m spending four hours devoted to work. If I want to go on a $2,000 trip, I have to spend 161 hours on work or work-related tasks.

The thing to remember is that this is basically tacking those extra hours on the end of my career. By spending that money on something on the spur of the moment for fun, I’m taking money away from retirement savings right now, and that lost savings means that I’m working longer hours later in life. That trip isn’t just 161 hours of work now, it’s 161 hours of work when I’m older and want to hang things up.

It starts to really put those things in perspective.

However, after a recent conversation with a reader, it’s clear to me that a person’s “true hourly wage” might not be powerful enough.

Seth made the brilliant point that there are some fundamental life costs that we simply can’t avoid. You have to have some level of housing. You have to eat. You have to have electricity. Depending on your situation, you might need a car.

Seth’s point was that you should subtract those fundamental life costs from your true hourly wage, because you use the true hourly wage to evaluate unnecessary expenses. After all, you don’t spend the rent or the mortgage payment on unnecessary things.

So, for example, let’s say that the person described above spends $400 on basic food needs, $1,000 in rent, and $300 in utilities per month. That adds up to $20,400 a year. If you subtract that out of the $34,000 left after taxes and work expenses, that leaves you with $13,600. Taking that number and dividing it by the 2,740 hours devoted to work per year, that leaves a person with $4.96 per hour of time devoted to work.

That $50 board game? That’ll take about 10 and a half hours of work. That $2,000 trip? 403 hours of work. Even something like a $5 cup of coffee and a bagel requires more than an hour of work to come up with that much discretionary income.

Not only that, people often lock down a lot of their discretionary income. Got a cable or satellite subscription? That averages $100 a year, so for our example person, that’s about 21 hours of work to pay for it. Got a gym membership for $100 a month? 21 more hours of work. Do you go out to eat twice a week and spend $15 a pop? Over the course of a month, that’s 19 hours of work to earn that.

Lower our example person’s salary a little and their true hourly discretionary income drops quickly toward zero.

Much like true hourly wage, I find that true hourly discretionary income is a really powerful way to put expenses in perspective. It quickly makes it clear how much of your life’s energy is devoted to unnecessary expenses.

If your true hourly discretionary income is $4 an hour, then something that costs $20 basically devours five hours of your life. Is it really worth it?

For me, I find that knowing my true hourly discretionary income gives me a pretty powerful metric for determining if an item is worth buying or not. When I’m considering a non-essential item, I just think about how many hours I have to work in order to actually pay for that item, and then it typically goes right back on the shelf.

Let’s say my true hourly discretionary income is $6 (a reasonable estimate). I go to the bookstore and I’m eyeing a book that costs $15. If I buy it, that’s effectively two and a half hours of work just to have the book. On the other hand, if I go to the library and get the book, I save those two and a half hours.

The truth is I don’t want to invest lots of hours in my life working for something unless that something is really valuable or meaningful. Just getting a cup of coffee at Starbucks isn’t valuable or meaningful. Going to a coffee shop with a friend every once in a while, on the other hand, is a meaningful experience – it’s rare enough that it’s actually a treat and there’s social value to boot.

Just buying a book isn’t highly meaningful on its own. However, if I read a book from the library and I realize it’s something deeply special and meaningful, then buying it is likely a worthwhile experience.

The point is that true hourly discretionary income puts your purchases in perspective. You clearly see how much of your life energy you’re trading for various things and you begin to see that it’s not really a great tradeoff.

How can you calculate your own true hourly discretionary income? Here’s how you do it.

First, figure out how many hours you work during a given year. You don’t have to be perfect, just make a good estimate.

To that number, add in how many hours you commute each year. How long does it take to get to work? Double it, then multiply that by the number of days you work each year.

You’ll want to also add in things like time spent working at home, time spent traveling, time spent doing things like entertaining clients, and so on.

Now, turn to your salary. How much do you make in a year?

Subtract from that every single required expense. This doesn’t just mean your costs for taxes and for commuting. It also includes things like work clothing, basic personal clothing, basic food and water, rent, basic utilities (like electricity), store brand household supplies, and so on. Include just the costs that are the minimal expense to get through life and keep working.

This will take a while. Think about all of your expenses and ask yourself whether they’re required to maintain a basic existence and keep your job. (A nice side effect of this is that it will often unveil areas of your life where you could cut back.)

Total up all of those expenses over the course of a year and subtract that total from your salary. That’s your annual discretionary income.

Then, divide that annual discretionary income by the number of hours devoted to work-related tasks in a year. That’s your true hourly discretionary wage. That’s how much discretionary income you get for each hour you devote to work or a work-related task.

Often, that number is shockingly small. It puts things like a cable bill or a night on the town into real perspective. Do you want to devote twenty or thirty hours of your life doing work tasks to this unnecessary thing?

Sure, sometimes you’ll want to, and you should sometimes. There are expenses in life that are worth those hours.

However, there are going to be a lot of things that you spend money on that really aren’t worth it. Those are expenses you should strongly consider cutting.

I often use my true hourly discretionary wage as a factor in deciding whether a particular expense is worth it. Usually, I find that I don’t really want to devote that much of my life to that expense and that makes it much easier to just say no to the more wasteful expenditures in my life.

Good luck!

Read more by Trent Hamm:

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74 Million Americans Have More Credit Card Debt Than Savings: What to Do If You’re One of Them

America’s compulsion for credit card spending appears to be reaching entirely new heights.

A recent report from Bankrate found that a staggering 74 million Americans now have more credit card debt than emergency savings, which is the highest that figure has been in nine years.

Looked at another way, only 44% of American households have more emergency savings than credit card debt, according to the same report. That’s the lowest that savings-to-debt ratio has been in nine years.

Also noteworthy: The deterioration of the American households’ emergency savings relative to credit card debt extends across both genders, all ages, all educational backgrounds, all income brackets, and political party affiliations.

In other words, Americans are collectively moving in the wrong direction, says Bankrate chief financial analyst Greg McBride.

“Consumers should make hay while the sun shines. Now is the time, with unemployment low and wages rising, to right-size the equation by paying off high-cost credit card debt and adding to emergency savings,” said McBride.

If you happen to be among the 74 million Americans struggling to get out from under a mountain of credit card debt, while fretting about having zero savings in the bank, the dilemma is often which challenge to address first? Save money? Or pay off debt? Or try to do both? Here’s what personal finance and credit experts had to say about finding a financially stable path forward.

Aggressively Pay Down Debt

When faced with more credit card debt than savings, there’s rarely one best solution that applies to everyone, begins David Gafford of Shift Processing, a credit card processing company. However, in most cases it’s going to be a wiser move to pay off high-interest debt before building savings, he said.

“The reason this makes sense is because if you’re paying more in interest on credit card debt than you’re making on the interest you gain by saving, you’re still losing money,” Gafford explained.

James Lambridis, founder and CEO of Debt MD, a startup that connects people with professional help to become debt-free, also urges paying off debt first before worrying about savings.

“We live in an age where people are constantly comparing their lives to those of their peers, especially through social media. Many people finance their extravagant lifestyles with credit cards in order to ‘keep up with the Joneses.’ As a result, some people have zero savings, and loads of credit card debt. When faced with this situation, your number one priority should always be to pay the debt off first before trying to accumulate savings,” said Lambridis.

“With the average interest rate on a credit card being around 16%, if the balance isn’t paid off in a timely manner, you’ll end up paying double or sometimes even triple the principal balance,” added Lambridis, who says paying such high interest on a mountain of credit card debt is the metaphorical equivalent of bleeding money.

Read more: Should You Use a Personal Loan to Pay Off Credit Card Debt?

Speed Up the Process of Eliminating Debt

To help rid yourself of debt even more quickly, start eliminating unnecessary household expenses and put that saved money toward your credit card bills.

“You need to be tracking your actual income and expenses down to the penny,” says Michael Kern, a CPA and founder of Talent Financial, a personal finance and small business consulting company focused on helping people get their finances in order.

“Go line by line and cut any expenses that are not necessary,” continued Kern. “This will allow more income to flow into savings and paying off debt, which will ultimately get you to your financial goals faster.”

Read more: 40 Ways to Save Money on Monthly Expenses

Shift Debt to a Lower Interest Rate Vehicle

Yet another critical step when trying to rid yourself of credit card debt is shifting the balances to a lower interest rate financial vehicle. From zero-interest balance transfer cards to personal loans, there are several options for doing this, says Lambridis.

“A debt consolidation loan can wrap all of the payments into one lower monthly payment at a lower interest rate and give you a concrete finish line for when the debt will be paid off,” he suggests.

Another option is enrolling in a debt management plan offered through credit counseling agencies, which can also help lower interest rates while helping you to pay off the debt in three to five years, said Lambridis.

“When you enroll in a debt management plan, whichever cards you enroll are closed, so you will not be able to use them,” Lambridis explained. “You make one payment to the credit counseling agency, and they disperse the funds to each of your creditors at the newly agreed-upon payback terms.”

Often, there’s a small fee to sign on for a debt management plan (around $50), said Lambridis. In addition, there will likely be an ongoing monthly maintenance fee, which is also around $50, depending on which agency you choose.

Read more: How to Get Out of Debt Without Credit Counseling

When It Makes Sense to Save Before Eliminating All Credit Card Debt

In some cases, it can be a good idea to work on establishing an emergency savings even while you still have significant credit card debt. For instance, Gafford suggests that if your debt already has a very low interest rate, go ahead and start putting money into savings for a rainy day.

However, if you still have a high interest rate, it makes more sense to focus squarely on paying down those credit cards or transferring your debt to a lower interest rate solution. “Once debt is at a lower interest rate, building an emergency fund becomes more feasible,” Gafford explained.

Ben Watson, CFO at DollarSprout.com, a personal finance and entrepreneurial website, suggest creating a mini-emergency fund while you’re working to tackle debt. Don’t aim to have the standard six to 12 months’ worth of expenses squirreled away that advisors often recommend. Instead set a target of having at least $500 to $1,000 set aside for legitimate emergencies, he says.

“If you’re starting from zero cash, spend a weekend or two cleaning out the attic, garage, and spare room and sell things you don’t need anymore,” said Watson. “Go full Marie Kondo on your place and list items on Facebook Marketplace, eBay, or have a garage sale. Anything you haven’t even thought about for more than 12 months should be considered as potential cash. There are tons of simple ideas to make a quick buck on the internet, find one that fits you and go for it.”

Read more: How to Make Money

A Lifestyle Out of Control

Mike Pearson, founder of CreditTakeoff.com, suggests the challenge so many Americans are now facing — having more credit card debt than emergency savings — has a great deal to do with how we frame the issues.

“[It’s] not a matter of simply not having enough money, but rather having your spending totally out of control,” explained Pearson. “When you control your spending, everything else — including debt payoff and savings — falls into place.”

In other words, he says, the best way out of this situation is to create a reasonable budget, stick to it, and at the end of the day, know that you simply cannot spend more money than you earn.

“If you take home $2,500 after taxes each month, then your expenses cannot exceed $2,500. Simple concept to understand, but much more difficult to apply in real life,” said Pearson.

Only when you’ve mastered this concept, however, can you truly start to make progress paying down your credit card debt and building up your emergency savings — because you will actually have money available to address both of those problems.

“Some will say it’s a good idea to have a $1,000 emergency fund first, just in case something bad happens. Others will say pay off credit card debt first because you’re getting killed with interest charges,” concluded Pearson.

“At the end of the day, it doesn’t really matter… Much more important than picking which one to tackle first is to understand both of these issues come back to spending. If you don’t get your spending under control, you will never climb out of debt and you will never have savings.”

Read more: ‘The Magic System for Getting Out of Debt and Building Wealth Quickly!’

Mia Taylor is an award-winning journalist with more than two decades of experience. She has worked for some of the nation’s best-known news organizations, including the Atlanta Journal-Constitution and the San Diego Union-Tribune.

Read more by Mia Taylor:

The post 74 Million Americans Have More Credit Card Debt Than Savings: What to Do If You’re One of Them appeared first on The Simple Dollar.

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First 50 Funds Interview: Royal London Global Bond Opportunities' Rachid Semaoune

Rachid Semaoune, co-manager of Royal London Global Bond Opportunities, gives Edmund Greaves the lowdown on the fund, which invest in bonds – debt issued by companies or governments. It’s also a Moneywise First 50 Fund for beginner investors

What is the Royal London Global Bond Opportunities fund?

The main objective of the Royal London Global Bond Opportunities fund is to generate a high level of income, around 5% to 6% a year, and to achieve some capital growth.

The fund is very unconstrained [unrestricted in what it can buy]. It is globally diversified and can invest in high-yield investment-grade bonds and in unrated bonds [company debt that has not had its risk level evaluated by an external ratings agency].

When the fund was launched in December 2015, we started with 60 to 65 holdings. We have around 180 now and we’re probably looking to settle around the 200 holdings mark.

WATCH: Moneywise editor Rachel Rickard Straus gets the lowdown on the fund from the manager.

How do you identify bonds to invest in?

We have an in-house investment process that has delivered strong performances for a variety of Royal London funds and strategies.

We believe that investors tend to overvalue liquidity [the ability to buy or sell a holding easily] and tend not to think about security within a bond and the ‘covenants’. Covenants are just a set of legal languages in the bond documentation that tell the company what they can and cannot do. We focus our investing process when we pick a bond on the security and the covenants.

We don’t mind illiquid bonds if we’re being paid to hold them [interest rates may be higher on illiquid bonds to compensate investors for the fact they may be harder to buy or sell]. This is one way of generating superior income.

What’s been your recent investment strategy?

With oil prices stabilising there have been great opportunities to invest, especially in European/Nordic energy. It’s a small sector, which tends to be more illiquid, but the bonds are secured on great assets.

A good example is a bond from a company called Jacktel. It is a dollar bond, just over $100 million. It’s illiquid and unrated. The bonds are secured on a platform located offshore, near Norway [if for some reason the company cannot repay its debts, lenders will receive proceeds from the sale of the platform].

The platform provides accommodation for the oil workers; it’s like a floating hotel. The platform is leased to Equinor, the Norwegian state-owned oil and gas company that used to be called Statoil. It’s a great company, 67% owned by the Norwegian state, and Equinor is a very creditworthy counterparty.

The investment is secured on the platform and it pays 10%.

The rate is high because it’s a very niche market, so it’s not open to many investors, and the bond is unrated. It’s not something that is on the radar of a lot of fund managers.

How often do you buy and sell bonds?

We tend to hold bonds for many years. We’re not traders. We are not trying to buy bonds and sell them on, making a two- or three-point profit.

If we think that a bond has value and offers great protection, or has great characteristics, we will hold it until something changes, either at a fundamental level or the pricing level.

Typically, less than 30% of the fund is changed each year.

What’s been your best investment decision?

General Electric (GE) has been a great investment. Its power business is not doing well. As a result, the company’s bond rating was recently downgraded from AAA to BBB+.

The company has more than $100 billion of bonds outstanding. The downgrade had a significant impact. A lot of investors and fund managers became forced buyers. [Some investors may have certain rules – for example, that they can only invest in debt of a certain rating, so are forced to sell if the rating on a holding falls.]

That triggered, at its worst, almost a 30% drop in the bond price. We analysed the company and decided that it had many ways to strengthen its balance sheet.

We bought these bonds at around 75p. The firm then announced the sale of some of its pharmaceutical business, which would raise around $21 billion, and that it would apply the proceeds to pay down debt. The bonds rallied sharply and are around 94p [at the time of writing].

And the worst?

My worst was a Lehman Brothers bond in 2008. I bought it because I believed that Lehman Brothers was too big to fail and that the US government would bail it out. Unfortunately, it decided to bail out Merrill Lynch because it was even bigger and let Lehman go bust.

At that time, government support for banks was kind of implicit. You’d have thought it inconceivable that the US would let Lehman Brothers file for bankruptcy.

That wasn’t such a good purchase.

What’s the first thing you personally invested in?

My home in London and a small flat in Marseille. I can see it every day. I’ve got that tangible security.

We have some bonds that are secured on properties. Property values go up and down but in the long run they’re still there.

What’s your top tip for a beginner investor?

I’ve been through many crises in my career: the Dotcom crisis, the financial crisis and the European crisis in 2011.

Don’t panic when markets are volatile. Don’t let that volatility change your strategy or drive your investment decisions. I think that is very important.

Royal London Global Bond Opportunities Key Stats:

Launched: 2015

Fund size: £105.66 million

Ongoing charge (OCF): 0.5%

Yield: 5.91%

Source: Morningstar, 7 March 2019

The manager behind the fund

Rachid Semaoune joined Royal London Asset Management in February 2015, from UBS Asset Management where he spent three years managing investment-grade credit portfolios. Prior to this, he was a deputy credit fund manager at Old Mutual (now Merian) Asset Management.

Rachid studied for a PhD in Physics at Imperial College London and also holds a postgraduate degree in laser physics from the Université Paris 13.

He co-manages the fund with Eric Holt.