4 Ways to Plug Your Money Leaks

Resolving to save Foolishly is good. Resolving to spend Foolishly is better.

We all spend. We buy groceries, services, and birthday gifts. We pay mortgages and utility bills. We go on dates and take vacations. We invest. (Right?) Like a hyped-up 2-year-old, money never sits still. All we can do is make sure it heads in the right direction. And if you're like me, that's a challenge most of the time.

This year, I'm resolving to improve. How about joining me? Here are four ideas for getting the most from your moola in the new year.

1. Consolidate services. Have you noticed how telecommunications companies always pitch bundles? There's a good reason for this. Internet and pay TV fees compensate for money losers like wireline telephone and cable access.

Every major telecom company has a bundle. More than 230,000 signed up for AT&T's (NYSE: T  ) U-verse digital TV programming package in the third quarter, with "high broadband and voice attach rates." In English, this means customers were signing up for more bundles of TV, voice, and data.

Can you really save doing this? Sure. Here at the Beyers household, we're trying a bundle through Comcast, whose Xfinity service includes an iPad app to help customers get TV anywhere. As subscribers to Xfinity, I estimate we'll save anywhere from $30-$50 per month we'd otherwise spend on separate providers.

2. Dump load funds. More than 80 million of us invest in mutual funds. Too many pay for the privilege through something called a load. Essentially, it's a sales fee collected when the account is opened or closed.

Either way, the majority of the time it benefits fund managers such as Eaton Vance (NYSE: EV  ) and Franklin Resources (NYSE: BEN  ) more than their investors. Both companies have enjoyed a surge in profits over the past year as newly enthusiastic investors have poured money back into their funds.

3. Refinance the house. Interest rates continue to be near historic lows. Why not try refinancing? Yes, there are costs and paperwork involved, but consider the savings. Refinancing a $200,000, 15-year mortgage charging 5.5% to 4% could save you more than $170 a month and $30,000 in interest payments over the life of the loan, according to Bankrate.com's savings calculator.

Sound too pie in the sky? Don't bet on it. We're getting a similar deal from our lender, JPMorgan Chase (NYSE: JPM  ) . The only reason we aren't saving on it is because we're taking out some cash for renovations and reducing the term from 15 years to 10 years.

Deals are more readily available today because banks have access to cheap money for lending. JPMorgan Chase and Wells Fargo (NYSE: WFC  ) , in particular, have better borrowing conditions to thank for resurgent returns on equity and net margins.

4. Renegotiate everything. Everything's negotiable until it isn't -- from your insurance premiums, to your mobile contract, to your cable service. Threaten to quit, and most service providers will find a way to keep you. Some may even throw in some perks.

Just ask DISH Network. In its effort to keep us from running into the arms of Comcast, the satellite provider offered us free pay-per-view movie coupons, and a new HD receiver. Churn costs DISH as much as any provider, and we've been subscribers long enough that it makes sense to offer us a deal to stick around. If we weren't so dissatisfied with DISH service, we'd jump at the offer.

So those are my four ideas. But they also can't be the only ones worth considering. Got a financial resolution to share? Use the comments box below to let us know how you'll get the most from your moola in 2011, and stay tuned to Fool.com throughout the next few weeks for more ideas for how to kick financial butt in the new year.

Interested in more info on the stocks mentioned in this story? Add AT&T, Comcast, Eaton Vance, Franklin Resources, JPMorgan Chase, Wells Fargo, or DISH Network to your watchlist.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of JPMorgan Chase and Wells Fargo and is also on Twitter as @TheMotleyFool. Its disclosure policy plugs the five-hole like no goalie you've ever seen.


Read/Post Comments (10) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 30, 2010, at 3:46 PM, MrMoney777 wrote:

    Sounds like foolish advice to unload load funds especially when the fee has already been paid. Load fees benefit the brokers that sell them not the fund families themselves. A good broker earns that fee by keeping your money in the most relevant fund for the current market conditions, movement between funds requires no additional fee. Franklin has hundreds of funds and some of the best emerging markets funds. Load funds are also inherently more stable in volatile markets since the average investor- prone to pull money out at the worst possible time- has to hesitate having already paid the load. It pays in the long run especially if you have a broker who not only watches changing market conditions on a daily basis but take the time to adjust your portfolio accordingly.

  • Report this Comment On December 30, 2010, at 4:50 PM, TMFMileHigh wrote:

    @MrMoney777,

    >>Sounds like foolish advice to unload load funds especially when the fee has already been paid.

    Bad phrasing on my part. The subtitle should have said, "Avoid load funds."

    >>A good broker earns that fee by keeping your money in the most relevant fund for the current market conditions, movement between funds requires no additional fee. Franklin has hundreds of funds and some of the best emerging markets funds. Load funds are also inherently more stable in volatile markets since the average investor- prone to pull money out at the worst possible time- has to hesitate having already paid the load.

    This is worse than bad advice; it's conflicting advice. Buy load funds because they allow your broker to time the market at no cost to you ... and because the load keeps you from trying to time the market.

    My problem with load funds is simple. Brokers pitch them as if they're designed to outperform their no-load peers. Very often that's *not* the case. The Fairholme Fund (FAIRX) is a great example.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On December 30, 2010, at 6:15 PM, MrMoney777 wrote:

    Tim.....The relevant question here is whether or not you have a good broker or perhaps are brokers worth the fee. Most people do not have the time or the inclination to accurately time the market- a process so complex that most professionals can't beat it. Just as most mutual funds can not beat the sectors they are invested in. I find it equally disturbing that the Fool trashed Load funds while in the same column showing an advertisement for their proprietary No Load fund. Too many analytical outlets become self serving- thats the real conflict. : )

  • Report this Comment On December 30, 2010, at 6:37 PM, TMFMileHigh wrote:

    @MrMoney777,

    Thanks for the follow-up.

    >>Tim.....The relevant question here is whether or not you have a good broker or perhaps are brokers worth the fee.

    I think the latter is more relevant, though I'd never advise using a broker. A fee-only financial planner, on the other hand, can offer wonderful service to those who have money questions they'd rather not tackle on their own.

    >>Most people do not have the time or the inclination to accurately time the market- a process so complex that most professionals can't beat it.

    So are you really suggesting it's possible to time the market? I've never seen research that says expert timing is the key to long-term wealth building. Good research and savings discipline is that most experts tell me.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On December 30, 2010, at 6:44 PM, TMFMileHigh wrote:

    Sorry, that last sentence got away from me. Should have said:

    "Most experts I've read cite good research and savings discipline as the keys to creating a market-beating investing strategy."

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On December 30, 2010, at 8:47 PM, meenyoo wrote:

    what's all this garbage with people posting shopping site links n such?

  • Report this Comment On December 30, 2010, at 8:53 PM, MrMoney777 wrote:

    Tim,

    Actually the market timing concept was brought up by you.......I was making the point that a good broker, which are hard to find, can actually add value dramatically over the course of years required to create wealth by keeping ones assets effectively distributed over multiple sectors. Load fees are irrelevantly small if one considers the decades long investment timeframe required to create true wealth. Most fund families like Franklin have multiple classes of shares so that an investor can still participate without paying a front end load. Franklins low expense ratios are one of the reasons they have earned my respect.

  • Report this Comment On December 30, 2010, at 9:06 PM, TMFMileHigh wrote:

    @MrMoney777,

    >>Actually the market timing concept was brought up by you

    Really? That's not how the thread reads to me. You wrote:

    "A good broker earns that fee by keeping your money in the most relevant fund for the current market conditions, movement between funds requires no additional fee."

    To me, that sounds a lot like market timing.

    >>I was making the point that a good broker, which are hard to find, can actually add value dramatically over the course of years required to create wealth by keeping ones assets effectively distributed over multiple sectors.

    Okay, but I'd still say you're always better off investing on your own in ultra-low-cost index funds, or hiring a fee-based financial planner to do this work for you.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On December 31, 2010, at 11:20 AM, dmawhinney wrote:

    Over time, load funds will outperform no loads as long as you have a good adviser who puts you with the right family of funds. There is no additional load for switching among funds within a mutual fund family like Franklin.

    No load fund managers must always show good performance or be left behind in the scramble for investor dollars. This leads to a significant degree of style shift where no load managers chase after performance instead of sticking to their stated objectives and buy/sell disciplines.

    No load managers also must maintain larger cash balances or be forced into unwanted sales to a larger degree than load fund managers. Investors in load funds have a trusted adviser who can help investors tolerate a degree of market volatility. No loads are at the mercy of fickle, unmanaged whims of investor sentiment. If you track the experience of investors in load funds versus no load funds, a much larger percentage of investors in no load funds wind up buying at the high and giving up at the bottom - a behavior avoided by investors with good advisers using load funds.

    Further, if you stay invested within the same fund family for more than 5 years or so, the annual fees of a no load begin to outpace the up front fee of a no load. That's because the fees charged by the no load funds apply to the current balance.

    It's just plain bad investment advice to focus solely on no load funds. Don't buy load funds from a broker; buy them from an adviser. There is a huge difference. I never collected a second load fee from any of my clients ever because I used solid mutual fund families, taught my clients about price volatility, and used families that had an array of top performing funds to chose from in the event their investment objectives needed to change. I also reduced load fees in most situations by reaching higher breakpoint levels with my clients. Those clients today are only paying 25 basis points in annual fees often on investments that have doubled or more. What are you paying on your doubled no load fund?

  • Report this Comment On December 31, 2010, at 11:30 AM, brocktonjohn wrote:

    hi,

    re: your advice on "bundleing" telecomm services.

    You're right you can save money vs. buying individually, but only for a period. Each provider offers "incentives" to attract consumers from the competition, these deal expire after a term, and the "roll to" rate is often the same or higher than you were paying. So, unless you keep switching to the latest-greatest deal, these savings are fleeting.

    I work for one of these providers, and I am a customer of another. I've seen my residential "bundle" go from $145/month to over $200, (with no changes) and I regularly sell customers on saving $50-100 a month, but that only lasts for a year at most. But, hey, then I can sell them another, better "deal"!

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