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.
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.