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Smart Buying

Don't Waste Your Money: The Rules Changed

You didn't do your homework.

TIPS 7-11

Untangling telecom bills

"Bundling" communications services to get discounts and a single bill sounds good, but you may also find yourself entangled in billing statements that confuse what you're paying for and why -- with a tab that creeps steadily higher. My wife and I recently took on the Verizon FiOS Triple Play Bundle (landline, TV and Internet), which originally cost less than $100 a month but has since risen to $145. We also have a separate Verizon Wireless account with five cell phones. We discovered services we didn't need and billing mistakes. In several phone calls (including an "I demand to speak with your supervisor!" session), we corrected one very expensive error, cut unused and unneeded services, and threatened to take our business to DirecTV. Total savings: $26 a month on the Triple Play, and $70 a month on cell phones. That's $1,152 a year. -- Robert Frick

Minuscule yields

If you have a $50,000 emergency fund in a money-market fund paying the average 0.03% yield, you're earning $15 a year. Open a no-fee, FDIC-insured savings account with a $500 minimum deposit at Discover Bank and earn 1.2% on your cash -- or $600 a year. You access your account online or by phone and make deposits by check or electronic transfer. (You're limited to only six withdrawals per month.) Another option: American Express Bank's FDIC-insured savings account, which pays 1.15% (or $575 a year) with a $1 minimum deposit. The account has the same six-withdrawals-per-month limit.

Inefficient giving

You don't want to keep contributing to a charity that is no longer meeting your goals. To get a quick snapshot, check the charity's most recent IRS Form 990 for total revenues and total expenses, and compare those numbers against the previous year's form. Make sure the charity is spending at least 60% to 75% on programs, as opposed to administration. (If the percentage falls below 70%, ask why.) And the coffers should not be depleted: A healthy organization will end its fiscal year with at least six months' worth of net assets. Finally, see how the charity measures up at watchdog sites such as www.charitynavigator.org and www.bbb.org/charity.

Overpaying for medigap policies

Medigap policies help cover Medicare's co-payments and deductibles, and fill other gaps in medical coverage. They're sold by private insurers and come in ten standardized variations: plans A through D, F, G, and plans K through N. The government requires each version to provide the exact same coverage no matter which insurer offers it, but people often pay more for the same version. For a 70-year-old man shopping for Plan F, the most popular plan, the difference between the cheapest and priciest policies can range from $2,500 to $3,000 a year. Compare medigap rates at www.planprescriber.com or at Medicare.gov's Medicare Policy Search (www.medicare.gov/find-a-plan).

To save even more money, consider the relatively new Plan N: In return for some cost sharing, premiums tend to be much lower than they are for Plan F. But unless you go to the doctor and emergency room many times, you could still come out ahead.

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The wrong annuity

Buying an immediate annuity is a smart way to stretch retirement income. But you could lose hundreds of dollars a month if you don't compare deals on them. Although some types of annuities are incredibly complex, single-premium immediate annuities -- which provide a fixed payout for the rest of your life -- are simple to shop for: As long as the insurer has a good financial-strength rating, pick the policy that offers the highest payout. You can't switch from one policy to another after you've invested, so it pays to shop smart at the beginning. You can look up the best annuity quotes from top insurance companies at www.immediateannuities.com.

See more ways to stop wasting your money.