Jan. 4, 2010 -- Elisabeth Leamy, consumer correspondent for "Good Morning America," identifies areas where people spend the most money and shows you how you can save more by tackling large expenses. In "Save Big," Leamy shows how to cut spending on houses, cars, groceries, health care, credit and more.
After reading the excerpt below, head to the "GMA" Library to find more good reads.
"SAVE BIG" Introduction
My savings sage —the one who crystallized everything I had ever thought about saving money— was a bleached-blonde mom wearing orange mood lipstick and towering, clear plastic high heels. She had this skittish way of laughing after she made an important point. You would think some imposing, paunchy, appropriately graying guy would have been my guru. But no . . .
Good Morning America had dispatched me to the Chicago area for a story about "The Most Frugal Moms in America." I admit I went with a resigned, well-at-least-I've-got-this-down-to-a-science kind of dread, expecting an interview about creative ways to reuse cottage cheese containers and old pantyhose. But then I met this savvy single mom who had paid off her mortgage in five years. Twice. On two different homes. She had even gotten laid off and managed to stay home with her kids for two years — without a job — because she kept her expenses so low.
"How do you do it?" I asked, with awe.
"I try to focus on the big stuff," she replied.
Then she let out that cute, kooky laugh. But I didn't really hear it this time because I was having my own little epiphany. Of course! I had never put my philosophy into words before, but there it was. I've always preferred to save a lot of money on a few things rather than a little bit of money on a bunch of things. I like to SAVE BIG. Not small.
I've never read a book that sees it my way. They all list a litany of what I call "Small Stuff Savings" on the premise that "every bit counts." Switch to low-flow showerheads, save $5. Inflate your tires properly, save $9. Use your own bank's ATM, save $3. Pack your lunch, save $7. And the all-time favorite target: Skip your morning latte, save $4.
Brace yourself, now, because my advice is to go for it! Have the latte! No, the Coffee Council is not paying me off. No, I'm not caffeine-addled. I don't even drink coffee! The point is, why give up life's little pleasures and conveniences when you can save money by attacking a few BIG expenses instead? In fact, you can save more money my way. You can SAVE BIG. The key is to identify the areas where you spend the most money, because that's where you can save the most money. The five things we spend the most money on are:
5. Health Care
I'm going to show you how to save tens of thousands of dollars in these five parts of your financial life. For example, refinance into a shorter mortgage and you can save $103,536. Find out about a secret warranty where the manufacturer fixes your car for free and save $1,200. Raise your credit score just 100 points and save $93,600. Stockpile groceries when they're on sale instead of when you need them and save $5,772. And pick and choose your prescriptions to save $ 6,350.
As you can see, I don't believe in pinching pennies. I like to pinch $1,000 bills! In fact, every tip in this book has the potential to save you at least $1,000. Anything less than that didn't make the cut. This book contains $1,176,916 worth of savings in all. You would have to deny yourself 294,229 lattes to save that much money!
These savings are possible for anybody who lives somewhere, drives places, charges stuff, eats food, or gets sick sometimes —and wants to do it all for thousands less. In the wake of the tumultuous economic times that began in 2008, there's renewed interest in saving money. My message is that it doesn't have to be a drag.
SAVE BIG (not small) and I think you will find that you save something even more precious than money: time. The puny savings ideas other authors tout take a lot of time. They need constant maintenance. They require willpower. In the face of a zillion different daily deprivations, most people fail. I find it much easier to channel my energy into a few BIG cost-savers that I only have to tackle every once in a while. That's why most of the savings strategies in this book are things you only have to do every few years.
The precise rankings of our top five costs don't really matter. The point is that they are BIG. In each Part of the book, I add up the BIG SAVINGS I'm about to show, then make a Small Stuff Savings comparison, just like I did with the lattes. You won't achieve these savings all at once, but each time you try one of my ideas you will SAVE BIG.
But wait! There's more! I've scattered BIG SECRETS throughout the chapters —insider information that will help you keep your money in your wallet. Then I summarize each chapter with my list of BIG TIPS, your action plan to get started saving. My Web site, www.ElisabethLeamy.com, is a companion to the book, organized chapter by chapter. Every time you see a Web site or calculator mentioned in SAVE BIG, you can go to my site and I will link you to the precise page that you need, so you don't have to hunt for it. I've also included recommended reading and other resources on my site.
Reprinted by permission of the publisher, John Wiley & Sons, Inc., from SAVE BIG: Cut Your Top 5 Costs and Save Thousands, by Elisabeth Leamy. Copyright © 2009 by Elisabeth Leamy.