Creative Ways to Cut Costs

Cutting insurance and prescription costs will increase your savings.

ByABC News via logo
January 12, 2009, 3:45 PM

Jan. 13, 2008 — -- Let the new year bring mean a new start for you financially. "GMA" financial contributor Mellody Hobson gives creative tips on how to cut costs and bank more bucks.

One of the best ways to cut back is by trimming your insurance costs, whether that's medical insurance or your other insurance policies. How can you do that? Raise your deductibles. If you raise the deductible on your car insurance from $250 to $1,000, you can save up to 15 percent on your premiums.

Do that and you'd save $125 every year on the average premium of $829. Increasing the deductible on your homeowner's policy can save you even more, about 25 percent or $191 on the average premium of $764.

The millions of Americans who are self-employed or unemployed can find the biggest savings. About 24 million Americans are part of families in that category, and they need to look for group health insurance.

These are plans that insure large numbers of individuals, at a discount, usually through a professional or trade association such as the National Association for the Self-Employed.

According to the most recent government statistics, the average family that's self-insured pays just over $5,500 a year in premiums.

You can save big money by ordering your prescription medications by mail. Many prescription plans have this option, and you need to take advantage of it. When you order a 90-day supply of medication, most plans will waive a good portion of your deductible.

You can save up to 35 percent on your monthly co-payments, or about $90 a year on the average prescription. There's just one caveat: Make sure a U.S. pharmacy is supplying the prescription, so you know the medication meets all U.S. safety standards.