Mellody's Math: Everyday Money-Saving Secrets

Who wants to be a millionaire?

Of course, the answer to the TV game show question is a simple one: Everybody.

While winning a million dollars may be out of reach for most of us, we can still find hundreds and even thousands of extra dollars in our own personal budgets by making judicious decisions and taking advantage of some extraordinary money-saving opportunities.

Here are 10 easy ways to save money, and even some ways to make money.

Join the Club

Who say's getting older is a bad thing? Anyone who is 50 years of age or older can join the AARP (formerly known as the American Association of Retired Persons) to receive discounts on everything from rental cars to admission to national parks. The cost to enroll is just $12.50 a year. (

Another club that offers a wide range of discounts to its members is the American Automobile Association, more commonly known as AAA or Triple A ( Besides providing roadside service to members approximately 30 million times yearly, AAA membership opens the door to discounts on everything from hotel rooms to homeowner's insurance. AAA's annual $52 fee entitles members to discounts at restaurants, movie theaters, sporting events, amusement parks and a vast array of travel-related ventures.

Regular Rebates

Aside from the fee-based, discount membership organizations, there are other clubs worth joining to save significant amounts of money. One of them is Upromise, Inc. (, which takes a percentage of the money its members spend at various retailers and service companies and deposits it into a savings or investment account. Enrollment to Upromise is free and members can link their phone bills, grocery store purchases and fill-ups at the gas station to the club in order to get money back.

Similar to frequent flier programs, which award miles for every purchase, Upromise members are credited with a percentage rebate each time they make a purchase at a participating Upromise vendor or with their Upromise credit card. Upromise estimates that families can save between $13,000 and $20,000 (assuming an annual return of 8 percent) over a period of 15 years. Members are given the choice of either enrolling in a 529 plan with a Upromise partner to invest their money, or leaving it in a Upromise account where it sits (without any interest gain) until the member decides to make a withdrawal.

Skip Car Rental Insurance, Inflate Your Tires

You can likely skip the rental car insurance next time you rent a car. If you own a car, your personal auto insurance will probably cover you in the event of an accident. Also, most credit card companies offer rental car coverage to credit card holders as long as they pay for the rental car with that particular card. The best way to make sure you are not paying twice for car insurance coverage is to call your insurance agent and/or credit card company before renting a car to see if you are covered. The savings could be substantial. Major rental car companies such as Hertz and Avis charge $10.50 a day for a loss damage waiver for car renters. (Price is based on renting a car in Chicago.)

Another way for motorists to save significant money is to keep their cars properly serviced, taking special care to keep tires properly inflated. Fuel consumption increases 1.5 percent and the life span of a tire decreases 15 percent with every 0.2 bar the tire is under-inflated. Approximately 20 percent of all passenger cars bear tires that are under-inflated by up to 40 percent.

No Butts About It

Quit smoking now, if only for the sheer financial cost of this unhealthy habit. The cost of lighting up easily surpasses the pricey habit of buying café lattes from expensive coffee shops each day before work.

So far, 16 states have raised tobacco prices this year. In New York City, the city's cigarette tax has increased from 8 cents to $1.50 a pack, driving the cost of cigarettes to $7.50 a pack.

The American Cancer Society estimates the cost of smoking at about $3,391 per smoker per year. By skipping the smokes and instead investing the money in a mutual fund (assuming an eight percent return) for 25 years, the money saved is remarkable:

Mellody's Math:

If in 25 years, you invested the $3,391 a year in a mutual fund (assuming an 8 percent annual return) you would have $267,734.42!

ATM — Automatically Takes (Your) Money

ATM fees and gold cards are a guaranteed ways for your wallet to take a hit. In fact, almost 89 percent of banks and savings institutions levy some type of charge for using their ATM machines. The most common ATM charge is for users who access the ATM of a financial institution that is not their own.

The average surcharge for such transactions is at an all-time high, $1.47 per transaction from the bank that is not your own. Plus, your own bank may charge an additional fee, on average, of $1.38 a transaction, making a total of $2.85 per transaction for those who withdraw money from a different bank.

With an average withdrawal of $60 per transaction, the fee for using another bank's ATM can cost you about 5 percent of your transaction. And, if you are a frequent ATM user, 5 percent can quickly add up!

Mellody's Math: The following scenario is if you use another bank's ATM (assuming you are charged by the other institution as well as your bank)

$1.47 per outside bank fee transaction $1.38 fee from your bank per outside transaction $2.85 total per transaction $444.60 per year, if you make 3 transactions a week

If you invest the $444.60 every year, for 25 years, (assuming an 8 percent return) you would have $35,103.13 in 25 years!

There are other costs associated with banking, too. Many financial institutions assess a fee for non-customers to cash a check. The best way to avoid any fee is to have your paycheck direct deposited to your account, or to use your bank's ATM to deposit or get cash back on your check.

When it comes to selecting a credit card, it is often a wiser to pass on the gold and opt for the no-frills standard card instead. On average, according to, the APR on gold cards is more than 3 percent higher than the average rate on a standard card. Some gold cards, like American Express come with an annual fee. In addition, there may be a higher annual fee to flash the gold, a privilege that usually brings only a higher rate of credit.

Extra, Extra …

There are many services you can simply live without. Take a look at what you are spending on phone service, for instance. On your next monthly phone bill, examine the itemized breakdown of all of the services. Additional features such as call waiting, call forwarding, caller ID and voice mail can quickly add up to more than $30 a month.

Give your monthly cable bill the same scrutiny. Cutting back on the multiple premium channels, and even the cable itself, can save you hundreds of dollars a year. Digital cable service can cost you upwards of $75 a month if you subscribe to the plans offering all of the premium channels. Ask yourself, how much of a premium are you really willing to pay?

In addition to your local phone and cable services, consider disconnecting your cellular phone. While it is possible to actually save money with a cellular phone plan, especially for long distance calls, there are also pitfalls. Exceeding your minute package or incurring roaming charges can dramatically add to the cost of cellular convenience.

After cutting back on the phone and cable services, take a look at your energy costs, another aspect of your home life that might cost more than it should. Besides purchasing appliances that are certified as energy efficient, you should contact your electric utility company to find out about their home energy audit options. Commonwealth Edison, in Chicago, for example, offers a free online audit service which enables you to enter information about your home to determine what your energy cost should be. A home energy audit can save you hundreds of dollars a year on heating and air conditioning costs.

Free Press

Many printed materials, including major newspapers, and national news magazines, are available on the Internet for little or no cost at all. Some send news updates through email for free. For those who refuse to give up the feel of the ink and paper, remember your local library and card provide a free way to access the Internet as well as a free read of your favorite magazines.

If you must have your news in print, look at getting a subscription. The daily stop to the newsstand can add up quickly. If you live in Chicago and buy the New York Times at the newsstand, it will cost you $10.75 per week versus a weekly subscription of $5.75 per week. The $5.00 difference adds up to a savings of $260 a year. Time costs $3.75 at the newsstand whereas a year's subscription costs $24.95 — a 77 percent discount off the newsstand price.

Bigger Not Always Better

Most consumers immediately believe buying in bulk and buying the bigger item saves money, but this is not necessarily the case. Buying bigger can actually mean a bigger price tag. With items such as peanut butter, toothpaste and ketchup, the family sizes often cost more per ounce than the smaller item.

You need to do the math before you buy bigger. For example, the Wall Street Journal recently reported a 64-ounce of Heinz Tomato Ketchup costs 25 percent more per ounce than the standard 36-ounce container. Likewise, a 16-ounce can of Minute Maid orange juice costs 51 percent more per-ounce than a smaller can. Translation: buying two of the smaller sizes often adds up to the better value.

Let Go of Some Luxury Goods

Old is definitely new again. Shopping at vintage and resale stores is not only a great way to save money, but a hip way as well. When it comes to your next cup of gourmet coffee, consider brewing a cup at home instead of picking it up on the way to the office.

Drinking bottled water is another very expensive habit. The average price of bottled water is $.90 per gallon. An average consumer drinks about 40 gallons of water every 2 months at a cost of $216 per year. If drinking tap water is not an option in your area, try choosing a filtering system like Brita, which would cut the cost of water to about 20 to 25 cents per gallon, and save you more than $160 a year.

Raise an Honor Student

Almost every college awards discounts to students based on their scholastic performance. In fact, about 76 percent of first-year students got some form of discount this year at 331 private schools, winning an average award of $7,000. According to the National Center for Education Statistics there are 750,000 scholarships earmarked for qualified students, totaling more than $1.2 billion.

After making the grades or excelling in something outside of the classroom, the second hardest part of securing a scholarship is finding out about it.

The Internet is an excellent resource for parents and students to find out about scholarship opportunities for students of all abilities. Web sites like and connect students to financial aid opportunities at no charge. A prospective college student simply inputs basic information and then is notified if there are any scholarships that match their profile. The scholarships are out there — it just takes a little work for students to find them. In fact, a typical high school student should be eligible to apply for 30 to 40 different scholarships.

Mellody Hobson, president of Ariel Capital Management in Chicago, is GoodMorning America's personal finance expert. Click here to visit her Web site, Ariel Mutual Ariel associate Matthew Yale contributed to this report.