Creative Ways to Cut Costs

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.

Trim Insurance Costs

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.

Slice Prescription Costs

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.

Negotiate and Barter

We all know we can negotiate at the car dealerships. But you can negotiate on just about everything else, too -- from physician's fees to cable TV bills and clothing. Always ask for a discount. You'll often get it.

The other side of this is bartering. On Craig's list bartering is up nearly 100 percent from a year ago. And there are even popular Web sites out there dedicated just to bartering. Swapthing.com has more than 162,000 members and is great for individuals looking to barter. And for businesses there's imsbarter.com.

Mellody Hobson, president of Ariel Investments in Chicago, is "Good Morning America's" personal finance expert. Click here to visit her Web site, www.arielinvestments.com. Amar Parikh contributed to this report.