Posted by Elisabeth Leamy, Mon Feb 08 2010, 11:53PM

I woke up this morning with the jarring realization that I haven't done a very good job of explaining how to SAVE BIG

I woke up this morning with the jarring realization that I haven't done a very good job of explaining how to SAVE BIG. Pitiful, considering that's the title of my new book and the topic of this column for three months now. As I tour around talking about the book, people keep telling me, "but I already own a house and a car, so saving big doesn't apply to me." Ack! Nothing could be further from the truth.

I think I know where this misconception started. I keep preaching that if you want to SAVE BIG you have to figure out where you spend big and that our top five costs are houses, cars, credit, groceries and healthcare. Readers took that literally and assumed I meant you can save big bucks only when you first purchase these things. Not so! The five categories are not so much purchases but expenses. Maybe I should have described them as housing, transportation, credit, staples and healthcare and that would have been more clear.
When I talk about saving on houses, for example, yes, you can save thousands by being a savvy home buyer, but you can save thousands more by being a savvy home owner. And the same goes for all five savings categories I discuss in my book and in this space. So let me give you a few examples to set the record straight.

Houses (Housing!)
Yes, there are tremendous opportunities to save money when you buy a house --by negotiating craftily, choosing the ideal mortgage and battling junk closing fees. But the BIG savings continue once you are in the house.
?Prepaying your mortgage. This is the biggest of big methods to save thousands and it only applies once you own the house! Let's say you owe $150,000 more on your mortgage. If you send in just $25 extra per month to put toward principal, you will save more than $11,000 over the life of the loan. If you send in $100 extra per month, you will save about $37,000! A mortgage is an obligation you took on. You can prepay zero and save zero or prepay just a little bit and save thousands! And even if you sell the home before your mortgage is paid off, the savings still add up quickly.

?Appealing your tax assessment. 60 percent of homes are over-assessed for property tax purposes and only 2 percent of homeowners bother to fight back, according to the National Taxpayers' Union. Here again, a chance for thousands of dollars in savings only because you already own a home. Right now is an especially good time to look into whether your local government is over assessing your property because so many properties have fallen in value in the wake of the real estate bubble bursting. I interviewed a New Jersey man who stands to save $5,000 a year if he wins his appeal!

Cars (Transportation!)
Buying used instead of new is the number one way to save on cars, followed by choosing a lesser known "dark horse car" and taking out the shortest possible car loan. Fortunately, people who aren't in the market for a car can also save big money on their current vehicles.

?Making it last. This sounds simplistic, but sometimes the simplest truths are the most beautiful. One way to save thousands on transportation is to keep your cars as long as possible. Most Americans trade in their vehicles every five years. Let's say you get the first one when you are 18 and the last when you are 78 and you always buy a $15,000 car. That's a dozen vehicles you are going to buy in your life at a cost of $180,000. If you can make your cars last just a little bit longer -- say seven and a half years-- you will only need eight cars in your lifetime. At $15,000 each, that's a savings of $60,000!
?Shopping around for car insurance. We tend to stick with the same insurance company for convenience, but switching can save you big bucks. In SAVE BIG I did a little experiment and shopped around for a friend with an imperfect driving record. I was able to find the exact same coverage, with two big, reputable companies but, wow, what a price difference. Company A's premium was $7,308 a year. Company's B's was just $5,830 a year --a $1,478 savings!

One of the best opportunities to save on healthcare is when you choose your health plan. But if you can't afford health insurance or if your employer doesn't give you many choices, there are still jaw-dropping savings available to you.
?Negotiate with your doctor. Whether you need a price break on routine appointments or major surgery, it's worthwhile to ask your doctor. A Harris interactive poll showed that 61 percent of patients were successful in getting a discount. The best way is to suggest you will pay in advance and match either the insurance company discounted rate or the Medicare rate. One example: the market rate for a quadruple bypass is about $5,500. The Medicare rate is approximately $3,000. So you would save $2,500 if you successfully negotiate to match the Medicare rate. If you have health insurance, but have to pay a percentage of your care, called "coinsurance," negotiating will also benefit you. To learn how to research discounted insurance and Medicare rates, click here: (please make the underlined a hyperlink to 27&part=Part V)

?Pick and choose your prescriptions. Many Americans have health insurance but no prescription drug coverage or they have to satisfy a high deductible before the drug coverage kicks in. If that is your situation, you can save thousands by being proactive about which prescriptions you take. The biggest savings is by going generic. One amazing example: prozac costs $8,290 a year but the generic version costs just $1,940 a year --a $6,350 savings! Another strategy: ask your doctor if an older drug will work just as well for you as a newfangled one. For example, Metformin, a longstanding diabetes drug costs just $270 a year whereas Avandia, a newer one, costs $1,872 a year. And one more idea: see if your medication has gone not just generic but over-the-counter. For example, Prilosec for heartburn is still available as a prescription at $1,997 a year, but the exact same drug in the same dose is sitting right on the shelf at your drugstore at a cost of just $234 a year! For more ways to save on medications and helpful links to make it happen, click here: (please make click here a hyperlink to 28&part=Part V)