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Economic Stimulus Plan: What Does It Mean For You and the Economy?; How to Get That Interview and Land Your Next Job; Protecting Your Bottom Line: Emergency Savings

Aired January 31, 2009 - 09:30   ET


GERRI WILLIS, CNN HOST: Hello. I'm Gerri Willis and this is YOUR BOTTOM LINE, the show that saves you money. Every weekend here to save, protect and build your money, from your house to your jobs, your savings and your debt, this is YOUR BOTTOM LINE.

Well, the big news that could affect your bottom line, an economic stimulus plan President Barack Obama is pushing to totaling more than $800 billion. So, just what would the passage of this package mean for the economy and for you? We're going to break it all down, right now.

Jeanne Sahadi and Steve Hargreaves are with and in Washington in Jeanne Cummings, chief money correspondent for "Politico."

OK Jeanne Cummings, I'm going to start with you. Talk about the bill, some 647 pages we're talking about. It's passed the House. One of the people I talked to said that this is like a year's worth of legislation in one bill. Where's it going next? What are its prospects?

JEANNE CUMMINGS, CHIEF MONEY CORRESPONDENT, POLITICO: Well, now it's in the Senate and the Senate will change the bill. Broadly it won't change, but there'll be detailed changes all aimed at trying to build a better bipartisan support for this bill than the White House saw in the House.

Also, there have been some provisions that, I think even the White House even admits were problematic. For instance, we saw the family planning money striped from it this week. So, there will be small changes. Broadly, though, the package is what it is. I think, what we'll see in the Senate are perhaps more incentives for businesses, included in it. They've been pressing, the business community has been pressing very hard to get a few more tax breaks.

WILLIS: Right, exactly so. As a matter of fact, people have talked about bipartisan opposition of this bill in the House, interesting things going on with it.

Jeanne Sahadi, I want to turn to you. Tell us, this massive bill what does it mean to our pocketbooks?

JEANNE SAHADI, SR. WRITER, CNNMONEY.COM: Well, the pieces for individuals, first the go to help the unemployed. If you've been laid off, you're going to see a $25 increase in your weekly benefit. You're also going see an extension of the amount of time you can collect your benefits.

So, if your benefits are going to run out in March, you're going to get at least a 20-week extension and 13 weeks beyond that if you're in a high unemployment states. As of last week, there are 29 high unemployment states. So, we're looking at an additional 33 weeks of benefits.

WILLIS: Well, and of course we've seen unemployment benefits extend once before, so this is another time they're extending benefits, but that really goes right to the pocketbooks of people in trouble.

Let's talk about the tax impact, thought, because we're going to get a little break, here. How much?

SAHADI: Well, the biggest, the make or pay credit, that will go to 95 percent of workers or close to it, not exactly. That's going to cost $145 billion. And it's going to mean about $500 per person and $1,000 per couple, but it's limited by income. You get the full credit if you make $75,000 or less, or $150,000, if you're a couple. You can, however, get a partial credit between $75,000 and $100,000, for individuals, and $150,000 and $200,000 for couples.

WILLIS: All right, so lots of numbers to drill down on.

Steve, I want to talk about the criticism of this plan. You know, everybody is talking about its costs, focusing on what could be $819 billion. Who knows, when we get done with this bill how much it might cost. What are Republicans saying is their big opposition?

STEVE HARGREAVES, WRITER, CNNMONEY.COM: Well, I mean, there are people that are questioning whether or not any type of stimulus projects are actually going to do what they're intended to do, you know, stimulate the economy. Some people say they take too long to ramp up and once they ramped up, they're hard to shut off.

A lot of Republicans were pushing for more tax cuts in this, as opposed to the spending part. They want to see that. So far, there hasn't been too much change in the tax plan, but as we heard, it's still got to go through the Senate, so we'll keep an eye on it.

WILLIS: Jeanne Cummings, you know, we talk a lot about this bill. And it's interesting to compare it actually to the previous stimulus package. How is it different?

CUMMINGS: Oh, it's significantly different. What they tried to do last year, they gave a rebate to taxpayers, which they hoped would stimulate the economy. It may have at a small margin, but most people used that money to either save or pay off debt. And it didn't have a major simulative affect.

The other thing that happened in the past year was that the government used its fiscal policy to try to spur an economic recovery. And by that, we immediate the fed lowering interest rates and thing like that. That didn't do the trick either.

WILLIS: And there's no more room to do that right now, really. There's nowhere to go.

CUMMINGS: Exactly, there is zero. So this is like the third leg on a stool. This is money just pushed into the system. It's a stimulus package that uses cash, and tries to just reenergize the economy by actually putting some grease in there and getting people buying, getting people spending, getting credit moving.

WILLIS: All right. Steve, I want to talk about housing for just a second. There's no money for foreclosures, here. What happened?

HARGREAVES: Well, that part hasn't made it in yet. But, there is a lot of money, especially when you talk about the energy aspects of this. There's been a big push by the Obama administration to make this country as green as possible. And there's going to be a lot of money for people that do conservation improvement to their home and there'll be some money for people that put alternative systems in their home.

So, the government actually is going to come in and help you out, if want to replace your fridge, replace your lighting, replace your stove, things like that. They'll help you out doing some of these things. So, it could be quite exciting for homeowners.

SAHADI: How about to help clean my apartment?


WILLIS: There's no money for that, Jeanne, sorry.

Well Steve, as long as we're talking about how this ends up in my pocketbooks, let's talk about health care for just a second -- 45 million Americans without health care, suffering right now because they don't have any coverage. Is there anything for those folks in this bill?

HARGREAVES: Well, a big chunk of it it's going to directly to the states to help offset Medicaid costs. You know, as more people lose their jobs, it's going to be more people applying for Medicaid benefits. So, over $80 billion will go directly to the states to help the states offset the cost of this.

There's also a provision in there to direct $20 billion for, to digitize health care records. This will, you know, not going to give you health insurance, but it's, when you go to the doctor's office, there'll be less paperwork to fill out and hopefully it will make the health care system more efficient.

WILLIS: More efficient and cost less.

SAHADI: But not in the near future. I mean, it's going to take a while. Just in terms of individuals, again, people who have been unemployed will get a subsidy to pay their cobra benefits. So, if you're not on Medicaid, you want to stick with your employer's plan, the government's going to give you a 65 percent subsidy for 12 months.

In addition, they're going to extend eligible to pay for cobra, because I think it runs out, I'm not sure if this is right, but after 12 months or so. They're going to extend it for people who are over 55, before they qualify for Medicare and also for people who have at least 10 years at an employer.

WILLIS: So, that makes a very big difference.

SAHADI: Much more affordable.

WILLIS: People unemployed out there, very big difference indeed. I thank my panel, here. Jeanne, Steve, Jeanne, thanks so much for being with us, today. Really appreciate your great help, today.

For more on President Obama's stimulus plan and all the latest political news m24 4 hours a day, logon to

Jobs, obviously, a very big topic right now. We'll show you exactly what you should do right now to get into that big job interview and land your next job.


WILLIS: New filing for unemployment benefits up 588,000 for the week ending January 24. The number of people continuing to claim unemployment insurance on a weekly basis, nearly 4.8 million and that's highest since the department began keeping records way back in 1967.

One of you are goals on YOUR BOTTOM LINE, give you all the information you need when it comes to your job. Donna Rosato is a senior writer with "Money", and Chester Elton the author of "The Carrot Principle." Am I getting that right? I know you've got it in your pocket there, Chester. There it is right there, in case anybody forgets the name, right?

CHESTER ELTON, AUTHOR: Perfect, thanks.

WILLIS: Welcome to both of you. Donna, let's start with you, you say you have to fire-proof your job. How do you do that? Do you just take on more work?

DONNA ROSATO, SR. WRITER, MONEY: Yeah, especially, not just take on more work, they say, as we know, a lot of staffs have been downsized, so instead of just putting your head down and doing what you normally do, this is a great time to try to stand out and step up and take on additional responsibility. Try to focus on higher profile things. But if you be can really be a team player and take on more things you're going to be considered a keeper rather than someone that might end up on the pink slip list.

WILLIS: And you may find yourself doing some of the jobs of those people who have been laid off.

ROSATO: That's right.

WILLIS: Chester, I want to get to you because you have a really interesting take on this. You say it's all about your attitude, that you have to be enthusiastic and upbeat, but Chester, how did I do that now?

ELTON: Well, here's the thing. I agree with everything Donna said. You know, take on additional responsibilities, be the team player, be the one that's upbeat. And it is going to be unusual, because so many people are depressed; they're looking at the news, 4.8 million people unemployed. But, if you can be that spark, if you can be that team leader, I think it goes a long way to, as you say, fire- proofing your job. You're the one people want to be around, you're the one people want to keep.

WILLIS: Donna, you have an interesting point, here. You say make friends in the right places. What do you mean?

ROSATO: Well, that's right. I mean, as Chester was saying, it's very easy to get caught up in sort of the griping and the complaining about layoffs and bad times, but there are people who are -- nobody wants to be around Debbie downer. So, you want to be around people who are going to be sort of, have sort of the good reputation. There are people who aren't getting laid off, who are still movers and shakers.

So, you want to associate yourself with people like that. You know, ask them advice, take them out for lunch. You know, and maybe they're good attitude and their good feeling will come to extend to you, as well. And also, when you're around a group of people at work and people are complaining, it doesn't mean you can't complain, too, but try not to feed into the negativity. Try to stay as positive as possible. Be glad you do have a job, at least for now.

WILLIS: All right, and Donna you also say, if you have to take a pay cut to keep your job, do it. Right?

ROSATO: That's a really difficult move. But, you know, if the choice is between losing your job or maybe, and taking a pay cut, sometimes a pay cut, at least in the short term, can make sense. Maybe...

WILLIS: It's a little painful.

ROSATO: It is painful, but maybe you can negotiate something short term.

WILLIS: All right. Chester, I want to get back to you, here. Tell me the right moves if I'm laid off. What do I do? Step No. 1, step No. 2. Lay it out here for us.

ELTON: OK, absolutely. First of, keep that positive attitude. You know, people are embarrassed when they get laid off and they say hey, this is something I have to keep to myself. Don't do that. First thing you want to do, you know, Donna says be around positive people. Leverage your friends and family, leverage your network immediately. Don't be embarrassed.

Look, there's 4.8 million people unemployed, it's not that big a deal. Right? There's a lot of people are in the same situation. What you want to do is start leveraging your network immediately. Ask your friends, ask your family for help.

Thirdly, embrace change. You know, a lot of people say, oh I've been in this industry for so long. What else can I possibly do? There are lots of things you can do and lots of skills that are transferrable. Perfect example, my brother's 55 years old, he's in broadcasting forever. Ended up getting, you know, with all the merging and so on, he's out of work for awhile, but he was very passionate about the environment.

So, he's got great leadership and sales skills. So that's what he's doing, now. He's in alternative energy. Embrace change and then surround yourself with those positive people.

I do agree, if you have a choice between taking a pay cut and being unemployed, take the pay cut. It's always easier to get a job while you're working. But, if unemployed, don't be embarrassed about that. Leverage friends and your family.

WILLIS: Great ideas. Chester, Donna, thanks to both of you. Really helpful stuff.

For more and the state of the jobs market, plus the rest of the day's news as it affects your bottom line, logon anytime to

Believe it or now, there are companies out there hiring right now. T-mobile, Google, Microsoft, Walgreen's, Borders Books and many others adding workers, but landing a new job could require some retraining. Check out your local community college or consider going online. A good option, if you need flexible hours or don't have transportation, distance learning allows you to use e-mail to communicate with your teachers and return assignments.

Go to Council for Higher Education Accreditation at to find which schools are legitimate. And polish your resume before that first interview, check out to view resume samples and templates or visit the Professional Association of Resume Writers and Career Coaches, their Web site is

Jean Chatzky is here, we'll talk all about what your emergency savings should look like and have lots of tips on protecting your bottom line.


WILLIS: Protecting your bottom line is what we aim to do on this show. Here to help with that is Jean Chatzky, personal finance expert and author of the upcoming book called "The Difference."

Great book, Jean, I've had a chance to look at it. I really, really like it.


WILLIS: We want you to help us answer the question, how to protect your bottom line. What are those things you do? Now, I know the first answer to that question for you is emergency savings.

CHATZKY: But not the emergency savings that we have been talking about for years and years, in this kind of a market, you need to supercharge those savings a little bit, not a three-month cushion, let's talk about a six-month cushion, nine or 12 if you can manage to swing it, particularly if you're a single income family.

WILLIS: Absolutely, But the problem is, where does the money come from, Jean?

CHATZKY: Well, you've got to look at your spending and you have to go through the process of actually tracking it to find the money. Only you can figure out where your little Achilles heels happen to be...

WILLIS: Heels might be the answer to that question.

CHATZKY: Oh, there we go.

WILLIS: Let's talk about securing your credit. And I think what you mean here is protecting your credit score, maybe boosting it.

CHATZKY: Absolutely, pay your bills on time, take a look at your individual cards, pay own the balances on those so that you're using only about 10 percent to 30 percent of the credit that's available to you. And don't close cards in this environment, they're taking away your credit lines away from you fast enough, you don't have to close them yourself.

WILLIS: Big problem for people out there, the credit cards and how they're closing them and raising rates. Let's talk about insurance for a moment. This is really the thing that protects me, whether it's my health, my home, you need it, and you need it and I've got to protect it, now.

CHATZKY: And when we are looking at cutting costs, we do not want to be looking at cutting costs in this area. We're hearing of people who are trying to cut back on their homeowners or their auto coverage. A big mistake. The bigger mistake is cutting health insurance, because that's the thing that leads people to bankruptcy. In all of these cases, if you can't afford the policy, the thing to do is just increase the deductible, which means that you'll take a hit out of pocket, but it won't bankrupt you if you get into trouble.

WILLIS: Now, one big opportunity out there, right now, mortgage rates, very low, 5.2 percent, according to mortgage bankers, this week. That's a great deal, I'm telling you, and Jean's saying the same thing.

CHATZKY: Refi the mortgage if you're sitting anywhere close to 5-3/4 to six percent, you're going to need a down payment in order to do it, but you're able to lock into these low rates for 30 years and then, as you get toward retirement, pay it down sooner so that you get to retirement and you don't have a mortgage and you have a place to live and you don't have to worry. WILLIS: Debt free is happy, isn't it? All right, one of the things people are really worried about right now, the jobless rate, 7.2 percent, as we have seen, a lot of people losing jobs, amazing number of companies cutting jobs. What do you do to keep your job?

CHATZKY: You really have to put in the hours, you have to put in the face-time. This is an era where hard work really counts and you have to be doing whatever you can to make yourself that most valuable player in the office. And whether that means just being low maintenance, or whether it means doing, stepping in to do the things that you no longer want to do, you go for it.

WILLIS: All right, well, Jean, you stay put, we're going to come right back to you. We've got a brand new Web page we'd like you to check out,, it's the go-to resource for you, your family and your friends. Drop by anytime to learn about upcoming guests, watch segments from the show and check out all of my top tip segments, what you might have missed. You'll also find links to our e-mail and iReports. We want you to see those iReports. That's

Don't go anywhere, we'll answer your questions about the economy, that's coming up next.


WILLIS: You've got questions about how to protect your bottom line in this tough economy and, hey, we are going to answer them with the help of personal finance expert, Jean Chatzky.

Jean, good to see you again. Let's get right to the questions.

Linda in Florida asks, "Why are my credit," credit card, I believe she means to say, "interest rates still going up even though I pay my bills on time?"

CHATZKY: It may just be the amount of credit that you're carrying, not just on this card, but another card. Add to that fact that the credit card companies, themselves, are feeling a little bit squeezed and you are in the middle of a bad situation, which means you either call those credit card companies up and complain and tell them you are receiving better offers elsewhere or you simply look in your mail for balance transfers and see what you can do.

WILLIS: That's great advice. Cheryl asks, "My daughter is going to college in the fall. I can't believe how much it's gone up. How can we get financial help? My youngest really one wants to be a physician's assistant, that's six to seven years of college."

Well, that sounds like a darn long time for that.

CHATZKY: It really does.

WILLIS: But it seems like everybody's getting masters degrees these days, how do you pay for that? CHATZKY: The first thing that you have to do is look for the free money, and that is scholarships and grants, there are a lot of places to search on the Internet for this free money, then you max out your availability of getting federal student aid, because that's the least expensive form of student aid. And beyond that...

CHATZKY: And the private ones are almost impossible to get, right now.

WILLIS: Right, exactly. Exactly, so at that point, you ask your child, perhaps, to go to work, take a job, chip in, do whatever you can to help pay those bills.

WILLIS: Great idea. All right, we've got an iReport question, let's hear from our iReporter.


WILLIAM BERNSTEIN, JR., IREPORTER: Yesterday, I have cut up all my credit cards, here they are. Those are cut up, never to be seen again, I have closed them all out. I only have a debit card. So guess what, I don't have cash, then I don't buy it.


WILLIS: Well, I just want to say, that's William Bernstein from Virginia Beach, i-mailing us. But here's the confusing thing about this. I love people not using their credit cards, but ripping them up, getting rid of them, not a great idea.

CHATZKY: Well, as long as you're not closing the account, it's fine. You're putting it in the freezer, you're sending it to your mother, you're doing whatever you have to do to keep your hands off it. When you close those accounts, you hit the part of your credit score called the utilization ratio. It represents a third of your score, it can take your score down in a hurry. So closing those accounts is not something we want to see people doing, right now.

WILLIS: So we love to see you not spending on your credit cards. J.D. asks, "Please, please, some advice for retired folks. Do we sell and lock in our losses. We urgently need help and clearly don't have 10 to 15 years to wait."

You know, you've to say in this market, it's pretty darn scary.

CHATZKY: I'm questioning the fact that they don't have 10 to 15 years to sit around and wait, if you're 65, if you're 70, you could live to be 100, which means that you might have 20 or 30 years, quite clearly you don't want to be having your entire portfolio in stocks, you want to be taking significantly less risk than that. But, I do believe that even a 70-year-old need a certain amount of their assets, 20 percent, in the market.

WILLIS: All right, well, Jean Chatzky, thank you for that.

As always, we thank you for spending part of your Saturday with us, YOUR BOTTOM LINE will back next week, right here on CNN. You can also catch it on HLN every Saturday and Sunday at 3:30 p.m. Eastern Time.

And you can hear much more about the impact of this week's new on your money on "YOUR MONEY" with Christine Romans and Ali Velshi, Saturday's at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.

Don't go anywhere, your top stories are next in the CNN NEWSROOM. Have a great weekend.