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Evaluating the Stimulus Package and What It Means for You; The State of Your Job; How to Talk to Your Family About These Tough Economic Times; How Not to Take Money Matters to Heart

Aired February 14, 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 we're here to help you save, protect and build your money.

On tap today, evaluating the stimulus plan and what it means to Your Bottom Line.

We'll take a look at the state of your job, plus have a talk to your significant other and your kids about these tough economic times. From your house to your job, your savings and your debt, this is YOUR BOTTOM LINE.

So, it's been debated, reworked and trimmed, but in the end, does the stimulus package really have what it takes to jump-start this economy and more importantly, does it have what's need to boost your bottom line. Lynnette Khalfani-Cox is a personal finance expert. Rick Newman is the chief business correspondent with "U.S. News & World Report."

Welcome to you both.

All right, so this package really went on a diet. It's $40 billion smaller than it was originally, at least in the Senate version. Does it make a difference and is there a lot of pork that's gone?

RICK NEWMAN, U.S. NEWS & WORLD REPORT: Well, it's like the sumo wrestler who lost 10 or 15 pounds. It's still a huge amount of money we're talking about, almost $800 billion. No one is really sure if that's the right amount and it's going to take a couple years before we know. Yes, there's absolutely pork in this bill. President Obama talked about no earmarks, that's kind of a technical explanation for the way Washington does business.

WILLIS: Right.

NEWMAN: But, a lot of this money will flow through to states and cities for these so-called shovel-ready projects we keep hearing about. That's building bridges, repairing roads, things like this. That is pork by another definition.

WILLIS: So, pork by any other name. OK. All right.

NEWMAN: I think so, but we need some pork, right now, I guess that's the consensus in Washington. WILLIS: Somebody needs pork. I want pork. I don't want you to have pork.

NEWMAN: There's jobs associated with pork...

WILLIS: All right, let's take about tax cuts for just a second and I want you to listen in to a statement made this week during primetime by President Obama.

Here's what he had to say about tax cuts.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Tax cuts alone can't solve all of our economic problems, especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it's only helped lead us to the crisis we face right now.


WILLIS: OK, so there are big middle class tax cuts in this bill, but they're smaller than originally were. Let's look at those numbers, right now. We've got a $400 tax cut for people earning less than $75,000, $800 for families. Lynn, I got to ask, is this going to be meaningful to people?

LYNNETTE KHALFANI-COX, PERSONAL FINANCE EXPERT: They're not going to feel it greatly, to be honest with you. It certainly is less than what President Obama had originally thought. If you recall, he was talking about a $500 tax credit for individuals or as much as $1,000, so it has been pared back.

Essentially, what it means is it's going to be about 15 bucks for the average person in your paycheck every two weeks. The American public is going to decide if that's significant. Frankly, no, I don't think so for most people, but something is certainly better than nothing.

WILLIS: And that's going to McDonald's maybe once a week, an extra trip out or something. And maybe that'll get some in the economy.

Rick, you know, we talk so Mitch about jobs and some have described this as a jobs bill. Can this create 3.5 million jobs or save as many?

NEWMAN: It might create, let's say, three million, let's pare that back a little bit. But that's going to take months, years really. So, by the time this -- I mean, this spending bill goes out three, four years. And, yes, by 2011, 2012, it will start to create jobs.

What I think it will not do is create a meaningful amount of jobs in the next six months when this recession is going to be most acute. We're going to see unemployment rate -- this is almost baked in at this point, it's about 7.6 percent, right now, we're going to see it get to probably at least nine percent, some economists say 10 percent.

WILLIS: Wow. OK. All right. That's high. That's really, high.

NEWMAN: It is not going to change that this year very much.

WILLIS: All right, well let's talk about, Lynnette, those jobs, and jobless benefits extended, bumped up, yet again, let's look at the details, here, that jobless, unemployment checks will have about $25 extra in them. That's not nothing, they're going to be extended yet again. Again, how meaningful?

KHALFANI-COX: Right. Well, I think this will help those who are still looking for work and haven't been able to find a job. Certainly we've seen, you know, we've got 11 million workers out of work right now. And as you were just suggesting, the unemployment rate will kick upwards.

I think, frankly, another really key part of this is the COBRA provision for people who've lost a job. Heath care is so expensive. That's why we've got more than 45 million Americans without it, right now. And so, the fact that the plan does include a provision that the government will pay up to 65 percent of folks' COBRA payments, which give them the health care benefits they might need, up to nine months. That is a very significant position.

WILLIS: And that's a major reason people go into bankruptcy. After they have a big health care problem.

KHALFANI-COX: Medical bills.

WILLIS: And it's too expensive. Can we please turn to homeowners? This is why we got into this problem in first place is that people were defaulting on their mortgages and this particular bill has precious little available to people, there's a tax credit for new home buyers. Rick, is that enough?

NEWMAN: I'm very skeptical about any efforts by Washington to solve this, the homeowner problem. The government's been trying to solve this problem for over a year. It's an extremely difficult problem and I think it's a misconception that President Obama can come in and he can push some secret button that President Bush didn't know the location of and suddenly that's going to solve the problem. It's really complicated and it's very hard to do.

I think, troubled homeowners should not be expecting help from Washington, they should be figuring out their own ways to get out of the hole.

WILLIS: Wow, that's depressing.

Yeah, I know, a lot of people are concerned about, Lynnette, to you, there's rumors out, discussion about a new plan that would actually go to people who have not faulted yet.

KHALFANI-COX: That's correct. WILLIS: What do you make of that? Is there yet another possible proposal out there? Can the government help?

KHALFANI-COX: I think that they can help, but I think it's going to be a very tricky situation. President Obama has talked about putting $50 billion towards helping struggling homeowners.

But my god, there's a whole heck of a lot of them. About one out of 10 are behind on their mortgages right now. Not the mention the fact that we had 2.5 million people who had foreclosure filings last year alone, very thorny problem. The tax credit that they're talking about the first-time home buyers, I think that will help to boost home sales, but it doesn't arrest the foreclosure problem in this country.

NEWMAN: You know, there's a danger here that people who are having trouble paying their mortgage right now are hearing this message that Washington might help. And so, I think people might just be sitting there waiting for a phone call, which is a mistake.

If you talk to your bank, there's a chance, and you say, look, I'm behind, I've got some difficulties, but I want to work this out and modify this loan. The bank is likely to be somewhat receptive to that, but you need to take the initiative. If you're sitting waiting for something -- there are five to 15 million people in this boat and don't expect you're the one that Washington is going to come rescuing.

WILLIS: It can be tough to get those bankers involved. Rick, I want to thank you for playing with us, today. That was great fun, really, enjoyed you.

Lynnette, hang tight, because we're going to talk to you again later in the show.

Forget full-time, a solution to finding a job you might not have thought of and we're here to help you find that very first gig.


WILLIS: With nearly two million people losing their jobs in the last three months, more and more Americans are looking for work and a lot of those folks are turning to freelancing. So, we're turning to Fabio Rosati, the president of Elance. is a Web site that connects freelancers with companies looking for their services.

Fabio, great to see you.


WILLIS: Well, let's get down to it. Now, I can understand why companies would wanted to hire freelancers, they have more control over their workers. But, why as a worker would you want to freelance? What are the benefits?

ROSATI: Well, being a freelancer is not easy, but it has some unique advantages, one you get to do the work you love. You choose the type of work that is of interest to you. You also get to choose the people you work with. You choose your customers, your clients. And you have the ability, if you work online, to reach beyond your geographic limitation. You can work across the country, you can work across the world. And that is very, very powerful.

WILLIS: So are there some kinds of jobs that are more likely to be freelance than others?

ROSATI: Well, today on Elance, out of the 25,000 jobs that were posted on our site in the last 30 days, the top five included programming jobs, design work, research work, writing work and a new area called virtual assistance, which is basically being an admin online.

WILLIS: That's interesting. I know a lot of people who want to do that, and it's amazing that you can do that completely remotely, now. Let's turn to success. How do you become a successful freelancer? What does it take? What are the tools, the tips?

ROSATI: Well, one of the big mind-set shifts is that all of a sudden you're on your own, you're an independent professional, you're a business. And when you think about how to present yourself online, you have to imagine creating a brochure about yourself. It's very different than a resume.

So, you're thinking about who you are, what are your skills and you start thinking about the kinds of skills that people need, that a business may need. And you really need to focus on those.

WILLIS: Well, so, you're really thinking of yourself as your own independent business. But, I also know a lot of people who freelance because they want to turn those jobs into full-time jobs. Can you do that? Is that possible?

ROSATI: It is possible. What happens is that you can start with a business that today may not have the ability to hire you on a permanent basis, but over time if they're successful, or if the economy rebounds, or he really like your work, they're going to give you more business. They're going to either rehire you or at a minimum, bring you referrals. So, the most successful freelancers understand that and they build a portfolio relationships.

WILLIS: Interesting, OK. Do you have a sense that more employers are out there are actually offering freelance jobs? Has that picked up compared to the falloff in full-time employment?

ROSATI: It absolutely has. We've seen an increase of over 50 percent in the number of opportunities that are posted and our site. And that makes complete sense, because many businesses still have the work, the work needs to be done. They have a lot more uncertainty and what happens when you have work and the uncertainty about whether you can hire full-time, you look at flexality (ph). Flexibility becomes incredibly important and freelancing fits that model really well.

WILLIS: What about benefits? Because, so many out there, the reason they don't freelance, they're wary of it, because frankly, they need health care benefits. Is there anything to do as a freelancer beside marrying somebody who has health care benefits, to get them?

ROSATI: Well, the picture in this area is not pretty. There are associations design guilds and different types of groups that offer group coverage that you can apply to, but it's still very limited. Full coverage, unless you purchase your own policy as an independent professional, you're still better off way spouse who has a full-time job and can get you those benefits that a company can offer.

WILLIS: Fabio, great information, really interesting. Thanks to you for your time.

ROSATI: You're welcome.

WILLIS: So, freelancing is a great way to fill gaps in employment, but so is part-time work, and the good news is that there are more employers offering jobs for people willing to work part-time.

Now, we found three companies that are looking for part-time workers, right now. And they are: Kaplan. Now, these folks help students prepare for college entrance exams, like SATs, GMATs. This company plans on hiring 2,000 to 3,000 instructors this year to teach classes. Of course, you have to have scored well on the test to teach it, but you can make 20 bucks an hour. For more information go to

Aramark supplies hundreds of seasonal hourly employees to staff events like rodeos and major league baseball. They operate around the country and their Web site is

And if you love cats and dogs, Fetch Petcare is hiring 1,500 part-time professional pet sitters in 37 states. Now, you have to be 21 years of age to get the job. Check out for details.

Remember, getting a part-time job is a way to get your foot in the door in a difficult jobs market and pay your bills in the meantime.

Money might not buy love, but it can get in the way. How to avoid love in trouble this Valentine's Day weekend.


WILLIS: In case you missed it, this weekend is Valentine's Day and although they say money can't buy you love, it can come between you and your love pumpkin. In fact, a new PayPal survey says 50 percent of couples are arguing more about money because of the recession.

Back now, to tell us how not take money matters to heart is personal finance author, Lynnette Khalfani-Cox.

Lynnette, great to see you, again. I'm glad you're back. Can you just solve this one mystery for me? So, why is it that people who are spend thrifts, who want to spend money, are always marrying people who are not? It seems like people are always on the road to conflict? KHALFANI-COX: Financial opposites. Right. You know, I really do think this is a cruel joke that god played on all of us. To pair up a spender with a saver or pair up somebody who is a splurge...

WILLIS: It's like we're always attracted to the opposite money personality.

KHALFANI-COX: Right. But I really don't think it has to be the death nail of the relationship. The key for people who are financial opposites, frankly, is to talk a lot more, to communicate and be willing to reach common ground, a little bit of middle ground. You're going to spend some money and you should be spending some of your money, but you also, of course, need to save, as well.

WILLIS: Lynette, talking about money is so hard and a couple, sometimes, because it gets to so many different issues. You say, though, that if you actually tackle your debt together, that's a good thing. How do you do that?

KHALFANI-COX: Well, you have to agree, let's get on the same page and let's work toward our collective goals. Too many couples are working at odds, they're thinking, well, I earned this amount or here are my bills or this is what I'm earning. That's not the way to do it. You really do have to say, let's go at it together, because we're going to build a lifetime together and really do want achieve financial harmony.

WILLIS: Financial harmony. Well, you know, even so, even with what you say, I always say, I always think it's a great idea for women to have a little cash set aside in their own name, just in case of emergencies. You know, know how women have gotten left behind in the past?

KHALFANI-COX: Right, not even in case of emergencies, let's be honest, divorce happens, a main breadwinner might die. I really do believe that there's value in having separate accounts in addition to maintaining a joint account from which you actually pay all of the household bills.

PayPal actually found that about 50 percent of all couples do have separate accounts and that can minimize some of the financial squabbles and battles that go on.

WILLIS: My money, your money, whose money is it?

KHALFANI-COX: Exactly. And not having to "ask for permission" anytime you want to make a routine purchase.

WILLIS: Yeah, that's a drag. It's a total drag to have to say: can I use this money?

And so many women and men now are both earners, so everybody's contributing and that should make it easier, but sometimes it makes it harder. One of the things you say right now is don't stop giving gifts. Why? I mean, we have a recession on, Lynnette, it's time to save? KHALFANI-COX: Well, I think that especially, you know, Valentine's Day, this weekend, people have to say to their loved one, I still love you, I still care about you regardless of what's going on in the economy.

And the strategy, though, is that you don't have to go overboard and you certainly don't have to get yourself into debt. And maybe you don't have to spend any money at all. I'm not encouraging people who don't have money to go out there and spend. The sentiment, though, is that don't let the economic crisis cause a relationship crisis.

If you know, for example, that your wife is expecting something on Valentine's Day, you've given great gifts in the past, don't just go cold turkey on her. Just set a cap, set a limit.

WILLIS: There's so much pressure on families, right now, and it's hard not to let what's going on in the economy actually become what's part of what's going on in your relationship. How do you build those walls, besides just giving gifts, frankly?

KHALFANI-COX: Right. Well, how do you build, I'm sorry, the walls, you said or break down the walls?

WILLIS: How do you build the walls to keep the economy out and keep your relationship in harmony?

KHALFANI-COX: OK. I think planning together, talking about it, and also being honest about your spending habits and choices that you make. Unfortunately, there's a lot of secret spending going on, belief it or not. One out of 10 surveyed actually said I've made purchases that I haven't told my spouse about. They might hide it in the back of the closet or in the trunk of the car, that kind of thing.

WILLIS: How many people do you know who actually secret spend and they bring, they go to the mall, they come back, and they take that package and they put it in the closet.


WILLIS: Hide it.

KHALFANI-COX: And I'm actually guilty of doing that in the past. It actually leads to big financial battles. It's not something you want to engage in and, frankly, it causes mistrust and it drives those walls, as you said, those wedges, between couples, because they start to think: hey, if you're doing this on the sly, is there anything else you've been doing that you haven't' told me about? So, secret spending, not the way to go.

WILLIS: Absolutely. OK. Bummer.


WILLIS: Lynnette Khalfani-Cox, thank you for that, we appreciate it. Now you know how to talk to your spouse about money, but don't forget about the kids. It's important to let them know when times are tough and we're going to tell you just how to do that.


WILLIS: These days families are having a different conversation around the dinner table, how to budget. So, how do you talk to your family about the economy and your finances? Lee Jenkins is a licensed minister and financial advisor and joins us now from Atlanta.

Lee, great to see you.


WILLIS: Well, let's start with this, you know, it's really an emotional issue when you talk about getting the family together and talking to them about money, because it can go right to how secure those kids feel. How do you bring this up? How do you talk to them?

JENKINS: Well, first of all, you have to start with the big picture. A lot of people are suffering financially right now, so you can't look at this as an isolated event as it relates to your family, so explain to the family that they are -- you are not the only ones suffering right now. Financial misery loves company and there are a lot of people that are in the same boat, right now.

So first of all, start with the big picture, and then just start to communicate about some of the changes that you need to take place in the home.

WILLIS: All right, I need you to explain, if you can, because I think this is really hard, because a lot of adults don't understand what's happened here. How do you describe, you know, a recession to a 5-year-old? What are the words you use to say, hey, this economy is bad when they don't even know what an economy is.

JENKINS: That's a very, very tough thing to explain to a 5-year- old or even a 10-year-old or even a teenager, but the bottom line, you want to explain to them how the economy works, in general. That based on certain things, whether it's the mortgage crisis, or the job loss, these kind of things affect people. And when people don't have jobs, they don't have money. And when people don't have money, they can't live a certain type of lifestyle.

So, you just kind of start from the top, keeping it pretty simple, but the most important thing is to explain how it impacts your family, whether it is a job loss or changing your spending or whatever.

WILLIS: Well, let's talk about changing your spending. How do you talk to the kids about budgeting and, you know, keep them focused on the idea that we're going to be OK, but we just can't spend what we have been?

JENKINS: Well, the first thing you have to do is to prioritize, make sure that you know what's important and what you can do without. You have to distinguish between your wants and your needs, so there will be some things that will have to be sacrificed and you'll want to sit down with your family and talk about things. You may not be able to go out and eat as often as you are accustomed to. You may not be able to go to the movies, you may have to eat more at home, you may not be able to shop for clothing.

So, these are the type of things you have to sit down and talk to your family about, so they will understand that certain things you will have to go without for a certain period.

WILLIS: Lee, I know you talk about a reward system, as opposed to penalizing people for spending too much, how does that work, the reward system?

JENKINS: Well, you want to let people know, you want to let your family know that a short-term pain equals long-term gain. In other words if we can put back right now, then six months later or one year later, we'll be able to do some of the things that we want to do.

So, the reward could be, you know, anything. For instance going on a vacation, again, you may have to do without a vacation this year, but you can do it next year even at a nicer place. So, you want to always look forward the future not just to focus on the short-term sacrifices.

WILLIS: Lee, great information, really interesting stuff, thanks for being with us.

JENKINS: Thank you, Gerri.

WILLIS: As always, we thank you for spending part of your Saturday with us. YOUR BOTTOM LINE will be back next week, right here on CNN. You can also catch us on HLN every Saturday and Sunday at 3:30 p.m. Eastern Time. And catch a special edition of "YOUR MONEY" from the Chicago Mercantile Exchange with CNN chief business correspondent, Ali Velshi, that's today at 1:00 p.m. Eastern and tomorrow at 3:00, right here on CNN.

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