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Breaking Down President Obama's First Address and What It Means to You; Tips for College Students Entering the Job Market; Answers to Your Financial Questions; Do-It-Yourself Projects That Won't Hurt Your Wallet

Aired February 28, 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 are here to help you save, protect and build money.

Today, we'll break down President Obama's first address to Congress and the nation and what it means to you. Plus, tips for college students entering the job market and answers to your financial questions. From your house to your job, your savings and debt. This is YOUR BOTTOM LINE.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, that day of reckoning has arrived. And the time to take charge of the future is here. Now is the time to act boldly and wisely to not only revive this economy, but to build a new foundation for lasting prosperity.


WILLIS: That was President Obama speaking to a joint session of Congress Tuesday night. What's on all our minds? Will the plan work? Jack Otter is the deputy editor of "Best Life," Donna Rosato is a senior writer for "Money" magazine, and Hilary Kramer is the AOL Money Coach.

Hilary, I want to start with you. You're a professional money manager, you're on Wall Street all the time, you have consumers as clients. Was the speech successful in boosting confidence?

HILARY KRAMER, AOL MONEY COACH: Unfortunately, it was not, Gerri. At least it wasn't a disappointment, it was full of hope. But the problem was that it was sobering. The message our president gave us is that this will take a significant amount of time. It took us five years of overspending and leverage to get into the situation, it doesn't go away overnight. And Wall Street didn't like it and individuals didn't like hearing it.

WILLIS: All right, long-term problems, long-term solutions. I want to show the results of the CNN Opinion Research Poll. Maybe you participated in this -- 81 percent of Americans believe the president's plan will improve the economy, 18 percent said it will not. That's 80 percent of those surveyed said Obama's plan will succeed in improving the economy. And of course, you know, this doesn't count everybody in the country, this is just CNN watchers, but it's not a bad barometer.

Jack, I want to go to you, here. Did you see the message as more optimistic?

JACK OTTER, DEPUTY EDITOR, BEST LIFE: I didn't, but I'm optimistic about the fact. I don't want to sound too partisan here, but we're coming off an administration where a guy who didn't go to Vietnam landed in a flight suit on an aircraft airier and said "mission accomplished" and nobody believed him. This guys says the mission is not accomplished, it's going to be a lot of hard, long work before it is, but I think, ultimately, we will. And I think that rings true and I'm kind of glad to have somebody lay in on the lie.

WILLIS: Yeah, not to get too much into politics, here, but a lot of promises, obviously, in the speech on the table -- $634 billion in health care. Big problem, among many big problems, right now. Fixing the energy problem in this country, energy independence, transforming education, we're going to find ways to cut the deficit. Is that too tall an order?

OTTER: Well, it sure is tough. I mean it's going to be very difficult to achieve all those. I think what state of the union addresses do, and this as analogous to a state of the union, is they lay out a long laundry list of priorities and you hope that you can at lease make progress on each one, if not achieve each goal.

I found the deficit the most interesting one, because during the campaign, we didn't hear much talk about the deficit and that worried me. I'm glad he's at least trying to talk it down. My theory is, he's saying to the Chinese, guys, we know there's a problem, please keep buying our bonds for a few more years.

WILLIS: Yeah, I think we all want the Chinese to keep buying our bonds and bailing us out of our debt. Right?

Let's talk a little more broadly here, though, about the budget and what we can expect. You know, one of my big concerns is that, you know, our kids are going to be paying for this forever. What do you say, Hillary?

KRAMER: Potentially not. The good news is that the United States, in relative terms, is in a much better situation, in terms of the recession or even the depression than the rest of the world. So, as long as we continue to see rates low and we can -- the stimulus does what it's supposed to do, and we can jump-start the economy, it's not going to be generations trying to recover from all this spending. It will take time and at some point our taxes will go up.

WILLIS: So, Donna, let's talk about the biggest problem for so many Americans now it's jobs, jobs, jobs. The president promised to create or maybe just reinstate three to four million jobs. Believable? When does it start? Where do I look for these jobs? What sectors?

DONNA ROSATO, SR. WRITER, MONEY: Well, I think it's important, what you said, it's not just creating jobs, but what the stimulus is going that's going to save jobs. And you're going to see an immediate effect from that. The stimulus plan is going to stages that's going to prevent teachers, fire workers and police officers from being laid off. So you're going to see a lot of jobs saved from that.

How long does it take for jobs to be created? That's going to be a little bit longer term. I think you see that. You might not see it until 2010 because it takes a little while to get the dollars into the system to be devoted to projects. But, you're going to see immediate effects with jobs being saved. You're going to see fewer layoffs and if that gives businesses confidence to start hiring again, you might see some release of those housing freeze -- hiring freezes, too.

OTTER: Business confidence, I think is key. I mean, right now, even if business ticks up a little bit, you know, what chief executive officer is going to say, let's go out and hire a couple hundred folks. I mean, no way. They're battening down the hatches. And only when we see progress on the economy will they finally hire people.

WILLIS: Let's move on to another topic for just a second, Hilary, because I know you've got something you really want to say about 401(k)s and it was a little noticed issue this week that there was a hearing on 401(k)s, a lot of really smart people, like Jack Bogle from Vanguard, came together to talk about what's going on with our retirement. What advice do you have for people, right now? Should they be pulling their money out of the markets?

KRAMER: This is a timing question. If you have more than five years and you can sit and wait for that money to come back or even a 10 year time horizon, better to sit, hold on tight. But, if in the next five years you're going to need money, whether it be to pay for tuition, pay for retirement, subsidize certain kinds of expenses, then the answer is you do want to try to go into cash.

And in terms of 401(k)s the big problem there, the penalties that one needs to pay. That is going to change. It has to change, because consumers, individuals, we need access to cash and it's in those 401(k)s.

WILLIS: Donna, take your losses now?

ROSATO: You can, and as Hilary says, time horizon is important. You know, if you're thinking about taxes, I mean, at the end of last year, if you lost a lot of money, you could offset some of your taxes. That opportunity passed now with December 31. But, this is a good time, if you think about it, for investors, especially young investors, to be in the market. Stocks are really cheap and if you have a long time horizon, this night be a good time to be in there and putting some of that money to work for long-term goals.

WILLIS: Jack, Donna, Hilary, thanks for helping us out. And stick around, we've got some more questions for you, later.

Jobs, jobs, jobs. Why so many college seniors are worried they might not graduate with one and we're answering your job questions from benefits to unemployment to where to start sending those resumes. My e-mail, (COMMERCIAL BREAK)

WILLIS: What could possibly be worse than losing your job? Well, never having a job in the first place. It's a harsh reality for college seniors graduating in today's market.


WILLIS (voice-over): Two years ago, a college senior, Jameel Merali, would have been a prime candidate for a job on Wall Street thanks to his education and international credentials. Not now.

JAMEEL MERALI, NYU STUDENT: I realize that the timing is not right, right now, for what I want to get into and it's really just about timing, it's not really any of our fault.

WILLIS: Jameel is part of a generation of graduating students who may not get the position they want because of the worst job market in 35 years.

MERALI: Yeah, I was depressed. It's definitely been quite a challenge.

WILLIS: Fifty-seven percent of schools saw a decrease of job interviews on campus this year and 31 percent say their career fairs are down.

UNIDENTIFIED FEMALE: It's definitely added pressure seeing the recession the way it is.

WILLIS: Mounting challenges and declining opportunities has students changing plans.

TRUDY STEINFELD, EXEC. DIR., NYU CAREER SERVICES: We have a lot of students who are saying, you know, I sort of feel like I have permission to do something I've always wanted to do.

UNIDENTIFIED MALE: When I got here, the first thing I did was look at other options.

UNIDENTIFIED MALE: Yes, I've spoken to them.

UNIDENTIFIED FEMALE: It looks like grad school might be my best option.

WILLIS: Nonprofits are seeing increased interest. Teach for America, who trains graduates to teach in low income areas has seen a 50 percent application increase.

ELISSA CLAPP, V.P. OF RECRUITMENT, TEACH FOR AMERICA: Given that our competitors are banks, consulting firms, corporations, and giving that those entities have start today pull back, I think we're just seeing less competition.

WILLIS: Jameel is deciding between working for a nonprofit in Kenya or going back to grad school. But he wonders about the $75,000 he's already wrapped up in student loans.

MERALI: It's not going to be making deals and making billion dollar bonuses, it's going to be the slower pace, it's going to be basically working with governments, with organizations and helping with countries, I guess, you know, build stability in the economy.


WILLIS: Stability in the economy and what it means for your bottom line. You've got questions, we've got answers.

Joining me, once again, Jack Otter, Donna Rosato and Hilary Kramer.

All right guys, we're going to start with an iReport, this one from Andrew Foster in Atlanta, Georgia. Listen to this.


ANDREW FOSTER, IREPORTER, GEORGIA: If recent college graduate can prove they've been looking for a full-time job and haven't received any offers due to the recession, should they be eligible for unemployment benefits?


WILLIS: Great question, Hilary, what do you say?

KRAMER: Well, to Andrew, I say yes, you should be eligible for benefits, but you would have had to have worked for six months of the last 12 months in most states, because remember, unemployment, you've paid into it and also, your employer has paid this employment tax. But, that being said, he should check with the local unemployment office, find out what he's accrued.

And, if he hasn't accrued remember, the stimulus package is taking care of a lot of those of us who are unfortunate in job searching and maybe there's extension on Medicare, well, for him it would be Medicaid if he needs it, welfare. I mean, it's quite unfortunate when you see someone healthy and vibrant looking for a job. But, that's what our stimulus package is doing, it's trying to help everyone get by until they can get a job.

WILLIS: And you know, when I talked to these students, they're always taking about maybe I'll just go back to school, maybe I'll get a graduate degree. In this economy, you may not want to run up that debt. Let's get the next e-mail.

"I got an offer for the perfect job, six figure salary -- a sales manager with a communications company. I had money issues about three years ago. I have a couple of things in collections which I am paying off, each of those is under $500 each. I have another item in collections over $3,000 which I am disputing. What are the chances that this credit scenario will hurt my chances of getting the job? Should I notify H.R. contact that is coordinating my background check and explain my credit scenario in advance?" Jack. Not on for the purposes of getting a job, but generally, you've got to watch out for this stuff, right?

OTTER: Sure, absolutely. I meant, this person, actually, I think, has it easier than a lot. The very first thing she should do, right this second, is turn off the television, go pay off those under $500 debts. I mean, she's got a six figure job coming, that's easy.

The $3,000 dollar one, I don't know the story there, if she wants to dispute it, fine, but then, yes, call that H.R. manager, down play it a little bit, perhaps, but just say hey, you know, some of those you might see on my record, those I've taken care of and I've got this $3,000 one I'm disputing, here's why. They ought to be happy you're coming clean.

KRAMER: But, generally, it's really that, they're really doing a criminal check. And that's the good news. They just want to make sure you were never arrested.

WILLIS: I don't like the fact that they're looking at my record. I have to tell you. I think a lot of people feel like it's sort of invasive.

Let's get the iReport from Jean Lindsay.


JEAN LINDSAY, IREPORTER: I have no 401(k), I will have to work until I drop. I have very little money for savings. What the heck can I do?


WILLIS: Wow, Donna, what can you tell Jean, here? She is struggling.

ROSATO: It's a tough situation and certainly one that we all face. But, Jean has a job and my first piece of advice is hang on to that job. You know, she's in her 60s and you're -- she's going to live for you know, 20, 30 more years, so you want to make sure you do all you can to hang on to the job that you've got.

And then, what you need to do is probably make some tough decisions. You know, you have to look at what are your biggest expenses and try to figure out where you can cut costs. Look at housing costs. Can you bring in a roommate? Can you rent out your house? Do things that you can do to reduce your costs. It is never too late to start saving money, no matter what age you are. And she's lucky she's got a job still.

KRAMER: But, Social Security is coming, too. At 62, partially, at 65, full benefits for Social Security and we shouldn't forget, that's a very important component of paying expenses.

ROSATO: That's true.

WILLIS: All right, guys, we're going to have to wrap it there. Thanks so much for helping us out, today. We really appreciate it.

Check this out, free financial resources and job search materials. Where you can find them, right now.


WILLIS: Everyone is finding ways to save in this tough economy, whether looking for a job or free financial guidance and resources, more and more people are turning to a familiar place, their local library.


WILLIS (voice-over): In an economy that doesn't play by the books, libraries are making a comeback.

UNIDENTIFIED FEMALE: Whenever you have tough economic times, public libraries are a place people go because they have no other alternative or because they know they're going to get the kind of powerful information that will make a difference in their life.

WILLIS: But the kind of information people look for is changing.

UNIDENTIFIED FEMALE: I'm here because I am using the database to help me with my job search.

UNIDENTIFIED MALE: People who have lost jobs in some states need to file their unemployment compensation paperwork online. They can't very well go back to the employer that released them to do that, so they come to the public library.

WILLIS: From job searches to tracking stocks to books on business and self-help money matters, in a tough economy, free financial help is a hot commodity.

UNIDENTIFIED FEMALE: There are times during the day when all 500 of the seats are taken up with people using our resources, using the Internet, using our databases, reading.

WILLIS: And attending free financial classes on everything from household budgeting to understanding mutual funds.

UNIDENTIFIED MALE: That's the investment objective of a money market fund.

UNIDENTIFIED FEMALE: We give 100 after-work seminars each year and we have a series on small business, a growing series on skill for the job search and then the next growing series, all the nuts and bolts, ABC, of finance and investment.

WILLIS: For those who are looking for jobs and those who are just looking to save.

UNIDENTIFIED FEMALE: They have a lot of great financial resources, they're useful for researching companies and doing -- looking for data on the market and the economy and they're very valuable, very expensive normally resources, but I can come here and I can get them for free, anything that's free and valuable, I'm there already.


WILLIS: All right, take advantage of resources without ever having to leave your home. Here's our ultimate guide to financial Web sites. For investment info, check out Trying to teach your kids about the value of a dollar? The U.S. Treasury Department has a Web site for kids at

And saving for college is a challenge these days, don't know where to start? I'll tell you,

Now, if you're looking for the biggest yields out there in CDs and savings accounts, or you want to check out mortgage info, head to

The National Foundation for Credit Counseling has a Web site to help you get out of debt, that address is

OK, so maybe it's the mortgage payments that have you troubled, go to the Web site of the Department of Housing and Urban Development at and if you're unemployed or maybe you're just underemployed, go to CareerOneStop for resources

Perhaps you want to get a job with the biggest employer in the U.S., learn about working for Uncle Sam and And if you're over 50, there are special career resources available to you, go to

And, of course, don't forget our very for more information on all these topics.

It may be hard to believe, but spring is right around the corner, that means it's time to spruce up your home. Do it yourself projects that won't hurt your wallet.


WILLIS: Well, in this tight economy you might want to save some cash by tackling home improvement projects on your own. But which projects should you take on and when should you hire a professional?

Earlier I spoke with Lou Manfredini, a home improvement expert and Ace Hardware's Home Improvement Man.


WILLIS Now, I happen to think I can do everything, but I know that's not true. And you're going to help us figure out which ones we can, which ones we can't. How do you really know your capability or maybe your spouse's capability?

LOU MANFREDINI, HOME IMPROVEMENT EXPERT: Well, it's all about knowing your limitations. This is the key. I think that so many times people get involved in something, they get in over their head and you really sort of need to stop for a second and say, OK, can I do this? Am I going to hurt myself? Am I going to hurt my house? Or people around me? And then if you can answer yes to most of those questions, then I say, go for it.

WILLIS: All right, you've got a specific set of things that you say you can do. We're going to drill down here a little bit. You say, light carpentry, light plumbing, light electrical, I don't know what that means. Help me understand.

MANFREDINI: OK, painting of course is one of the easiest things, right? This is something that anybody can do. It's a very inexpensive home improvement, you buy a gallon of paint for $25 and a brush and rollers and you literally can change the room. If you don't do a nice job, you're just going to have a little bit more cleanup.

But remember, always, when it comes to painting that 95 percent of a good paint job is in the preparation and this is where it takes a little bit of knowledge to, you know, scrape a little bit, sand a little bit, prime a little bit.

WILLIS: But that information is out there and it's easy to understand, I think, and you don't really need a whole lot of technique to paint a room. But when it comes to, really, the technical, practical parts of your house, the carpentry, what can I do and what should I hand off?

MANFREDINI: All right, let's say you want to update the kitchen. Let's say that the doors are looking a little, you know, worn out, and you just want to change the look, you can buy online, you can buy new doors, now cabinets to go on top of there, it's unscrewing the hinges, putting new hinges on and putting the new doors. You can buy them prefinished, if you don't want to deal with that, as well. That's what I consider light carpentry, or maybe changing the doorknobs in the interior of your home to kind of spruce that up.

WILLIS: Easy peasey, right?

MANFREDINI: Right, it's a couple of screws and it literally is no time whatsoever and anybody can do that.

WILLIS: And you're going to have me doing some plumbing, too? I mean, come on, what would you have me do?

MANFREDINI: Well, OK, I don't want you to replace a toilet.

WILLIS: Oh, I don't either.

MANFREDINI: But, you could replace the handle on the toilet. You could replace the little flapper inside the toilet, where you know, maybe it's not flushing correctly. Maybe even, if you've got a lot of confidence after doing that, you could consider changing the vanity faucet. Because if you're not messing around with the drain, it literally is just, you know, a couple of hoses that come down for the water supply, a few little nuts that hold it on to the vanity sink itself. It might leak, but at least you're going to know right away. WILLIS: That's great, just fantastic direction. Now, let's talk just a little bit about what are the absolutely no-way things you should not attempt on your own? Give me the quick list?

MANFREDINI: I don't think I would start out by building a deck, when it came to the carpentry. The exterior painting when it's high up, where you've got to use tall ladders, I'd probably stay away from that.

You know, if you're going to hang new doors, replacing windows is not something on the carpentry side that you'd probably do. Installing a water heater or a toilet, we talked about that, that's something that, you know, really goes to the professionals. And then electrical, adding circuits, maybe even installing a ceiling fan, that's something where it's specialty wiring that may need the help of a qualified licensed electrician and licensed plumber on those two specific trades.

WILLIS: All right, Lou Manfredini, that's for your help today, we appreciate it.

MANFREDINI: My pleasure.


WILLIS: Love that Lou.

Well, 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 you can hear much more about the impact of this week's news on your money on "YOUR MONEY" with Christine Romans and Ali Velshi, Saturdays 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.