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YOUR BOTTOM LINE
What Is President Obama Doing For Your House, Job, Savings, and Your Debt?; Changing Your Travel Plans to Avoid Swine Flu; Proper Money Etiquette: When to Ask For Help and When Not To
Aired May 2, 2009 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CNN HOST: Hello. I'm Gerri Willis and this is YOUR BOTTOM LINE, the show that saves you money.
What is President Obama doing for your house, your job, your savings, your debt? Then changing your travel plans to steer clear of swine flu, how to get a refund if you're looking to re-book the vacation. And proper money etiquette, knowing when it's OK to ask for help and when you should just say no. YOUR BOTTOM LINE starts right now.
The first 100 days of the Obama presidency are over but the administration still has a long way to go to turn this economy around. For jobs to housing to health care, let's talk about it.
Lynnette Khalfani-Cox is the author of "Your First Home." Andrew Rubin is the host of "Sirius XM Doctor Radio" and Mike Santoli is with "Barron's." Welcome all, good to see you guys.
Well, let's start with you, Mike, I want everybody to weigh in on this question, but I want your reaction to the speech and let's keep in mind, you know, the president is saying things are on the upturn but, you know, we had GDP the lowest since the 1950s, we've got an American automaker in bankruptcy. How do you read it?
MIKE SANTOLI, BARRON'S: I think it's all context. Essentially, we know things have been bad and I think that the emphasis in the first couple of months was just how bad it is in order to get people to buy in to drastic measures. We bought in. We've kind of put these policies in place where there's the stimulus, the financial rescue and all this stuff, and now it's time to say cycles ultimately bottom in turn and I think that's about where we are.
WILLIS: So, you think it's not controllable necessarily by the president. Andrew, what do you say?
ANDREW RUBIN, SIRIUS XM DOCTOR RADIO: I say on my radio show we're getting a lot of calls with people who are in trouble because they're losing their medical insurance and they don't know where to go and it's directly related to the bottom of the market where people are losing their jobs and they need a place to turn for health insurance.
WILLIS: And it's hard to get answers on those questions.
Lynnette, what were you listening for? LYNNETTE KHALFANI-COX, AUTHOR: I saw a lot of hope and optimism in what he was trying to saying, he was trying to change the tenor and tone of what he was saying in the first couple of months because really people are looking to whether it's Ben Bernanke talking about green shoots or even the Fed this week saying we are seeing a little bit of signs of recovery. That's the message now that I think the administration is going to try to combat.
WILLIS: I want to talk about housing for a second, because it's so important and really what got us into trouble in the first place and I was on one of these Treasury calls this week listening to what they're doing in making housing and home affordable and work and they admit they're really not doing deals out there, you know, big plans, $75 billion to keep people out of foreclosure and it's not happening yet. Lynnette, how long is this going to take?
KHALFANI-COX: I think it's going to take some time and this is the most intractable problem. One of the biggest issues is capacity. A lot of banks simply don't even have the staff to deal with the tremendous volume of calls. We know that the Hope for Homeowners' mission has been practically a complete failure; maybe two dozen or so have been able to refinance or get loan modifications. That's going to be the biggest challenge, I think, to the administration in terms of a lot of economic policies and the agenda that they have to set.
WILLIS: All right, Mike, you know, $8,000 tax credit could be a very big deal for people out there looking for their first home. Can it save the housing market?
SANTOLI: Not alone, no. but you also have record-low mortgage rates. The Fed is engineering record low mortgage rates, but we have too many homes in this country. It's not just that the turnover is too heavy, with too many sellers versus buyers, too many were built and we have the bulge of supply because of foreclosures. So, it is something to be chewed through and all of this is going to help, but not be the magic solution.
WILLIS: To chew through and digest and get rid of. Exactly.
Andrew, I want to turn to you, you are the health care expert, here. What did you hear in the speech? Was there anything that really appealed to you? Is there going to be any big omnibus bill that completely changes health care as we know it?
RUBIN: First you have to give the Obama administration credit for what he has done, what they have done. They did introduce COBRA legislation that funds 2/3 of COBRA, they put $87 billion into the state Medicaid programs for children and adults who have gone without insurance had the states not gotten the funding and they put $20 billion into electronic medical records so that institutions can start talking with their doctors back and forth and improve quality, lower cost.
What I really heard last night in this speech was a national health insurance program that insures the 40 to 50 million people who don't have insurance. How do we get there? Really, really expensive and really complicated.
WILLIS: And really controversial. Tough to put through in Congress even though, you know, it's all in one party now.
RUBIN: A very divided Congress.
WILLIS: You know, what is interesting is one of the biggest plans getting money right now, Medicaid, those S-Chip programs, $1 4.5 billion of the spending that's gone out the door for stimulus, has gone to that. Do you think that's really helping people out there?
RUBIN: I think it's keeping -- S-Chip is for children and keeping children insured in health care, listen, anything you do to keep people insured, particularly children, is important. I don't think it's stimulating the economy, I think It helps the states fund these programs and that's a great thing to do. I wouldn't really call it the first step towards health care reform.
WILLIS: I got to move on to banks for just a second because I know everybody out there is so exercised about all the money that's gone to banks. Mike, I'm going to start with you, you know, Bank of America needs more capital, Citi needs more capital. When are they going to start lending money to me? That's what I want to know. They have my taxpayer dollars. I want to see something in return.
SANTOLI: Well, everything's working at cross purposes, here, we want the banks not to have losses on bad loans, therefore, they're more reticent and more careful about who they're lending to. Honestly, overall banks in aggregate have not slowed their lending terribly much, they've put more restrictions on credit lines.
WILLIS: It doesn't feel that way.
SANTOLI: It's the non-bank lenders that were the fly by night guys that sold their stuff to Wall Street that are gone. It's $3 trillion of lending capacity that went away, so it's not as much Bank of America and JPMorgan that have said no, we're not lending anymore. They've pulled back, but they always pull back in a recession.
WILLIS: What do you think, Lynnette, do you think people are getting loans?
KHALFANI-COX: The consumers I'm hearing from say they feel the spigot has been cut off. I mean, they say it's a lot more hurdles that they have to jump through, they say they had their interest rates increased, their credit lines slashed, even those with pristine credit. So, I agree with Mike that a hole segment, the subprime market, for example, totally gone away in a lot of regards, that's why we're seeing more FHA loans for homes, but across the credit spectrum, people report that it's tougher to get auto loans, credit cards, mortgages, student loans, everything is a lot tighter.
WILLIS: Right. And I feel that pain. We all feel that pain. Guys, thanks so much. Great panel, great work. Lynnette, Andrew and Mike, thanks for being with us today. And is it safe to travel? Whether your plans are for a business trip or a family vacation, you might be rethinking them now. Details on how the swine flu affects you.
WILLIS: With the outbreak of swine flu in Mexico last week, many of you may be rethinking your upcoming travel plans, so where is it safe to go and is it possible to change, exchange or refund a plane ticket, a hotel room? Peter Greenburg is the travel expert and joins us now from West Palm Beach.
Peter, welcome. Great to have you, here.
PETER GREENBERG, TRAVEL EXPERT: Happy to be with you, Gerri.
WILLIS: All right, let's start with those airlines. How accommodating are they really being, here? Will they cancel flights? Can you re-book? I mean, are they really helping people out?
GREENBERG: They're actually doing the responsible thing here, they're allowing people to either cancel their flights or re-book them with no penalties or cancellation fees.
GREENBERG: And that's what they should be doing. At the same time a lot of airlines overseas are applying, let's say, the European Union and asking them to allow them to cancel their flights entirely. It's not because of the swine flu and their responsibility, it's their bottom line. Their flights are empty.
WILLIS: Wow. And that's a scary thing, too, just the economic consequences of all of this. But, when it gets down to the individual, if you have some kind of pre-existing medical condition today, what should you be doing? Should I just not fly anywhere at all? Should I take normal precautions?
GREENBERG: Well, it's good preventive medicine, if you got a pre-existing medical condition and you think your immune system is not up to it, you shouldn't go. That's the bottom line. But, my position is very simple. If you do not have that existing medical condition, if you're in good health and you practice just good, basic personal hygiene, I would say to go.
Wash your hands before and after eating, wash your hands before and after going to the bathroom and, most importantly, if you're going to be an airplane, wash your hands before and after that flight because, consider all the things your hands are touching in that enclosed environment.
WILLIS: Wow, and so it's everything your mother ever told you.
GREENBERG: Of course.
WILLIS: But Peter, you are not saying go to Mexico, are you? Are you saying, hey, that Cancun vacation you've had planned for a year, go ahead, do that. Are you saying that?
GREENBERG: Not only am I saying that, I'm doing it myself in a week.
GREENBERG: Yes, I am. And I'll give you some historical context, here. Where did I go during the SARS crisis? There was no epidemic, it was a SARS crisis. What was the crisis? Nobody was going.
I went to Hong Kong when the hotel occupancies were three percent. And what happened? I had a great time. What about the avian flu? The only people really infected were people who worked at chicken farms. And remember hoof and mouth disease? Well, I wasn't greeted at the airport in the United Kingdom by anybody frothing at the mouth. It's just basic common sense. Check with your doctor, make sure that you're in good shape, practice good personal hygiene, a little preventive medicine and off you go.
WILLIS: Well, I don't know if I agree with that. I mean, I wouldn't be going to Mexico right now, and I know a lot of people out there will avoid it as well. But, you make a good point about other destinations and one thing you may say that may make sense here, you might want to take out some travel insurance. We really don't know where this whole thing is going. It could affect other destinations as well.
GREENBERG: Exactly. You should take travel insurance out no matter where you go if you have a large investment, if you're buying a $59 ticket on Southwest Airlines, go with God. But if you've a substantial investment in a cruise or a hotel, you need to protect yourself, but you have to read the policies carefully because it has to be a listed condition for them to cover you. If it's just the threat of a disease or the possibility of a sickness, you're not covered.
WILLIS: All right, Peter, great stuff. Thanks for the advice. We really appreciate it. You've got to come back.
GREENBERG: I'll do it.
WILLIS: All right, OK. See more on the swine flu's global impact and learn how to protect yourself from the virus. Check out CNNhealth.com where Dr. Sanjay Gupta and Elizabeth Cohen are answering your questions.
Everybody's been there whether it's a friend asking you how much you make or a couple trying to decide how to pay for a night out, how do you talk money without getting too personal? Plus this.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: They're a dollar off each item. And right over there are the items on sale for $1 each, so my cost zero.
(END VIDEO CLIP)
WILLIS: You heard her, the coupon lady shows you how to save big bucks at the grocery store.
WILLIS: From splitting the check at dinner to lending money to a friend or a family member, money etiquette, it's always a touchy subject. With lost jobs, tight budgets, awkward money moments tend to be spreading up more than ever. Kristin Van Ogtrop is the managing editor of "Real Simple Magazine."
Kristin, welcome, good to see you.
KRISTIN VAN OGTROP, REAL SIMPLE MAGAZINE: Thank you, great to be here.
WILLIS: All right, well let's talk about it. Start with the nosy questions that people come to you, what did you pay for your bag? Where are the shoes from? How much did you spend on them? Can you steer clear of those without being rude?
VAN OGTROP: I think you can. I mean, the first thing to remember, you know, and as you mentioned the situations are getting all the more awkward these days. With everyone's budgets so tight, you can, first of all, just because someone asks you a question doesn't mean you have to answer it, which I think is the first thing that trips a lot of us up.
You think, oh, I've been asked a question; I need to answer that question and answer it honestly. You don't need to answer any question you're asked. Maybe if you're in a court of law you have to answer the question, but if you're with a friend.
So a good way to get around it is to defect with humor. You know, if someone says, so, you know, I love that yellow top you've got on, how much was that? You could say, well, I'd have to -- I could tell you but I'd have to kill you.
WILLIS: Or it was more than I wanted to pay.
VAN OGTROP: Or, it was more than I wanted to pay, but isn't it fabulous? You know, or it was more than I wanted to pay, but I still really like it. You know, you can deflect the question. If you have someone who really insists on knowing, I would still continue to try to deflect and then you can come right out and say, look, you know, I don't want to tell you. I'm sorry, I don't want to tell you.
WILLIS: But one question you do have to answer, obviously, but one question you do have to answer if you go out to dinner with friends is you have to split the bill sometimes.
VAN OGTROP: Right.
WILLIS: And I think that can be an awkward moment. Sometimes the best thing to do is make sure the rules are laid out before the bill even comes.
VAN OGTROP: Exactly. Exactly, you know, RealSimple.com teamed up with CNNmoney.com and we did a poll, 20,000 people online answered and the one thing we learned is eating out is the biggest place where people are cutting back on their spending and it makes all the situations that much more important when you are laying out the cash eating out.
So, a good way to go into that sort of a situation when you don't want to split the bill evenly, you're just having a salad and everyone else is having a bottle of wine and an entree, is establish kind of the ground rules up front. Say, oh, so we're all going to pay for our own meals, right?
Or, you know, if you're surprised when the check comes, it's good to have a little bit of cash on hand and you can say, hey, guys do you mind if I just put in $20 for my glass of wine and my salad, does that feel fair? So I think honesty and kind of trying to establish as much of an understanding up front is a good way to go.
WILLIS: Establish it up front. Kristin, let's get this idea of lending money out to friends. It's always uncomfortable and even trickier with family. What are the rules of the road?
VAN OGTROP: OK, the first rule, I would say, is don't always expect you will ever see the money again.
WILLIS: So you would only lend out money you could afford to lose.
VAN OGTROP: I would only lend out money that, you know, again, whether it's $500 or $5,000 that you can live, never seeing that money again. I would go into it with that. Lending money to friends and family members is so ripe with problems to begin with. You know, if you feel like you must, it's good to establish some kind of payment plan or some kind of understanding -- again, going into the relationship. Yes, I can lend you $1,000, but can we do it this way? You will pay me "x" amount per month.
WILLIS: Well, I love that idea and your advice, just fantastic.
Do you know how healthy your finances are? If not, it is time to find out. Our friends at CNNmoney.com have come up with a very easy way to test the strength of your money plan. Poppy Harlow is here to take us through it.
Hi -- hey there, Poppy.
POPPY HARLOW, CNNMONEY.COM: And Gerri, it's such a neat tool. I've been on it myself, taking the test myself a few times now. It's essentially a personal stress test of your financial health. It's right on the Personal Finance sections of CNNMoney.com. The question: how healthy are your finances? Take a look here. Just go to the page and pull it up.
What we did is we factored in an age of 40 and an annual salary of $50,000. You can measure is lot of different things from your housing payment to your debt to your company stock holdings, life insurance. We're going to take a look here at housing and we've put some numbers in here, take a look, if your monthly payment on your house, you rent, or maybe your mortgage is $1,200 on the $50,000 a year salary, where do you stand? Just press enter.
Careful here, you're paying too much. Really, this payment should not exceed 28 percent of your gross income. We did factor it in at $1,100 a month, that put you in a safe area.
Let's look at your debt next. These are including your mortgage and also your monthly credit card payments, et cetera. We factored in $1,800. Let's see how the person stands. Again, danger, you're carrying a bit too much debt. This payment every month shouldn't exceed 36 percent of your gross income. Now, we factored in $1,500, that puts you in a safer place.
And, finally, let's take a look at retirement savings, because it's so important right now despite rough economic times that you are putting away for your retirement. This person put away $500 every month and has $75,000 saved up. Well, congratulations, you're on the right track for retirement. These are the three of the segments, Gerri, you can put in emergency savings, diversification, very nifty tool once again, just go to CNNmoney.com, click on the "Personal Finance" tab and you'll see the tool right there -- Gerri.
WILLIS: Poppy, awesome stuff. Love that. CNNmoney.com.
And no matter how your finances are looking these days, saving money is always a good thing, but not always easy to do, especially when it comes to food. Kris Van Cleave of our Washington, D.C. affiliate WJLA, she met up with one woman who has mastered the art of saving at the supermarket.
SUSAN SAMTUR, SMART SHOPPER: I'm starting out with the coupon flier, which I always take a look at first, because in this I'm going to find the items that are on sale.
KRIS VAN CLEAVE, WJLA REPORTER (voice-over): Susan Samtur takes her grocery shopping very seriously. Known as the coupon queen, when she looks down an aisle, she sees huge savings just waiting to be found.
SAMTUR: My husband and I were both teachers in New York City, but we didn't make enough to make ends meet, and so I began couponing and refunding.
VAN CLEAVE: Thirty-seven years later, she's a pro. Susan says she gets about $2,000 a year in cash from refunds she sends away for. And her weekly grocery bill, you'll have to see to believe.
SAMTUR: They are a dollar off each item, and right over there are the items on sale for a dollar each, so my cost is zero.
VAN CLEAVE: With her coupons filed by category and a list broken down by section of the grocery store, she's off.
(on camera): Of the items on the list, how many of these do you have coupons for?
SAMTUR: Every single one, practically. Almost every one.
VAN CLEAVE (voice-over): From the paper aisle to the meat section to fresh vegetables...
SAMTUR: But, there are items that often times will have their own coupon...
VAN CLEAVE: ...Susan finds deals on things you'd actually want in your kitchen.
SAMTUR: Wheaties is on sale also.
VAN CLEAVE: Her strategy?
SAMTUR: Cut out all the coupons, save them, put them into some kind of a category system, plan your shopping before you walk into the store.
VAN CLEAVE: With her cart full and her list checked off, we head to check out. The total?
CINDY DELCID, CASHIER: One fifty-two, eighty-six.
VAN CLEAVE: Now, it's coupon time.
SAMTUR: Some of these are from newspapers, but the bulk of them, the majority of them, are from refund offers that I've previously sent away and gotten back a coupon to get my next item free.
VAN CLEAVE: The process takes several minutes...
SAMTUR: And that was 3.50.
VAN CLEAVE: ...but the price keeps dropping.
DELCID: I've never seen nothing like it. First time, and I want to see it again.
VAN CLEAVE: You will, too. Our final total, including tax: $9.43. Look at the receipt: $144.00 in coupons, a savings of 97 percent.
WILLIS: Holy cow. I'd hate to be behind her in line.
Want to increase your home's value? Start outside. How to get the most bang for your gardening buck.
(COMMERCIAL BREAK) WILLIS: First impressions are always so important. Whether you're looking to buy or sell, your home's curb appeal can make or break a deal. We took a ride out to Tenafly, New Jersey, with landscaping guru Jason Cameron to check out one good looking home.
WILLIS: So, Jason, this is the view, this is the view that you would see on the Internet if this house was on the market. This is the view that you'd see coming to the open house. This is -- this is a money shot right here. So, what do you think?
JASON CAMERON, DIY NETWORK: It is a money shot. And for a possible buyer looking at this house, first thing that I look at, is how well maintained the landscape is. And obviously this is very well maintained.
And the thing about landscapes you want to keep in mind. You don't want to overdo it. You don't want to take away from what it is you're looking to buy, which is the home. So, as the person who owns the house, all about the house and you want the landscape not to overpower it but to enrich it.
WILLIS: But to point to it, right?
CAMERON: Point to it.
WILLIS: Right? I got to tell you, though, look at this driveway, because I think the driveway is awesome.
CAMERON: Yes, it is. Pretty nice.
WILLIS: You know, this can be a real distraction from the house itself, but they've done a beautiful job with this, right?
CAMERON: They've done a beautiful job. I mean, this not lonely looks great, but adds ton of value to your house. But a job like this for a do-it-yourselfer is a little much. But a smaller job, you can do it. And you've got to remember, too, with pavers is that it's $10 to $15 a square foot to have it installed, it's very expensive. Ninety percent of that is labor.
WILLIS: You know, one other thing, I like the way these bushes frame the doorway. They're bringing you right in the front door.
CAMERON: We're on the same page you and I.
WILLIS: I think so, maybe.
CAMERON: That caught my eye, as well. And when you have a prominent space like this, I mean, this is the focal point, this is what people are going to look is the front door, the entrance. They did a good job framing it in with these two evergreens on each side, so it's very prominent area, so you want to anchor -- basically anchoring the front door.
WILLIS: So Jason, let's check out this backyard.
CAMERON: Yes, let's do.
WILLIS: Wow, the grass is gorgeous. They've really worked hard on it.
CAMERON: It's beautiful grass.
WILLIS: But I have to ask you this question.
WILLIS: There's a lot going on back here. There's a lot of chatchkas (ph).
CAMERON: There's a lot to like.
WILLIS: What do you think?
CAMERON: There's a lot to like about this, but that would be one of my criticisms is that there's a little bit too much going on. I mean, there's a lot for the eye to take in. There's a lot of different types of...
WILLIS: Urns and pots.
CAMERON: Urns. But, it really is a matter of preference. Obviously the homeowner really likes the stuff. And, again, it's their backyard, but for resale purposes you might want to simplify things and not have so much going on.
WILLIS: What about the hostas, I love these hostas, they're huge.
CAMERON: Again, it's a little texture element. So, the hostas, hydrangeas, bushes are great, like boxwoods and rhododendrons, like you like, those are flowering bushes and the evergreen bushes. So, a lot of different elements going on, but they're all low maintenance, and that's really important because you don't want to spend a lot of time maintaining a landscape.
WILLIS: OK, so short list action plan, tip No. 1, look at your house as if for the first time. Second, don't be afraid to do it yourself.
WILLIS: And, three, don't overbuy.
CAMERON: Don't overbuy. Don't overdo it. Don't overwhelm your house. You know, keep it simple. Again, planning like plants together, layering, getting some color and some year-round color. So, you want short-term color, which is annuals and perennials and you want year-round color, which is bushes, evergreens and hydrangeas.
WILLIS: OK, I think I've got it. CAMERON: You got it?
WILLIS: Good stuff. As always, we thank you for spending part of your Saturday with us. Don't go anywhere, your top stories are next in the CNN NEWSROOM. Have a great weekend.