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Cash for Clunkers Continues; Become an Empowered Patient; Stay Employed By Making the Most of Your Job; It's a Good Time to Start a Small Business

Aired August 8, 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. Become an empowered patient: tips to wage a battle against your insurance company if your claim is denied. Making the most of a miserable job: solutions that don't involve sacrificing your paycheck. And starting a small business: grab a pen and paper, we'll show you how. YOUR BOTTOM LINE start right now.

Cash for Clunkers, some say a big success, others argue poorly planned by the government. The program burned through its billion dollar first round of funding in less than one week. Now, with $2 billion more headed on the way, how long can we expect it to last? Jack Hidary is the chairman of

You helped design this plan so we really got the person who knows the most about it with us today. I want to share some numbers we have, though, to ask you about them.


WILLIS: You know, total number of clunkers out there, some 40 million. Even with the $2 billion, we're going to take out less than a million of these clunkers. Is that enough, are we really getting traction against the problem the president says he would like to fix?

HIDARY: Well, Cash for Clunkers is a start. It's a program that we need right now because of the issues and challenges of the auto industry. We've got to help the auto industry. We've also got to help the consumer. You have millions of consumers that have the clunkers and costs them a lot to fill it up with gas at the pump, it costs them a lot to go work and back and forth with this clunker. On average, people who trade in their chunkers are saving $750 a year in gas with their new car...

WILLIS: And as that price goes up, they'll save even more, right?

HIDARY: Exactly, that's at $2.60 a gallon. Imagine if it goes back to $4. We're predicting that gas will go back to $4 within nine months.

WILLIS: What? Back to 4 bucks?

HIDARY: Back to 4 bucks. That's right.

WILLIS: All right, well, you heard it here first. We're headed back up for the gas prices. That's amazing. Why, though?

HIDARY: We went from $1.45 to $2.70 this week, we're moving up there because you have demand coming back as the recession ebbs a little bit, and demand comes back and China starts buying more car.

WILLIS: That's all pressure for higher prices.

HIDARY: Exactly.

WILLIS: Let me get to some of the other issues for Cash for Clunkers. You know, under the program newly purchased cars have to have an efficiency of 22 mpg. Not that impressive.

HIDARY: Not that impressive. Actually, we were asking for much higher. We wanted a minimum of 25 percent above cafe, that is 33 miles per gallon.

WILLIS: That's impressive.

HIDARY: But there was a compromise in the congress, a lot of people there fighting for the U.S. automakers, we were fighting for higher efficiency and the U.S. automakers, in the end the compromise was 22 mpg.

But, here's the good news. Consumers are voting with their wheels for higher efficiency, on average, they're trading in cars 60 percent now higher than the ones they brought in.

WILLIS: But Jack, if one of the goals was to get Americans to buy American cars, it's not working. I mean you look at the list of cars in terms of popularity. They tend to be Japanese.

HIDARY: Actually, it is working in several respects. First, 45 percent of the cars being bought are from the Detroit big three. Second, a lot of -- most of the Toyotas and Hondas bought are made in America by U.S. autoworkers in Tennessee, Alabama, Mississippi and Kentucky.

WILLIS: Wheels within wheels. Yes, they are -- the companies, themselves, are obviously not in this country, they're Japanese.

HIDARY: But, they're making the cars here.

WILLIS: So, what's next? After Cash for Clunkers do we get a new program that takes its place?

HIDARY: You know, that's a great question. We just got more $2 billion for our program, now. So, we have $3 billion. I think we even get one more billion this coming fall, maybe in September or October. That's $4 billion, about a million cars taken off the road and a million families put in a new, more efficient car, now having less of a gas bill every single year.

WILLIS: Yeah, but you have been talking about something you call "feebate." So, a tax on people who actually buy gas guzzlers. So, now we're not just incenting people to buy full-efficient cars, we're actually penalizing people who don't.

HIDARY: Well, that's a great question. Looking forward, how do we continue to fund this thing? Cash for Clunkers costs a lot of money, $4 billion in this case. And so we want to look for a revenue neutral way for doing that so the U.S. taxpayer doesn't have to lay out cash.

One way that that's being proposed is a feebate. And a feebate is a fee and a rebate, so we call it a feebate. A feebats says if you want to buy a guzzler, say a big Escalade or a big SUV, you're going to pay an extra fee. On the other hand, if you want to buy a high mileage car, you're going to get a rebate. And that one matches the other. So, it's actually revenue neutral. But, we want to send a message to the consumer with pricing, that we want you, the consumer, to please buy a high mileage car because then you will have lower operating costs of that vehicle.

WILLIS: In other words, buy your Escalade now. All right, Jack, thanks for helping us out today. We appreciate it.

HIDARY: Thank you, Gerri.

WILLIS: Health care reform, still a hot topic in Washington as Congress heads home for its summer recession. CNN's senior medical correspondent, Elizabeth Cohen, joins us from Atlanta to discuss one of the most common complaints about health insurance, that the companies -- insurance companies deny claims they really should pay.

Elizabeth, what should you do when an insurance company denies your claim?

ELIZABETH COHEN, CNN SR. MEDICAL CORRESPONDENT: Gerri, you know how in real estate everything is location, location, location? Well, patient advocates tell me when you're fighting a insurance denial, the words are fight, fight, fight. You just need to keep fighting it.

So, let's take a look at some specific tips that we have from the "Empowered Patient" columns about how to fight an insurance company when they're denying a claim they ought to be paying.

First of all get all the paperwork so that you can prove your case, that means the paperwork from your doctor and from your insurance company and then as I said, fight, fight, fight. That means appeal your insurance company's decisions. Advocates tell me that most of the time when people appeal, they actually get their way, which is pretty interesting.

WILLIS: Hey, Elizabeth, so you don't have to be satisfied with the first answer. You can actually ask, hey, I don't like what you told me, I'm going to continue to appeal this?

COHEN: Absolutely. The advocates that I talked to said they have people who have appealed four times and it took four times, but finally the insurance company agreed to pay. So that's a great point, Gerri. If they say no the first time, keep going. Also, ask your original doctor for help. Say, doctor, they're not paying for this procedure that you did, can you help me out here and call the insurance company. And doctors are usually happy to do that.

Now, finally, if all else fails, get yourself a lawyer. Again, the advocates that I talked to said sometimes when the insurance company says no, over and over again, the minute they get that letter with some legal letterhead on it, that they actually will cough up the money.

WILLIS: All right, well what about avoiding all these problems in the first place? I don't want to have to go through a long appeals process. I want to get action now. How do I do that?

COHEN: Right, you need to sort of get everything in order before you actually have any procedures. And so the first thing you want to do is you want to check with your insurance company, are there any things that they generally just never ever pay for. In vitro fertilization is a great example. Some insurance company policies just say we don't pay for that, that's a general exclusion. You want to check that out before you get an expensive procedure.

Also, again, get everything in writing, whether it's from your insurance company or from the doctor. And that's that sort of lead leads me to tip No. 3, don't trust your doctor when it comes to insurance. You know, trust them for medical things, but not for insurance things.

For example, we talked to somebody who -- where the doctor said, oh, I'm going to do Lasik surgery on you and I called the insurance company and they said no problem, we'll pay for it. Well, it turned out the doctor had it wrong. They don't quite know what happened in the communication there, but the doctor wasn't right. The insurance company never did promise to pay for it. So don't trust your doctor, get it in writing from your insurance company.

WILLIS: Elizabeth Cohen, great information. Thank you so much.

COHEN: Thanks.

WILLIS: All right. Most people have something they don't like about their jobs. But, listen up, now is definitely time not to quit. How to make the best of a bad job, next.


WILLIS: Employment numbers released this week show that workers are still feeling the recession even as many are saying the U.S. economy is beginning to recover. The latest ADB employment report shows a loss of 371,000 jobs from private sector and that is the smallest monthly loss since October. The report was better than economists' earlier prediction of 350,000 jobs for the month of July.

Clearly, if you're unhappy with your job you need a solution that doesn't involve giving up your paycheck and re-entering an already unstable job market.

Tom Musback, managing editor of Yahoo! Hot Jobs, joins us now.

And you've got some really interesting advice here, Tom. I just want to tell viewers out there, recent survey -- according to a recent survey, some 54 percent of workers said if I could leave my job I would and what's more, as soon as this economic downturn is over I'm going to look for a new job. Are you surprised by those numbers?

TOM MUSBACK, YAHOO! HOT JOBS: No, I'm not. I mean, a lot of people have difficulties in their jobs. They like to complain about their jobs. But given the tough environment we're in, they feel kind of stuck and so a lot of people, yeah, that's the main feeling they have is they're stuck in their job.

WILLIS: All right, well, let's talk about some of the problems and how you should fight back against them. If you have a bad boss, a screamer, someone that doesn't appreciate your work, what do you do?

MUSBACK: Well, sometimes in those cases, communication also is a real problem. So, make sure that you schedule frequent update meetings with your boss, so you can get on the same page about, you know, certain issues or things that need to be done. And also when you do go to the boss, make sure that you present solutions. Often people come in and talk about problems. And, you know, we learned as kids, no one likes a complainer and that's definitely true with your boss. So, be solutions oriented.

WILLIS: OK. Some people are just bored. Let's face it. You know, and especially now, some people are kind of sitting on the sidelines because there's not a lot of money to do things, they want to be involved, they can't. What should they do?

MUSBACK: That could be a matter of setting some new goals. If you don't have goals, definitely set some goals. If you can, you know, set those up with your boss in agreement. Or maybe just set personal goals. The point is, to have some measure of achievement. You want to know what success means in your job and have ways to measure that. That can often change your perspective.

WILLIS: But, you can develop your own definition of what success is, right?

MUSBACK: True. True.

WILLIS: OK. So, some people, too, feel I think like I work in a big company, nobody knows my name, I'm invisible. How do I break through that anonymity?

MUSBACK: Right. A lot of people feel like oh, my job doesn't matter to anybody, and it's good to sit back and really think about, OK, who does my job affect? How does it make a difference in someone's life? And if you can look at it that way and focus on that relationship, even if it's just one co-worker that your job makes a difference for, if you can focus on that, that can often change your perspective and make you feel -- if you know that your job is making a difference to somebody, that can really make a difference to you.

WILLIS: You know, it occurs to me, Tom, that if you employ some of these tactics you might come to the realization that your job is better than you thought it was?

MUSBACK: That's right. That's right. And that's a great thing to have in this economy, because people want to hang on to their jobs. So yeah, if you can change your perspective on your job, that's fantastic.

WILLIS: All right. Well, Tom, thanks for your help today. We appreciate it.

MUSBACK: All right, thank you.

WILLIS: Now, if you've just received a pink slip or just worried you may be next on the chopping block, it may be time to get some retraining. One free option, the Department of Labor's local one-stop career centers where you can attend free, yes, free classes on job preparation and computer train. Go to for details.

You may want to consider an apprenticeship, a combination of job training and classroom education. Check out the Department of Labor's Web site at for information on paid programs, paid, where you can work with chefs, electricians or carpenters or a number of other trades and learn a new job.

Up next, why now is a great time to start a small business and how to do just that.


WILLIS: Unemployment is high, the recession is dragging to an end, but is now a good time to start a small business? Joining us now are two small biz experts, Dani Babb and John Rutledge.

All right, guys, tell me why I would start a business now?

JOHN RUTLEDGE, RUTLEDGE CAPITAL: Because today, everything's on sale half price what it would be in a normal economy. You can get people, you can get office space, you can get all the materials you need, so go out and do it and you will be a hero if you do.

WILLIS: Save money. What else, Dani?

DANI BABB, THE BABB GROUP: Well, if you can build your business now today when consumers do begin spending again, you're going to have a full fledge business ready to run. You can save money, you can buy used equipment, you can get talented labor that's looking for a job for a little bit less money today than you could in the past.

WILLIS: All right, those are some good reasons. You guys recently spent some time in Georgia with a decorated out of work military vet looking to find a financially sound way to follow her dreams and become her own boss.

Let's take a quick listen to her story.


WILLIS (voice-over): In the eight years since retiring from the Air Force, Lori Lawrence has had three different jobs. She quit one and was laid off twice. After the last layoff in February she started rethinking her options.

LORI LAWRENCE, ENTREPRENEUR: I started thinking, I'm tired of going through this. What would I really enjoy?

WILLIS: So, her aging husky, Cody, is too old to need much grooming anymore, he inspired her to set her sights on opening a dog grooming business in the upscale Atlanta suburb of Peachtree City. Money was tight, so she swallowed her pride and opened a fruit stand.

LAWRENCE: It is not doing anything like I hoped it would do, but it's more money than I had last week.

WILLIS: Fruit is only bringing in a few hundred dollars a week, which isn't nearly enough to launch her business, compared to that, dog grooming looks like a gold mine.

LAWRENCE: People spent $42 billion last year on their pets alone. You know, it's there. How do I -- how do I get in? I want in.


WILLIS: All right. So guys, Lori is such a great of what's going on out there with people who do want to start their own business. I want to talk, though, just a second about where to go for money, because that's clearly one of the big problems, here. Friends and family, banks, John, what do you do?

RUTLEDGE: Well, first thing to understand is you probably don't need as up money as you think you need. People come to us with business plans that say we need $1.2 or $2.2 million. Break it down dollar for dollar. Get rid of what you can, push as much length as you can. You might find you need 10 percent as much. And when you do, then go to every source you can, from family to the banks.

WILLIS: Now, when you talked to Lori you actually dialed back her expectation of expenses quite a bit. She thought she would spend in the first three years some $380,000. You said, no, no. no, more like $210,000. Do people consistently overestimate how much they're going to spend and how do they get good estimate standing?

BABB: They do. First of all, people are not looking for the cheapest resources, they're not looking online for equipment. In Lori's case she needs to sell 3.2 million tomatoes in order to make her dream happen. So we scaled that back, we scaled $100,000 off of start-up costs by beating up leasing agents, by going to vendors and telling them that we needed a substantial break in cost. I mean, wanted vendor-based financing, that's another way to help knock off costs and then finally go to... WILLIS: Vender-based financing means what?

BABB: Well, you go to the vendor and you say I'm willing to buy your equipment, but I need six month, I need 12 months before I can pay, and a lot of vendors are willing to do that if you've got good personal credit.

WILLIS: All right, so to be a financial success, though, over the long run, and face it, half of all start-up businesses fail in the first five years -- what does it take, what is the secret -- John.

RUTLEDGE: The secret is the guts to do it. Lori's a legitimate hero. She's not going to fail in that department. But also...

WILLIS: Guts are important, but let's talk about, you know, real strategies that will really get you a small business.

RUTLEDGE: Real strategies is learn with small mistakes in the beginning, lose small amounts of money, spend as little as possible, accelerate the revenues, buy the materials businesses going broke or going out of business, you can save half of that.

And so, it's a beachhead one dollar at a time. Small business isn't a thing you magically one day open up and it's a success. Most businesses fail, but most of the owners of the failing businesses come back and try again.

WILLIS: So, you scale up and scale up as you find small successes, Dani?

BABB: That's one strategy. Now, a lot of people that run business plans by us, they want have 2,000 square feet, 2,500 square feet. They really need 1,000 square feet, for example to open their business. Maybe they don't need a place on the road to open their business.

So, sometimes it's a matter are looking at your dreams in stages and not just going for the gold, initially. I mean, the gold in mind, but taking baby steps to good there. We've, by far, found that to be the most successful strategy.

WILLIS: One of the things you guys say that I think is funny. You sat BYOB. Be your own bank, not bring your own bottle, but be your own bank. How do you do that?

BABB: Sell your stuff. You know, I started a business with $10,000 worth of Gucci bags on eBay.

WILLIS: You sold your Gucci bags?

BABB: Yeah, but I had to buy a lot of them at wholesale online before I could resell them at full retail. And they were a couple of years old, but people still bought them, I made good profit and I started a business that way. And today, there are so many sources for people to do that. RUTLEDGE: Look in the garage, look in the closet, anything you're not using can be sold to somebody. But, also the things you need are already probably owned by somebody else, don't let them off the hook.

WILLIS: All right, Dani, one word for people out there trying to start a business today. What would you say? Bit of advice, bad economy, what should they do?

BABB: First of all, make a very strong relationship with a community banker that knows and don't go in asking for one hundred grand with a bloated business plan, scale it way back.

WILLIS: All right, spend less.

BABB: Spend less, be more successful.

WILLIS: I like that. All right guys, thanks so much.

Next, why one family is living all by themselves in a 32-story tower, and a crazy way one realtor is trying to pedal homes.


WILLIS: A bleak outlook from a big bank. Deutsche Bank estimates 48 percent of all U.S. homeowners will be underwater in their mortgages by 2011 and that means they'll owe more than their house is worth and that's an estimated 25 million Americans with a major drain on their financial health.

And now, a look at two very different stories when it comes to America's housing. Up first, home alone in Fort Myers, Florida, here's Christina Bailey of our affiliate WFTX.


CHRISTINA BAILEY, WFTX REPORTER, (voice-over): New Jersey fire captain, Victor Vangelakos and his wife Kathy dreamed of retiring in southwest Florida, and ultimately leaving this riverfront condo to their children.

VICTOR VANGELAKOS, BOUGHT CONDO AT OASIS: We sold the house in New Jersey and used that money as the down payment for this building. This is everything we got, we put into this.

BAILEY: But an oasis it is not. Eight months after closing, the family are the only ones who live in this 32-floor tower, a building they expected to become a bustling community amidst restaurants, a movie theater and a marina. Instead, isolation.

VANGELAKOS: It's very eerie. It's like a scary movie.

BAILEY: Vangelakos also says health and safety hazards abound. This trash outside their door, a dark and deserted parking garage and lack of promised security. VANGELAKOS: The fire alarm system, which is my business, as a fire official, has been out of service. We had an intrusion June 29, about a month ago from today, somebody came into the building somehow and were pounding on the door where the room next to where my children are.

JONATHAN EWING, VANGELAKOS FAMILY ATTY: They sold a lifestyle and that lifestyle has kind of fizzled.

BAILEY: Their attorney, Jonathan Ewing, is working to get them what they paid for or get them out.


WILLIS: Well, for their part, the related group says the Vangelakos family is welcome to move to the second tower while they tried working out the transition with their lender to relocate next door. The builder says it has not discontinued service or done anything that would make life uncomfortable for the family, but are under no contractual obligation to buy back the apartment.

And now a road trip to Denver where the term pedaling homes takes on a whole new meaning. Heidi McGuire of our Denver affiliate, KUSA, explains.



HEIDI MCGUIRE, KUSA REPORTER, (voice-over): Ditching the car or bike really isn't a new concept for some Coloradans, which is why avid cyclist and echo-broker Bridget Slavin thought this was a no-brainer.

SLAVIN: Because a lot of people are like, oh, yeah, you know, of course, bike tours. I mean, it's just kind of the perfect way to go.

Please wipe your shoes before you head in.

MCGUIRE: Home buying bike tours has been done in other cities and Bridget decided this summer it was time to start her own tour to show off houses in northwest Denver.

SLAVIN: All right, let's go. Let's go check it out. And the idea is catching on.

UNIDENTIFIED MALE: We're all pent up at work all week and it's good to get out on the weekend.


MCGUIRE: And into several houses, usually five or six with two hours.

SLAVIN: Instead of driving around from open house to open house, I set them up four and you get a variety of homes to go look at so that you can kind of narrow down the type of home that you think would fit your personality.

All right, so this house lists at 237.

MCGUIRE: Other agents also benefit from the traffic these group rides offer.

SLAVIN: To be able to have, you know, six people come through a house at one time you really get a wonderful amount of exposure.

UNIDENTIFIED FEMALE: You can be excited together and it's all like we're a little kid in a candy store getting to go into new houses and see new things.

MCGUIRE: And the biggest bonus of biking has to be noticing what's outside that new house.

UNIDENTIFIED FEMALE: You see so many different things riding your bike, they if you just fly by at 60 miles an hour in your car and you miss.

MCGUIRE: Because it's not just about purchasing the right home, but also buying into the right neighborhood.

Heidi McGuire, 9-News.


WILLIS: Sounds like a fun way to spend a weekend afternoon.

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 next in the CNN NEWSROOM. Have a great weekend.