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YOUR BOTTOM LINE
Health Care Debate Rages On With Congress Out of Session; Credit Cardholders' Bill of Rights; When to Rent and Not Buy
Aired August 15, 2009 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
POPPY HARLOW, CNN HOST: Welcome to YOUR BOTTOM LINE, the show that saves you money. I'm Poppy Harlow in today for Gerri Willis. Well, Congress may be on recess, but the health care debate rages on. We'll talk big savings when it comes to preventative care.
Then, the credit cardholders' bill of rights. Find out what rules go into effect this Thursday. Plus, how to rent anything from electronics to sporting equipment to tools and appliances, we'll tell you when not to buy. YOUR BOTTOM LINE starts now.
Well, August is make or break month for health care in America. Town halls are causing public uproar confusion and is running rampant. Our chief business correspondent, Ali Velshi touring the country on what else? The CNN Express. Joining us now from the Missouri State Fair.
Talk about getting the pulse of America, Ali. What are you hearing?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yeah, this is a fantastic place to do that. But, we've been driving from Atlanta to Des Moines and we passed through Georgia, Tennessee. Got that out of order. Georgia, Tennessee, Kentucky, Illinois, Missouri, heading into Kansas and Iowa. And we're talking to people, usually in places smaller than would normally get media coverage, about health care.
In the beginning of the week, as that health care debate was really heating up on TV with those town hall meetings, we were trying to get a sort of a quieter discussion going. There was certainly plenty of disagreement where we went. We ended up in one very interesting place, in Paducah, Kentucky, northwestern Kentucky on the Illinois border.
And we had a bit of a town hall meeting. One of the women who at the meeting, was formerly a congressional candidate, she was a Democratic candidate who ran in the last election and lost. But, she had some very, very strong views on health care. Here's a bit of a taste of what she told us.
(BEGIN VIDEO CLIP)
HEATHER RYAN, UNEMPLOYED MOTHER: Well, my husband and I are two of that 47 million plus that aren't -- don't have health care. And I'm not talking insurance, of course we don't have insurance, but I want health care. My husband has diabetes and he just had a bout with cancer. What insurance company is going to cover us? There aren't any. If I get sick today, were do you think I'm going? I'm going to the emergency room. Who's that costing? That's costing us, the taxpayers. So, if it's going to cost my bottom line, if they have to tax me more in order to get health care, tax me. Tax me, tax me, tax me. I am willing to pay.
(END VIDEO CLIP)
VELSHI: I have to tell you, Poppy, and you can see a larger version of that interview, which is worth seeing on CNNMoney.com, there were people who really didn't agree with that at all. They were saying they'd like to fix health care, but the last thing they want are more taxes, we can't afford more debt, we can't afford more taxes.
So, there's a heated debate going on in the country. I'd like to think that the people we've been talking to, through the course of this trip, are having a heated debate, but it's civil, it's respectful and we're trying to sort of get down to the nitty-gritty of cost, of quality of health care, of access to health care and of choice. And those are really the issues that are coming up this week -- Poppy.
HARLOW: Ali, you guys are doing a great job. Thank you for being out there. It's a tough proposition, I mean, raising taxes in the midst of a very deep recession. All right, Ali, thank you so much. Appreciate it.
Well, one way to seriously slash health care spending, by investing in preventative medicine. Andrew Rubin is the vice president of the medical center and clinical affairs and affiliates at NYU's Langone Medical Center. He's also the host of "Health Care Connect" on SIRIUS Doctor Radio.
You know a lot about this topic and people like you are in demand right now because they want to know how we can fix health care but do it in a way that is somewhat affordable. So, let's talk about the waste. Where is the waste in the current health care system coming from?
ANDREW RUBIN, NYU LANGONE MEDICAL CENTER: Well, it's interesting. You got to put this in context. So, President Obama wants a bill that's not going to cost the taxpayers any more money. So, the only thing you can do is find where the waste is.
Now, waste can be found in lots of different places in the health care system, but I think some of the easy things to look at are obesity. You know, $200 billion spend on taking care of obese people. Smoking, I think the numbers are between, in a recent study, between 190 and over $500 billion in people who smoke. So, you know, we got to filter out all the noise in the politics and actually get down to work and start tackling some of the areas where we can save some money in the health care system to cover more people, because that's what this is about.
HARLOW: All right, exactly. And there's a number of proposals out there floating around Capitol Hill, right now, lawmakers in their home districts, this month talking to their constituents. But, in the proposals you have seen so far, from the GOP and from the Democrats, what's included when we talk about prevention?
RUBIN: Well first, before you even talk about the bills, President Obama's part of the stimulus package was a billion dollars for preventative medicine, wellness programs. You know, now people can say what is that going to do? It's a drop in the bucket. But, making people healthy and taking better care of themselves is a great start.
In the bills I have seen, particularly in the Senate bill, there's $10 billion currently written into that for wellness and prevention programs. So again, it's a drop in the bucket, because if you are talking $200 billion for obesity, it's going to cost $10 billion to make people healthy. That being said, you're going to save a lot of money if you can solve 25 percent of the obesity problem, you could save percent of $200 billion. That's a lot of money.
HARLOW: And we're talking costs that come both to the individuals, the families, the households across America, and to businesses. I mean, Health care costs and subsidizing health insurance for employees is a huge cost to businesses. What are you seeing that American businesses are doing or should be doing when it comes to both wellness programs and also to disease management?
RUBIN: I saw a recent Pricewaterhouse Coopers study that just came out where they surveyed self-insured big businesses; they're putting a lot of money into wellness programs, preventative medicine programs. Now, they are a little bit skeptical about whether it's going to work, but they are putting money into it.
So, subsidizing gym memberships, smoking cessation programs, you know, better eating, healthier food choices. They are putting money into that and in fact, IBM is a recent example of a company that over two or three years invested, I think, about $80 million and saw a $190 million return on investment in terms of lower health care expenditures. So, there's real money there, but it's, you know, sometimes hard to quantify.
HARLOW: And finally, quickly, as an individual, what can I do to cut my health care cost? Does this come down to not getting too much insurance that I don't need?
RUBIN: Well, that's a complicated question. I want to say two things about it. First, what's in the current legislation is they're going to basically eliminate discounts for healthy people and that, I think, is a little problematic, but we'll see how that shakes out. Listen, it's always better to be healthy. You will always save money on health care if you take better care of yourself. Fewer doctor visits, less medications, be healthy.
HARLOW: Go to the gym, don't smoke, eat healthy. Appreciate it, Andrew Rubin.
All right, let's go forward. The credit card holders bill of rights. Changes that will affect your wallet this week.
(COMMERCIAL BREAK) HARLOW: Well, the average American carries more than $10,000 in credit card debt, much of which is comprised of interest payments, penalties and fees. And the so-called, Credit Card Bill of Rights was passed back in May. First rules, they'll go into effect on Thursday. So, here with what you need to know is Schwark Satyavolu the co- founder and also the president of BillShrink.com.
Thanks for joining us. Appreciate it.
SCHWARK SATYAVOLU, BILLSHRINK.COM: Thanks for having me.
HARLOW: Let's get right to it. You found that those with excellent credit status have the highest interest rate increase. Why is that?
SATYAVOLU: Typically the people with the best credit have the best rates and that they have the lowest rates and what the credit card industry has been doing in order to reinvent themselves in the face of new legislation is increase the lowest rates that they offer the consumers. And what that has meant is the people with the best credit are paying higher now for their credit.
HARLOW: It seems counter intuitive, actually, but at the same time you're dealing with banks facing the highest defaults they have seen in many, many years. So they're protecting themselves, in essence, right? And the consumer is going to suffer as a result?
SATYAVOLU: That is correct. I think in a way what the credit card act has done, has make it very difficult for the credit card industry to make revenues the way they have typically made revenues, through interest rates and fees and so on so forth, it's much hard to change interest rates when the full law goes into effect in February. And so what lot of credit card companies are doing today is preparing for that new change by making some changes today and making it possible for them to maybe move down in rates, later, after the full law goes into effect.
All right Schwark, obviously, this all goes into effect in February, but folks need to know what happens this week. On Thursday, there is -- some of the rules taking effect. Talk to us about those, first starting with the protection from arbitrary rate increases.
SATYAVOLU: That's correct. So I think there's two clauses of the entire act that actually go into effect Thursday. The first is protection from arbitrary rate increases, which is a clause that requires that the credit card companies give consumers 45 day notice before any rates are changes. Typically, it's been arbitrarily changed by the credit card company and you found out after the fact. And now, you have to have a 45 day notice before any rate changes can be made.
HARLOW: OK, and what else is happening on Thursday?
SATYAVOLU: The second big thing that is changing is the grace period adjustment. There used to be a minimum 14-day grace period for you to be able to pay your bill and now, you have a 21-day grace period, starting Thursday, to pay your bills.
HARLOW: All right, finally, what do we have to look out for in February when this all takes effect?
SATYAVOLU: There's a number of different aspects of this law. I think there's two very interesting things that would benefit consumers. The first is a fair allocation of balances. Now, that's a very complicated rule, but what it effectively means is that if you had a zero percent balance transfer, then you put $10,000 that you transferred to a card at zero percent, and then spent $100, and that charge is earning interest or you're paying interest at 18 percent.
And you paid down $100, that $100 would not apply to the $100 with 18 percent interest. You would actually start paying off the zero percent balance today. And come February, when you pay the $100 it will pay off the 18 percent, you continue to keep the zero percent. What that is, is a significant savings in the overall interest payments that consumers will make over the long-run.
HARLOW: And what about, quickly, the no universal default? That's a big issue.
SATYAVOLU: It is. and today, if you default on a card or have any kind of negative activity on a card, say card company A, you card with credit card company B can actually increase your rate to what is called a default rate, which is typically about 30 percent or so. Come February, that will no longer possible. So, each card company can only act to reduce or increase rates to a default rates when you actually default with them as opposed to the other credit card company.
HARLOW: All right, very useful, helpful information. Appreciate it, Schwark, thank you so much for joining us.
SATYAVOLU: Thank you.
HARLOW: Well, in July, 7.5 million people held multiple jobs, that's according to the Bureau of Labor Statistics. Now, with employers cutting back on hours and wages, many are turning to a second job for some extra cash. So, what do you need to know before you start moonlighting? Laura Rowley at the Yahoo! Finance columnist and the author of "Money and Happiness." She has some helpful tips, with us.
Let's start off with that, Laura, thank you for being here, appreciate it.
LAURA ROWLEY, YAHOO! FINANCE: Thank you.
HARLOW: Let's start off with the first things that you need to know before you decide to take on some extra work?
ROWLEY: Well, the first thing is to think about, does it violate your employer's policy? You don't want to jeopardize that first job for the second job? Secondly, what's the financial impact. Are you going to have to pay to commute? Will you have to pay for day care? What's the tax implication? Is it going to push you into a higher tax bracket and you're actually not making as much as you thought?
And then finally, are you going to have to pay for any equipment? There's some legitimate call centers were you can work at home and take calls, but you have to have a designated landline for $25 or $30 a month, so you're going to have to work five or six hours just to pay for your equipment.
HARLOW: Right, so do the math. Also, think how it's going to impact your quality of life, of course. When you look for moonlighting positions, are we talking bartending or restaurant hostess or waitress? Or are there other sort of opportunities out there?
ROWLEY: It really runs the gamut. For somebody younger, it could be a bar, a restaurant, even babysitting. For somebody older, it's usually an extension of what they're doing on the job. So somebody who is an I.T. person maybe helps people set up home computer audio equipment in their homes.
HARLOW: Let's talk about when you take on that second job and look at the time that you put into it. You're saying put a time limit on yourself and set some goals. It's fine to take an extra job if you need the cash, but set some goals and put a limit on that, right?
ROWLEY: Yeah, absolutely. Whether your goal is to pay down a credit card or get an emergency fund or change careers, say what is the goal for this amount of time I'm going to be spending on this. And I'm going to do it for three or four or five months, so you can see the light at the end of the tunnel. Because it really does take a personal toll, working two jobs.
HARLOW: It does, and you have to think what time am I going to have with my family and what time am I going to have for myself. You know, you read about people working two 10 hour shifts. You know, working 70 a week. You also have to think about that, as well.
Finally, if you take a second job or if you look at it and say listen, this isn't really for me, but I'm not happy in the current position, I'm not making enough, what career shifts can you make without moonlighting?
ROWLEY: Well, I think it's important to sit down and look at what it is you really want to do. Who can help you? Could you spend that time, instead of spending it on a second job that's unrelated to your job, is there education or training or credentials you can get that will boost your salary in your current job?
HARLOW: That's a great point.
ROWLEY: Or move into a career, maybe examine what part of your career you like best. Maybe you're an accountant, but what you really like is interfacing with other people. Or you're an event planner and you really like the numbers side of the business. Find what it is you like best about your job and aim in that direction. And rather than a second job, think about what education training, internship could I do on the side to move in that direction. HARLOW: Make the most of the position you are in, right?
HARLOW: Thank you so much, Laura, appreciate it. Thank you so much.
ROWLEY: Thank you.
HARLOW: Well, up next, green your home. Projects you can do now to slash your energy bill.
HARLOW: All right, well you have shut the lights off. You're unplugged your electronics, you even take short showers, but your energy bill, it is still through the roof. You are not alone, you should know that according to EnercyStar.gov, a single family home averages about $2,200 on their annual energy bill.
Our next guest has projects you can do yourself, right now, to cut your energy bill. Amy Matthews is a licensed contractor and host of DIY network's "Sweat Equity." She's also from Minnesota, which naturally makes her a wonderful person, from the land of 10,000 lakes, just like me.
AMY MATTHEWS, LICENSED CONTRACTOR: Thank you. Thank you very much.
HARLOW: Thank you for being here. All right, so when you want to save on the energy bill, you got to cut the waste and you do that using, are you kidding me? A candle?
MATTHEWS: A candle and a tissue.
HARLOW: What's up?
MATTHEWS: This is an easy way to DIY a test to see where the leakages in your windows or your doors. You can have a blower test, which is somebody coming in, you spend at least $200 on the test. They suck the air out of the house, the high pressure air from outside comes in and you see where the leaks are.
But, you can find those yourself by holding a tissue up to a window, seeing if it pillows and lighting an candle and holding that to any areas you think there might be infiltration of air and if the candle bends, you know you need to seal that window better. So, this is the cheapest way to do it on your own.
HARLOW: All right, makes sense, and do it yourself and do it on a budget.
MATTHEWS: Yeah, exactly.
HARLOW: Let's talk about your windows, because weatherizing your windows is an easy, affordable way to really save some energy. How do you do that?
MATTHEWS: It is. Well, there's -- first, you can get new windows and use tens of thousands of dollars in your budget doing that. But you do get a great return if you put new windows in, buyers live that. But a cheap way to do it is to buy products like these, the window insulation kit. There's all different brands that do this. And what you do is you'll put plastic. You've probably seen this, some people end up keeping it up all year, because they just don't even want to take it down.
HARLOW: We have those on our windows in Minnesota.
MATTHEWS: In Minnesota you have to do this.
HARLOW: We do.
MATTHEWS: And essentially you kind of shrink wrap the windows. There's also a foam that can go on. This goes on inside any of the areas. You know, if it is a wood window, it's going to expand and contract, in the summertime it's going to be tighter, but in the wintertime, you're going to have leakage and this seals everything up.
And also for the door, where you're going to get a lot of draft, is underneath the door, and this is perfect for putting underneath the door and stopping any of that air. And most of these products, for packs like this, $10, $20 at the most, so for your whole house, $150, you can seal it up and save a ton on overall energy costs.
HARLOW: All right, and the older your home, probably, the more you're going to need to do. And then actually, focus on the bathroom, because your shower can be really wasteful, right?
MATTHEWS: Yeah, I mean, some of the old shower heads we're using four to seven gallons per minute for your shower head. Now, the new federal regulation is 2.5. So, they've at least gotten better. So, if you haven't updated your shower head in a long time, do it anyway. But, the low flow ones, like these, are 1.75 gallons a minute. OK, so you're going to reduce by 30 percent more your cost on water savings.
HARLOW: And what about your toilet?
MATTHEWS: The toilet is really important. The new toilets are made with 1.6 gallons a flush. The old ones were like seven gallons per flush, just a ton of waste. A family of four, you know, you're talking 16,000 gallons a year that you can save by getting a better toilet. And they also have dual flush toilets, now. So, if you have liquid waste, you can press one button and only use .8 gallons. So, there's tons of saving if you look at all the water saves in the house.
HARLOW: And also when you look at your faucets, I mean, this is a beautiful faucet, so you can update the design and save.
MATTHEWS: Yeah, if your faucet was made before '92, it's going to be using five to seven gallons per minute. You go through a regular thing of dishes, you spend 120 gallons. And that's bad. You can also, instead of getting a whole new faucet, if you've updated this more recently, just put this tiny little aerator on the tip, it goes right here. This only costs $10 and that's going to reduce the water flow to about one to three gallons per minute, which is great.
HARLOW: You do it yourself. And finally, let's get to these lights, here. This is for under your cabinet, right?
MATTHEWS: These are for under cabinets and I always, with DYI, show them great ways to improve like their kitchen, the beauty of it, so you're doing two-fold, you're making your kitchen more functional by adding under cabinet lighting. But when you do that, you don't want to increase your energy bill. Doing something like this is going to save you money in the long-run. I recommend changing out all the lights to the compact fluorescent in the house if you can and you're going to save hundreds of dollars a year on that, thousands of dollars over the life of the lights.
HARLOW: These are great things you can do yourself. You can save a lot of money and you can prove to yourself, hey, I can do that too, right?
MATTHEWS: Easy stuff to do. And 20 to 50 percent of your total energy cost in savings, just by doing these things.
HARLOW: Not to mention, you're being good, you're being green.
MATTHEWS: You're being green. You're saving water.
HARLOW: Amy Matthews, thank you so much, I really appreciate it.
MATTHEWS: Thank you.
HARLOW: Well, why repainting instead of buying might save you money in the Long run?
Well, why renting instead of buying your next big-ticket item might just save you money in the long-run. We're going to show you how.
HARLOW: Well, these days, you can rent just about anything, whether you are test driving an item for purchaser or just renting for weekend use. When does a rental make sense and how much money can you save. It's a great question and Ann-Marie O'Neill is the deputy editor of "Real Simple." She's here with some answers.
Ann-Marie, thanks for being here.
ANN-MARIE O'NEILL, REAL SIMPLE: It's great to be here.
HARLOW: Let's talk first about the three steps you need to consider before you decide to buy or rent.
O'NEILL: Well, first of all, you have to work out, is it worth it? And to do that, an easy calculation is to work out your cost per use. Is this something you're going to use a lot or a little, how much does it cost, do that easy calculation, and that's how you work out whether it is worth it in the first place.
Then, work out where this item is. Is it a heavy thing? Is it going to require shipping? If that's the case, look locally. In the magazine, we have a bunch of national Web sites and there are a lot of them out there where you can rent items. So, if they are small items where it's ease to ship, you can look nationally.
HARLOW: Let's talk first about when you want to rent electronics. Let's say you're having a big party and you want to get a great Bose sound system or one of those higher end brands. Do you buy that? Do you rent that?
O'NEILL: Well, that's a case where you'd probably want to rent. You know, if you have something that's inferior and you want to splash out, then it makes sense to actually rent something in those cases.
HARLOW: All right, let's talk about renting sporting equipment? Let's say I want to take up surfing, here in New York City, which is tough to do. But, should I rent a surf board or rent some ice skates, if I want to learn that. I mean, what's the idea there with sporting equipment?
O'NEILL: Well, renting a surf board in New York City is actually a really good example, because you're probably not going to go to the beach every day. You may not know whether you'd like it. Rent it to start with, see where you go. You might be fantastic, in which case, go buy one. But, if you are not fantastic and you give it up, then at least you haven't splashed out on a big item like that.
HARLOW: I mean, I guarantee I wouldn't even be able to get on my feet. But that aside, let's move to car rentals, because they're not just for vacations anymore, are they?
O'NEILL: Right, we all rent cars when we travel and that's what we have come to consider. But, think about if you're buying a car, you usually get a test drive of about 20 minutes. You don't try and pack your kids, your groceries in there. You don't try and see how many suitcases fit in the trunk. So, a great idea is to rent it for a weekend, driving it around, see how it fits with your lifestyle and then buy it. Because it's a major purchase.
HARLOW: What about big tools or appliances?
O'NEILL: Well, a lot of tools you don't need on a regular basis. So, if you need to shop down a tree, then rent the chainsaw. You're not going to be doing that every weekend, hopefully. So, you know, those things make sense to rent. And appliances, if you are going somewhere for a short time and appliances aren't included in your home rental, then it makes sense to rent those, as well.
HARLOW: All right, and finally, the fun stuff. We are going to a big gala, we want a new dress, but don't want to shell out hundreds and hundreds of dollars. O'NEILL: There are some great Web sites out there where you can actually rent dresses and bags. There's a Web site called Avel, used to be called, Bag, Borrow or Steal, where you can rent really high end designer bags for a week or a weekend, then another place where you can rent fabulous gowns called, Wear Today, Gone Tomorrow and you can get designer gowns for 1/10 of what you would pay for them in the shops.
HARLOW: One tenth?
O'NEILL: So say, you've got like an $1,850, you know, couture dress that you're only going to wear once, you're not going to spend that much money, but you might spend $185 to go to a ball or something like that.
HARLOW: You might have one fun night with the dress, bring it back. Ann-Marie, thank you so much for joining us. I really do appreciate it.
All right, and 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 3:00 p.m. Eastern Time, and of course, you can log on to CNNMoney.com for the latest on your money.
Don't go anywhere, your top stories are next in the CNN "NEWSROOM." Have a great weekend.