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YOUR BOTTOM LINE
Ways to Pump Up Your Income; Deals and Steals on Airfare For You and Your Family; Save Cash With Small Improvements Around the House
Aired November 14, 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 this is YOUR BOTTOM LINE, the show that saves you money.
Make money right now. We've got a list of ways to help you pump up your income right away. And get out of town without breaking the bank, deals and steals on airfare for you and your family. And save some big cash with some small improvements around the house this weekend. The show that saves you money starts right now.
The stock market is back up, hitting a 13-month high this week. For lots of folks that means a big sigh of relief, as the value of their investments start to build back up. Now, whether you stuck it out or jumped ship in the past year our next guest is here to tell you what you need to do to make the most of your investments. Ric Edelman, the author of "Rescue your Money" and he joins me from Washington.
Ric, great to see you again.
RIC EDELMAN, AUTHOR, RESCUE YOUR MONEY: You, too, Gerri, always a pleasure.
WILLIS: All right, so everybody in the building is asking me, OK, we've seen what's happening with stocks. Let's throw money at it, right? Is it now the time to invest?
EDELMAN: Yes, it is absolutely the time to invest, provided that you have the proper perspective, meaning a long-term time horizon. If you're thinking you're going to get rich quick by throwing money into stocks today you might be sorely disappointed, but if you've got a five or a 10-year outlook, this is a great time to invest.
WILLIS: Now, what's interesting about what's gone on is that last year everybody got so scared in that market sell-off, they got out of stocks, some of them taking heavy losses and many of them, many of them, Ric, have never gotten back in so they've completely missed the rally this year. What would you tell those folks?
EDELMAN: To get over it. When you make investment decisions based on your emotions, you're almost always going to do the wrong thing at the wrong time. And you're right, Gerri, a lot of folks bailed out last year all the way through last spring because they were scared and they have missed the 60 percent rally, 70 percent rally that we've enjoyed since March 9. The worst part is that they've reinvested into bonds and bond funds, and those investments are poised for big losses in the next couple of years.
WILLIS: Poised for losses? Bond funds are poised for losses?
EDELMAN: They really are. And it's ironic because people are investing in bonds out of a desire for safety. What they don't understand is that bond prices are affected by interest rates. If interest rates rise, bond values fall. Most people don't understand this.
WILLIS: All right, well that's a good warning to folks out there. What about if you stuck with your investments? Let's say you've stuck to your guns, you saw the market falling last year, you said hey, I'm just going to hang on and what's more, I'm going to keep throwing money at this. What would you tell those folks now? Should they take their gains, should they move on?
EDELMAN: I have one word for you, congratulations. Your fortitude has been vindicated. You have proven that you were able to stick it out. You were able to stand away from the headlines and the fear factor that was encouraging so many folks to do the wrong thing and by continuing to invest in your 401(k) at work or your own mutual funds and your IRA, you've actually made money. Most people who have continued to invest over the last two years have more money today than they did two years ago, because they had the fortitude to stick it out. Keep doing what you're doing, because you've got the magic answer.
WILLIS: So, you know, another question that I keep getting asked and I think it's a really good one, should individual investors, should they buy stocks, should they stick with mutual funds? What about these ETFs that are so cheap, they're so inexpensive to buy? What is your favorite thing?
EDELMAN: Very clearly ETFs, exchange traded funds. The days of buying individual stocks are over. When you can have the biggest companies in America and in the world go broke, whether you're looking at General Motors or AIG or Lehman Brothers or Bear Stearns or Freddie and Fannie, when the biggest and best in the industries can go broke that shows the days of buying individual stocks are gone. You need to instead buy baskets of stocks and that's what a fund is. Don't buy retail mutual funds, buy exchange traded funds. As you pointed out, Gerri, they are dirt cheap. You can buy them for practically nothing and it's the way to go.
WILLIS: OK Ric, one word answer, is the stock market going to end the year higher or lower?
EDELMAN: We're very optimistic that the stock market is going to continue to do well.
WILLIS: All right, OK, Ric Edelman, thank you, I appreciate your help today. EDELMAN: Any time, Gerri.
WILLIS: Now, investing isn't the only way to grow your money. If you're looking for extra cash there's some things you can do right now to pump up your income. Donna Rosato a senior writer with "Money."
Donna, great to see you, again.
DONNA ROSATO, MONEY: Great to see you again, Gerri.
WILLIS: All right, so you have some really interesting ideas, here, and one of them, of course, is go to class, teach a class. But what does that take?
ROSATO: Well, you know, often either a lot of life work experience and possibly a masters degree, but there's a huge demand for education. You could teach at a two-year college, a four-year college, a vocational school, continuing education there's a big demand for that.
WILLIS: How much money would I make doing that?
ROSATO: It depends, from a community college you may get $1,000 per class, up to like $5,000 or $6,000 per course. Now, takes a lot of time to prepare for the classes. You can even teach courses online so you have to kind of balance that out, but it's also a great diversifier for your career and lot of section for the people who are doing teaching.
WILLIS: Not a bad thing to put on your resume. One of the old- fashioned things you would do is rent out a part of your house to somebody. Right? But can you make money doing that? I mean, really?
ROSATO: Right, a lot of the things we're talking about, you need a little bit of elbow grease, but if you have a room in your home with a private entrance and a private bath, those are going to fetch the most money and it's not a bad way to turn some unused space into extra income.
WILLIS: I read somewhere that the average studio goes for $947 a month, so that's not chump change out there.
ROSATO: It is not. Now, of course you want to be careful and vet the people who are going to be in your house and living with you. But it can bring in some funds. If you find the right person and it's already unused space, it can be a nice way to bring in a little bit of extra income. You got to check with your local zoning board to make sure it's allowed, though.
WILLIS: All right, so you say monetize a hobby. Now, I am a big cook. Could I make extra money, maybe a little extra dough on the side?
ROSATO: Sure I know folks they love to -- you could give cooking lessons, someone who loves to plan parties could be an event planner. You can turn a passion into a hobby. I have a very good friend, he's a soccer nut. You know what he does on the weekends? He's a ref for a local league and he makes some good money. So, yes.
WILLIS: He's doing something he likes?
ROSATO: Doing something that you like. Now, you know, you have to do your due diligence and see what the market is for these kind of things, but you know, and don't want to kill your passion for what you enjoy, but you can make some money and enjoy what you're doing.
WILLIS: You know, the usually thing that I think people decide that they want to do is that they consult.
ROSATO: That's right.
WILLIS: But everybody and their mother is consulting right now because the job market is so bad.
ROSATO: That's right, but it's a little easier if you have a job to do consulting on the side, you're kind of deploying some of your existing expertise, you can go to some previous employers. Now, the big key with that, of course, is you don't want to have a conflict with your current job.
WILLIS: You have to tell your boss.
ROSATO: You got to check your boss, you don't want to steal business from your boss or work for a competitor, but if you're a graphic designer you can do some things on the side, if you have marketing skills, you might want to develop a Web site or a social media plan for a noncompetitor. There's lots of things you can do on the side, and you can bring in some good dough doing it, too.
WILLIS: All right, I love that. And of course it doesn't take a lot of preparation if you were already involved in that kind of work to begin with.
ROSATO: That's right.
WILLIS: It's just finding those people out there who need the services.
ROSATO: Right, and you can go to former employers, a great way to find out what is in demand, go to elance.com or guru.com and you can see what jobs are in demand, what skills and how much people are going to pay for them.
WILLIS: Donna Rosato, thank you very much.
ROSATO: Thanks, Gerri.
WILLIS: It's in times like these where some folks will do just about anything to get by and that includes trying to take advantage of you. Up next, fighting fraud and how to protect yourself.
(COMMERCIAL BREAK) WILLIS: The lights are on, but nobody's home. About one in seven house was empty in the third quarter, that is the highest reading since the government began tracking the number 45 years ago. Now the total house vacancy rate standing at 14.5 percent right now, foreclosures are partially to blame as strapped borrowers can't make their mortgage payments.
In October, foreclosure filings dropped three percent from the previous month, but are up 19 percent from this month last year. RealtyTrac, that's the company that puts together the foreclosure numbers, they say three consecutive monthly declines is unprecedented for their report, and may be an indication that the foreclosure tide is turning.
And there's more. House prices, it seems, may be finally bottoming out, good news. The national median home price was $177,900 in the third quarter, that's up 7,000 bucks from the previous quarter. However, that is still down more than 11 percent from the third quarter of last year.
Vacancies, foreclosures, home prices, with all this news, sadly, mortgage fraud is still on the rise, and scammers got a whole new bag of tricks. Listen up, because we're going to tell you the signs when that offer of help may be a scheme,
Ann Fulmer, vice President of Interthinx, she also exposed mortgage fraud in her own neighborhood and she joins us now from Washington.
Ann, great to see you again.
ANN FULMER, INTERTHINX: Good to see you, too, Gerri.
WILLIS: All right, so let's start with this idea that mortgage fraud is still going up. Why, and what are these new types out there?
FULMER: Well, fraud seems to thrive in unstable markets regardless of whether prices are rising or falling and as always, schemes morph to take advantage of basically market opportunities. Right now, there's an awful lot of houses on the market in terms of foreclosures, there's a lot of vacancies, there's a lot of pressure to move those units and so the schemes have morphed to take advantage of that situation.
WILLIS: Wow, OK, so let's talk about where these are, because we've got a great map we want to show people, color coded here, kind of a heat sensitive map, you can see where this fraud is occurring, it's really, Ann, the usual suspects here, California, Nevada, Florida, the places where we've really seen home prices plummet. Why is the fraud concentrated there?
FULMER: Well, interestingly enough, it turns out that because fraud oftentimes leads to foreclosure, these were state's leading in mortgage fraud cases during the boom. Now those houses are now leading in foreclosure and that's where the fraud is happening today is in these states with a high level of for foreclosures because that, again, is where the market opportunity is.
WILLIS: So Anne, if I have a vacant house in my neighborhood, should I be worried? Are there going to be scammers coming in to take advantage of us?
FULMER: Potentially, there's a lot of things to be worried about with vacant houses especially if there's a lot of vacant houses or more than one. The department of justice and criminologists will tell you that vacant houses are pretty much magnets for both property crimes and are responsible or associated with an increase in violent crimes against persons, as well.
FULMER: In some cases, and in some cities, there are organized movements to put spotters in these homes. They may not or may not have utility services and if there's no one providing electricity or gas to heat the home, you have a higher risk of fires and we see a lot of arson and other fires involved with vacant houses.
WILLIS: Wow, so there's lots of problems, not just one. I want to talk about short sales for a second, because you say this is one of the new scams out there. There are short sale specialists? First of all let's define short sale. What is a short sale and then how are the scammers getting involved?
FULMER: Well, a short sale basically means that the bank agrees to let you sell your home for less than the amount of the mortgage owed. Short sales are the hot, new thing now because foreclosures are so bad on your credit record and a short sale is not quite so bad and it's an easier, cheaper way for the banks to get rid of the properties, because they obviously have a huge backlog of properties and don't want to be landlords.
If you look on the Internet, you'll see that the get rich quick investment gurus and experts are touting short sales as the way to quick riches and that's, again, because of these market opportunities. There's just a huge supply of distressed borrowers and easy to take advantage of them.
WILLIS: Anne, just quickly, I want to get to a couple of places to go if you think you're in trouble. Where do you go if you need help?
FULMER: You can report your concerns to the local police, the FBI. Another great place now is to report it to your state attorneys general because they are very concerned about these short sales and foreclosure rescue schemes and a lot of states have task forces that are willing to come in and help.
WILLIS: Ann, great info. Thanks for helping us out today.
FULMER: You're welcome.
WILLIS: Next your weekend project, get your home ready for the winter months before it's too late and save some big bucks. (COMMERCIAL BREAK)
WILLIS: Winter will be here before you know it, and that means it's time for tips to save you some heat and some cash this winter. Earlier I spoke with Lou Manfredini, a home improvement expert and Ace Hardware's "Helpful Hardware Man."
WILLIS: And this is important because you know the weather is getting cold.
LOU MANFREDINI, ACE HELPFUL HARDWARE MAN: Oh yeah, right.
WILLIS: And I want to start with windows. My windows, what a mess. What can I do to keep the heat in?
MANFREDINI: First thing is rember this, windows and doors are your areas of greatest loss in a home, even after you put brand new windows in its natural, obviously because of the glass. If you can, and if it's within the budget, replacing the windows it's a terrific time mow because of the federal tax credit.
WILLIS: Oh, there's free money to be had.
MANFREDINI: Well yeah, and there's all kinds of that right, and up to $1,500. But you need to stick with major manufacturers because not all of them qualify. There's certain criteria the windows have to have in order to meet it. You can't just go out there and get it. It's the "U" factor.
WILLIS: Hey, wait, wait, wait. The "U" factor, is that what I'm looking for?
MANFREDINI: You're looking for a .30 "U" factor, which is the solar heat loss. The heat loss, rather, that a window has.
WILLIS: I assume they're advertising that, right?
MANFREDINI: They are and the solar heat gain, there's another number of .30. So, you have to watch all this and you got to work with manufacturers.
Now, if windows are not in your budget, OK? You want to do something to cut those drafts. What I've done is prepped this particular window, now this is a brand new window, you would never do this with this one, but for the sake of argument I put double sided tape around this window and I'm putting on a window film, OK? this is basically creating...
WILLIS: Wow! You're putting plastic wrap on your window.
MANFREDINI: Plastic wrap on the window, OK? This plastic wrap, now I know it doesn't look like much right now, but once you tape this on and you use you use a hair dryer.
WILLIS: Oh, let me get the hairdryer.
MANFREDINI: Get the hair dryer for me. Oh, I need it over here.
WILLIS: Oh, OK.
MANFREDINI: You turn it on and what's going to happen is it's going to shrink this so that you don't see it, it's going to tighten up so much that you'll be able to trim around the edges. And listen to this, Gerri, by cutting the drafts in your windows, you can increase the energy efficiency of the drafty window by up to 70 percent.
MANFREDINI: So, this is a place where you're really going to lower your costs.
WILLIS: Why buy new windows?
MANFREDINI: Well, the problem is the look and the operation. If they don't operate -- if you're using a spoon to keep them open, then you might want to put that on your budget.
WILLIS: Let's get to doors. What do I do to keep drafts from going through?
MANFREDINI: Same thing. Weather stripping, you can go around and door. They make window kits also that are larger for patio doors. Keep in mind that when you do this and you put out over the door you're not going to be able to open the door. So, I man, in an emergency, of course, you can rip right through the plastic, so I don't want anybody to worry about that. Caulking is another thing.
WILLIS: You know, old-fashioned but it works and it's cheap.
MANFREDINI: It's the greenest product in the new millennium of using caulking around windows and doors. It's one of the most effective ways to eliminate drafts in your home.
WILLIS: I wish we could get some out, but unfortunately we can't do today. All right, so let's talk about filters, furnace filters, because, again, a cheap way to make sure your furnace is operating as efficiently as possible and these things, just not a lot of money.
MANFREDINI: And I don't spend the money on this, because this is a 99-cent filter, the blue filters that you get. They don't do anything for the indoor air quality of your home. And so you want to upgrade to pleated filters, then you can go up higher. There's Ace pleated filter there's a 3M filter, there are all really good filters that do a nice job of trapping particulates in the air.
MANFREDINI: But you have to change them regularly because when they get clogged the furnace works harder, uses more energy, and it's also very important, too, Gerri, to have your furnace inspected and cleaned by a licensed professional on an annual basis. It will cost you about $100, but then you'll have the peace of mind that over the winter months it won't clunk out on you in the middle of February and you have an expensive service call.
WILLIS: Good point. All right, I want to talk about my lawn for a second because it's been an issue this year and I know I can do things now to make it better next spring. What would that be?
MANFREDINI: Actaully the winter and the fall is the best time to take care of your lawn. So, you're going to rake up all those leaves, OK, and you're going to get rid of all the thatch that's grown there during the summertime, then you're going to put a winterizing fertilizer. No, there are several different ones out there that go on.
WILLIS: See them right there.
MANFREDINI: Right there. And even, there's a big bag there. The bigger bag is a natural -- it's a natural product, full of iron. It's actually made -- it comes from Milwaukee county sewage.
WILLIS: So, you don't have to buy things that are going to hurt the environment.
WILLIS: You can buy things that are green.
MANFREDINI: By doing that fertilization in the fall, right now, what's going to do is promote healthy root growth and in the spring your lawn is going to come back more healthy. Then you do a little spot seeding and start on that whole four-step program and you'll be the envy of the neighborhood.
WILLIS: I have to figure out a way to get you to my house. That's the next thing.
MANFREDINI: We'll go right after this.
WILLIS: All right Lou, thank you so much.
MANFREDINI: My pleasure.
WILLIS: Chances are your thanksgiving travel plans are all set, but there are end-of-the-year bargains to be had. Cheap airfares for you and your family, coming right up.
WILLIS: The holidays are rapidly approaching, so when's the best time to book that flight home, and where can you get away this year for less? Peter Greenberg is the travel editor for CBS News and he joins us from Washington.
Peter, great to see you again.
PETER GREENBERG, CBS NEWS: And likewise.
WILLIS: All right, let's get to it. You say ultimately you have to be flexible about your travel dates if you want to get the best deal, so when is the best time to travel over the holidays?
GREENBERG: Well, we're talking about Thanksgiving; you have to embrace the notion that I have that what is Thanksgiving all about? It's an obligatory dysfunctional family get-together. You have to go.
WILLIS: Hey, now, I love Thanksgiving.
WILLIS: Well OK, but you're going to love this even more when I tell you how to do it. Instead of going the Wednesday before and coming back the Sunday after, which you'll be doing your own personal impression of the movie "Planes, Trains, and Automobile," you're also going to be paying too much.
GREENBERG: My suggestion, fly out on the first flight on Thanksgiving morning, you'll get to where you need to go in time to carve the turkey and have all your relatives push all the buttons and then you get to come back on a Friday afternoon when they're stuck at the mall and nobody's flying, you can go bowling on the plane.
I'll give you some examples. If you want to go between Chicago and Los Angeles, for example, on the Wednesday before Thanksgiving coming back after, that fare is about $741 if you book it today. If you go the Thursday, come back on the Friday, it goes down to like just a little more than $300. Now, that's less than half. But the best part of the deal is you've satisfied the Thanksgiving holiday, you had a great time, you've gotten back and the weekend belongs to you, you can watch as much bad college football as you want.
WILLIS: I see where you're going with this and I respect it. All right, let's talk about the best deals, because that's why you're here, right? We're going to talk about great deals out there for people who want to travel. What are they, Peter?
GREENBERG: Well, for example, British Airways right now, they have so much excess capacity, they've essentially put their world route system on sale. They've got deals from New York to London, $229 each way. But if you do the package deal, they'll give you a flight to London and three nights at a hotel for $659 and not just London, they're doing it into Cairo, Istanbul, anywhere you want to go, and you just got to just book it before, I think, the 20th of November.
Hotels.com has a deal if you book before the 26th of November. I'll give you one example, alone, the Fairmont hotel in Scottsdale its less than $170 a night, and that's considered high season. So, that's not a bad deal.
WILLIS: Peter, what about cruises? You've got a good cruise deal you want to show us.
GREENBERG: Oh, this is a suicidal cruise deal when you think about the pricing. I mean, think about this.NCL has a three-night cruise coming up in the Caribbean for $149 or $199? This is ridiculous. If you take a look at these fares, I mean, they've been as low as $249 recently, do the math. That's what $50 a night, $60 a night? And that includes three meals. You'd be better off leasing out your apartment wherever you live, move permanently to the ship. You'll make money.
WILLIS: All right, skiing, and let's do it quickly here, I hate to press you. We've got great information. I want to get to as much as possible.
GREENBERG: Sure. The ski deals out there are also big because you're dealing with gray-area times.
GREENBERG: It's not just the height of ski season. If you look at some of the offers on the Web sites right now, they are specifically lowered across the board, but the key here is not just the fare and not just the rate. You got to ask for value added. And what I mean by that is don't just go by the rate. Say, hey, can I get lift tickets in that deal? Can my kids ski free? Can my kids eat free? And in many of these cases the resorts will actually throw that in because they need you to be there.
WILLIS: Well Peter, I could keep you here all day. Thanks for the information. It was just fantastic.
GREENBERG: You got it.
WILLIS: As always, we thank you for spending part of your Saturday with us. YOUR BOTTOM LINE will be back next week right here on CNN. You can also catch us on HLN ever 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.