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YOUR BOTTOM LINE

Statistical Recovery Human Recession; Investing Together; Toyota Recall Nightmare; America's Biggest Rip-Offs; Happiness Freebies

Aired February 6, 2010 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


GERRI WILLIS, HOST: Good morning. I'm Gerri Willis and this is YOUR BOTTOM LINE.

Coming up, make a smooth transition into a new job, changing careers without bungling the opportunity. Plus, the very latest on Toyota's massive recall. Why some say the problem is far more complex than just your gas pedal. And today's "Free for All," tips and tricks to improve the quality of your life without spending a dime. The show that saves you money starts right now.

So, a lot of us are thinking about finding a job. If you're trying to change careers right now or you're planning to make a job switch in the future, well, you'll want to hear our next guest. Tom Musbach is the senior managing editor of "Yahoo! HotJobs" and he joins us now from San Francisco.

Tom, great to see you, again. You know, a lot of people...

TOM MUSBACH, YAHOO! HOTJOBS: Hi, Gerri, great to be with you, too.

WILLIS: A lot of people are calling the recovery that's going through right now a statistical recovery and human recession. We just can't seem to get any traction on this job market. What's a first step you need to take if you're going to make that change before you accept an offer?

MUSBACH: Well, you definitely want to make sure you do lots of research. Switching is always a gamble and the more research you do, the more assurance you'll have that this is right for you. And especially if you're changing industries, doing a career change, you need to make sure that you know about whether you need to get additional training or whether you have skills that are transferrable. And of course, you always want to research whether the job growth is good in that particular industry.

WILLIS: Yeah, you get lots of surprises along the way if you make a big career change. You say, though, that you shouldn't leave your old employer on bad terms. And we know there are a lot of feel out there who really want to change jobs. How do you manage, how do you negotiate that change? How do you go from one place to the other without having bad blood?

MUSBACH: Well, you definitely want to make sure that you cultivate good ties with your current co-workers, because you know, they may be references for you. So -- and when you do leave, you know, ask them if they can be references. Because if you leave on bad blood, I mean, employers today definitely check on your background. And some of that stuff may come up and may come back to haunt you if you do leave with bad blood.

WILLIS: All right, so we know from the numbers released just this week that the number of people who lost their jobs in this recession is probably far greater than we originally thought. So, the more work you can do up front, getting advice, for example, from people who may have made similar career changes, this would seem to be critical, right, in making any kind of big transformation?

MUSBACH: Definitely, you definitely want to get advice from people that you trust because, again, this is -- this could be a risky move for you. And you don't want to do it alone. You might have blind spots in terms of what your strengths and weaknesses are. If you talk to people that you trust, you may get some really good advice on what you need to work on. But also, go through your network and talk to people who might know this industry better than you, might know the job function better than you.

WILLIS: Do you think people have realistic expectations when they go into a new job like this? Do they know what to expect?

MUSBACH: It's hard to say, especially the way people are feeling now. I think a lot of people might just think, oh, the grass is going to be greener, I got to get out of this job. But, it's really important to be realistic about your expectations, particularly around salary or happiness. Just because you make more salary at a new job doesn't mean you're necessarily going to be happy with that job. So you really got to think about why it is you want to switch, what you're looking for, and then make a plan. Think about where will this change get me in one year or where will it get me in three years, is it where it want to be?

WILLIS: All right, I guess money isn't everything. Well Tom Musbach, thanks for your help today, we really appreciate it and I'm sure we'll talk to you again soon

Turning now from your job to your house, new research suggests that when a home's value falls below 75 percent of the amount on the mortgage, well, the owner starts to think about walking away, even if he or she has the money to keep on paying. But walking away from your home, mailing in the keys to your lender, well, that should be the last resort, doing so will ruin your credit in years to come. Instead, the second you think you'll have trouble making your mortgage payment, get on the phone with your lender, ask for what they call the loss mitigation department and explain your situation.

If you've lost a job or had a serious illness in the family, make sure you have the documents to prove it. You may be able to get your loan modified, meaning your interest rates or other terms of your mortgage changed or altered to your advantage. You may also get a forbearance, this would let you pay less than the full amount on your monthly mortgage bill.

Now, granted, you may find your lender unwilling to cooperate with you, but you owe it to your financial future to at least give these strategies a shot. One other place to go for help, the Home Ownership Preservation Foundation is a HUD certified, non-profit organization that can give you advisor resources to work out a plan. Give them a call at 1-888-995-hope.

The Toyota recall makes a major turn. Word now that the danger may will electrical. We're going to keep you and your family safe.

But up next, the best places to invest. We want to help you make the most of your money.

(COMMERCIAL BREAK)

WILLIS: Valentine's Day just a week away. And we all know about the stress money can cause in a relationship. So, should you and your loved one share investments, invest separately, together? Here to help us, Neil Parmar he's with "Smart Money" magazine and he's going to tell us the pros and cons when it comes to investing with your partner.

Now Neil, I have lots of opinions on this. It can be hard to invest together because people have difference investing styles.

NEIL PARMAR, "SMART MONEY": Very true. And especially with the recession we're seeing more financial cracks in the relationship where more wives are seeing they're becoming conservative, more men wanted to stay the course. And this just brings up a lot of tension and fighting.

WILLIS: Right, the tensions in fighting, but you know to begin with sometimes you have a different investing style. You know, my husband likes to try to market time. I keep my money working all of the time. There's no way we can invest together, is there? Is there any way to come to some kind of meeting point halfway?

PARMAR: You could always agree on having certain products where you invest together, perhaps some things less risky where you both agree. And then it's always a good idea, experts say, especially today, to split up some of those assets and then just go with your own investing styles rather than fight with one another.

(LAUGHTER)

WILLIS: Yeah, it can take a lot of wind out of your sails when you have to argue everything you do. I want to talk a little bit about income differentials. This is really important, particularly now when some people have either been laid off, maybe they've had to take a pay cut along the way. What do you do when one person earns a lot more money than the other?

PARMAR: It's a great question because a lot of people who used to earn more still feel they need to put in the same amount as they used to they feel embarrassed if they don't. But the reality is very few couples these days are earning 50/50 equal incomes. And so, what experts suggest doing is splitting it up, maybe 60/40 even 70/30, put that amount into an account and then whatever's left over, play it and have some sort of fun money sitting there.

WILLIS: Have some fun money sitting there, so that you guys can both do something. This really in some ways comes down to control, don't you think?

PARMAR: It does.

WILLIS: In so many ways. Some people can't give up control. Some people can't share control. Some people don't want any control. How do you navigate those personality differences?

PARMAR: Well, it's interesting that now more women are actually taking ownership of their finances. They're learning more about investing, researching.

WILLIS: It's because we make more money.

PARMAR: Well, and that's true. But, the problem is over the lifetime they're still living five to 10 years longer but earning 23 percent less. and so, experts are basically saying it's good idea to save longer or at least get a bit more aggressive closer to time to retirement.

WILLIS: You say and this is interesting, double your risk. You double your risk if you invest separately. Now, why would that be?

PARMAR: A lot of couples don't actually sit down and see what stocks they've chosen. So, if they both end up picking the same companies and those companies both decrease you've lost the same amount of money each. In the past a lot of them would choose one stock together. So, now you're not only paying separate commissions for those trades, you're also seeing that that risk is doubling.

WILLIS: Now Neil, do you see that as people get older they tend to merge more efficiently without less fighting, do people come to agreement more or do they come to less agreement because they both are earning more and more money?

PARMAR: Generally experts are saying they are getting a little bit better about investing together, but with the crash what has happened is that people now say, no, you know, I was much more conservative, I just didn't speak up early enough. And so now they're saying I want to take ownership and at least have some say in my finances.

WILLIS: I want to have some say in my finances and maybe even do it together this Valentine's Day. Neil, thank you so much.

PARMAR: Thank you.

WILLIS: One great way to save money for retirement is a Roth IRA and there are some new rules this year that make it a good time to move your money from a regular IRA to a Roth. Greg McBride is a senior financial analyst for Bankrate.com.

So, of course, the big change here is the income limitations are going away. But tell me this, why would you make the change? Because you're going to have to pay a very big tax bill.

GREG MCBRIDE, BANKRATE.COM: There are a number of advantages to the Roth IRA. For starters, if you're young, think of a snowball rolling downhill. You want to pay taxes when that account value is very small, hot when you're at the bottom of the hill and retirement and it's a lot bigger. Also, Uncle Sam's got a lot of bills to pay. There's a real possibility tax rates could go up in the future, converting now into a Roth as a nice hedge against higher tax rates in the future. It gives you another lever to pull in retirement because this is money you can get to without being taxed and you don't have to start taking money once you reach a certain age which you do with a traditional IRA.

WILLIS: That's really a big deal, is being able to leave your money in place if you want to, for example, when the market fell apart you could have either sat on the sidelines and not worried about selling off some of that stock and taking a big loss.

MCBRIDE: And certainly, life spans are also getting longer, I mean, people are living more and more into their 90s, maybe it's triple digits, it's nice to know you've got a pot of money you can pull on later in life.

WILLIS: But Greg, if I'm retired and I don't have income, it seems my tax rate would be lower.

MCBRIDE: And that's one of the advantages of the Roth IRA is that you can actually pull money out without it bumping you into a higher tax bracket. So, let's say your pension and social security kind of have you bumping up against the next tax bracket, the ability to pull some money out of that ROTH gives you some additional spending power without pushing you into a higher tax bracket.

WILLIS: Any other changes that are coming that are going to make it better to be in a Roth?

MCBRIDE: Well, one thing that's unique to this year only is that is if you convert in 2010 you have the option of deferring that tax bill paying half in 2011 and half in 2012, again, that's for conversions done this year only.

WILLIS: All right. Well, you know, it would have been great if this had happened last year when the market was tanking, right?

MCBRIDE: Exactly. But the income limit prevented a lot of people from doing so, so now the door is open.

WILLIS: All right, so let's just talk about IRAs in case folks out there don't know really what it is. It's a savings and retirement vehicle. How much can you set aside each year?

MCBRIDE: If you're under age 50 you can set aside up to $5,000. If you're 50 or over, you can take advantage of what are called catch- up contributions, your maximum would be $6,000.

WILLIS: All right. Well, it's a great way to save. And big changes coming that I hope are going to help a lot of people. I know you helped a lot of people today, Greg. Thank you.

MCBRIDE: Thanks, Gerri.

WILLIS: We have the latest on Toyota's massive recall, new details coming up every day, every hour. What you need to know, next.

(COMMERCIAL BREAK)

WILLIS: Toyota owners, listen up. If you know somebody who owns a Toyota, listen up, so I guess that's everybody, now. This recall nightmare is far from over. With new concerns over electrical systems and dealers and drivers anxiously awaiting replacement parts, we want to get you the very latest news on this. Joining us now is John Linkov, autos editor for "Consumer Reports."

John, great to see you, again.

JOHN LINKOV, "CONSUMER REPORTS": Thank you.

WILLIS: As we get started here, I just want to show folks the makes and models on the 8.1 million vehicles that have been recall so that you know if your car is one of these. Let's take a look at this. The first list here are accelerator pedals that could stick on their own. Toyota, Corolla, you see the years of, you know, 2009, 2010 in some cases, you wanted to look at those cars. There's another list we have as well that we want to show you.

This is the gas pedal caught on the edge of the floor mat. You can see the list here. This is a lot of cars, John. And I'm telling you, people out there are really, really concerned. Federal investigators saying this week that now it could be an electrical system problem. It seems to get bigger every day. Tell us about this electrical system problem, what do we need to be aware of?

LINKOV: Well, what we're hearing now is that the current generation, 2010 Prius is having electrical system software problem where basically underbraking, there's a little bit of a lag when you press your brakes on a rough road or an icy road, so you're giving your car brake to stop and then you feel almost like you have no brakes and you're pushing through. So, they're saying it's a software problem. The cars that are rolling off the line now have that fixed and that they will do some sort of job action to fix the cars that are already on the ground.

WILLIS: Hey, this is Prius, this is the make and the model that Toyota has bet its future on and they're having problems with this, now. Is that a safety issue?

LINKOV: Well, it is a safety issue. Simply because it's going to prevent you from operating the car smoothly upon braking it's another situation where it's different from the other ones where the car's accelerate out of control. This one is actually you're trying to slow the vehicle and you don't have the feeling. But there is braking, it's just that it's a little disconcerting. If you keep pushing through, push through the brake as if you're pushing it through the floorboard, you're going to have braking power, according to Toyota.

WILLIS: I have to ask you, where is the National Highway Traffic Safety Administration been on this? You know, we talked a lot about on this show about what went wrong in the mortgage market, the regulators stayed home, they were not awake. And it seems like we might have a similar problem, here.

LINKOV: Well, the regulators have been a little slow to react. There's been talks about the floor mat issue since 2008 with vehicles.

WILLIS: Wow.

LINKOV: Recalls last year, a lot of it. And it only really went to Japan and really pushed Toyota in December and early January to really do something about this. Some of it might be staffing cuts. Some may be the manufacture really hasn't shared a lot of information. There have been commentary to people saying Toyota has been really slow to respond to this and they've been incrementally expanding the recall and the job actions.

WILLIS: And you said, of course, that in the age of Twitter and Blackberries a lot of people may be responding to what's been in the news, as well, and that might have boosted some of the numbers, too.

I want to talk about an offer a lot of Toyota owners are getting this week in the mail from other manufactures, auto manufactures, GM among them say, hey, bring your Toyota to us, we'll trade it in and give you $1,000. Is that a deal I should take advantage of?

WILLIS: Well, there's blood in the water, so they're all attacking, but it's a deal if you have an old Toyota. It's a deal if you're buying a good car from GM or from Hyundai or from Ford, but don't take the money and run because it's a thousand dollars and you're scared about your car. The likelihood of your Camry, your RAV 4 your Tacoma having a problem is small. The universe is huge, there have only been a small number of vehicles that have had a problem, so don't give away money.

WILLIS: But, John, if it happens, it could be a real problem.

LINKOV: Oh, it certainly can.

WILLIS: So, tell us what to do if we run into this issue. Give us the one, two, three on exactly the steps to take if you have this issue.

LINKOV: First, keep your wits about you. Don't be paying attention to your radio or your Blackberry. Secondly, immediately, if that car starts accelerating, you feel it's the gas pedal is going down, put the car in neutral and then push on the brake pedal as if you're pushing it through the floorboard.

That will bring the car to a stop, but the engine while revving, will not be pulling the car along. Once it's in neutral, you're not driving the car anymore. The engine will be making noise, but the car is not accelerating. And then, pull it to the side of the road slowly, turn it off, call AAA, call a tow company, call Toyota customer service, they may be able to bring you a tow truck to you.

(LAUGHTER)

WILLIS: They better bring me a tow truck. OK, John, thanks for your help today, great advice. Put it in neutral. You got to put it in neutral. OK.

From recall to rip-offs, grab a pen and a paper, we're going to tell you the absolute biggest rip-offs out there, right now that you may not even know about. It's all courtesy of CNNmoney.com and Poppy Harlow.

What's the deal?

POPPY HARLOW, CNN NEWS CORRESPONDENT: Gerri, you know, looking at all the rip-offs out there right now, it's hard to pick the best ones, but let's start with text messages, because folks if you look at your cell phone bill and you're astonished, this is why. Text messages are short. They're cheap. They cost a third, a third of a cent for the company to deliver, but they cost you 20 cents to send and ten cents to receive. Do the math, Ger, with 6,500 percent mark- up. Ouch. Watch those text messages.

Let's move on to the next one, name-brand painkillers. Head to the drugstore, you know what I'm talking about. If you compare prices, you've seen this before, the ingredients are exactly the same, but if you look at name brands they are a lot more expensive. We went to Duane Reed here in New York City, we checked out 500-count bottles of Advil vs. Generic ibuprofen, Advil, $8.45 compared to $5.25 for the generic, that's a 60 percent mark-up, Ger.

WILLIS: You know, I was in Vegas last weekend, and you can get a cheap rate on a hotel room there, but they really hit you on the miscellaneous in-room charges. Let me tell you. Tell us about those.

HARLOW: They do. I mean, I hope you had a good time in Vegas, Gerri, by the way.

WILLIS: It's hard not to.

HARLOW: Right, and you can get good deals on hotel rooms, et cetera, but look at this, if you're in Vegas, and let's say you want to go to the hotel mini bar and you want to buy some gummy bears, well, we found at New York City luxury hotels, gummy bears for I am not kidding, $14, a 1,300 percent mark-up if you compare it to how much you'd pay at the drugstore. So, hotel mini bars, folks, be very, very, very careful, there. They're going to rip you off.

Also movies in your hotel room. You want a night in, you want to stay in and watch a movie, look at the price before you click buy because hotel in-room movies can cost you anywhere from $10 to $15 and if you go to the movie store, you rent them online it's about five bucks, Ger, so a big mark-up there, about a 200 percent mark-up for in-room movies.

We're in a recession. You have to watch your money. Pay attention to these, they are America's biggest rip-offs. More of them on CNNmoney -- Ger.

WILLIS: My husband bought the gummy bear, of course.

HARLOW: Of course. Men. Men!

WILLIS: Poppy, thank you for that.

HARLOW: You got it.

WILLIS: Still ahead on the program, a total free-for-all. Hey, who doesn't love a good freebie? We'll tell you how you can shop and be happy without spending a pretty penny.

(COMMERCIAL BREAK)

WILLIS: Whether it's budgets, bills or just the chill in the air, winter can be tough for-of us. Earlier I spoke with Sarah Bernard, the contributing editor to "New York" magazine who has things you can do, right now, to improve your mood while spending little to no money.

(BEGIN VIDEOTAPE)

Sara, your first tip here, I don't know, I feel like I'm hearing my mother -- make your bed. Really?

SARAH BERNARD, "NEW YORK": Yes. Isn't that a great one? This actually came from Gretchen Rubin who wrote a whole book about the subject called "The Happiness Project," about trying to improve your mood in little ways. And she says outer order produces inner order. So basically the idea is if you have a really messy environment you're not going to feel settled inside, your mood is going to be down. But if you do something really simple like making your bed in the morning, you're setting yourself up for a great day and you're also feeling like you've accomplished something immediately.

WILLIS: Even if that's the only thing.

BERNARD: Even if that's the only thing. It sets the tone for the rest of the day.

WILLIS: All right, let's talk about quarters. How can a simple quarter improve my day?

BERNARD: A simple quarter well, what you want to do with that quarter is actually put it in a parking meter for somebody else, because if you actually create -- we were calling it random acts of kindness for other people...

WILLIS: Pay it forward, right?

BERNARD: Yeah. Pay it forward, you will find it that it actually elevates your mood to help other people. You're not necessarily getting credit for it, you can do this anonymously, but it actually lifts your mood to do it.

WILLIS: You know, I love this thing about yellow because I've always thought if you paint your house yellow when you're trying to sell it, people love that color. It's really upbeat and warm. Now, do you agree?

BERNARD: Well, I do. And I also had this conversation with a pantone color expert who studies the effects of different on different people's moods and they said, this is somewhat logical, since it's the color of sunlight, if you surround yourself with a nice, sunny yellow, it actually does lift your mood. And that's something that we can all probably use right now, especially in these dark winter days.

WILLIS: Let's talk about green apples and cumbers. What does that have to do with my mood?

BERNARD: Well, actually we're talked to a lot of experts who pointed out the importance of scent and aroma to your mood and these are apparently two of the biggest mood lifters, green apple and cumber. So, if you want to just buy a candle that has these scents or even just use shampoo or lotions that have those two things, you might not even realize it, but subtly, it's going to do something for you.

WILLIS: Or buy the real thing.

BERNARD: Or, buy the real thing.

WILLIS: OK, All right. You say something, I don't even understand what it means. Diversify your cognitive portfolio. What does that mean?

BERNARD: That means, try to do something different with your time every day. Let's say if you have the luxury of going to museums on Mondays, go to movies on Fridays, read books on Sundays, try to mix things up for yourself so that you're working your brain in different ways and you're actually creating a variety of things that you can become an expert on. That also improves your mood.

WILLIS: To me the number one thing on this list has to be eat dark chocolate. I love chocolate. I love candy. Anybody tells me to do that, I'm going to follow that. It makes you feel happy.

BERNARD: And that was an advice from an integrated medicine specialist. So, that wasn't frivolous. That was actually saying that dark chocolate is the new superfood. So, eating an ounce of it a day is actually scientifically proven to make you happier.

WILLIS: OK, chocolate, wine, I'm loving this list. Sarah, thank you so much for helping us out, today.

BERNARD: Thank you.

WILLIS: Before we wrap things up here this morning, we want to take a moment to say good-bye to a tremendous colleague and an even better friend. After nearly eight years at CNN, three with this show, CNN producer Sara Lane is leaving us to join the Peace Corps. Sara will be moving to Malawi for two years to do a whole lot of good for people there. As you can see, she knows how to let down her hair with the best of us.

Sara is part of the team we have here that works week in and week out to put this show on television and to help you save money.

We wish Sara the very best of luck and things are certainly going to be different here without her.

As always, we thank you for spending part of your Saturday with us, we'll see you right back here next week.

Don't go anywhere, your top stories are next in the "CNN NEWSROOM."

Have a great weekend.