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YOUR BOTTOM LINE
New Government Program Paying People to Walk Away From Their Homes; John Bogle: Investing Today for Tomorrow; Slashing Your Energy Bill; Now Is a Good Time to Book a Vacation; Slashing Your Grocery Bill With Coupon Mom
Aired March 13, 2010 - 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: Well, good morning everyone, welcome to YOUR BOTTOM LINE, I'm Poppy Harlow. We have a lot ahead this morning including a man that "Time" magazine called one of the world's most powerful people and influential people. John Bogle will be here today to talk about investing today for tomorrow. Very important stuff.
And we'll help you slash your energy bill with one of our favorite home improvement experts. And a visit to the supermarket. Why not? With the Coupon Mom. We'll show you how to slash your grocery bill possibly by hundreds of dollars. It's the show that saves you money and it starts right now.
Well, for many of you out there, your home is top of mind right now if you're underwater on your mortgage or about to file for foreclosure, this could help you out. A new government program actually paying people to walk away from their home if they just can't pay the mortgage. So, who qualifies for this program?
Here with the important details is Greg McBride. He's the senior financial analyst for BankRate.com. Thanks for being here, Greg.
Let's talk about the first issue here is that it starts soon. It starts April 5 and it allows homeowners to do a short sale on their home, essentially sell it for less than they owe on the home and the government is going to give folks $1,500 to help them relocate. Who's going to qualify for this program? Who should be listening?
GREG MCBRIDE, BANKRATE.COM: That's the thing. Not everybody's going to qualify. You have to have a demonstrated financial hardship. You have to otherwise qualify for the modification program and so this is designed for people who would otherwise qualify for the modification program, but couldn't or won't make the payments and say in that program.
HARLOW: Is this, bottom line, going to help the people that need it most or is this going to possibly turn into another bureaucratic nightmare of too much paperwork and not a lot of action, not a lot of results?
MCBRIDE: I do think we have to be patient. These government programs, as history has been our guide, Poppy, they take a while to ramp up. So, it's going to take a while, but I think the design of this is good in the sense that it is geared toward helping the people that do need it the most. Those that otherwise fell out of the modification program, that couldn't swing the lower monthly payments and that otherwise go into foreclosure, it's given the short circuit, but otherwise...
HARLOW: It's also a shift in government tactic, here. We've seen the government take so many steps to keep people in their homes. Now, it seems like they're admitting, all right, we know that's not realistic, we're going to help some people who just can't make the mortgage and have to walk away.
MCBRIDE: And that's exactly right because the modifications are not realistic. Not everybody's going to be able to swing those lower monthly payments. Not everybody wants to swing those lower monthly payment, particularly if they're upside-down and this helps that.
HARLOW: And just so people know what a short sale is, you're selling your home at a price that is less than you owe on it because you can't pay what it's worth. The bank's going to lose money on this, in a short sale, but they're better off than if people just aren't paying a mortgage month after month after month. Right? So banks will partake in this?
MCBRIDE: They will, there's also an incentive for the loan servicer, a thousand dollars for them to facilitate in this progress and they lose less on a short sale than they do on a foreclosure. So, you know, there's an incentive from the lender's side, as well.
HARLOW: And also for your credit score, you're going to be hurt in this regard, but a little bit less so than if you foreclose on your home?
MCBRIDE: It's the lesser of two evils in terms of the impact on your credit score.
HARLOW: So, that's a good way to look at it. In terms of how many people you think this could help, any estimates right now?
MCBRIDE: I have no idea, I mean, a lot of the estimates we've seen initially with some of these previous government programs turn out to be pie in the sky and the programs actually fell well short of that. So, I think that time will tell. And again, we're going to have to be patient because these programs do take a while to ramp up and really become effective.
HARLOW: And it's good at least to see the government taking action here, continually to help people in this beleaguered housing market, that continues to be a huge issue even as the economy recovers. We'll see. Greg McBride, thanks so much, we appreciate it.
MCBRIDE: Thanks, Poppy.
HARLOW: And it's almost here. Tax day. Oh, we all love that day. It's just one month away and we are of course all over the rules, the refunds and the rest of the details you need to know when it comes to filing. If you were looking for a job in 2009, listen up. There are tax deductions for job seekers. You can write off a lot of things like your resume expenses, employment agency fees, your travel expenses to and from interviews. But be careful, here. Don't write off too much, you can't write off that new suit that you brought for the interview or that new laptop that you used to hunt for jobs.
Also, you need to know who's eligible. Anyone who's looking for work in their current field, they're eligible. If you're switching careers or you're a first-time job seeker, you're not going to qualify. And also, if you've been out of work for a long time, the long time unemployed, unfortunately they don't qualify, as well.
But here's what you will get. More help from us about how to save on your taxes up until that April 15 deadline. And if you've got a question you want answered, please e-mail us here at YOUR BOTTOM LINE at cnn.com. We're going to do our best to answer your questions right here next Saturday morning.
And coming up next, investment giant John Bogle joins us for a candid conversation on investing.
HARLOW: Well, did you know that 44 percent of workers guess, they guess, when it comes to their retirement needs. That's according to the Employment Benefit Research Institute. Here with some expert advice on what to do with your investments for now and for the long- term is an expert investor, John Bogle. He's been dubbed an investment giant by "Fortune" magazine, he's the founder of the Vanguard Mutual Fund Group.
Thanks for being here, John, really appreciate it.
JOHN BOGLE, AUTHOR, COMMON SENSE ON MUTUAL FUNDS: Good to be with you, Poppy.
HARLOW: Your first edition of "Common Sense on Mutual Funds" was released 10 years ago. You've leased it again now after all of the chaos in the markets over the last few years. And you've said, I think this is so interesting, "investors are their worst enemies." People can't look out for themselves, so what are the tips that you're saying they need to follow right now? What do they need to do?
BOGLE: Well, the best thing you have to do when you're investing is first you've got to save. If you don't put any money away, believe me, you're not going to have -- I mean, it seems simple and it is simple, it's just not easy, but you've got to do that. And then you need an intelligent financial plan, which is essentially asset allocation between stocks and bonds, how much risk you want to take on the stock side.
How much income you want the investment to produce, which bonds help with, along with some stability, and then you don't want to change all the time. One of my rules is don't peek. You know, if you don't look at your 401(k) statement or your retirement plan statement for 10 years, believe me, you're going to have so much money you won't believe it when you open your 10 year statement.
HARLOW: Don't peek. Don't take a look. And you know, you reiterate this in your book time and time again, you talk about the importance of balanced investing, no matter your age. So, in terms of being balanced in this market, what is that right now?
BOGLE: First, a word on balanced investing. There's no question, I don't think, that over most long-term periods, stocks will do better than bonds, so if you own any bonds in your balance program, and that would be the other -- the balanced program is simply bonds and stock -- if you own bonds, it will give you a lower return.
But the beauty of bonds is that it will be like a little dry powder, a little stability when the markets fall apart that will keep you from being your own worst enemy. You'll see something is holding up in your portfolio and it will moderate the decline on the equities side.
So, my rule of thumb is, as we get older, I maybe an expert of that, we've accumulated more wealth, we have less time to recoup or losses and we need income to help us in our older years when we're not earning money anymore as compared to our younger years when all of our income comes from our human capital, not from our investment capital. So that suggests very strong, as you get older, you want more bonds and less stocks.
HARLOW: Makes sense. You know, you've also talked, John, about the fact that some of these low cost trading services, you think, treat investing like a game and that that's a big mistake and don't be enticed by these advertisements we see on TV, right?
BOGLE: Well, they're all just kind of crazy. They want you to trade and because that's the way they make their living and if you can just envision the very simple concept that any kind of a trading market, when you're trading, buying and selling securities, if you're a buyer, there's a seller over there, right?
And the stock doesn't care whether you or the seller owns it, so it's an even trade, doesn't add or subtract value until those Crupies (ph) of Wall Street, just like the Crupies in Los Vegas, get their hands into the mix and then trading becomes a loser's game.
So, long-term investing is a winning game and short-term speculation is by mathematical certainty, a losers game. So, get in the winner's game and out of the loser's game. It's not very complicated.
HARLOW: Common sense. Thank you so much for some common sense this morning. We appreciate it, John. Thank you.
BOGLE: Good to be with you.
HARLOW: And remember, you can make sure you're always up to date with the latest financial news by signing up to follow CNN Money on Twitter. Just logon to Twitter.com/CNNMoney to sign up. But, still ahead this morning, mastering your money. From slashing your electric bill to saving bit on your next vacation, we've got you covered.
HARLOW: Well, your electric bill and utility meter, both hard to read and understand. So just where is your money going each month? It's important to know. Here to break it all down and help us to save a little money in the process is Danny Lipford, a home improvement expert and the host of "Today's Homeowner" with, of course, Danny Lipfort. Thanks for being here.
DANNY LIPFORD, HOME IMPROVEMENT EXPERT: Oh, glad to be here.
HARLOW: I got to tell you, when you get your energy bill, mine always seems to be sky high, and look at these extra charges on there, transmission charge, distribution charge, transition charge, all of this stuff, it's like a hotel bill, all those taxes.
LIPFORD: It does remind me of a hotel bill with all those little things that are hidden there, that are hard to really understand where they're going with that. And it's the same way with most utility bills that they have issues on there for sustaining what they have and then enlarging what they have and green initiatives and all of that. A lot of that can't be controlled, but what you can control is how many kilowatt hours that you use.
HARLOW: Now, let's talk about, this is a traditional power meter. There's digital ones now, but this is what most folk have on the outside of their home or in their apartment building. It's tough to read, so explain exactly how -- because you can read it yourself and make sure your power company is right..
LIPFORD: Right, right, and that's not a bad idea to check them every now and then on that. And of course, the main thing you want to do is to keep it from spinning so much, because as it spins, the numbers keep going up...
HARLOW: If you turn them on, you can see it spinning.
LIPFORD: This is an incandescent light, so it's going to move it a little quicker than say the compact fluorescent lamp. And the little meters and the little dials there basically, you just want to round, if it's in between numbers, round it to the lower number and that will give you the reading of kilowatt hours.
To give you an idea of that a kilowatt hour is if you lift a 100- watt light bulb on for 10 hours, you're using one kilowatt hour. So, that just gives you a little unit of measurement of what's involved in that.
HARLOW: Thank you for simplifying that. I think so many people out there have no idea what a kilowatt hour is, so...
LIPFORD: I know, it can get a little bit complicated. HARLOW: It's a good point, but you said honestly, the best way to save is the basics, it's about your behavior, right?
LIPFORD: Well, it's a lot to do with the behavior and if you get in the habit of turning your air-conditioning down a little bit or the heat up a little bit, that type of thing, and of course, a programmable thermostat makes that a lot easier. They're only $50 or $60.
You can adapt your heating or cooling system to your lifestyle, that's all that's necessary and then on the sunny days, close those curtains and keep the sun from coming in and heating up the room or using some of the reflective solar film, also it a good way to go.
HARLOW: Now, some folks also have an option of what power company they use. Not everyone does, but some people do. So, if you're shopping around comparing between power suppliers, how should you decide which one is going to save you the most?
LIPFORD: Well, just like any unit measurement, how much per kilowatt hour. Open up the yellow pages and see what options are there for electric power providers.
HARLOW: Ask them for sample bills, maybe?
LIPFORD: Ask for sample bills, ask how much they charge, how they compare with other companies. They'll have that data very handy, because it's competition then and competition is good.
HARLOW: And when they're competing, you're going to get a better price in the end, so it's worth calling around.
LIPFORD: Right, and there's a lot of green power companies out there that are starting to spring up all over the country, and you can put in a search engine, Google "power sources" and you may find someone in your area that gives you that alternative, as well.
HARLOW: Always keeping us green.
LIPFORD: We're trying.
HARLOW: We appreciate it. Thanks so much.
HARLOW: All right everyone, it is that time again to spring ahead for daylight saving time and while the jury's still out on whether it actually saves that much energy, the change of time, a good reminder for you of some things you should do around your house twice a year. Here's some tips, OK?
Change out the batteries in your smoke detectors, really arguably the most important battery-powered device in your entire house. And, you don't have to throw those batteries away, maybe you can use then in your remote control, there might be some juice left, so think about that. And also, take a peek inside your medicine cabinet. Are there are any medications that are past their expiration date, if so, you've got to throw them out. And also, review your family emergency plan.
I know you all have one of those and if you don't you better write one, but in any event that something goes wrong, make sure everyone in your house knows what to do, who to contact and where you're all going to meet. And of course, don't forget to actually set your clock ahead one hour before you go to bed tonight.
Still ahead though, clipping coupons and lots of them. We're going to show you how to get the cart full of groceries for the fraction of what you might think.
HARLOW: Well, spring break is approaching fast, and summer's just around the corner, and whether you're dreaming of a beach escape or just a quick weekend getaway, our next guest says right now is the time to book that vacation. Joining me now, the international editor of "Travel & Leisure," Mark Orwell, thanks for being here, appreciate it.
MARK ORWELL, TRAVEL & LEISURE: Thank you.
HARLOW: Some great deals right now, especially in California. Right?
You better believe it, right south of San Francisco, only about 25 miles down, an area called Half Moon Bay, surrounded by redwood grove, pumpkin fields, wineries and of course the beautiful pacific ocean. Fifteen hotels have gotten together to offer you a pay for two nights, get the third night free.
You're saving 33 percent, better yet one of those hotels, the Ritz-Carlton in Half Moon Bay, this is a place super luxurious, they don't normally discount. So, if you ever wanted to stay at a great resort, and just some gorgeous coast, now is the time to do it.
HARLOW: A free night. Who could ask for more? Looking at New England, there's a good winter getaway, right, but you have to book it now.
ORWELL: That's absolutely right, book it right away. It's at the Mountain View Grand Resort in Whitefield, New Hampshire, in the White Mountains. It's been around since 1865, they have a family and winter adventure package going on right now, it's $179 a night for your accommodations, plus your snowshoeing, ice skate, snow tubing. Book it now, you're going to love it. This has become an icon of New England.
HARLOW: And talking about families and sports fans, I know there's a spring train getaway that you can take advantage of if you do it soon, right?
ORWELL: Hey, baseball fever is already in the air. HARLOW: Sure.
ORWELL: With spring train. No better place to do it than to get to Arizona. The L.A. Dodgers and the Chicago White Sox both do spring training in Phoenix. There is a hotel called the Wigwam, great resort. It looks like an old adobe-style building. They have a spring training package, $399 for two nights, plus you're going to get tickets to a Dodgers or a White Sox game, plus game-day parking. It's a great chance to actually interact with the players during spring training games, too.
HARLOW: That's a different kind of trip. That sounds great. And also a beach getaway. If you just want to hang out in the sand and relax, where can we go for a good deal?
ORWELL: Well, just an 80-minute flight from Miami, very easy to get to, the Turks and Caicos Islands. And on the island of Providenciales, there is the sands at Grace Bay are one of the most gorgeous stretches of coast.
HARLOW: Beautiful island.
ORWELL: Oh, a beautiful island and a beautiful resort. It's sort of a Caribbean plantation style, free-form pool. Go shopping at their little town of Providenciales, scuba dive, learn to sail a Hobie Cat. They have a deal, they're $642 for three nights.
HARLOW: Pretty good.
ORWELL: A 25 percent savings over the regular rate, plus they're going to give you a $50 credit at their romantic open air restaurant.
HARLOW: Finally quickly here, I found if you book at different times of the day or days of the week, you get a better deal. When should people book?
ORWELL: Usually the best time to book is after midnight on a Tuesday. A lot of deals are implemented at that time.
HARLOW: After midnight on a Tuesday. Hey, I'm going to stay up all night.
ORWELL: Weekend is probably the worst time to book it. During the week is your best chance to get a good deal.
HARLOW: All right, good to know. Helpful tips. Thanks so much, Mark. We appreciate it.
HARLOW: Well up next, we are going to introduce you to the Coupon Mom. And believe me when I it will you this lady does not mess around.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Now, this is how you make a list. Like that, with spreadsheets. See that? Got to step it up.
(END VIDEO CLIP)
HARLOW: Well, the number of coupons redeemed last year rose 27 percent to a grand total of 3.3 billion, that was the largest jump in two decades. And fueling the increase, heavy coupon users who redeem 104 or more coupons over just six months. That's according to an August report by Nielsen. And these users tend to be women, of course, under the age of 54 with college degrees and household incomes above $70,000.
Well, no one knows how to clip a coupon better than the Coupon Mom. So, we asked HLN's Rafer Weigel to tag along with Stephanie Nelson as she hit up her local supermarket.
RAFER WEIGEL, CNN HLN SPORTS CORRESPONDENT: Hey, Poppy, we're here at the Kroger in Roswell, Georgia, where the Coupon Mom is going to show me and everybody how we can save big bucks on our grocery bill.
STEPHANIE NELSON, THE COUPON MOM: Yes.
WEIGEL: I'm Rafer. Nice to meet you.
NELSON: Nice to meet you. Are you ready to save a lot of money?
WEIGEL: I am. I'm excited.
NELSON: Good. Let's go. OK. Now, it's all about strategic shopping. Strategic shopping is when you combine promotions with coupons and sales. And this is a good example of understanding how your store works. This says 10 for $10, you don't have to buy 10, you can buy one for $1. What I'm trying to do today is save the most with coupons and I have a coupon for $2 off two, so I can get two absolutely free.
So here we are, all at the baby products. If I got the item that is pictured, I get a dollar off I'd pay $2.19.
WEIGEL: Which would seem like a good to deal to most people.
NELSON: Yeah, but you know what I like, nine cents.
WEIGEL: You can do better.
NELSON: That's what I like. Here's bar soap that is the same brand and it applies. It's usually $1.09, you take the coupon, now I'm getting it for nine cents. Most people wouldn't know you could get that because they're going by the picture, but always go by the words. WEIGEL: She's like the coupon ninja.
NELSON: I buy three copies of the newspaper because if you're a coupon user, if you have three sets of coupons you're going to save a lot more, you're going to get a lot more free stuff.
WEIGEL: Oh, my goodness, a whole $1.19.
NELSON: No, I'm looking for free. We're looking for free.
WEIGEL: All right. You've got high standards or low ones, I'm very impressed.
NELSON: Here's a great example of what I call stacking the savings. That's when you combine more than one savings program. In this case, there's a special promotion, so this item is instead of $3.79 it's $2.29. I also have a coupon I printed for a dollar so that brings it to $1.29, but I can use that along with an electronic. I'll pay 29 cents instead of $3.79. and I think we've got everything on the list.
$130. So, before any savings at all we're at $130.21.
WEIGEL: Which is an average week at the grocery store.
NELSON: That's for some people. Not for us. But I start out by doing the store card, which gives us all the sale pricing. That brought us down to $72.87.
WEIGEL: So right now the computer is in disbelief.
NELSON: Right. Although you didn't do anything wrong. It's just...
WEIGEL: As am I.
NELSON: OK, good. I'm happy. For a varsity shopper, this is kind of number we want to see.
WEIGEL: Look at that 89 cents. That is insane. That's insane. That's crazy.
Well, Poppy, there you have it, $130 worth of groceries for 89 cents. I would say that is a job well done, Coupon Mom, I am blown away by you.
HARLOW: And so are we. Truly amazing. I thought I was good at finding deals. Guess I'm not that good. That was very, very impressive. So, for all of you at home, you might be wondering how much the Coupon Mom had saved. Well, she's been at it for 16 years and estimates that she saved a grand total of $80,000. Now, she and her family, of course, they don't need all of that food, so she's a good Samaritan, she donates a lot of it to her local food bank.
For more tips and tricks from someone who has clearly earned the title of expert, pick up a copy of her book "The Coupon Mom's Guide to Cutting your Grocery Bills in Half." Well maybe even more than in half.
We'll be right back here next week for YOUR BOTTOM LINE. Save time for us 9:30 a.m. Eastern. And don't miss Christine Romans and CNN chief business correspondent, Ali Velshi on "YOUR MONEY," today at 1:00 p.m. Eastern and tomorrow at 3:00. But, right now, it's time for a check of the top stories right here in the "CNN NEWSROOM." Have a great weekend.