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YOUR BOTTOM LINE

Bush Tax Cuts Expire, Student Loan Defaults, Online Courses, Five Minutes Health Fixes, Manage Assets, Childhood Obesity

Aired September 18, 2010 - 09:30   ET

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


STEPHANIE ELAM, HOST: Student loans seem to take forever to pay off and student loan defaults are on the rise. What to do if you fall behind on your payments?

The doctors, they're in the house. You may recognize these docs from TV and they're here to share five-minute health fixes with you.

And it's the one meal a day they eat out of your sight, how to pack the best school lunch for less. The show that saves you money starts right now.

So, the big debate in Washington and at dinner tables across the country, the Bush tax cuts. With Congress having to act by January 1 to either extend them or let them expire, we want to know what affect those decisions could have on your bottom line.

Josh Levs is here to show us what you might be paying the IRS next year.

Hi, Josh.

Steph, so we keep hearing this debate, but how will it affect your bottom line. We have a few examples we're using from the tax calculator at the Tax Policy Center, and I want to introduce you to that. You can take a look at them and see how their taxes would change.

Now, this is our friendly neighborhood avatar couple. Let's say their income is about $57,000, right now, and right now they're paying taxes of about $3,500 a year. Well, if the tax cuts were to expire, the ones enacted during the Bush administration, if they went away, this couple would now be paying about $2,000 more in taxes. And that's a lot of money. It's a big chunk of change for this couple.

Now, let's take a look at what the tax policy center calls a high earning. If they're over the $100,000 mark at about $106,000 a year, if they're currently paying taxes about $9,400, their taxes would jump about $3,000, a little more than $3,000. And again, that's something they would really feel. It's a big chunk of change.

Now, let's do something a little different. We're going to look at a couple over that $250,000 mark and see what would happen if President Obama's plan would be enacted. So, let's give this couple a high income of up near $400,000, there you go, $396,000, if right now their taxes are just over $100,000, about $102,000, their taxes would jump up about $6,000 to $108,000. Now, there's a lot of variables. And those of you who are real number crunchers out there, I will tell you the Tax Policy Center is factoring in a permanent AMT patch, which the president wants.

All right, finally, last example we're going to see, here. What do we hear all the time in the debate about tax cuts? Millionaires. So let's make this couple some millionaires, right now. Their income, for the purposes of this, will now be $1.75 million and their taxes currently, at about $573,000. Well, if President Obama's plan were to be enacted, we crunched some numbers here, theirs would go up $645,000. That's about $70,000 higher in taxes than what they're currently paying.

That's an example of what you hear in this debate that millionaires would end up paying more and that's where you get both sides of this debate, which is better for the country to have more of that money given to the government or left in the hands of these families to spend in various ways or not.

You can, of course, find out how it might affect you by plugging in your information to the Tax Policy Center Web site using that tax calculator. Hopefully, it'll show you how it'll impact your bottom line -- Steph.

ELAM: Oh, Josh, we love you and your avatar couples. Thanks so much for that.

All right, turning now to another big story this week, college isn't paying off for everyone. An increasing number of graduates are defaulting on their student loans with the worst offenders coming from for profit schools. The overall default rate on federal student loans climbed to seven percent in 2008, up from 6.7 percent a year, earlier. That's the highest since 1997 when the rates stood at 8.8 percent.

So, we want to make sure that you know what to do if you fall behind on your payments. So, we went right to the source of good information. Lynnette Khalfani-Cox is a columnist with WalletPop.com.

Lynnette Khalfani-Cox, I know how to do say your name. But tell us though, this is something that people need to be reminded of. If you default on your loans, what will happen?

LYNNETTE KHALFANI-COX, WALLETPOP.COM: It gets really, ugly really fast. Not only can you ruin your credit rating, of course, that can impact your job options. A default stays with you forever, essentially, until you go ahead and rectify that situation.

For people who have professional licenses, like doctors, lawyers, even morticians, anybody who gets a state-generated license, not paying of that means your career license could be revoked. So, it gets really bad. You could have your wages garnished, tax refund checks taken, all that of stuff.

ELAM: Does that mean then there's a change in how we're perceiving student loan debt compared to the other debt that we have? KHALFANI-COX: Right, I think that increasingly people are recognizing that student loan debt is America's other huge debt problem and we've got to do something to fix it. We came thought the mortgage meltdown, that crisis.

People know, of course, about credit card debt, but people are asking questions, is it worth it to get a college education? Is there a big payoff or will I be saddled with debt for 30 years?

ELAM: Yes, that's something people don't think about. Look at, one thing I do think people want to do is, OK, look, I'm in a situation. Can I defer my payments? Can I get a payment plan? Is that possible?

KHALFANI-COX: Right, absolutely. Especially if you have federal loans, I encourage people to find out about the four different options that are available to repay your student loans. Essentially it boils down to this, the standard loan repayment program lets you pay off your student loans in 10 years. There's also an extended loan repayment program, a graduated loan repayment program and an income contingent or income sensitive loan repayment program. Doesn't matter, you know, essentially those last three stretch out your payments to anywhere from 25 to 30 years. It could be as short as 12 year years, but you essentially consolidate your loans, stretch out the payments, that'll give you some relief on the cash flow side for the monthly payments, but you are going to pay more in interest charges by extending those loans.

ELAM: The best part of this, though, is you've got to do something about it otherwise you're going to get in trouble. Lynnette Khalfani-Cox, thanks always for coming by and breaking it down.

KHALFANI-COX: My pleasure.

ELAM: One way to cut the cost of college and jump start your education is to enroll in online courses, but you might want to listen to this first. Here to make sure you don't fall victim to some common mistakes the Kim Clark, she's a senior writer from "U.S. News & World Report." She is joining us right now from Washington.

Hi Kim, I'm glad you're here because I think this is a topic a lot of people really don't get. And you're saying the first thing they need to do is research the school. Why is that?

KIM CLARK, U.S. NEWS & WORLD REPORT: Well, of course if you attend an online college or any college that's not accredited by a federally approved agency, you can't get federal financial aid like loans and grants, other colleges won't consider that transfer credit. And, of course, employers aren't really that interested in it. And secondly, you were talking about student loans, the government publishes the loan repayment and default rates for just about every college, so it's a great idea to check out the colleges you're looking at to see if other students are drowning in debt or not. And you can do that very easily by going to the Department of Education's Web site Ed.gov and finding out those kinds of things. ELAM: So, once you figure out this is an accredited place you can learn and take these classes, shouldn't you be prepared for how much time these online courses are going to take?

CLARK: Well, I think a lot of people sign up for online courses thinking, oh, it's online, it'll be easy. But the best courses are often harder than a regular class you would actually travel to. The teachers I've talk to say at the minimum you have to budget 10 hours a week for class time and study. And the best courses, 15 or 20 hours. And don't think you can take a vacation in the middle. A lot of these classes require you to post something two or three times a day. So, you can't go off for a week to Cancun or something.

ELAM: And that's actually more involvement than you would have in a brick and mortar school , because you go to your class and once you're done with your class, you're done until you're there. But I guess part of that too is knowing how you learn. If you're a person who likes a lot of interaction, maybe this isn't for you, right?

CLARK: Exactly. They've been doing interesting research on who is succeeding in online course and who is not. And generally they're finding that older students do better online because they have the discipline. If you're somebody who is a procrastinator, online courses are not for you. If you need someone to yell to make sure you do your assignments, online courses are not for you. If you're an older student, you're very disciplined, you can take an online course.

ELAM: But, you know, if you are taking online courses, you've got to be prepared for any glitches with your technology and you're also saying you should consider some things about the teacher, as well. What is that?

CLARK: Right. Well, if you're a technophobe or you have an unreliable connection, or you're relying on the libraries' computers, obviously it's going to be difficult for you to complete an online course. Right? Secondly, teaching an online course is just like anything else and people get better about it with practice. It's a new field, so a lot of professors are just entering into this and not so good at it. It's kind of good to check and see if your teacher has had some experience teaching an online course and there are some Web sites like RateMyProf.com and Pick-A-Prof where you can see what other students think about them.

ELAM: And the last thing here that I think a lot of people might think that the teachers aren't going to know if you cheat. You're saying not so fast.

CLARK: Right. It's so easy when you're online to just highlight a little phrase from Wikipedia and cut and paste into your story or your article or your paper, whatever you're writing, but, of course, the professors have technology too and there's programs such as TurnitIn.com that can catch, even if you steal three words, they'll notice it from almost any Web site, any Web site. So, you can't cut and paste. You really have to do your own work.

ELAM: So, be careful with those three words. Don't start every paragraph with "the trouble is" or something like that, you might get in trouble. Kim Clark, thanks so much for your time today.

CLARK: You bet.

ELAM: All right, there's lots more ahead this morning on the show that saves you money. The doctors from "The Doctors" are here with five minute health fixes. And does this make my assets look fat? Now, now, it's a book. Don't worry, I'm not getting saucy with you. We'll see if they can put you on a financial diet, next.

(COMMERCIAL BREAK)

ELAM: So guess what, everybody, there's a power shift that's happening in American households. Women now control more money than the men and that's according to the Allianz Life Insurance Company. So, let's make sure, whether or not you're a man or woman in this case, that you have all of the tools you need to manage your money the right way. Susan Hirshman is the author of "Does this Make My Assets Look Fat? A Woman's Guide to Finding Financial Empowerment and Success."

You got love the title, but really Susan, when you take a look at it, you're saying that the way you manage your money is no different than the way you manage your diet. Explain that to us.

SUSAN HIRSHMAN, "DOES THIS MAKE MY ASSETS LOOK FAT?": Exactly. Most people know how to manage their money, they just don't realize it, because who hasn't been on a diet? So when you look at the language and you look at the processes of investing, they are so similar to dieting and that's what you have to understand is that it doesn't have to be intimidating, you know it and you can do it.

ELAM: And yes, it's something you've already got into your life already. So, simply break down for us what exactly is the process of investing.

HIRSHMAN: Yes, the process of investing is the same exact four- step process as dieting, again, right in line. Here we go, the first in -- let's go dieting, the first step in dieting, you weigh yourself and think about your goals. Second step, is you devise your plan, third step, you execute on your plan, right, go food shopping. And fourth, review and monitor.

And isn't it ironic, when we look at investing the four steps are, set my goals, set my asset allegation, which is my investment plan, third is go shopping for investment products, and fourth, review and monitor. Exactly identical.

ELAM: And then on top of that, when you're looking at where you're going to invest and how you're going to invest or how you're going to manage your diet, you've got your four basic food groups and four asset classes, right?

HIRSHMAN: Exactly. And again, the parallels are uncanny. Let's think of carbohydrates, for example. Carbohydrates, there's a lot of different kind of carbohydrates, but the purpose of carbohydrates is to give your body energy. And carbohydrates, if we just think about them as stocks, right? Stocks. What do they do? There's a lot of different stocks, so we need to know the difference between the good stocks and bad stocks, so to speak, and what stocks are meant to give your portfolio energy. And we can go on and on. In the book, "Does this Make my Assets Look Fat?" we go, for each class we identify a food group that matches it.

ELAM: So, I think when you're also trying to diet, there's different reasons why you're dieting. Maybe you need to gain weight, maybe you need to lose weight, maybe you just need to make sure your cholesterol is check, whatever it could be, but you're saying when you're investing, there's actually five phases of your investment life, as well.

HIRSHMAN: Yes, there's five phases. The first phase is wealth creation. Here, you're 20, you're starting out, second phase is wealth growth, 30s, 40s, wealth accumulation, 40s to 50s, wealth preservation, you're in your 60s, wealth transfer, in your 70s. And at each stage, there's specific ways to invest and there's specific issues that you face that you really need to be aware of.

ELAM: And everyone needs to think about those phases.

HIRSHMAN: Exactly.

ELAM: I do think what we've learned this is a good case when you do want your assets to look fat. It's the thing you want.

HIRSHMAN: I love this. Because I always walk around and think I've got fat assets and I'm happy. So, that is really good.

ELAM: That is really good. Susan, thanks so much for joining us.

HIRSHMAN: Thank you.

ELAM: All right, so I have a question. Is there a doctor in the house? Actually we've got two. Doctors Travis and Dr. Lisa from the hit TV show "The Doctors" are up next with five minute health fixes that will save you money. Stay with us. (COMMERCIAL BREAK)

ELAM: So you might just recognize our next guests from their Emmy Award winning shows "The Doctors." We have Dr. Lisa Masterson and Dr. Travis Stork, they're here with some quick and inexpensive ways to improve your wellbeing. They have the new book and it's called "Five Minute Health Fixes: The Prescription for a Lifetime of Great Health."

Thank you so much for being here, Dr. Lisa, Dr. Travis. So, I know people are like why do you have doctors on a money show? Like, what are you doing? But you're saying that there are ways to be healthy that actually can also help your budget, as well too in your new book, right?

DR LISA MASTERSON, "THE DOCTORS": Every minute you invest in your health today will increase your lifespan later on. So it'll pay off in the long run.

DR TRAVIS STORK, EMERGENCY ROOM PHYSICIAN: Yes, you're going to have so much wealth later down the line if you take care of your health early. I'm an ER doctor, I see people, unfortunately, come into the ER for conditions that could have been prevented. And I always stress prevention will save you money. Health's more important, I have to say, than money. If you don't have your health, money doesn't matter. But one does beget the other, believe it or not.

ELAM: No, it makes a lot of sense.

Let's talk about a few topics that people are always talking about, one of them being their always talking about their weight, but there are some ways, like you said, to prevent any issues, whether or not you gain weight, lose weight, whatever it may be, but there's some good ways to go about monitoring your weight, right?

MASTERSON: And I love how your show is called the bottom line, because we think a bottom line as that bottom line getting bigger will actually be a problem, so there's lots of good tips in the book about how to lose weight and basically bicycling. This one used to say, you know, why do you drive your car to the gym and I said, well, OK, I will try to do the bicycle. Bicycling, bicycling will help you save money, save gas and help that bottom line.

STORK: And it may seem extreme but I actually do bike to work and people may laugh, but I am doing good things for my health and think about all the money you save in gas, maintenance. So, I am not saying everyone realistically can bike or walk to work, but those are things to think about. If you're crunched for money, things that good for your health usually are good for your wallet, and especially when it gets back to food.

You mentioned obesity. People will say well Dr. Travis, fast food is cheaper. I can save money by eating fast food. But I'm going to tell you right now, in the book, for instance, four walnuts a day, great for brain health. Walnuts are a nutrient-dense food and relatively cheap for the nutrients you get. So, you can actually make smart decisions. Pack some almonds, pack some walnuts in your bag so that you don't have to run and get fast food. It's good for your wallet and your health.

And if you are going to do that, you can take the stairs and go up and find your way to it.

MASTERSON: And pack a lunch.

ELAM: And bring your lunch in. One of the things I want to say about that, though, is because one of the debates you hear all the time is organic or not organic. Is it worth it to spend the extra money and get yourself organic fruits and vegetables, wheats and all those things?

MASTERSON: Well, certain things, yes and certain things, no. You can buy a lot of things in bulk and save a lot of money, like dried beans and things like that. but, fruits, vegetables, you know, that are packed with nutrients, sometimes frozen ones are good, as well, and we talked about these on the show as well as in the book.

STORK: Yes, so if money is an issue, but you want to go organic, try organic berries that are frozen, because like Lisa said, they're much more affordable than the fresh, but they are just as good for you.

ELAM: But they're just as good for you, right. So, that's something to keep in mind. And then one last thing that I think will stand out in a lot of people's minds. You are saying, if you want a healthy heart, go on vacation?

MASTERSON: That's so right. Absolutely right. And you know, going on vacation doesn't take five minutes. But plan something. You know, whatever it is that you are dreaming with, start planning it now. Everybody who's at home, just start writing it down and then save for that. And because you really need to take a break. Stress, we found stress, has real health consequences, there's high blood pressure, so you really have to take those vacations.

STORK: And the best part is planning for the vacation. We found that is what decreases your stress the most. Enjoy planning the vacation, because your mind is going somewhere else. You're getting excited and don't forget, when you are on vacation, it's OK to have some free time in the day. It's a vacation.

ELAM: You don't have to plan everything out.

STORK: Exactly.

ELAM: No, I think that's a very good idea. Well, of course, if you want more information on this, you can always check out the new book "Five Minutes Fixes" and you can also check out the doctors on the show, Dr. Lisa, Dr. Travis, thank you so much for joining us.

MASTERSON: Thank you.

STORK: Thank you for having us.

ELAM: Putting our money and our health altogether, there.

All right, the kids are back in school. They've got their supplies, they've got their homework, but do they have the healthiest lunch? Well, how to feed the kids the right way, next.

(COMMERCIAL BREAK)

ELAM: I've got a shocking fact for you, how about one in three children in the U.S. is overweight or obese. It is so shocking in fact, that first lady, Michelle Obama, has made it the mission of her "Let's Move" campaign teaching kids how to eat right, especially when it comes to school lunches. So, here, with healthy and fun lunch options for your little ones is Kat Kinsman, she's managing editor of CNN's Eatocracy Web site.

Kat, thanks so much for being here.

KAT KINSMAN, CNN EATOCRACY.COM: Thank you for having me.

ELAM: Let's get right into it. Can you go ahead and tell us a bit about what we can do to make sandwiches a little bit more fun for kids?

KINSMAN: Well, we were all so traumatized by those horrible soggy peanut butter and jelly sandwiches we went to school with. So we just thought we would have a little bit more fun, make it a little bit healthier by getting, say, a lower sodium peanut butter that's still just as delicious, doesn't' have any added sugars or anything like that. You have to watch out for the lower fat ones, because they add sugar to it.

Now, a few things that we can do to make it a little more fun is, is you're going to use the whole grain bread and just stamp out a cute little pattern on it.

ELAM: Whatever you want to do, a flower...

KINSMAN: We're using a heart, sending a little bit of love to school with the kids and get something that's cute like that.

ELAM: And they will more likely eat it.

KINSMAN: Yes, and the bread scraps, you can turn those into croutons, bread crumbs, whatever you want. You also don't have to do peanut butter and jelly. You can do peanut butter and say, some cut- up fruit. You can do grapes, you can do strawberries, whatever happens to be in season, just a little bit more delicious. You can also go with a whole grain pita.

ELAM: And so, these are some options, there. And along with the sandwich idea, when you talk about lunchmeat, you say that there's some things that you should know about lunchmeat. So, tell us about that.

KINSMAN: There are -- ideally, you want to get something that is hormone free, because you're looking toward the future, might cost a little bit more, right now, but in the long run, you're going to be paying less for health care bills, it's just so much better for you. This is a little lunchmeat that we found. Generally, you want to just avoid anything called "lunchmeat" that doesn't have identifiable meat in it, maybe something that doesn't have any sodium added, they are healthier choices.

ELAM: All right, and of course along with the healthy idea is what I've found is if you give kids vegetables and you don't make a big deal about it, they might eat it. But, if your kid already has decided they're not into vegetables, what are some ways to get fruits and vegetables into their body?

KINSMAN: It is all in the marketing. You can send it along in cute little segments, like this. It seems like a treat then, if you put it into cute little Tupperware thing, it feels like a little present that you're opening. Fresh sugar snap peas, fresh snow peas, those are all really crunchy and delicious. Or you can just put them in the oven for a short period of time, a little bit of cooking spray or salt on them and they turn into the most delicious chips. You can do that with kale, with green beans, even with Brussels sprouts are fantastic.

ELAM: A lot of vegetables you can do that.

KINSMAN: Or put it with hummus and hummus is a universal...

ELAM: And hummus is great and that's good for you, too. Let's talk a little bit about these lunch kits and also these juice boxes, because you're saying they're easy, but they're not necessarily good?

KINSMAN: Again, you're paying in the long-run for that with that with extra sodium. They may lower the fat a little bit, but they're going to amp it up with sodium with sugar.

A lot of sodium.

Lots and lots. A lot of these average out at 900 milligrams of sodium, which is most of the sodium you should get in a day, as a kid. And they are just not good for you. They are packed with all kinds of bad things. You might, again, these are ideally are going to cost you less, these add to environmental damage and just in the long-run not a great solution.

ELAM: So, if you are talking about environmental damage, let's talk about cute ways of getting the lunch to the school. So, you've got some containers over here that are really, really cute, here.

KINSMAN: They are not very expensive. This one was 3.50, it comes in all these cute little segments. You can put fruit kabobs in it, that one, I believe was 9.50. And if you amortize that over the year, that's just cents per day, it's cuter, you're not throwing away a million little plastic bags.

And you can get whatever favorite colors are, and you get it right there for the way they like it,

Different one every day of the week.

ELAM: So cool Kat Kinsman, thanks so much for stopping by and giving some tips.

KINSMAN: It's my pleasure.

ELAM: OK, great. Thanks so much. And thank you for spending part of your morning with us. It's time now to get you a check of the top stories, CNN Saturday continues right now.