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YOUR MONEY

Smart is the New Rich: Work-ing It Out; Escaping the Debt Trap; Home Sweet Home; Smart Home Buying; Where the Jobs Are; Paying for College; Money and Couples

Aired November 28, 2010 - 15:00   ET

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


CHRISTINE ROMANS, HOST: Welcome to this special edition of YOUR MONEY. I'm Christine Romans.

We averted a second Great Depression, but we wait for jobs. The economy is growing, but too slowly. No question, this period will be written about in history books, but we're not sure how it will turn out.

So many things are out of your control - the Fed stimulus, deficit reduction, job creation, global competition. Over the next hour, we will focus on what you can control, because smart is the new rich.

We live in a time now where there are more people on food stamps in this country than going to college. I'm joined by comedian Hal Sparks; Ryan Mack, President of Optimum Capital Management; and clinical psychologist Jeff Gardere.

Ryan, let's start with you. Has the Great Recession changed us forever?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: I - I think it gave us a - a tremendous smack in the head, where before - I almost equate it to almost like a pre- and post-Barry Bonds, you know?

ROMANS: Right.

MACK: Barry Bonds before the steroids was a pretty good ballplayer. But, after the steroids, with the juicing, essentially it had a lot of home runs and did a lot of things, but our juicing was debt, and we got so overwhelmed with juicing and debt that we really lost control of what it was like to be without debt.

So now, we're back to living off - our debit card use has exceeded our credit card use.

ROMANS: Right.

MACK: Our savings rates (INAUDIBLE) between 5 percent and 6 percent. It was no - no accident that it was the first time since the Great Depression that it went negative in 2007 since the Great Depression, so we're starting to come around now. We're going to grow slower. We're going to get out of it, but now we just have to get used to life without the juice. ROMANS: Jeff, we talk about the juice, the debt, the asterisk on the American middle class. Has the American middle class now, with the asterisks, are we going to - are we going to rethink the way we acquire things and the American passion for filling our house with stuff on borrowed money?

JEFF GARDERE, CLINICAL PSYCHOLOGIST: I think that if we don't pay attention to what has happened to us in the last couple of years, we truly are stupid and we know that a lot of people feel that Americans are stupid people. I don't think they are. I think that we've learned from it. I think we better change the way that we look at debt, we better change the way we look at the way we spend, and we've got to do better.

And even though we are in a recovery and things are getting better, I think that we better continue to tighten our belts, strap on those seat belts and for the next couple of years really try to grow our wealth, but do it in a very smart way.

ROMANS: There's no margin for error, frankly. They're just - I don't mean to scare people, but there's really not a lot of margin for error.

HAL SPARKS, COMEDIAN: You know, and quite frankly, that's the way I like it. I live - I work in an insecure business, so I've never had the illusion of security that a lot of people counted on, and when you get your pension wiped away or your arm adjusts upward and those kind of things, things you thought you could count on -

ROMANS: So you've been a - you've been frugal for the - from the very beginning?

SPARKS: I had to be. You know, but - it was - it used to be called broke, now it's called frugal. I appreciate that.

But, if - in all honesty, I think - I hope we've come through this and that it bring - you know, and we've grown from this, but if you look at all -

ROMANS: We don't have any choice but to grow. I mean, that's the thing. It's like -

SPARKS: I don't know, because I think in - to some degree, if you look at the AIDS crisis, followed by the late '90s into the 2000s of people getting more sexually active again without being safe, there's got - there's an arc where people fade.

The depression, I mean, wasn't that long ago.

ROMANS: Well, we -

SPARKS: It was a generational thing.

ROMANS: True, but we averted a second Great Depression, so that's -

SPARKS: That's totally true. Absolutely.

ROMANS: -- that's different. I mean, and that's different. And we didn't avert the first Great Depression, so that really changed people. Will we be changed like our grandparents - great grandparents were changed?

SPARKS: That's - I hope so, but that's what I mean. I - I think it's up to you. I think you have to make an active choice to - everybody's changed by the decision. It's not how life affects you, it's how you process what's happening. We could (ph) -

GARDERE: And I - and I think if you look at folks now, we're not going to wait on whether we have social security. I don't know, when I hit my 60s or 70s, whether social security will be there for me. So I can't rely on the government. I have to rely on my own strengths.

ROMANS: I hear that so much, and that's so true.

SPARKS: But I also - it will, by the way. It will. Some variation of it will be there. But the question is will we be living a lot longer? We have like a Harvard longevity group coming up, there would be - a human body can last 250 years now.

ROMANS: Yes.

SPARKS: The 65-year retirement age starts to sound childish.

ROMANS: Right.

SPARKS: And so we are going to be up against - we, you know, like -

GARDERE: Don't tell that to those folks in France who are very upset about it. I mean, they're (INAUDIBLE). Right.

MACK: It's - it's hard to - it's hard to teach someone who's never been hungry that you need to save for food.

ROMANS: Right.

MACK: And that's just the bottom line. And this generation, until 2007, had never experienced what lack - really understood, which our grandparents did, and -

ROMANS: My grandfather, by the way, used to always say -

MACK: Exactly.

ROMANS: -- hunger is the best sauce.

MACK: Is the best teacher.

SPARKS: That's right. Yes.

ROMANS: And we, for two generations, haven't (ph) known that. MACK: And so, now - again, then, this is - again, your book is a very timely book because people are willing to listen because now they understand what it means to be without. So now they say I don't - I don't want to have to go through that again. So let me pick this book up so we don't have to go through that any longer.

GARDERE: And, really, what the - you say smart is the new wealthy. You're absolutely right. But the new wealth, as I see it, being able to just pay your bills -

ROMANS: Right.

GARDERE: -- having food on the table. No -

ROMANS: Your expectations have changed.

GARDERE: No grand illusions. Oh, I want to get that 15-room apartment downtown. You know what? I want to be able take care of the three rooms I have uptown and pay the rent on time.

That makes me happy. I'm refocused. I've learned the lessons. I know it's not about the money. It really is about the happiness and doing the right things.

SPARKS: I also think that being someone who as - as far as hunger being the best sauce -

ROMANS: He's like, I've been hungry and it didn't taste good, ever.

SPARKS: Not it's not. That's not a lot of fun. And I grew up underweight and shorter than I should have been when I was a kid because of that specifically. There's no school lunch programs where we lived for a long time, those kind of elements.

There - there are - there is -

ROMANS: So you grew up today the way people are worried their families are going to be after the recession.

SPARKS: Yes. And - and there was --

ROMANS: You've experienced this already.

SPARKS: And there's damage done in that that sometimes is -is negative to growth long-term, to safety, to entrepreneurship, where people are too afraid to -

ROMANS: Right.

SPARKS: -- to reach out now, you know, where they - what little security they have they're so protective of it and so scared that that - since entrepreneurial growth is what drives this economy in the big, it could scare people away from it.

GARDERE: But if - but if it - if it doesn't kill you, it makes you stronger, and I think a lot of folks through this recession and now through the recovery realize that there isn't anything that they can't do when it comes to survival, that they can be on food stamps and that's OK for a little while, that they can do things that can take them to the next level that perhaps they would never have done before -

ROMANS: Right.

GARDERE: -- such as working 14 hours a day. That's OK. That's the new normal.

ROMANS: And what - we want that - we want that privilege of being able to work for 14 hours a day. We want the job.

(CROSSTALK)

ROMANS: Right.

Jeff Gardere, clinical psychologist, thanks so much. Also contributor to HealthGuru.com. Gentlemen, you're going to stick around because we're going to continue to explore these - explore these issues.

There's a new saying out there, take this job and - well, and tolerate it. Your job drives your personal economy, and you cannot afford to lose it.

How to succeed in the one you have, or we're going to tell you how to find the one you desperately need. That's next.

(COMMERCIAL BREAK)

ROMANS: If you're like most Americans, according to "Consumer Reports," you will spend 15 hours at holiday gatherings this season. How about celebrating the season and looking for a job at the very same time?

Career adviser Ellen Gordon Reeves is the author of "Can I Wear A (sic) Nose Ring to the Interview?" Ellen, there's networking around the tree, there's networking around the punch. Is it OK and safe to merge these two worlds?

ELLEN GORDON REEVES, AUTHOR, "CAN I WEAR MY NOSE RING TO THE INTERVIEW?": Absolutely, but you've got to behave yourself, OK?

ROMANS: Don't drink too much.

GORDON REEVES: Don't drink too much. The first thing is keep that eggnog consumption under control because if you really are job hunting, as Mark Prince says, you never get a second chance to make a first impression.

ROMANS: True.

GORDON REEVES: So - and you have to be prepared. You have to have a business card - ROMANS: Right.

GORDON REEVES: -- because when the other people wake up from their holiday revelry, they might not remember meeting you, so you want them to have a souvenir of the conversation.

ROMANS: And you want to get their business card, too, so that you can maybe follow-up.

GORDON REEVES: So you can follow up, and you have to have your elevator pitch prepared. It has to be short, succinct, it has - you have to be able to say, unapologetically, I'm job hunting. I want to be an elf. I've trained with Santa Claus himself for 20 years. I have 20 years experience in the North Pole. Let's talk when it's convenient for you.

But, remember, it is a holiday party. It's not a career fair.

ROMANS: Yes. You got to be tactful on this.

GORDON REEVES: Get back to being social.

ROMANS: You've got to be tactful on this.

But, you know, everyone knows somebody who's looking for someone, and, frankly, when I talk to people who have found their dream job in the midst of all this horrible economic news, it's because they met somebody who they have a mutual friend, a mutual acquaintance. So people are looking as well.

GORDON REEVES: They can look out for you. You know, 80 percent of all jobs, at least, are filled by personal referral -

ROMANS: Right.

GORDON REEVES: -- and over 80 percent exist in what we call the hidden job market. They are never advertised. So you've got to be out there. Keep looking for people.

ROMANS: If you've been out of work for a long time - so we've got, I think, 46 percent of the unemployed have been out of work for six months or longer, the long-term unemployed. You've really been out of the game a long time. This could be a golden opportunity for you.

GORDON REEVES: It is, and it may be the time that you feel least like going out and partying and you feel like you can't get the - your foot in the door. You have got to get out of your door, get out of the house, have a new look, feel better, get out there. Be in the game.

If - if you've been out of the work for six months, once you get over the grief and the anger - and get that all out on your friends and family, never on a potential employer - you've got to say, this is what I can do for you (INAUDIBLE), and here's how I've been spending my time, volunteering, doing pro bono work - ROMANS: Fill the gap.

GORDON REEVES: -- temping. Don't mind the gap, mine the gap.

ROMANS: Yes. Interesting.

I want to talk to you, Ryan, about something that is - is really causing a lot of consternation, especially among those people who've been out of work for six months or longer. They are more likely to have credit problems because they haven't been able to pay their bills. And we know that HR managers are running credit checks.

If you look at this, according to the Society for Human Resources Management, 47 percent of employers say they are doing credit checks on some candidates. Thirteen percent are doing it on all candidates. Those are more likely to be finance jobs, where you're in charge of money, and 40 percent say they're - they're simply not doing any credit checks at all.

MACK: Yes.

ROMANS: But if you've got basically a 50-50 chance of having your credit check -

SPARKS: Yes.

MACK: Yes.

ROMANS: -- what do you need to know on the job hunting circuit?

MACK: Well, you do have rights, and the Fair Credit Reporting Act does dictate individual rights that you have, and not all states are doing it, like Oregon. They don't - they don't allow credit checks for individuals who are trying to apply for jobs. But, just understand that they have different actions, like a pre-adverse action disclosure statement -

ROMANS: That's right.

MACK: -- that they have to give to you if they're going to deny you the job or fire you from a job essentially about - because of your credit, and then once - that consists of your credit report as well as information to say that here's where you can go to try to challenge inaccurate information on your credit report, so -

ROMANS: Right. I think the most important thing for people on this front is if you are going in and your potential employer says, you know, look, we see a credit issue or we're going to run a credit check - we're going to run a credit check, and you know you've got a 500 credit score.

MACK: Right.

ROMANS: You get out there in front of it and say, look, I just want you to know that I had a - I've had a divorce two years ago, as a lot of people, as you know, probably have. But I'm really on solid footing right now.

Explain exactly what happened, because a lot of people are blown out.

SPARKS: And a lot of people would actually understand.

ROMANS: Yes.

SPARKS: A lot of times, that might appeal to them in some ways where you go, everybody knows this has been a wrecked economy. Nobody is hidden from it. Nobody has missed out on it.

ROMANS: Right. The HR manager (INAUDIBLE) could be having a foreclosure next door.

SPARKS: Same deal. Right. He could have a worse credit score than yours. He could go - he might - I'm worried that you might take my job. I think that might be the only reason he doesn't hire you (ph).

GORDON REEVES: But you're - you want to show them what you're doing about it because employers want to hire your future, not your past.

But you're right. Hit it head-on. Explain it, and -

MACK: And I would just like to say, there's - there's - a lot of individuals are complaining about whether or not this is fair, and I try not to get into that debate as much as what we should try to be doing, and try the preventive measures of making sure that we don't have that 500 credit score.

ROMANS: Fair or not - fair or not, it's happening.

MACK: It's happening. Exactly.

ROMANS: So you need to make sure that you're moving your score up, and we're going to talk more about that, Ryan, with some of your advice on how to make sure your score is going in the right direction and how that follows you around.

I mean, it is the number. It's more than - more than the age on your - on your driver's license, more than your credit card number. Your number is three little letters you have no control over, although you do have some control. We'll talk about that.

Part of that is the - the credit debt purge. I'm going to introduce you to one couple who paid off $88,000 of debt - yes - in just over three years. Hear their story and take our challenge. Could you be debt free in three?

(COMMERCIAL BREAK)

ROMANS: Ouch -- $88,000 in debt to debt free in three years. It sounds like a false promise from a television ad, but not for one New York couple. (BEGIN VIDEOTAPE)

ROMANS (on camera): There are more than a dozen accounts that you had to close off.

DON CARROLL, PAID OFF $88,000 DEBT: Oh, yes.

CAROLE CARROLL, PAID OFF $88,000 DEBT: Oh, yes.

ROMANS (voice-over): Three years ago, Carole and Don Carroll were $88,000 in debt. Today, they're debt free.

D. CARROLL: There wasn't like we went, let's go buy a Maserati. All it takes is one little hiccup to start this horrible, horrible snow ball effect going downhill.

ROMANS: The Carroll spent every penny and then some on credit cards, gas cards and medical bills even though they had health insurance. Then Don lost his job.

ROMANS (on camera): You were literally near a nervous breakdown over these bills.

D. CARROLL: Yes.

C. CARROLL: When you can't sleep, it just - it's just - it gets to you.

D. CARROLL: Yes.

C. CARROLL: And that was - that was the straw that broke the camel's back. I stopped sleeping.

ROMANS (voice-over): They did not want to file for bankruptcy.

C. CARROLL: We made the debt. We should pay for it.

ROMANS: A nonprofit credit counselor put the Carrolls on a five- year payment plan. They finished in just over three.

GAIL CUNNINGHAM, NATIONAL FOUNDATION FOR CREDIT COUNSELING: I think if there is a silver lining to the recession, it is that it has refocused people's attention on their own personal finances. I think they are ready to move back over into the driver's seat.

ROMANS: So how did the Carrolls do it?

D. CARROLL: You just have to get organized. I don't know if you really call it having less. It's just not having it immediately. You learn to live with what you need, not with what you want.

ROMANS (on camera): What is your message for people who might see your story and think, wow, I - I have $40,000, $50,000, $60,000 in credit card debt. I will never get out from under this.

D. CARROLL: Never say never. C. CARROLL: It is totally fixable. But you have to - you have to take the steps to say I need help.

(END VIDEOTAPE)

ROMANS: The Carrolls couldn't do it alone. They used a nonprofit credit counselor. Every penny of their income went to pay their debt. The bottom line is for everyday items the Carrolls now only buy something if they absolutely need it and they have the cash on hand to pay for it.

Personal finance expert, Lynnette Khalfani-Cox, is the author of "Perfect Credit." Lynette, we can both agree that debt is like losing weight. It really is.

LYNNETTE KHALFANI-COX, PERSONAL FINANCE AUTHOR: That's right.

ROMANS: It's easy to say, oh, you can get out of debt by paying more on your debt than using or brining in every month.

SPARKS: It is so (ph).

ROMANS: But it's like the same thing as losing weight. It's easy to say eat less -

KHALFANI-COX: Right.

ROMANS: -- and exercise more, but we still have a problem.

KHALFANI-COX: Right. And so many people have a problem. I mean, when we look at the debt statistics in this country, we know that debt has become more of a problem, not less of a problem. So just saying, oh, you know, pay off those debts or don't charge so much, it just doesn't work like that. Especially now during the holiday shopping season, so many people are going to be racking up even more debt. So this is a very timely topic.

ROMANS: It's one interesting thing, I asked the Carrolls how they paid off the credit card debt, how they prioritized.

KHALFANI-COX: Right.

ROMANS: They paid the highest balance first, which you hear that from personal finance expert. If you got high balance credit card debt, pay it off first and you'll - you'll save more in interest. But it's not -

KHALFANI-COX: Pay the high interest rate you can.

ROMANS: High interest rate, right. But it's not always that simple.

KHALFANI-COX: Right.

ROMANS: Sometimes you need to - to kick a card off of the list -

SPARKS: Right.

ROMANS: -- just for the psychological boost. Tell me about that.

KHALFANI-COX: Absolutely - absolutely right.

This drives me nuts because frankly about 99 percent of all personal finance experts tell consumers pay off your high interest rate debt first. The problem I have with this strategy is that, first of all, it doesn't work for everybody. And secondly, not everybody is actually bothered by having high interest rates.

Really, the problem for some people is that they've got a wallet full of credit cards -

SPARKS: Right.

KHALFANI-COX: -- and so they need to actually attack their area of pain. If you've got too many credit cards, pay off those with the lowest dollar balances first. So if you've got 12 credit cards, say, but you have some cards that only have $200, $400, maybe $800 balances, you knock those cards out first. It will give you that psychological boost -

SPARKS: Yes.

KHALFANI-COX: -- to keep going. The motivation is what keeps you going. It's disheartening when you pay off high interest rate credit card debt and you barely see the -

ROMANS: Right.

KHALFANI-COX: -- balances budge. Those people don't stick with the plan.

ROMANS: Right.

SPARKS: A lot of times, it's a lot of debt accumulation is caused by confusion about your own - you're just shuffling money to pay for stuff. So eliminating certain cards just makes thing simpler and simpler to deal with. You're going much quicker from 12 or 8 cards to four cards, to three cards and you're going OK, I have these big two to cover and I'm good.

KHALFANI-COX: Right.

ROMANS: There are different strategies for different people. Basically, what we're talking about here is you pay off the high interest rate card, you pay off the card with lowest balance, which is something that Lynette thinks is a good idea if you want to - if it's going to help you -

SPARKS: Just go with that (ph).

ROMANS: -- keep going or you pay off the highest balanced credit card.

KHALFANI-COX: And sometimes -

ROMANS: If you do that, you could be losing access to credit -

KHALFANI-COX: Right.

ROMANS: -- which could be a problem if you get yourself stuck and you need to - you need to use that money.

KHALFANI-COX: That's correct. But here's the trade off. If you pay off the cards with highest dollar balance first, chances are you've already taken a hit on your -

ROMANS: Right.

KHALFANI-COX: -- credit score, because having high credit utilization rate, in other words, using up a high percentage of credit that you have available is already hurting your FICO credit score.

So if you start to pay those high dollar balances down, is it possible that some creditors might, you know, start chasing down your credit line as they call it? Yes, it is possible. They might reduce your credit line. But frankly, we're two and a half years into the credit crunch. If they were going to lower your credit limit, they probably would have already done it by now.

ROMANS: So look at it as a perfect credit. Thank you so much.

KHALFANI-COX: Thank you.

ROMANS: Nice to talk to you as always.

What is the better investment? Adding a new wood deck, a new master bathroom, a home office renovation or a new front door? The answer plus whether home prices will rise next year. That's next.

(COMMERCIAL BREAK)

ROMANS: Every hour last year, 322 people lost their homes. This year, more than six million people have simply stopped paying their mortgage. For those of you still in your home, making payments, the foreclosure crisis has turned the American dream into a nightmare, because your property value has been going down, pretty much straight down since 2007.

Mark Zandi is chief economist for Moody's Economy.com. Mark, have home prices stopped falling?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: No. They're still falling. They're down just over 30 percent from their peak which was about five years ago. And then many parts of the country, they're still declining.

ROMANS: They're going to keep declining or are there places where we are going to see the pain, the nightmare at least stop for now. Because a lot of - most people out there are making their mortgage payments, most people want to see the foreclosure crisis over so they can start moving again for new jobs, for - for whatever reason in their community. If feels like we've just been frozen in time here.

ZANDI: Yes. We have I think another six to 12 months of price declines in many parts of the country, because we still have a lot of foreclosed property that has to go through the process, through a distressed sale. And when properties are sold in foreclosure or short sale, they sold at a discount which keeps prices down. So I think it's going to be another six to 12 months before we see the true bottom in national house prices.

Now, some parts of the country are going to do better, but on average across the country more price declines.

ROMANS: We've seen, you know, parts of the Pacific Northwest starting to stabilize. There are actually prices rising in some parts of California where, you know, where Hal lives.

SPARKS: Right.

ROMANS: Not Hal's house in particular. Oh, maybe Hal's house (INAUDIBLE), I'm not sure.

SPARKS: Yes, actually my house in particular. Thank you very much. Smart decision -

ROMANS: Good. Good.

SPARKS: -- to be made. But a lot of this has to do with, you know, crack development during a rush.

ROMANS: Right.

SPARKS: We were - we were talking during the break about how right now we're living on Twinkies essentially, you know, this extra sugar kind of idea. The mortgage, you know, where your prices are really high -

ROMANS: Right.

SPARKS: -- based on nothing.

ROMANS: Right.

SPARKS: And then you have to go to eating fruit and that's sensible, healthy and tasty. But after that kind of a diet, it just seems ridiculous. House prices are actually normal now. They're actually going back to their sort of - they're correcting to it.

ROMANS: If they continue to fall for six to nine months as might be the case, frankly then maybe they're not quite normal just yet.

Let me ask you another question that a lot of homeowners, people who are paying their bills on time, Mark, have been very concerned about. When you start talking about deficit reduction and then moves in Washington to balance our books as a nation, you hear people talk about pulling back on that mortgage tax credit. Do you think that's likely?

ZANDI: I think eventually, yes. Not next year. Not the year after. Not even the year after that. But if you told me 10 years from now that the mortgage interest reduction has been scaled back, I wouldn't be surprised.

Now, right now you can get a deduction on a second home. That will probably go away. You can get a deduction on home equity line of credit. That will probably go away. And there's no limit. So there will be some limit on the size of mortgages that can qualify for mortgage interest reduction. So we'll still have one, they'll be just smaller.

ROMANS: I think what they're you talking about right now what's on the table frankly in Washington is where very rich people with mortgages that cost -

ZANDI: Yes.

ROMANS: -- more than $500,000, also first and second home and you're right for home equity line of credit, but, of course, no decisions have been made yet on balancing America's books and where housing will fit into that.

Ryan Mack, 30-year fixed rate loans are cheaper than they have ever been. Those interest rates are so low. Fantastic.

MACK: Right.

ROMANS: If you can get a loan and you're not afraid of home prices, they're going to continue to fall for six to 12 months if Mark Zandi is right. What does a smart buyer need right now, Ryan?

MACK: A smart buyer needs patience more than anything else. We need to understand that. More than market conditions, your own personal financial situation should determine exactly if you're ready to buy a home.

I mean, too many individuals, they looked at the market, they figured out the people next door, they bought a home, the next door, they bought a home. Well, you know, I need to buy a home because they bought a home. Well, that's not the right time to buy a home.

You have to look at your FICO scores at 750 or higher so you can get the best rates. Have you acted as if you've been buying a home (INAUDIBLE) A lot of individuals, if you're renting, you're paying $800 a month, that mortgage is $1,200 a month. Start putting $400 a month into a savings account so you're acting as if you're paying for that mortgage.

But don't forget you have more than just the mortgage to pay for. You've got gas. You've got maintenance. You've got property taxes. You've got a lot of upkeep around the property. Start looking around and seeing what your landlord is doing around their household to figure out exactly what sort of additional expenses, and start acting as if you're paying those expenses yourself and really getting yourself in that next -- I mean, take 9 or 12 months of time. If it takes you a year in order to get that 20 percent down, that's fine. Take that year. Make sure you can get that 20 percent down. Avoid the PMI (ph) payments. And do it responsibly.

ROMANS: Before the break, we gave a little quiz, Mark Zandi. We gave a quiz about what is the best return on your dollar. Is it adding a home office? Is it adding a wood deck? Is it a bathroom remodel? Or is it a front door? And the answer is a front door. Anything with curb appeal is the thing that you get most of your money out right now.

And in fact, the return on renovating has been declining for the past five years, along -- right along, Mark, with the declining housing market. Only 60 percent of your remodeling costs in 2010 would be recouped by home owners. The message here is if you're living in your house and you're spending money to fix up your house, you got to live it in a long time. You got to love your house and love what you're doing, right, Mark, because the housing market is not healthy quite yet.

ZANDI: Well, I think even in the best of times, you -- it would be unusual for you to recoup all of the dollars you would put into your home.

ROMANS: That's right.

ZANDI: Right? So now it wouldn't be surprising, when house prices are down and falling, that you'd recoup even less. So if you're going to make an investment in your home, I don't think I would do it based on investment returns, I'd do it because it'll make living easier.

SPARKS: Livability, yes.

ROMANS: If you're trying to sell that house and you need to fix it up, keep in good mind the Viking stove is probably not going to get the return that the steel (ph) front door will.

(LAUGHTER)

SPARKS: And that's actually not going to happen any time soon. Don't try to sell your house because prices are actually, over the next whatever, six months are actually going to go down kind of significantly --

ROMANS: All right --

SPARKS: -- because it's -- yes. I think.

ROMANS: Says Hal Sparks, comedian and economist for the housing market.

(CROSSTALK)

SPARKS: Who has a house! With curb appeal!

(LAUGHTER)

ROMANS: All right, Mark Zandi, thank you so much.

ZANDI: Thank you.

ROMANS: Moodyseconomy.com (ph). Gentlemen, stick around because forget the fight over health care reform. How to get a job -- how to get a job today in the fastest growing part of the American economy.

(COMMERCIAL BREAK)

ROMANS: Health care is the fastest growing part of the economy. It's also the fastest growing segment of the jobs market. Even as the labor markets were melting down for almost two years, health care jobs were added month after month. But not all health care jobs are created equal.

(BEGIN VIDEOTAPE)

TANNEKE BURNS, STUDENT, BUNKER HILL COMMUNITY COLLEGE: Are you OK?

ROMANS (voice-over): Tanneke Burns enjoys her job --

BURNS: Relax your hand for me.

ROMANS: -- drawing blood for a Boston-area blood bank. But over the past couple of years, she's watched her hours shrink. Seven or eight-hour blood drives now last just five.

BURNS: I've always been told that as long as you have a job in health care, you're pretty much set.

ROMANS: So Tanneke, a mother of five, is pursuing a more secure career in nursing. She goes to class at night and works during the day.

BURNS: I don't consider myself to be a risk taker, but I guess on some level, this is.

ROMANS: A risk that will likely pay off. The population is aging, and an estimated 50 million Americans enter the health care system when reform kicks in in 2014.

ANDREW RUBIN, NYU MEDICAL CENTER, HOST, SIRIUS HEALTHCARE CONNECT: They're going to need hospitals and doctors and nurses to take care of them. Demand for health care services equals demand for good jobs.

ROMANS (on camera): Where are the jobs in health care? It's not just nursing. It's all up and down the spectrum now.

RUBIN: It's up and down the spectrum. It's a big field. Any health care profession is a big field, and you have all levels of people within there. And the jobs, quite frankly, are going to be found in all those levels. ROMANS (voice-over): There's already a shortage of health care IT professionals, medical coders and medical assistants. The government estimates hundreds of thousands of home health aides and personal aides will be needed over the next decade. Often those jobs come with on-the-job training but low pay. Median wages for registered nurses, however, is $66,530.

Tanneke burns is hopeful. There will be student loans to pay off, but she's confident she's made the right choice.

BURNS: I always told my children, You need to go to school and get an education, but I felt like if I haven't gone to college, how can I expect them to do it? How can I expect them to do something I haven't done myself?

(END VIDEOTAPE)

ROMANS: So here's where the health care jobs are. The Bureau of Labor Statistics estimates there'll be more than a half a million jobs created in nursing by the year 2018. Of course, going back to school isn't for everyone, like it was for Tanneke Burns. But the BLS also projects an explosion of new jobs for home health aides, personal care aids. Those have no medical experience or training really necessary, or minimal training.

Andrew Rubin is VP of clinical affairs at NYU Langone Medical center and the host of Sirius XM Doctor (ph) Radio. Andrew, it's critical, I say, to get a so-called ladder job if you're going to go into it. You know, go into nursing, do the two years of training to be an RN, I think. Then you can move above with more training, more education, more degrees to get even higher-paid jobs. Some of these jobs pay well into the hundreds of thousands of dollars. If you're on the lower end, though, sometimes there's not a lot of room for movement.

RUBIN: That's true. But as -- you know, as you say, not all jobs are created equal. So you have to kind of decide what your career ambitions are. You know, a lot of people don't want to --

ROMANS: And your skills.

RUBIN: And your skills. And they don't want to interact with patients. But that doesn't mean there's not a lot of jobs out there.

ROMANS: Like what?

RUBIN: Well, there's, you know, med (ph) billing, Insurance billing.

(LAUGHTER)

RUBIN: There are a lot of jobs in --

ROMANS: Calling me about the insurance billing --

(CROSSTALK) ROMANS: Calling me again about the insurance billing.

RUBIN: Medical coders, administrators like myself, you know, my day job. There are lots of jobs. And depending on what you want to do, you just have to target your career (INAUDIBLE)

ROMANS: I think most people would like to grow old and be healthy and live in a nursing home. We know there are a lot of jobs --

SPARKS: Especially the last part.

ROMANS: You know, as we're -- right. As we're --

SPARKS: Sweet.

(LAUGHTER)

ROMANS: You know, in fact, on his weekends, he goes and he checks in just for fun.

SPARKS: Totally.

(CROSSTALK)

SPARKS: Mom's a nurse.

ROMANS: And the comedy. He gets most of his comedy from nursing homes.

SPARKS: My mom's a nurse, and now for years has worked in home health administrative services for the state of Kentucky, and -- and she did -- she had, quote, unquote, a "ladder job"

ROMANS: Right.

SPARKS: -- in that area. But it took a very long time. She worked at a private doctor's office for years, and then there was a transition of having a hard time finding --

ROMANS: Right.

SPARKS: -- a nursing job for a while. So it's a secure job because it can't be outsourced.

ROMANS: Right. Although we are seeing in some urban areas -- and you and I have talked about this before -- you're seeing hospitals close, so -- I get e-mails from people say, You keep talking about nursing and health care jobs, but they're closing the health care in our neighborhood. Overall, you're going to see an explosion of health care jobs. It might just not be where the hospital has closed.

RUBIN: Mobility -- and mobility is key. So what happens in New York City may not be the case in Kentucky.

SPARKS: Exactly. ROMANS: I want to talk about it from the point of view of a patient. We've talked about health care reform, or health care and the explosion of health care from the point of view of getting a job. But as a patient, look at the cost, health care costs. I don't think that most people would understand that a nice private room is going to cost you today $79,900 for a year. Go down this list here. You can see how expensive it is -- assisted living $37,572. Andrew, I don't think we're saving enough. I don't think we're saving enough because these numbers are going up several percentage points every single year.

RUBIN: You know, we talk about this with any segment that we do. Plan ahead. You have to prepare for the future, whether it's, you know, choosing your insurance for next year or planning what happens when you turn 65, 75, 85. Start saving today. And there are a lot of ways you can actually do that.

ROMANS: Talk to me a little bit about health care reform. In health care reform, there's something that you keep talking to me is so exciting. It's called the Class Act (ph). And I have a lot about this in my book, but you can also -- you can Google this, as well. It was a Ted Kennedy dream provision that made it into health care reform.

RUBIN: So essentially -- and I get the -- you know, the letters wrong. But it's essentially allows employees to enroll. And you have to actually voluntarily -- you're automatically enrolled, and then you get opted out. But you essentially pay into this program for five years. And then after five years, if you need money for non-medical expenses --

ROMANS: Even long-term care.

RUBIN: -- long-term care or any medical -- any expenses associated with your health care, should you -- that are not, you know, medically oriented, you can tap into this fund up to $50 a day. And it's a great savings plan. It's controversial because it's another entitlement program.

ROMANS: Right.

RUBIN: It's intended to be self-funded. We'll see how it actually plays out because the rules haven't been written yet.

SPARKS: The issue with this is that it's going to become more and more necessary because the Baby Boomer generation's going to be the first one to really hang onto their youth as long as possible, and then they're going to hang onto their old age as long as possible. We're going to -- it's going to -- people are entering in -- what are there, 28 months on an average person is in --

ROMANS: Yes.

SPARKS: -- is in a --

ROMANS: Twenty-eight. Well, when you check -- SPARKS: -- assisted living --

ROMANS: -- in some places, assisted living or to the nursing home, I mean, you're talking most people are there a couple years.

SPARKS: My grandmother has been there for -- in one for, I think, seven years now. She's not going anywhere anytime soon, bless her sweet heart. So --

ROMANS: And the money's coming out of her pocket.

SPARKS: It will be a --

ROMANS: Every second!

SPARKS: Well, or my mom and my uncle and my aunt.

ROMANS: Right. Right.

SPARKS: And -- and it's -- and she's going to be there a full total maybe 11 years. And she's an outlier in her age group. In the Baby Boomer generation, it's not going to be.

ROMANS: Right.

SPARKS: And you're going to find --

RUBIN: Absolutely right.

SPARKS: -- much, much bigger expense.

ROMANS: So the job opportunities taking care of this aging population, but it also --

RUBIN: Absolutely.

ROMANS: We all need to be thinking about how we're going to take care of ourselves because we are (INAUDIBLE)

RUBIN: And one important point to make because we talk about health savings accounts --

ROMANS: Yes. Yes.

RUBIN: -- all the time. These are, you know, tax-free accounts that you can put money into for your health care long term.

ROMANS: Right.

RUBIN: You can use them for long-term care expenses.

ROMANS: Oh, good point.

RUBIN: So if you put money in --

(CROSSTALK) RUBIN: -- roll over, and you will be able to use it.

ROMANS: All right. Andrew Rubin, thank you so much.

There's only so much money to go around. So do you put off your retirement savings to put your kids through college? The answer will surprise you next.

(COMMERCIAL BREAK)

ROMANS: It's never been more important to get the right education in the right field. For the class of 2010, smart students in the so-called STEM fields have the richest prospects. STEM -- that stands for science, technology, engineering and math -- and they dominate the list of best paid majors, best paid majors including petroleum engineering, chemical engineering, mining and mineral engineering, computer science, computer engineering. You get the picture.

Mark Kantrowitz is publisher of Fastweb.com and Finaid.org. Mark, you say students, if they're -- if they're -- if they're taking on loans to pay for college, they really need to choose carefully here because you're going to end up with an awful lot of debt that you're going to have to pay off.

MARK KANTROWITZ, PUBLISHER, FASTWEB.COM: That's right. And your income after graduation dictates how much debt you can take on to pay for that education. As a good rule of thumb, you should borrow no more than your expected starting salary after you graduate.

ROMANS: So if you're a petroleum engineering major, you can take on $80,000 in debt, if you need to. If you're a music major, you should not be graduating with $80,000 in debt because you are going to really be hurting to pay that off.

KANTROWITZ: That's right. And if you're going to pursue your dreams in art, you should try to minimize your debt so that you don't graduate with too much debt, more debt than you can afford to repay.

ROMANS: Ryan, this is a softball for you. If you're a parent, do you save first for your kids' college or do you save for your retirement? And I already know what you're going to say.

MACK: Well, obviously, you know, there's a scholarship for individuals to go to school, but there's no scholarship for retirement. So we have to understand that we have less amount of time once we get older, in our golden years, so we shouldn't (ph) spend that time trying to invest in your child's school. It's great to invest in your child's school education -- don't get me wrong. However, your retirement, you got to put your gas mask on yourself before you invest in -- put it on the baby. So this is what we have to understand that we have to do.

And there's a lot of great ways to do it. The 529 plans are great ways to do it.

ROMANS: Yes.

MACK: We put money -- this is tax-free and tax-free (ph) on when you put your money in, you get your great tax deduction, and it's tax free you put (ph) it out as long as it put towards education. A lot of mistakes that individuals make. A lot of times, individuals will try to give gifts to their children. And sometimes that money is counted more if the child owns (ph) it in their possession against their financial aid packages than if you hold it for yourself. So -- and grandparents, great time to give gifts away. You can -- medical bills and college expenses, you can give these things and not under your gift allotment to make sure (INAUDIBLE)

ROMANS: This is why Ryan does a brisk business because everyone's trying to figure out how to do it and do the best thing for your family. And I think, Ryan, the bottom line is you'd like to be able to do both. You'd like to be investing for your retirement and your kids' college education. But for a lot of families, that simply isn't possible.

You know, Mark, you have three rules of thumb that I quoted in my book, three things that people, I think, can take away right now and remember if they have a kid or a grandkid or they're in college. Always borrow federal first. Never borrow more money than you expect to earn in your first year working. And live like a monk in college so you don't have to when you're paying it off. Your best advice! I mean, I think those days of kids getting student loans and going on spring break -- they must be over, right? I mean, this is a whole new world, Mark!

SPARKS: What kind of monk, though? Are you tagging (ph) your own wine?

(LAUGHTER)

KANTROWITZ: Well, and the reality is, every dollar you spend using student loan money is going to cost you $2 by the time you pay it back.

ROMANS: Wait, say that again. I want people to really remember that. So everyone out there with a kid in college, listen up. Say this one more time.

KANTROWITZ: Every dollar you spend using student loan money is going to cost you $2 by the time you pay it back.

ROMANS: All right, Mark Kantrowitz, Finweb.org (SIC), thank you so much for joining us. You two are going to stick around so that we can deal with this next segment. I can't wait for both of your takes on this.

OK, opposites attract, but when they have opposite money habits, it can be hazardous to your relationship. Find out which money trait makes you more likely to stay in love. That's next.

But first, succeeding as a small business with a mix of innovative products and successful viral marketing. (BEGIN VIDEOTAPE)

TERRENCE KELLEMAN, FOUNDER, DYNOMIGHTY DESIGN: Hi. Welcome to Dynomighty. Dynomighty's actually my company. I started it eight years ago. It was -- the whole concept for Dynomighty evolved out of a product, essentially, that I had found by rummaging through the garbage, of all things. But what I was doing was working at the Museum of Modern Art at the time, and I stumbled upon -- literally stumbled upon -- the idea for the idea for this magnetic bracelet. So it took me a year to invent this product, and then I started selling it at the Museum of Modern Art. And eight years later, here we are.

Based on the success of the jewelry, I did other organizers in magnets. This is actually called the Deskdot (ph) desk organizer. It's all magnetic beads that hold your business cards together, or you can use it for your pictures or whatever.

And then we had our YouTube success, which really changed and redefined the business entirely. And I did all these tricks and put them on a video on YouTube that lasted about a minute. And within a month, we were a featured video on YouTube, and we had just an enormous response. And within the space of three months, we had sold $130,000 worth of jewelry. Now we have almost 140 videos on line and YouTube is our number one referrer, beyond all other referrers.

To have a dream, you know, from the point in which I was working on my day job 9:00 to 5:00, to have an idea for a product and to bring that to fruition, and now, eight years later, have a company that our biggest problem is our rapid success -- I mean, that's the thing I'm the most proud of.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: Thrifty couples are happiest, and too much debt can ruin a marriage. Consumer debt is an equal opportunity marriage destroyer. It doesn't matter where you live or how much money you make, too much debt strains a marriage.

Jeffrey Dew is an assistant professor of family, consumer and human development at Utah State University. He researches money and couples. And Jeff, I'm quoting you here. Your -- your study, your research has shown that consumer debt is really, really dangerous to your love life.

JEFFREY DEW, ASST. PROFESSOR, UTAH STATE UNIVERSITY: Yes, consumer debt is definitely a problem for married couples and also cohabiting couples.

ROMANS: You know, according to the Marriage Project at the University of Virginia, couples who disagree about money once a week -- 30 percent more likely to divorce than couples who fight less often. So think about it, everybody. How often do you fight with your spouse about money? Is it -- is it more than once a week? Because your chances of going down the wrong path are right up there. What makes thriftier couples happier, Jeff, than everybody else?

DEW: Well, I think you really said it at the beginning there. Thrifty couples are simply not accumulating consumer debt. And when we say consumer debt, we're talking about credit card debt, or you know, maybe the installment loan on your furniture from the furniture store. But the studies that I've conducted show that couples -- the more consumer debt couples have, the less happy they are in their relationships and the more -- the more they fight over money.

ROMANS: And it doesn't matter how much money they make, right? It doesn't matter -- I mean, you can be living right on the poverty line, but if you're not racking up debt, you're in a happier situation than couples who may be have more money, maybe are middle class or solidly upper middle class, but they've been living beyond their means.

DEW: That's right. Those couples who live within their means tend to be happier and fight less than those who are -- who are not. And it really doesn't matter how big or small your means are. I think our expenses really rise with our income, and so -- so we just have to manage those and make sure that we are not spending more than we're making.

ROMANS: Ryan, you probably -- you sit down with a couple and you're trying to give them, like, a diagnosis --

(CROSSTALK)

ROMANS: OK, why are you spending so much? And you got to let go of the pocketbook a little bit! Geez, you know?

MACK: I've seen a lot of individuals in front of me go at it tooth and nail over differences --

ROMANS: Over money.

MACK: -- with money. Over money. Well, essentially because it's the surprises. It's that, I didn't know that you had that additional bank account. I didn't know that you felt this way.

(CROSSTALK)

SPARKS: I didn't you had a secret apartment across town with someone else living in it. I didn't know that --

(LAUGHTER)

SPARKS: -- that car parked on the driveway was a private investigator. I didn't realize we were both paying out of our joint account for the private investigator I've had following you!

(LAUGHTER)

MACK: And this -- and this -- it's no surprise that always end up being the biggest -- and so I always say, Listen, give yourselves two hours a month. One hour every two weeks, get up before the kids and just talk about your individual goals and your couple goals. How are you doing with the individual goals? Can I support you in any way? How are we doing with our couple goals as a household? Can we support each other? What can we do to make (INAUDIBLE) move ourselves forward? And then go through an estate planning. But I think getting your estate planned is actually a good counseling tip for individuals to --

ROMANS: Really.

MACK: -- for couples to make sure that --

ROMANS: You have to decide priorities and figure out what's coming in the door. Even a budget can be a good way of figuring out --

MACK: Yes.

ROMANS: -- you know, what your priorities are.

SPARKS: It's always hard, though, when you take it to your mortality. That's the issue. It's, like, don't -- estate planning or even, you know, preparing for end of life care, it -- like, people run from that more than anything else. You got to --

ROMANS: It's true.

SPARKS: -- make it fun. That's my advice.

(LAUGHTER)

ROMANS: Right. Hal Sparks, comedian Hal Sparks, who can make money and the lack of it very funny, (INAUDIBLE) Ryan Mack from Optimum Capital Management, Jeff Dew, marriage researcher who gives us lots of food for thought about paying down your debt, and you will live happily ever after. Thanks to all of you.

Hal's stand-up DVD, "Charmageddon," is now available on Amazon.com. Makes a delightful gift for the holidays. He also wrote the very funny foreword to my new book, "Smart Is the New Rich," the book that's the basis for this special edition of YOUR $$$$$.

Join me on Facebook and Twitter -- oh, there you go! Mutual plugging! Join me on Facebook and Twitter for a running conversation about the book and about all the money matters that we talk about here with Ali on YOUR $$$$$ every Saturday, 1:00 PM Eastern, Sundays at 3:00.

Make sure you join me on Saturday mornings 9:30 Eastern for "YOUR BOTTOM LINE."

Have a great weekend, everybody.