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YOUR BOTTOM LINE
Reset Your Approach To Finances, Food, Family This Holiday Season
Aired December 24, 2011 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR; Good morning everyone. It's Christmas Eve. This is a very special holiday edition of YOUR BOTTOM LINE.
From drunk uncles to taboo topics how do you keep the family peace this holiday season? Plus, the holidays are a good time to take stock of everything in your life from finances to health to family. How to hit the reset button and set yourself up for peace, prosperity, and good health in 2012.
Let's begin with money. 2012 can be the year to take control of your finances again and end the year in better shape than you started. That is our goal, folks. Stacy Francis is the CEO of Francis Financial and John Ulzheimer is president of Consumer Education at SmartCredit.com.
Welcome to the program. Good morning.
STACEY FRANCIS, CEO, FRANCIS FINANCIAL: Good morning.
JOHN ULZHEIMER, PRESIDENT, SMARTCREDIT.COM: Good to be here.
ROMANS: John, we don't want to ad more credit card debt. We don't want to end this year and go into 2012 with more credit card debt on top of the debt from the year before. How do you get a grip on this situation? Your credit situation is critical here?
ULZHEIMER: All that stuff you're going to open under the tree tomorrow morning, a lot of that stuff was paid for using store credit cards, retail store credit cards. The average interest rate on those cards is a whopping 24.9 percent. That is absolutely absurd. So as you enter 2012 the first thing you should do when you get those bills is to endeavor to attack the balance as quickly as possible because every single month you revolve one of those balances you can take that money and basically throw it away. It is not working for you. It becomes working against you at that point. That should be step number one in the new year.
ROMANS: It is interesting, because we notice that the returns after the Black Friday weekend were the highest they've been in years. Because I feel like people realized wait a minute, I won't be able to pay this off at the end of the month, or even in three months, which maybe is a good sign.
Let me ask you about credit card terms changing, too. You say be careful they might change in the new year. How do we track that? ULZHEIMER: Absolutely. You need to become familiar with two terms -- fixed interest rate, variable interest rate as a card holder. It's very likely that the interest rate on your credit cards have been changed without you knowing about it from a fixed rate to a variable rate.
Why is this a big deal? Variable rate credit cards are pegged to the prime rate and many experts believe that interest rates have to go up in 2012, which means this. The interest rate on those credit cards are also going to go up. And the Credit Card Act requires the credit card issuer to notify you of any increase in the interest rate except for variable rate cards.
So it is very likely in the new year when interest rates start going up that if you start swiping and carrying balances it is going to be more expensive to do so, than even you think because your interest rate has been changed without you knowing about it.
ROMANS: Stacey, I want to talk more about credit cards and high credit card debts. Usually it means you don't have a sufficient emergency fund because if you have something that breaks in the car you're putting it on the credit card. You have something you want to pay for right away you put it on the credit card. It is time to build up the reserve. This needs to be your goal. Your cash reserves, your savings, in 2012.
FRANCIS: Exactly. We're setting it as a New Year's resolution. It is the best financial resolution you can have is beef up the emergency fund.
ROMANS: How much do you need?
FRANCIS: You need at least three to six months of your living expenses. For a lot of individuals if you are the primary wage earner look more so six to 12 months of your living expenses. Put it away. That is why so many people find themselves in credit card debt. That is why so many people find themselves in bad financial situations.
ROMANS: You are a financial planner. You know if you have all this credit card debt you are playing defense. You are not playing offense with your money. You're not able to grow and move forward with retirement planning and other things because you're sitting on this near-term debt that is completely difficult. Can people get out of debt? Can they really make the decision to get out of debt and try to do that in 2012?
FRANCIS: Yes, they can. But it's not necessarily going to be an easy thing. Just like losing weight. It doesn't happen overnight.
FRANCIS: You need to really look at your budget and figure out what are the things you can put out of their budget. Also, you need to do a systematic savings plan every single paycheck. You've got a certain amount that goes to pay down that debt that goes also toward that emergency fund. ROMANS: All right. John, I want to ask you what everyone should focused on when it comes to retirement. In the near term is the credit card debt and then long-term we have retirement planning. And it is very important at the end of the year to be taking a look at whether-especially your age-how much you are putting away, whether it is enough, and whether you can put more away.
ULZHEIMER: I would even go this far and would suggest if you have any credit card debt at all, that you really should put the retirement investments on the side burner for now. Here's why. The average amount of interest that you're paying on credit cards generally each credit card is 13 percent to 15 percent depending on who you believe. The average interest rate on retail store card is the mid 20s. I guarantee you're going to be paying those interest rates on balances that you roll over.
But what you cannot tell me, nobody can guarantee a mutual fund, a stock, anything at all that is going to have those types of returns over any period of time. So it is absolutely step number one get out of the credit card debt.
Step number two, look, it is an election year. We have no idea what is going to happen. Markets are up and down 100 points each direction every day. This stuff drives normal investors like me crazy. I would suggest doing what a very smart person once told me to do. Stop staring at it. If it drives you that nuts, then just stay out of it for a while.
ROMANS: Stacey, you have another very good point to end the year and reset your finances. You say keep your resume updated. This is an investment in yourself at the end of the year. Keep it updated at all times. Why?
FRANCIS: Just as we said with John if the markets are driving you crazy. The best investment you can make, actually, right now is investment in yourself. Put your resume together. See where there might be some gaps. Make sure you fill in those gaps whether it's going back to school for education, while working, or maybe asking for more responsibility, taking on a new project where you're at. The biggest control piece you have is investing in yourself. No one can take that away. It's only up market investing.
ROMANS: John, you mentioned store cards a couple times. Very quickly when you're going to return your gifts-maybe not, when you're going to shop the big sales at the end of the year and the store offers you 10 percent off, and this in store credit card, what do you say?
ULZHEIMER: Just say no. Absolutely not. This is an unsophisticated way of applying for credit. You do not want to load up your credit reports with retail inquiries, the absolute worst kind. You don't want to load up your credit report with nuisance balances across all those little credit cards. Because here is what you don't know, Christine, you don't know if you are going to need that strong, powerful credit score in the next 12 months to refinance a home, to buy a new car, to finance some major purchase. You don't know what you don't know. What we can tell you is the lower the score the more expensive it's going to be to carry that debt. Leave the discounts on the shelf. Pay cash. Pay with a credit card. Pay the full amount, and pay it off as quickly as you can.
ROMANS: They aren't offering you that card because they are nice. They are offering you that card because they know they'll make money off you.
ULZHEIMER: Of course.
ROMANS: Remember that, everyone. John Ulzheimer, Stacey Francis, very nice to see you. Happy Christmas morning everyone -- Christmas Eve morning. Have a great day tomorrow.
Next, hitting the reset button on your health. Food costs money. Eating healthy costs even more money, right? Doesn't have to; some surprising information about the cost of your food, next on YOUR BOTTOM LINE.
ROMANS: Here is an expense no one can avoid, food. The average American household spent more than $3600 last year on groceries about 8 percent of the typical household budget. We can help you get control over the budget and make sure the money you spend on your food helps your wallet and waistline as well. Peter Moore is the editor of "Men's Health" magazine and contributor to the "Eat This, Not That" series. And the "All New Super Market Survival Guide, An Essential Guidebook for Navigating the American Supermarket".
Welcome to the program and happy holidays.
PETER MOORE, EDITOR, AUTHOR, "MEN'S HEALTH": Thank you.
ROMANS: First I want to talk about how you say invest in nutrients. Why do you want to invest in nutrients not necessarily calories?
MOORE We tend to think when we are buying something at the store or processed food that we'll get a good deal. The fact is the cheapest ingredients are the ones you stuff in the bags whereas if you buy the whole food the sweet potato, rather than the fries you're getting a ton more nutrients in those sweet potatoes than you will the bag product. And it is going to be better for you and probably going to taste better, too.
ROMANS: This is the better value, not this.
MOORE: Exactly. What you've got is five times more fiber in there and many more vitamins as well.
ROMANS: Let's talk about drinking your calories. It is easy to indulge in spirits as they say. You say go dark. Fill your cart with dark. Explain.
MOORE: Well, as President Obama taught us in Ireland last year go for the dark beer. You are going to get polyphenols, which is cancer fighting, and also iron and dark beers tend to be low in calories. Guinness is a very low-calorie beer and maybe that is why Obama is so thin.
ROMANS: You look at the dark when you're looking at cantaloupe versus honeydew melon, too. There are some differences here. Explain that to me.
MOORE: Exactly. Again, it's darker because it has more nutrients in it, the cantaloupe is. So we are looking at twice as much vitamin c in there.
MOORE: And also up to 70 times more vitamin A in cantaloupe than honeydew.
ROMANS: So the darker food is usually better.
MOORE: Exactly. Shop dark.
ROMANS: It is easy to assume the fancy, natural food store you get a good value for your money. It says natural on there. You know you're paying up, maybe for those products. So you should feel happy in that purchase, or you should be skeptical?
MOORE: Well, when you go into the healthy food store what you're giving yourself then is permission to eat anything and everything in the store. That is part of the reason why they do the sampling in there. It leads you toward more self-indulgence when you're pulling those little morsels of cheese off the plate. So you tend to buy more high-calorie food when you do that.
ROMANS: This is a holiday time that is all built on over consumption. We talk about how we want to reset our lives for 2012. We eat too much, we drink too much, we spend too much, then we worry about the debt, the weight, and the fact we got into an argument with our uncle.
MOORE: Absolutely. I say eat as much as you want on the actual holiday, but let's watch out for the other 364 days.
ROMANS: I know. And drink a lot of water. I think you should drink a lot of water before you go to a party, between your beers, so you can maybe drink more if you have to. All right. Peter Moore, "Men's Health", so nice to see you. Thanks for coming in and happy holidays to you.
MOORE: Great. Thanks.
ROMANS: The holidays may be a great time to reconnect with family but also primetime for family feuds. Not at my house. Up next your go-to guide for avoiding those uncomfortable situations and keep the peace this holiday season.
(COMMERCIAL BREAK) ROMANS: Well the song says it is the "most wonderful time of the year" but is it? Not for everyone according to "Consumer Reports." So, 16 percent or 35 million Americans dread having to be nice during the holidays. And 24 percent say they dread seeing their relatives. And 15 percent do not look forward to attending holiday parties.
Let's bring in Pete Dominick host of Sirius XM's "Stand Up" and clinical psychologist Jeff Gardere; two friends of the show.
Pete, holidays are a great time to spend with your family-or not. Some people dread it-why do people dread being with their wonderful family?
PETE DOMINICK, HOST, SIRIUS XM'S STAND UP: There are people watching right now with members of their family that they wish they weren't with.
Because, you know, blood is thicker than water. A lot of us don't have in common, for example, we have the evangelical wing of my family and they thank the Lord for every single thing that happens the entire meal and day. It's annoying to me. But I try not to say anything. And I think, to be fair, I might be the family member everybody is trying to avoid as well.
ROMANS: I think maybe they're thinking, they are praying-they only see you once a year.
DOMINICK: We have a lot of different interests, we come from different walks of life, maybe different incomes, we have different problems, politics.
ROMANS: Shall we stay away from certain things? It used to be you have to stay from politics, religion, and maybe very close personal issues in the family. But then my family, what else are you going to talk about? This is why you get together to talk about the big stuff.
JEFF GARDERE, CLINICAL PSYCHOLOGIST: You say blood is thicker than water and with some of these families there will be blood. But I think it really is about positive mental attitude as always. And, yes, we do discuss many of these political issues, family issues.
ROMANS: It is a political year, by the way. There could be really interesting politics this year.
GARDERE: I think it makes for stimulating conversation as long as you set the ground rules, as long as you --
ROMANS: What kind of ground rules?
GARDERE: First of all, that you listen to other members of your family.
GARDERE: That you can express your interests, your opinions but you are not going to step - ROMANS: What if they are wrong and you know it?
GARDERE: You're not going to step on people.
DOMINICK: No, no. That is the thing. I have to ask you about that.
DOMINICK: It has so much to do with ego. When we say politics and religion it is actually as you pull in the driveway your family members, you know what issues, you know your family well enough. You know which issues --
ROMANS: But it's like "Groundhog Day." Because every year it is the same. There is always the same kind of touch points and you know you'll go there, and then you go there.
DOMINICK: But as you said, and I have to ask the Doc. How much this of has to do with ego? If I spend the time with my family today do I have to be right today, with the family?
GARDERE: Pete, I agree with you. We should see these conversations, again, reframe it, cognitively. You know I have to give the psychology speak, right?
GARDERE: We have one comedian, one psychologist.
We have to reframe it cognitively about learning from other people. That's why you put the ego to the side and say I'll give my opinion. I want to share something but as part of that quid pro quo, I will also learn from this conversation. And therefore you don't step on one another. You don't disrespect one another.
ROMANS: Can you have taboo subjects? Can grandma say we are not talking about the president, period? Or we are not talking about Gingrich versus Romney at my dinner table.
DOMINICK: I think Grandma says, yes. Yes. Grandma or Grandpa, but Mom and Dad might not be able to make those same rules.
GARDERE: I would say even if Grandma says something like that, we would ask Grandma why and then therefore begin the conversation.
ROMANS: Because she doesn't want mud wrestling in the front yard.
GARDERE: Well, but I think you can teach an old grandma new tricks. And she may have had bad experiences with the family before, but you can make it a positive experience. I believe in stimulating conversation. But there are some things you should stay away from. For example someone talking about, you know, some major, major incident. I don't want to get into specifics. That happened in the family where people just refused to speak to one another. DOMINICK: Reliving terrible things.
GARDERE: Reliving trauma. We are not going to have answers at the dinner table on that table on that day. So we should shelve that for the time.
ROMANS: Let me ask both of you, how do you defuse a situation once it happens?
GARDERE: I agree.
ROMANS: You have to-
DOMINICK: Humor, avoidance, and drugs and alcohol.
GARDERE: I agree.
DOMINICK: But the other thing is turning to the kids sometimes. We do. You want to get into it with me, fine. But you know what? My kids are here. So we're not doing this. We're not having some argument while the kids are here. And those kids, I think, sometimes are what should be - a lot of people, Doc, say you shouldn't argue and you shouldn't be yelling in front of kids, some say you should. But I don't think you should be having those types of disagreements.
GARDERE: It can really embarrass a lot of people around the table. Again, if you do it constructively, or say let's talk about this, but let's talk about it a little later, and let's not talk about it now after you've had two martinis.
ROMANS: And not drugs, but maybe a little eggnog, Pete.
GARDERE: And a lot of humor.
DOMINICK: There are a lot of anti-anxiety drugs out there. I was referring to prescription drugs, of course, Doc.
ROMANS: Of course, you were.
GARDERE: We'll bail him out.
DOMINICK: I don't mean going out to the woodshed on Christmas Day. I mean doctor prescribed.
GARDERE: I think, I'll take you to the woodshed right now.
DOMINICK: I've been there.
ROMANS: Pete Dominick, Doctor Jeff Gardere, nice to see both of you. Happy holidays. GARDERE: Happy holidays.
DOMINICK: Happy holidays.
ROMANS: Next on YOUR BOTTOM LINE, meet one family who disconnected from the American dream to reconnect to themselves 5,000 miles away from home.
ROMANS: Could you just pick your family up and move to a different country? Right now? For many families, it's just not an option. But for Jennifer Wilson and Jim Hoff, it was the wake-up call they needed. Jennifer chronicled her family's experience in Croatia in her memoir, "Running Away To Home".
I spoke with them recently about how they were able to reset and reconnect with their family.
ROMANS (On camera): This is a story that I think a lot of people can relate to. You're living, two incomes, two kids, you've got day care, you've got your jobs, you're kind of running the rat race. And that's the American dream. But one day, you said, what are we racing for? What happened, Jen?
JENNIFER WILSON, AUTHOR, "RUNNING AWAY TO HOME" : You know, we were feeling just this restlessness in our household. And we weren't connecting with each other or with our two little kids, Sam and Zadie. And about that same time, my great aunt, Sister Paula, who was almost 100 years old, passed away. And we inherited her personal papers. I learned about this ancient Croatian mountain village where my family came from.
The more I learned about this place, the more it seemed suspended in amber for the past 100 years. And I just kept thinking, what might the ancestors have to teach us about family, and about getting by in hard times? The recession was coming on about that time. We had a lot to learn. And this book is about what we did when we were there.
ROMANS: Your wife says to you, how about we go to Croatia? I know it's a longer process than this. Let's take our two kids out of American schools, let's leave our house in Des Moines. Let's sell all of our stuff at a garage sale, a pay-what-you want garage sell no less. And let's move to Croatia. And what does Jim Hoff say?
JIM HOFF, JENNIFER WILSON'S HUSBAND: I was an easier sale than I think she thought I was going to be. I was ready for a break. So there is always going to be a reason not to do it. And we just decided it was time. I was coming home late from work and seeing my kids for a couple hours each night. And I was feeling a little disjointed. And I just wanted to see them more.
ROMANS: And what a way to see your kids 24/7 than to take them to a village that's been the same for 100 years.
ROMANS: And at the same time you're thinking about doing this, the stock market falls 600 some points. You have lost-a third or a fourth of your 401(k) gets wiped out. Well, I might as well, what else do you have to lose?
WILSON: It is time to just start over again. And we just thought, what we are doing now is going to have to change anyway. And I couldn't think, we couldn't think of a better time to begin anew with our careers, with our family. It seemed like a good time to reset.
ROMANS: You make this really interesting point that we spend so much time thinking about how we want to do at work; how we want to be perceived among our friends, our we want this. And we don't spend that much energy on our own family. We kind of take the core group for granted, almost.
WILSON: Right. You know, it was -- to us, I just feel like we spend so much time deciding how we want all sorts of things in our lives. But we really wanted to know how we wanted to proceed as a family. And it turned out, after we spent all of this time in this little village of 800 in Croatia, that that really constitutes family for us, too. We could trace most of those people back to being cousins.
ROMANS: Let me ask you about your kids. So you have a little boy and a little girl. Now, your son, was he all for it or was he a little cautious? He had to leave friends from school. What did he say?
HOFF: Sam wasn't into it at all. We had to bribe him. So it was a little old fashioned capitalism.
ROMANS: Oh, good. What was the bribery?
HOFF: He had to sell all of his-a lot of his toys. But he got to keep his LEGOs, but he got to purchase a Nintendo DS.
ROMANS: Oh, well, there you go.
WILSON: Because it's packable.
ROMANS: So that is what the cost is of a-but your daughter, she said something to you that sort of is uplifting and heartbreaking at the same time. She wanted to spend all of her time with you. Tell me why.
WILSON: She took it so lightly. She said, do I get to be with you both all day every day? And she said, yes. She said, the I'll go to Croatia. I don't need anything for it, I'll just go.
ROMANS: That's really sweet. OK, so you came back. What have you found? You've written about this experience. The book is called "Running Away To Home." Tell me about the title, explain the title.
WILSON: You know, we went all of this distance to try to find something else in our lives. And it turns out that we with really just found each other, the same thing that we had before we ever left. And so to us, it was just the answers were always there. It just took some sort of restart for us to really get on track as a family, and even in our jobs. I mean, we came back. I think I can speak for Jim, too. We came back with this renewed interested in what we do.
ROMANS: When I was talking about this book, and about this idea of what you guys did, a lot of people came up with the same idea. They left the old country for a reason, to build this new country. It's going back to the quote/unquote "old country", I don't know, give you more hope about the American dream and opportunity here?
HOFF: Yeah. I mean, we came back with a renewed gratefulness for what they had -- the struggles that they had went through.
WILSON: We were still glad to be Americans. We were so glad to be back home in Des Moines, Iowa. But we had so much respect for Croatia and the natural beauty there. The place is truly unspoiled. And we have a lot to learn from that.
ROMANS: OK, the book is called "Running Away To Home". It is a great read. It is very funny, and I love that the travel writer is the one who kind of freaks out. And the rest of you novices were fine. Very nice to see both of you, Jennifer Wilson, Jim Hoff.
WILSON: Thank you so much for having us.
ROMANS: How is that for restarting your family and your outlook on the American dream?
That's going to wrap things up for us this morning. This conversation continues online. Find us on Facebook or Twitter, our handle is CNNbottomline. You can also find me, @christineromans. I listen to, read and respond to, all the Tweets and e-mails we get. From all of us here on the show we wish you and your family, happy holidays, happy new year. Back now to CNN SATURDAY the latest stories of the day. Have a great weekend, everybody.