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AMERICAN MORNING WITH PAULA ZAHN

Interview of Allen Wastler, Money.com

Aired January 24, 2002 - 08:47   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN FINANCIAL ANCHOR: Congressional Budget Office telling us all yesterday it looks like there will be budget deficits for the next several years, and the anticipated surpluses over the next decade revised sharply downward to the tune of something like $3.5 trillion less than we thought even as recently as a year ago.

No problem for the government to run deficits, but what about your family? Not so easy. We're joined now by Allen Wastler, who is the managing editor of Money.com. Old buddy of mine, all around good guy. The government just prints more money. You and I can't do that.

ALLEN WASTLER, MANAGING EDITOR, MONEY.COM: We can't do that.

CAFFERTY: Tell me -- you got a little help up on the website for folks?

WASTLER: We got lots of help on the website. It all comes down to this -- you spend and you save. Hopefully, you save more than you spend.

CAFFERTY: In this country, though, we're notorious about not having a very good savings record (ph).

WASTLER: Overspending, overspending, and savings is a problem, too. What we got for you is, first of all, figure out how much you're spending and on what.

And we've got a nice little feature up on the website called the ideal budget. You go to that, and it will break out recommended levels that various CPAs and people that we've talked to say that you should spending on certain items, okay?

We've also got a little worksheet there that you can run through and figure out exactly what you're spending on each thing. There is the article, and right there, the ideal budget. You go to that worksheet, you start filling that bad boy out. Now, it's long, it might be a little tedious, but what it's going to do for you, is let you know where you're spending too much, and where you -- maybe you need to come back in toward the norm.

CAFFERTY: A lot of the money that disappears kind of falls through the cracks. It's like you almost don't realize where it goes.

WASTLER: That's right. And a lot of people -- now here's the big trick, big problem. A lot of people say, "okay, I'm going to spend everything, pay all my bills, do all that, and whatever's left over, that's what I'm going to save."

CAFFERTY: There's nothing left over.

WASTLER: Uh-uh. No, no, no, no, no. No, no, no. You've got to treat saving almost like a bill.

CAFFERTY: Right.

WASTLER: Now, the recommendation: 15 percent of your gross income per month, that should go into savings. And a lot of us...

CAFFERTY: And they say "pay yourself first," right?

WASTLER: Pay yourself first. Just make it a standard little thing. Now I pay myself.

Now, here's the trick. A lot of us do the 401k program, just do it up to the 6 percent company match, and then, you know, hope for the best. No, you got to go beyond that. You got to save a little bit more. Look at different ways, different IRAs you can bring into the mix. Also, you should keep a close eye on your 401k, as the Enron debacle sort of tells us right now.

CAFFERTY: We don't have time to get into it, but there is a very good editorial in the Wall Street Journal today about the Enron situation and about the 401k plan that was in place at Enron. The gist of the editorial is that the company did not make any mistakes when it came to the 401k's, that the 401k plans were actually working okay there.

WASTLER: It's a standard plan, okay? There's one cautionary note there. The average 401k plan, 37 percent of it, for the average American, is invested in their company's stock. That might be a little weighted too heavy, but it's not like the 401k plan doesn't have ways for you to adjust for that, but you should check it out.

CAFFERTY: You can diversify your plan, and spread the risk out. Good to see you, as always. My regards to the folks on the 20th floor of this building.

WASTLER: I will pass the note back to Bull Durham (ph).

CAFFERTY: Where I used to toil -- Paula.

PAULA ZAHN, CNN ANCHOR: You can't go down a floor anymore, Jack, and go say hi to those folks?

CAFFERTY: They won't let me in. They won't let me in.

ZAHN: All right.

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