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Living Paycheck to Paycheck

Aired December 23, 2006 - 16:00   ET

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

FREDERICKA WHITFIELD, ANCHOR, CNN NEWSROOM: From the CNN Center in Atlanta, I'm Fredericka Whitfield. A special look at Americans living paycheck to paycheck. But first, here's what's happening right now in the news.
Sanctions for Iran. The U.N. Security Council orders all countries to stop supplying Iran with materials that could contribute to its nuclear and missile programs. The resolution was passed in a unanimous vote earlier today. The move follows Iran's failure to suspend its uranium enrichment program.

For the first time in nearly two years, an Israeli-Palestinian summit. In Jerusalem, Israeli Prime Minister Ehud Olmert welcomed Palestinian President Mahmoud Abbas for a meeting announced just hours in advance. Afterward, a Palestinian official said Olmert agreed to try to bolster Abbas by releasing millions of dollars in frozen tax funds.

Iraq policy on the table. The new defense secretary is briefing President Bush and other top officials at Camp David today. The meeting follows Gates' three-day trip to Iraq this week. He is expected to make recommendations on changes in U.S. policy in Iraq.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American people are keeping you in our thoughts and prayers, and we will make sure you have the resources you need to accomplish your mission.

(END VIDEO CLIP)

WHITFIELD: Both President Bush and Democrats used radio addresses today to thank U.S. troops. The president says the new year "will bring change."

Senator Evan Bayh of Indiana says those serving in the military top the nation's list of blessings.

And travel out west is getting back to normal. Two more runways at the Denver International Airport opened today as the facility recovers from a two-day blizzard. Bad weather caused travel problems from Britain to Brazil. Nine million Americans plan to fly between Christmas and New Year's.

And now, "A Paycheck Away." Anchor Carol Lin takes a hard look at how so many American families are living on a financial high wire with little to no safety net to catch them should they fall. CAROL LINN, CNN ANCHOR: We are going to bring you a special report. Sixty-five percent of Americans are living paycheck to paycheck. During this season, many are choosing between holiday presents or putting food on the table.

How can so many hard-working people - yes, I said hard-working people - end up on the streets? There are 3.5 million homeless people according to the National Coalition for the Homeless.

Tonight we bring you their stories from New York to Los Angeles, the nation's capital to Jeffersonville, Indiana.

Plus, we'll tell you ways to keep yourself out of the red - all in this special hour of the CNN NEWSROOM.

Now, let's start with a family who did everything right to live the American dream, yet went from homeowner to homeless.

CNN's Deborah Feyerick looks at one woman's struggle to get back on her feet.

DEBORAH FEYERICK, CNN CORRESPONDENT, NEW YORK: On a cold December afternoon, Julia Smith and her 12-year-old son Michael walked past the three bedroom home that used to be theirs.

JULIA SMITH, FORMER HOMEOWNER: I miss it. I do. I miss the people. I miss the neighborhood. I've still got friends that live here, and I do miss it. I mean, you know, I'd be a fool not to.

FEYERICK: Smith and her son live in Jeffersonville, Indiana, on the banks of the Ohio River across from Louisville, Kentucky. Locals call it the crossroads of America.

SMITH: It's not the big city, but it's not country bumpkin, either. It's just down-home folks.

FEYERICK: There are close to 29,000 people living in Jeffersonville. More than four percent of them are homeless, even some with jobs.

SMITH: See, mom does know how to weld.

FEYERICK: Smith, a high school graduate, lost everything three years ago following an on-the-job welding accident that left her badly burned. She ultimately lost her job and her home.

SMITH: Every time I dropped that hood and started welding, I just - I'd shake from head to toe, and I'd break out into a sweat. I ended up having a nervous breakdown.

And that's why I was - basically, that's why I'm no longer employed there.

FEYERICK: Smith's situation is not uncommon, according to Barb Anderson, who has devoted her life to fighting homelessness. BARB ANDERSON, DIRECTOR, HAVEN HOUSE SERVICE: In our community, we have a lot of working poor people, fully employed - $6.50 an hour is their average wage.

So, they rob Peter to pay Paul until they can't afford Peter or Paul anymore, and they end up in our shelter.

And we'll have two or three families sometimes in one room.

FEYERICK: Anderson runs Haven House, a shelter, she says, that's way over capacity - a common problem in rural areas.

ANDERSON: And we're the only shelter in a two-hour radius between Louisville and Indianapolis that accepts people for longer than three or four days. So we get people from all over the southern part of the state.

FEYERICK: After finding a new job as a security guard at a local hospital, Smith was able to move into a Haven House apartment, which costs $450 a month.

She pays 30 percent of her salary and works hard doing odd jobs in order to lower her rent and build for the future.

SMITH: It can happen to anybody. I mean, I'm a good example of that. I had a home, a nice home. I mean, it wasn't a big mansion on the hill, but it was mine. You know, a place I could come, hang my hat and say, hey, I'm home.

And things happened. It just didn't work out for me.

Where did he move the capital?

FEYERICK: Smith says that everything she does is for one reason - love of her son.

SMITH: Oh, he's the most important thing in my life. He is the reason I do anything. He's my everything. He's why I get up in the morning.

FEYERICK: Her wish for the holidays?

SMITH: I will have a home. It may not be next year. It'll be soon. I'll have my own home. You can mark your calendar on that. I just don't know what state yet.

But I will. I'll have my own home again, something that I can leave to my son.

FEYERICK: Deborah Feyerick, CNN, New York.

UNIDENTIFIED FEMALE: You just should never take for granted what you have, because you never know when one day you don't have it anymore.

LIN: She knows first hand. Now she's trying to make sure her daughter keeps a positive outlook on life.

And this mother found herself living near Skid Row. Now she's taking forward steps with no chance of sliding back.

WILL SMITH, ACTOR: Hey, don't ever let somebody tell you you can't do something.

LIN: Will Smith captures the struggle of Chris Gardner, who slept in subway restrooms fighting to raise his son and survive as homeless man. Where's the real-life Chris Gardner now? He talks to me later during this special NEWSROOM report, "A Paycheck Away."

(COMMERCIAL BREAK)

LIN: Thirty percent of homeless are adults with children. Tonight, we're focusing on living paycheck to paycheck, and when you miss one, how things can spiral out of control.

So, what would happen if your mortgage or rent increased? That's what sent one woman and her children onto the streets of Los Angeles.

CNN's Peter Viles reports.

PETER VILES, CNN FINANCIAL CORRESPONDENT, LOS ANGELES: When CNN first met this single mother of four back in June - we'll call her "Mary," she was homeless, living with her children in a shelter a block away from Skid Row in Los Angeles.

"MARY," FORMERLY HOMELESS IN LOS ANGELES: How am I going to get out of here?

VILES: Since then, Mary has answered her own question. She's found a job in home health care and a new home, living temporarily with friends.

"MARY": I still don't believe I was there. You know, in a way it's kind of a like a dream that you don't want to remember.

VILES: Her nightmare began with a rent increase. Last spring she could afford $900 a month. But when her rent was jacked up to $1,200, she couldn't pay it. She lost her apartment, which meant she also lost her job caring for children there.

The shelter wasn't perfect, but it was so much better than living on the street.

"MARY": You know, you're like, you know what? I may not have liked the food, and I may have not liked this, or this was OK, but this was good - but it was shelter. You know. You didn't have to be one of the people on the street with a tent with your kids. So, it was a good thing.

VILES: The Union Rescue Mission sees lots of cases like Mary's. Families squeezed out of the unforgiving Los Angeles housing market, where the median home price is just over half-a-million dollars. ANDREW BALES, UNION RESCUE MISSION: In Southern California with high rents, it's two parents working as hard as they can to keep afloat financially.

And if one parent leaves, or if a catastrophic illness comes, or if you don't have enough job skills to get a good-paying job, you're just, you know - you're often one paycheck away from homelessness.

VILES: Mary's emotions are raw. She broke down in tears when we sat down with her. She's not sure she can find an apartment she can afford. Her budget is still $900 a month.

And she doesn't want to go back to a shelter.

"MARY": Homelessness does not disappear. It does not disappear. It is always in the back of your mind. So, like, I can't do that again.

Peter Viles for CNN, Los Angeles.

LIN: So, now, you might say, was it their fault? Did they borrow too much? Spend too much?

Here's a profile.

Homelessness is defined differently, depending on what federal agency you ask. But generally, a person who is homeless is someone "without a fixed, regular and adequate nighttime residence."

The National Law Center on homelessness and poverty estimates on any given night in this country, anywhere from 450,000 to 2 million people are homeless. And as many as 3.5 million people are likely to be homeless at some time in a given year.

That's almost the population of Los Angeles.

ANITA BEATY, ATLANTA TASK FORCE FOR THE HOMELESS: We think that the people we know are homeless are the tip of the iceberg, because so many folks are living with other people or living, hopefully, invisibly in abandoned buildings or in their cars, sometimes camping out in the woods, sometimes in motels.

LIN: One of the fastest-growing segments of the homeless population is families with children. A survey of 24 U.S. cities last year found families with children make up a third of the homeless population.

The National Coalition for the Homeless and many organizations dealing with children and families cite the lack of affordable housing as a principle cause of family homelessness, along with stagnant wages.

The Economic Policy Institute says the real value of minimum wage today is 26 percent less than in 1979.

The average American would have to earn three times the minimum wage to afford a two bedroom apartment.

The U.S. conference of mayors has found homelessness increasing between 11 and 19 percent each year.

And now, another story that will touch your heart. From the battlefield to life on the street. Thousands of U.S. military veterans return home, some with nowhere to go.

Anderson Cooper talks to one who calls his car home.

And later, Lou Dobbs takes on the advocates and critics. And, yes, he's going to tell you who to blame.

All this and more when "A Paycheck Away" continues right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

LIN: Back to our special report on people living paycheck to paycheck.

Serving his country meant financial ruin for Joe Raicaldo. He did all that he was asked, but that doesn't matter when you're battling fate - a veteran suddenly at war with his own pride.

Here's CNN's Anderson Cooper from Long Island, New York.

ANDERSON COOPER, CNN ANCHOR, LONG ISLAND, NEW YORK: There are two things National Guard Corporal Joe Raicaldo never dreamed he'd see - the sun setting over Iraq and the sun setting over his '98 Plymouth, the car he now calls home.

CPL. JOE RAICALDO, IRAQI WAR VETERAN, NATIONAL GUARD: I never thought, like after the ball was dropped, you're out here in this parking lot. I never thought I'd be here.

COOPER: The long road to get here, a parking lot in Jones Beach, New York, began two years ago in Iraq.

So, you were in the sling here.

RAICALDO: Yes, actually in that top piece, in the gun turret.

COOPER: Joe was the gunner in this humvee when his vehicle took a sharp turn and flipped. His body was nearly crushed underneath.

RAICALDO: I just remember I couldn't move anything. I couldn't breathe. I was bleeding. You know, I just felt blood all over me, my face.

And I squeezed out the words, "You'd better get a medivac fast," because I thought that was it.

COOPER: Joe suffered traumatic brain injury, broke his back, all his ribs and shattered his left arm. He was unconscious for days.

RAICALDO: They told my sister - they were going to fly her out there - I wasn't going to make it.

COOPER: But to the surprise of his own doctors, he survived. Over many months, doctors pieced him back together, using metal rods and screws to fuse his spine, and metal plates to hold his shattered arm together.

That's a lot of metal in you.

RAICALDO: Yes, a lot of metal. You could probably build a small Eiffel Tower with the hardware I've got.

COOPER: Today, every step hurts, but Joe remembers when he could run on this beach for miles.

RAICALDO: Me and friend, we used to go eight miles that way.

COOPER: Joe can't lift more than 10 pounds, so he couldn't go back to being an auto mechanic. Instead he took a job with the National Guard patrolling Penn Station in New York. He says he lasted six months before landing in the hospital again with back pain and a bone infection.

RAICALDO: And at that point I gave up. I simply gave up. I know I can't work. I have no income coming in. I'm finished.

COOPER: What he had coming in was $218 a month from a disability check. So, it wasn't long before Joe, at age 50, ended up homeless.

RAICALDO: This is my clothes closet here.

COOPER: The trunk is your closet?

RAICALDO: Yes. Again, the maid never showed up. I'm going to fire her when I get a-hold of her.

COOPER: Joe says he's looked for part-time work, with no luck.

UNIDENTIFIED MALE: Hey, Joe, how are you?

COOPER: He has one sister and a few friends who have offered to help, but he's too proud to accept it, and too proud to stay in a shelter. So he spends most days alone, a stranger in his hometown of Hicksville, New York, on Long Island.

One possible reason for his withdrawal - Joe was recently diagnosed with post traumatic stress disorder.

RAICALDO: I just don't belong. I don't feel I belong anywhere around here.

COOPER: Joe is one of an estimated 600 homeless veterans from Iraq and Afghanistan. That's not many compared with the 200,000 or so from all wars who are currently homeless.

But these vets are showing up even more quickly than after Vietnam, a war that left nearly 70,000 homeless, an even greater number than died in combat.

CHERYL BEVERSDORF, NATIONAL COALITION FOR HOMELESS VETERANS: If the experience with Vietnam is any predictor, I am very worried about the numbers of homeless veterans, or people at risk of being homeless, who are returning from Iraq and Afghanistan.

COOPER: The Department of Veterans Affairs is working to avoid a repeat of what happened after Vietnam.

JIM NICHOLSON, SECRETARY OF VETERANS AFFAIRS: There was a delayed effect with a lot of veterans after Vietnam. We know that. We've studied it. We've learned from that.

And so, that's why we're trying to intervene now, right away.

COOPER: The V.A. spent more than $1 billion on homeless programs last year, but some veterans still fall through the cracks - misclassified, as the V.A. now says Joe was - unable to receive full compensation.

Do you feel sort of like you got lost in the system?

RAICALDO: Absolutely, lost. I'm still lost. I'm still dizzy for what happened.

COOPER: And sick and tired of fighting for benefits. Last month, though, Joe's persistence began to pay off. His disability status was raised from 20 percent to 60 percent, or $873 a month.

But as Joe puts it, in New York that is just enough to either afford an apartment or eat - not both.

RAICALDO: I'm disgusted. And it's not because I'm a veteran or a soldier, or somebody who served. That means nothing. You know, we choose to go. No one forced us to go.

I'm just saying we should be treated like a human being, for God's sake. That's all I want.

And I think about the other veterans from other wars, and they're still fighting to this day. And it's just - it's horrible. And I had to live it.

COOPER: It was only after CNN made repeated inquiries about this case, that the V.A. called to inform us that Joe would finally be granted full, 100 percent disability status - retroactive to March, and worth $2,600 a month, meaning he may actually get to sleep in real bed very soon.

When we called Joe with the news, he said he'll believe it when he gets the first check.

The war in Iraq may have broken his body, but it's the fight here at home that's come close to breaking his spirit.

Anderson Cooper, CNN, New York. LIN: Well, Joe's road to financial recovery has better scenery these days. He's now renting a room and is no longer homeless.

Still, he worries about other veterans who may have fallen through the cracks, just like he did.

ANDY LOOMIS, GRADUATE STUDENT: Costs are high, and it's tough making it by every month.

LIN: It's those monthly bills that worry us tonight.

If you're in financial trouble, or know someone who is, grab your pen and paper. Help is on the way.

Plus ...

WILL SMITH: This film represents the greatest dream and the greatest hope that a man has for his ability to be, and his ability to accomplish.

LIN: Actor Will Smith on his movie, "The Pursuit of Happiness," coming up in the next 30 minutes.

Chris Gardner went from homeless to Wall Street, and has some words of inspiration for you.

(COMMERCIAL BREAK)

WHITFIELD: Hello. I'm Fredericka Whitfield. Here's what's happening right now in the news.

U.N. sanctions imposed against Iran. In a unanimous vote late this morning, the Security Council banned the sale of nuclear material and technology to Iran. Tehran called the vote illegal and said it won't halt its nuclear program, despite threats of further sanctions.

And for the first time in nearly two years, formal talks between Israeli and Palestinian leaders. In Jerusalem, Israeli Prime Minister Ehud Olmert welcomed Palestinian Authority President Mahmoud Abbas. The meeting was announced just hours in advance. Afterward, a Palestinian official said Olmert agreed to release millions of dollars in frozen Palestinian tax funds.

The president and some of his top advisers are meeting at Camp David this weekend. Playing a central role, new Defense Secretary Robert Gates, just back from a three-day trip to Iraq. Gates is expected to make some recommendations on changes to U.S. policy in Iraq.

And thousands of people are still trying to get to their holiday destinations. More runways have finally opened at the Denver International Airport after a two-day blizzard shut it down.

Meanwhile, weather problems have caused travel tie-ups this weekend, from Britain to Brazil.

We return now to our look at American families living paycheck to paycheck. Once again, here is Carol Lin.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When you decide how to spend your paycheck, you have to set priorities and live within your means. Congress needs to do the same thing with the money you send to Washington.

LIN: Setting priorities, as President Bush said this morning. It's good for Congress, and it's good for the average American. But sometimes it's not enough.

Our next story is going to surprise you. A couple with college degrees and one of them working toward an advance degree. Still, they're barely getting by.

CNN's Lisa Sylvester reports from Washington.

LISA SYLVESTER, CNN CORRESPONDENT, WASHINGTON: Andy Loomis is a Washington, D.C. graduate student. His wife is a consultant. They have a four-year-old daughter, Olivia, and another child on the way.

ANDY LOOMIS, GRADUATE STUDENT: I'm well educated. My wife's well educated. And we're in a fairly good situation, but yet costs are high and it's tough making it by every month. And I think that's very common.

SYLVESTER: The variable interest rate on their home equity loan is taking a bigger bite out of their monthly check. It's up $250 a month. Factor in rising graduate school costs and health care expenses, and they're on the front lines of the war on the middle class.

More and more professionals and their families are finding it hard to keep up in this so-called economic recovery.

BETSY LEONDAR-WRIGHT, AUTHOR, "CLASS MATTERS": A lot of professional, middle class families that thought that they were set, because of their education and the high level of job that they have, they're finding it very hard - especially if they private college tuitions to pay - they're finding it very hard to make ends meet.

SYLVESTER: Professional job growth has been sluggish at best. The economy added only 12,000 business service jobs in September, down from an average of 32,000. Many middle income families are feeling the pinch with the housing market cooling, expenses rising and salaries flattening.

GREENSTEIN: The person right in the middle of the income scale has lost ground. That person's income has fallen, once you adjust for rising prices, by $2,000 since 2001.

SYLVESTER: Professionals, including consultants and accountants, now share a common worry with blue collar manufacturing workers: the wholesale shipping of jobs to cheaper overseas labor markets.

(on camera): Many middle class professionals are making up the difference between higher costs and flat income by borrowing. Credit card debt has increased to $1.8 trillion in 2005 from $70 billion in 1980.

Lisa Sylvester, CNN, Washington.

(END VIDEOTAPE)

LIN: Tonight we're not only spotlighting the state of living one paycheck away, we're also talking about how to keep it from sneaking up on you: prevention. CNN's business correspondent Valerie Morris told me that planning for tomorrow demands a clear view of where you stand today.

(BEGIN VIDEOTAPE)

VALERIE MORRIS, CNN CORRESPONDENT: You need measure your expenses against the budget every month. And it's going to reveal ways that you can cut your expenses and open avenues to saving.

So, write everything down that you spend for one month. At the end of that month, highlight those mandatory expenses: rent, mortgage, insurance, car payment, groceries. Anything that's not highlighted, really is basically discretionary spending. And that's where you can decide to put some aside.

Because the reality is, what you're trying to do is to build an emergency savings account. So that you can break this paycheck to paycheck cycle. You can build an emergency savings with as little as $10 per paycheck, because this is intended for when there truly is a need and truly an emergency. And the average person should have three to six months worth of this emergency funding so that it's your rainy day account that can cover things you don't expect.

LIN: Just to be clear define emergency fund which is different than a savings account you're talking about, right?

MORRIS: Oh, you are so right. It's a big difference. A savings account is one thing. What I'm talking about is, money set aside, if there is no other way to buy necessities.

LIN: How do they actually live on less?

MORRIS: What they need do is be aware of their debt-to-income ratio, the formula. Your debt should not exceed more than a third of your income. So for example, if you make $30,000 a year, if you're trying to save 36 percent of that or rather spending 36 percent of that, that means $10,800 should be expenses.

You make $35,000 a year your expenses should be no more or your debt should be no more than $12,600. $40,000 a year, $1440.

The idea is to make sure that you live within your means and that means you can't spend more than you make. Or you shouldn't because some people do, and that's how they get into deep debt.

LIN: So with those numbers in mind, then, how much should you set aside for retirement? MORRIS: About 10 percent of your gross income for retirement savings. You know I like to talk to 20-year-olds and tell them if you put aside $25 a week, do you know what the magic of compounding can do for that? In your 20s is the very best time to start saving for your retirement.

Just think of it as money that you put away that you don't need to access for 40 years. It will grow.

LIN: What do people do to pay down debt when you're just barely getting by?

MORRIS: You know, it is a very difficult thing. And I understand that people want to give their kids great surprises. That's one thing. If your brakes fail or you need new tires, that's more of an emergency situation.

Here's the basic strategy. Pay as you go. Don't charge more than you can pay off in full each month. If you're in trouble and you have a lot of credit card debt, pay off the highest interest credit card debt as soon as possible, even if you have to divert some of the money that you had earmarked for savings.

But one absolute for everyone regardless of circumstances, pay on time, every time. And if you can't pay the full amount, pay more than the minimum always. If you just pay the minimum, you will be paying for decades.

LIN: And you know where I find a big savings, too, is if I bring my lunch.

MORRIS: This should be for kids and parents. Parents have to set that example. Don't expect your kids to do it if you're still going to hit your favorite restaurant and have a $12, $15 lunch.

As you were saying, if it's a $7 lunch five days a week that's $35 a week that you're saving. Right? If it's four weeks at that amount, $140. If we look at the year, you can save more than $1600 a year just doing that. That's an amazing thing.

LIN: That's a vacation.

MORRIS: I know. Or, it is a nice little tidy sum to put in your retirement account.

And just one final thing. I'm not saying that people should just squeeze themselves so much that they have no fun at all. It is just be practical and logical. Set up some good disciplines that you religiously follow and share those with your children.

And if your spouse isn't as money savvy as you are, figure out who should be the C.E.O. of your financial house.

LIN: That is good advice indeed.

(END VIDEOTAPE) LIN: She's terrific. Valerie Morris has more advice as well. It's all available on CNN.com. Look in the "Only On CNN" box and click on from homeless to Wall Street.

Now, as we're seeing people are determined.

(BEGIN VIDEO CLIP)

UNIDENTIFIEDD FEMALE: Life is not always the best, you know, the best way you want it.

(END VIDEO CLIP)

LIN: This woman, like many others, is making the tough choices now so that life will be smoother later.

Plus, his life story is on the big screen this weekend. The real Chris Gardner says if you're struggling, the cavalry is not coming. So what does he mean by that? His interview coming up in less than 15 minutes.

(COMMERCIAL BREAK)

LIN: People across the country living paycheck to paycheck: a car accident or job layoff could force them out of their home and it could happen to any one.

Now Melody didn't want us to use her last name, but she represents one of the fastest growing populations of homeless -- women with children.

(BEGIN VIDEOTAPE)

LIN (voice-over): This is melody's night to prepare dinner. She is serving turkey for nine families including her own. The 38-year- old has been living for five months in this shelter outside of Atlanta, Georgia with her 8-year-old daughter.

MELODEE: You just should never take for granted what you have because you never know when one day you don't have it anymore.

LIN: She lost her job as an office manager for a construction company. This is a woman who has been working nonstop since she was a teenager, at times two jobs at once. Without those two paycheck, she couldn't make the rent and had nowhere else to turn.

MELODEE: Within a month's time we were told we had to leave. I don't have any family that is in better position than I am as far as life goes and didn't have anywhere to turn except church and had somebody at church turn me on to this place.

LIN: Melodee and her daughter share this tiny room at Calvary Refuge center. But it's not a free ride, the federal government allows cavalry to charge them up to nearly a third of their income and Melodee managed to find another job a month after she arrived. MELODEE: Daycare right now is outrageous. And this refuge pays for my daycare with my child. I have to work odd hours to where she would be there more than just your normal hours. And I really couldn't afford it right now. There is no way I could.

LIN: Melodee used to volunteer at shelters herself. She now has a different perception of the homeless.

MELODEE: I'm sure we all have our own stories and what -- they are going to be totally different from one another. What my picture is now is definitely changed because here I sit. But that doesn't mean forever. That just means for now.

LIN: The national coalition for the homeless says the number of homeless families with children has increased significantly over the past decade. And declining wages and rising rents and mortgages put housing out of reach for many workers.

ANITA BEATY, ATLANTA TASK FORCE FOR HOMELESS: The typical image you get when you say the homeless, which we try not to say, you know, the man with a cap who is stumbling around in the street, that is not the picture of homelessness.

The picture is families, single women with children, men who are living single but have been forced to separate from their families in many cases. Well-dressed people in good jobs are one paycheck away from homelessness if they don't have a nest egg and if they would miss a job paycheck and miss a mortgage payment or a rent payment and couldn't cope or compensate in any other way. They could wind up homeless.

LIN: Melodee wouldn't allow her daughter on camera for this interview. She is trying to shield her from being ridiculed because she's homeless. But she says this experience will only make her stronger.

MELODEE: It's affected her any, I hope that it's grown us closer to understand that life is not always the best, you know -- the best way you want it. Everything cannot happen the way you want it.

(END VIDEOTAPE)

LIN: Now it's no secret much of America's middle sclas trapped by low wages and soaring costs of things like insurance and rent. Well, who is to blame? Well, our Fredricka Whitfield put the question to Lou Dobbs, host of CNN's "LOU DOBBS TONIGHT" and author of the book "War on the Middle Class."

(BEGIN VIDEOTAPE)

LOU DOBBS, CNN ANCHOR: The fact of the matter is that the advocates should be the men and women who are elected to our United States Congress, to the White House, and who should be representing the largest group of voters and people in this country: the middle class. The middle class is defined as all but those who are rich and those who are poor. That amounts to some 250 million Americans. And instead of being represented in Washington, they are being shunned. And as I said, they are being assaulted, thrown into direct competition with cheap labor. And our elected officials are not improving public education, which is the great equalizer in this society. Instead, they are failing an entire generation of Americans.

Half of all blacks are dropping out of high school. Half of all Hispanics are dropping out of high school. We're failing an entire generation of Americans.

FREDRICKA WHITFIELD, CNN ANCHOR: When you talk about failing an entire generation of Americans, while some critics including yourself say among those failing an entire generation of Americans, the government or Congress, others are actually blaming these Americans that we speak of saying that perhaps they aren't managing their lives well enough, they aren't making the right choices. What do you say to those critics who underscore that?

DOBBS: Well, I say to them, look at the reality. The reality is that the median income in this country is $33,000 a year. Half of all working Americans make less than $33,000 a year.

Now, all of these geniuses who say it's so easy for a man and woman trying to raise a family or more likely one parent trying to raise a family and to support their kids, get them an education -- it's easy for a few elitists to blame them, but the fact is we need to blame ourselves for tolerating this situation in which we are not permitting our middle class to earn a decent living and to have a quality of life that was available to Americans 30, 40 years ago.

(END VIDEOTAPE)

LIN: Our Lou Dobbs. Now, on Saturday and Sunday nights at 6:00 p.m. Eastern as well. Seven days a week, get his opinion and point of view.

Now, a lot of people obsess over money, but most of us just want to be happy. One multimillionaire is and not because he's rich.

(BEGIN VIDEO CLIP)

CHRIS GARDNER, MILLIONAIRE: Money is the least significant aspect of wealth. You do get to a point in your life what's important to all of us is our health, our children, and some degree of happiness.

(END VIDEO CLIP)

LIN: That is Chris Gardner. His life story is a major motion picture called "The Pursuit of Happyness." Gardner's story could be yours. We'll hear from him after the break.

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(BEGIN VIDEO CLIP)

WILL SMITH, ACTOR: People can't do something themselves they want to tell you you can't do it. You want something, go get it. Period.

(END VIDEO CLIP)

LIN: "The Pursuit of Happyness" -- Will Smith lights up the screen this weekend as Chris Gardner, a down on his luck family man trying to make a life for him and his son.

Well early on, Gardner gambled on a non-paying internship hoping it would lead to something big. And it sure paid off. Today Gardner is a multimillionaire running offices in Chicago and New York. But Chris Gardner told me he's not a rags to riches story.

(BEGIN VIDEOTAPE)

GARDNER: Money is the least significant aspect of wealth. Money does not have anything to do with happiness or success in my estimation.

LIN: But money is what put a roof over your head and gives you the car to get to your job. And buy clothes for your kids.

GARDNER: Does that mean you're happy?

LIN: I don't know, tell me.

GARDNER: I got one problem right now that some of the wealthiest people in the world do not have. I often cannot sleep at night because my face hurts from walking around smiling all day. OK. And I know a lot of people with a lot of money that don't have that problem.

LIN: You know, in this special that we're doing on the working poor, Chris, I do these interviews with people across the country. And here's what they say to me about these people who are losing their jobs, losing their homes. You know what, it's their problem. They spent too much, they got in over their head, they didn't have the education it took to manage their money. Why should we help them? What would you say to those people?

GARDNER: Who's going to help you when it happens to you?

LIN: Well, a lot of people think it's not going to happen to them.

GARDNER: Well, you know what? Some of them are right, and some of them one day are going to be in the exact same position for whatever reason. And they will think that they have done absolutely everything in the world right, and they probably have.

But think about what about most people, for instance, who worked for that little company down in Texas called Enron who not only lost their jobs, lost all of the retirement, all their pension assets, and as a result of that fiasco, have lost everything in the world that they own. What about them?

LIN: You know, because some of the critics would say the chutzpah that you demonstrated to get that job -- or get that internship with Dean Witter, well maybe he just didn't apply that in medical sales. Maybe that's why he lost his job. What would you say to people like that?

GARDNER: You know, to those people, first of all, I don't talk to people like that. I don't have to. All right.

I found a business, fortunately -- I found something that I absolutely love.

Now, that's something that I'm stressing to people everywhere I go. Do something that you feel passionately about, something that you feel strongly about. And forget about money. Do something that you would do for free because you enjoy it.

LIN: But when you were standing -- OK. Let's put it this way. When you were running from that jail cell to get to that interview, all right, were you thinking about your passion or were you thinking about the money that you needed to make to get that car back and to feed your little boy?

GARDNER: You know what, it's all about passion.

LIN: That's what it was. That's what we saw -- you were standing there in your undershirt before those executives at that table.

GARDNER: That's why I'm still running today. I'm just wearing nicer shirts.

LIN: You feel like you're running today?

GARDNER: I'm still running today. But I'm running because I want to. I choose to. Not because I have to. There's a whole different ball game.

LIN: So what do you say to people who are in those same circumstances that are portrayed in this movie who feel like they have lost everything and have so much at stake for their children, people who are living in shelters this holiday season. They want to know what did it take? Is it enough to say look, you got to have the passion? What would you tell those people?

GARDNER: I tell those people, and I talk to those real people every day, and the things I say constantly are, number one, baby steps count, too. As long as you are going forward. You add all those baby steps up one day and you'll be amazed where you might get to. And number two, very important, the calvary is not coming.

LINE: The calvary -- meaning what?

GARDNER: It's not coming.

LIN: The federal government or...

GARDNER: Any kind of help. Any kind of help or assistance or anything is not coming. And your darkest days, when it's all on the line, the only person you can count on is you.

LIN: You realize what an inspiration you are to so many people you work with? Did you know we were at your office and we talked with some of your employees? This is what a couple of them had to say about you.

UNIDENTIFIED FEMALE: He'll call me from the airport and be like, somebody stopped me today and said you know, because of you I get up every day.

UNIDENTIFIED MALE: With Chris being the way he is, bringing that enthusiasm, bringing that attention, that presence, it just keeps us just going, going forward. And I'm probably one of the only guys, few guys that actually enjoy coming to work just so I can come in and actually learn something from Chris.

LIN: Colleen Carlson your president and Salvador Guerrero who works in marketing.

GARDNER: Wow.

LIN: Yeah? Are you impressed? Well, they're talking about the boss, right?

GARDNER: You know what, the only reason I can do any of the other things that I am doing is because I've got people like Colleen and Salvador and others on the team.

LIN: One of hollywood's biggest stars, Will Smith, all right, took this role.

GARDNER: One of?

LIN: Embraced it. And this is what he had to say about the experience and about you.

SMITH: The film represents the greatest dream and the greatest hope that a man has for his ability to be and his ability to accomplish.

LIN: That is a man who has everything and this he looks at your experience and what an inspiration it was. What was it like to work with him and see him on the screen playing you?

GARDNER: I got to tell you, look. Will Smith played Chris Gardner bert than Chris Gardner ever did.

(END VIDEOTAPE)

LIN: He was so funny.

Well, a couple of notes on the movie. Will Smith has been nominate forward a Golden Globe for his portrayal of Chris Gardner. And Chris even has a brief cameo in the movie.

For more of his story, go to CNN.com and scroll down to "Only on CNN" and click on "From Homeless to Wall Street."

We thank you so much for joining us for our special "A Paycheck Away."

Now, a check of the hour's headlines after the break. But first your responses to our last call question based on our theme tonight, living paycheck to paycheck, why do you think this is happening? Here's what you had to say.

CALLER: I'm Harry calling from Philadelphia. The reason why so much of our society lives paycheck to paycheck is because unfortunately, the school system out there never prepares most people on how to prepare for the real world.

CALLER: I think the reason is because everybody wants everything now and we're not used to saving any more like past generations in order to buy things.

CALLER: The reason people living paycheck to paycheck, because they spend more than what they make and they overcharge and the credit card people let you borrow too much money and keeping track on there they pay 18 percent interest and that's why they get broke.

CALLER: Yes, my name is Cheryl Tennes (ph) and I'm calling from College Station, Texas. And I personally think that the minimum wage should be higher than it is. There's no way that someone can survive on minimum wage in today's lifestyle and cost of living.

(COMMERCIAL BREAK)

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