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Your Money

The Best Deals This Holiday Season; How the President Wants to Fix the Air Travel Mess; Perfect Time to Ask for a Raise

Aired November 18, 2007 - 15:00   ET

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

(NEWSBREAK)
VELSHI: Welcome to YOUR MONEY, where we look at how the news of the week affects your wallet. I'm Ali Velshi.

ROMANS: I'm Christine Romans. Coming up on today's program, the struggles to live the American dream and the group that's finding it hardest of all.

VELSHI: Plus, we'll make sure you get a good price when you sell your car.

ROMANS: And what not to tell your boss when it's time to ask for a raise. We hope to get you some extra money this year.

VELSHI: But first, we haven't carved the turkey yet and retailers are already nervous about whether you're going to spend enough money this holiday season. New numbers from Washington this week showed that inflation is slightly higher in October. The CPI was up 0.3 percent last month. Christine will do the math on that for you.

ROMANS: Some big retailers are warning that the soft housing market, gas prices and the credit mess will hurt holiday sales. Wal- Mart, Macys, J.C. Penney are some of the companies bracing for slower sales. It is important because middle class shoppers are real drivers of the economy are looking like they are pulling back.

VELSHI: Now our first guest says that you are about to see the biggest change in consumer trends in our lifetime this year and all about timing. He's Britt Beemer the chairman of America's Research Group, a company that researches consumer behavior. Brit good to see you. Thank you for being with us.

I got a piece of news this morning from Sony saying that this is going to be the best year ever for electronic sales. I don't know if that's wishful thinking, that's a prediction or a little cheerleading.

BRITT BEEMER, AMERICA'S RESEARCH GROUP: I would say more cheerleading than reality. Hope always springs eternal.

ROMANS: We know every time we count the consumer outright (ph) they seem to come back and show us that they can spend more money than they earn with great predictability. But this year seems to be a little bit different. A lot of things piling up there that suggests that maybe people are going to pull back, they can't pull all that money out of their house and they are not spending all that money to redo their homes.

VELSHI: They put more money in their gas tanks and in their home.

ROMANS: Exactly and they are going to pay 25 percent more to heat it. Will we see the consumers pull back or if they have all these sales, will we be enticed?

BEEMER: Well there is a couple issues. First of all, we have the perfect retail storm right now. Never in the history of retail have we seen higher food, higher fuel and we got 20 percent of consumers complaining that their property taxes have gone up. So, you look at those three issues that put a lot of pressures. Let's just say one thing, you are right. Consumers continue to spend money and if you're a parent, you're still going to spend money on your kids' toys, even though you may not know what toy to buy this year. You're still going to buy something.

ROMANS: The "New York Post" had this great headline this week, said there would be a toycott that people would buy DVDs and they're going to buy books for their kids and Don Mays of the Consumer Union said it's a great year for puppies. That's not necessarily very good for retailers. You don't think some American families will say I got all these other pressures I'm not going to come home with $300 worth of toys this year.

BEEMER: Well I think they may not spend as much on toys this year and 60 percent of parents say they don't want to buy any toys from China but when they get in the store they'll find it is hard to do that. But I will tell you this, this year video games will be bigger because consumers say their kids don't chew on them, doll babies will continue to big because they are pretty safe, but the other thing is, the bicycle is making a big comeback this year because parents say the kids don't chew on the bikes and bikes become a nice gift under the Christmas tree from Santa.

VELSHI: We're going to be following over the next few weeks exactly what the consumer is doing. No sooner have they shopped and we'll get numbers on what they spent on the weekend. What you're going got be doing, however, is watching what the retailers do in response to what the consumers do and the consumer out here wants to know how do I best time my shopping so I get the sales. If it's a rough holiday season that means a win for me when I'm shopping, doesn't it?

BEEMER: Well it is true, and I'll tell you this, consumers will never get a better deal than Friday morning if they want to buy a big- ticket item. As you know last year the prices that came out on Black Friday between 6:00 and 8:00 a.m. were never beat for the rest of the season. Almost 40 percent of America, remember that this year. And that is why we're going to have more consumers shopping early on Friday morning in the history of America.

ROMANS: Britt just a quick question for our viewers, we should wait, stay away from the mob the day after Thanksgiving and in that lull in the two weeks before the final push to Christmas, we could get some good sales? BEEMER: No, I would tell people this, if you want a big-ticket item like a TV or computer, fight the crowds and get in there Friday morning. If you want to spend something in the $50 to $75 range you'll get the best deals in the last ten days because retailers will slice prices.

VELSHI: Interesting.

BEEMER: Retailers won't slash prices right after Thanksgiving because they're going to believe this year they could sell things in those two weeks in December and you're going to buy them anyway. I think consumers will out fox retailers again this year and say I will wait until the market is down again.

ROMANS: Britt Beemer just telling us how to outfox retailers.

VELSHI: Brit, good it see you, as always. Thank you.

BEEMER: Thank you.

VELSHI: Friday morning, Black Friday, I'm going to be, as I always am at a shopping mall waiting for these folks to come in.

ROMANS: There's no place in the world I'd rather not be than doing that.

VELSHI: I don't know why I love that, but I enjoy doing it. Tune in, watch.

ROMANS: I will not be there. I hopefully will -- I think I am working, though.

Up next on YOUR MONEY, you've probably been through horrific airport delays at one point, probably recently. The president says he has a plan to make it all go away. We'll tell you all about it, next.

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VELSHI: I don't have to drive too far this Thanksgiving; I'm going to go 15 miles to a shopping mall because I am going to be there on Black Friday. So I am dodging the holiday traffic.

ROMANS: But I'm having 17 people and 7 children fly in from various parts of the country that are dealing with the airport hassles and plane delays, I hope they get there in time for the turkey.

VELSHI: They'll be steaming mad.

ROMANS: But interestingly enough the president of the United States this week announcing some measures to reduce congestion and delays at airports he seems to know that this commercial situation, something has got to give.

VELSHI: Stephanie Elam is here with that and other travel stories in this very busy travel week. Stephanie. STEPHANIE ELAM, CNN CORRESPONDENT: That is right. This is the busiest travel week of the entire year. It is estimated that most of the people this weekend were on track to actually have this be the most traveled year in 2007 as far as air travel is concerned.

If you look at the airports, it's not just that the terminals are too crowded but also the air space. On Thursday President Bush announced the Department of Defense and the Federal Aviation Administration will work together to open unused military air space to commercial flights. This move will work to reduce delays caused by holiday congestion and bad weather. The FAA would reroute air space, still unused space in the air and on the ground and find more precise routes for takeoffs and landings.

As for the D.O.T., it says it will also propose boosting that $200 bump fee. This is one that a lot of fliers would like to hear about. Airlines have to pay travelers who find themselves with a ticket but without a seat. Well, now, they're saying they'll boost it to more than $600. That's a great thing. That needs to happen a long time ago.

Another possible role would categorize a flight that is more than 15 minutes late over 70 percent of the time as an unfair and deceptive practice. Airlines would then get slapped with fines and I don't think you'll find any traveler against that plan.

ROMANS: That is a fantastic idea. In terms of the lines at the actual security, I was appalled this week at GAO reports, Government Accountability Office, finding that you while I get stopped for my keys, I complain about this all the time, I could take bomb components on with no trouble.

ELAM: This is one story that upsets people and one that people always think about. If you look at it involving security, undercover federal investigators were able to get through security checkpoints at 19 different airports with bomb parts, according to the report from the Government Accountability Office. The reports said TSA officers followed procedures in most cases, but the investigators managed to get the items, the components of which they bought at local stores and over the Internet for less than $150 bucks on to planes by taking advantages of weaknesses in the system.

At a Capitol Hill hearing on Thursday lawmakers from both parties grilled TSA chief Polly who downplayed the report. He called the TSA screeners the world's best and he said that some of the liquid explosives and detonators that investigators smuggled past security were not strong enough to blow up a plane.

ROMANS: I'm not sure that makes me feel better.

VELSHI: The little bit of shaving cream I'm sneaking on the plane.

ELAM: If you have lotion in your purse, they'll find that. I think the point here is that they are saying that you have 19 layers of security at the airport, before you go through security, once you're in security and afterwards before you get on the plane. So, they're saying this is not likely just showing where weaknesses are and how they can address them.

ROMANS: One weakness at one level does not show the 18 other layers that would have caught it before or after.

ELAM: They're checking. They are looking to see where the weaknesses are.

VELSHI: That takes care of air travel. There will be a lot of drivers this weekend and once again, we're looking at now we're approaching record gas prices again.

ELAM: I believe 80 percent of travelers who are going more than 50 miles away from their home will be driving for Thanksgiving. That's according to AAA. For those of you who aren't taking to the skies, obviously, more important to you because gas is so expensive right now. A study from the Oil Price Institute found that lower-income drivers pay eight times more on filling up then the wealthier Americans do, as well. The five most painful places to fill up, Alabama, Mississippi and Kentucky. Residents of Wilcox, Alabama for example, they spent 13 percent of their income to fuel one vehicle. People in Huntingdon County, New Jersey for example where the median income is four times what it is in Wilcox spent just 1.5 percent of their income on gas. For this study the oil price information report used 2002 as its starting point when gas was cheap and wages were high.

Since then wages have been stagnant while gas prices soared. So basically when you look at this right, if gas prices are going up and your income is not and you're making just $20,000 a year, someone else making $150,000 a year the percentage that they're spending is more painful for someone in Wilcox.

ROMANS: For the holidays, if you're going to grandmas, you're going to grandmas whether or not gas prices are going up. You still have to figure out.

ELAM: Also the other thing is a lot more people drive in some place like Alabama than they do in New York City because of better infrastructure for public transportation. That factors in on how much they spend on gas.

VELSHI: You go it Chicago a lot that was on United.

ROMANS: Where your airline options might soon be diminishing. The U.S. airline industry continues to struggle, reports surfaced that Delta and United were talking about a major merger and they are not alone. While Delta Airlines denied reports of merger talks with United some industry experts see eventual mergers creating three mega airlines carrying more than 70 percent of the nation's air traffic.

VELSHI: Really big week for air news. This week the Dubai Air Show saw the largest ever aircraft order for civil aviation, Emirates which is the largest airline in the Middle East placed a $34.9 billion order with Airbus for 93 aircrafts and took an option for 50 more. You may not have heard of Emirates but it is one of the fastest-growing airlines in the world. It is growing at 20 to 25 percent a year, could be the biggest airline in the world in a few years. It was started in 1985 with two just planes and now has more than 100. I spoke with executive chairman Maurice Flanagan and he said Emirates is flourishing because Dubai is a convenient connection for many travelers.

(BEGIN VIDEO CLIP)

MAURICE FLANAGAN, VICE CHAIRMAN, EMIRATES: You've got the Americans on one side and China, Japan, Australia, well, that's where the world works. The Pacific is too big for it to work. The center of that is Dubai.

(END VIDEO CLIP)

VELSHI: Interesting way to look at it. If you take the world and flatten it, Dubai is in the center. You can connect any two cities in the world by stopping in Dubai, which, by the way, has good shopping. So they are benefiting form that.

ROMANS: Any two cities in the world can be connected with one stop in Dubai.

VELSHI: It is a good marketing tool. You can connect any two cities from any city in the world. But Dubai wants to be the hub, right now Emirates flies to 90 destinations around the world. There you go.

ROMANS: Coming up right after the break. Taking a look at why your 401(k) more funds doesn't necessarily mean more diversity.

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ROMANS: Do you balance your 401(k) every year?

VELSHI: I actually do it more frequently. I don't know if it's too much but I do. That puts us into a unique part of the population. Most people don't look at their 401(k) s.

ROMANS: There is someone on our staff that looks at the 401(k) balance every single day.

VELSHI: That's a little much. Now, here's the thing. I am getting in a lot of trouble from people when are not financial people who say, what do we do to protect ourselves around these markets? I say because it's the quickest answer to the quick question is you have to be diversified. I had a number of very smart people come up it me and say put a sock in your mouth if you keep saying it.

ROMANS: We are going to tell you what it means. Walter Updegrave with "Money" Magazine is a senior editor and he tells us how you can cash in on your working years to pay for that 401(k). Big mistake in 401(k) is not to have one. You've got it be invested in your 401(k).

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY MAGAZINE: Well, that's the most important thing. Sign up, start contributing to it. One of the things that the government is now doing is allowing companies to make that easier. Companies for years have been doing this process of auto enrollment and getting people and enrolling them because if they sign you up and give you the option of pulling out if you don't want to be enrolled, more people participate.

So, now, some new government rules have come out that are making that process easier. That's great because it gets more people in to the plan. That said, just because you're auto enrolled you should also look, hey, how much am I contributing? They may put you in a low contribution rate, 3, and 4 percent. You want to be up more 6, 7, and 10 percent something like that to get the most out of the plan.

VELSHI: Let's talk about; if you're in for the first time, people forget this very quickly. You spend a third of your life at work. You don't need to be over invested in your own company, no matter how good a company you work for, you can't have all your eggs in that basket.

UPDEGRAVE: A lot of people make this mistake. You would think since Enron people would have wised up a lot, but in plans that offer a company stock in their 401(k), it remains the single largest option that people choose. So, and people do that for a number of reasons. They think they know the company and have a little bit of an inside edge. Any single stock whether it's your company or any other stock, much more volatile.

Two to three times more volatile than the market overall and generally what that means you do have a very large upside potential if things work out right. If they don't work out right, then you have a very large downside potential.

ROMANS: If you lose your job or something goes south. You don't need to have double exposure on something so important like that.

VELSHI: And the retirement.

ROMANS: You have to rebalance. Not just throw some money in there and wait three or four years, every year you have to rebalance to make sure you're staying true to what your risk tolerance is.

UPDEGRAVE: Well as Ali mentioned before this diversification, it's nice to be diversified but if you don't change that mix back each year to what it was at the beginning of the year what is going to happen is the years stocks do very well you'll become heavier in stocks. When bonds become heavier, you'll be heavier in bonds.

VELSHI: That involves selling the things that made money and that are always the hard part. People don't want to buy more of the losers and sell the gainers.

UPDEGRAVE: That's the other beauty of rebalancing; it forces you to do something that you wouldn't normally do on your own. But you should be doing it and that is after stocks had a run, lets say large cap growth stocks had a run, it is great to take some of that money off the table and put it into something that has not done as well. Because that is what is likely to do a little bit better in the years ahead.

VELSHI: You know the criticism about telling people to diversify, why if you don't understand it why this is bad because some people think diversifying is buying as many funds as you can get.

UPDEGRAVE: That brings up another big mistake in 401(k) plans. Some people approach this like a buffet; I'll take a little bit of this and little bit of this. They do this with their investment options. You think they're diversified, but, in fact, you may wind up if your plan has a lot of bonds funds in it, you may end up with too much in bond funds and you wind up in things you shouldn't be in at all. You don't want to just help yourself to an equal portion of everything that's out there.

ROMANS: Quickly if you're 22, like Ali and I, you should have what kind of ratio with stocks with all of those years ahead of us?

UPDEGRAVE: All those years ahead of you, people in their 20s, like yourself, very heavy in stocks. Maybe something like 80 percent or so, maybe a little bit more because you're not concerned about the ups and downs of the market.

VELSHI: Because you have time.

UPDEGRAVE: You have plenty of time to ride it out. If you're an older person, like myself, you're in your 50s, you're getting towards the end of your career, and then you need a little bit more balance. You need more bonds because you don't want to fluctuate quite as much. Even there, you do need growth. You need are talking something like 65, 60 percent in stocks and maybe the rest in bonds.

ROMANS: If you're, if you need idiot-proof investing you can pick these funds that actually adjust all this for you. You put in your retirement date is and it does all the work for you.

UPDEGRAVE: Exactly, target-date retirement funds. Sort of a no- brainer solution.

VELSHI: Walter, good to talk to you. Thank you so much for being with us.

ROMANS: All right. Coming up, the American dream and how one group is finding it harder to achieve.

Plus, the best time it ask your boss for a raise.

VELSHI: Don't tell them.

ROMANS: I'm not going to tell.

(COMMERCIAL BREAK)

(NEWSBREAK)

ROMANS: Well let's take a look at this week's top headlines. California, Florida, and Ohio leading the country in foreclosure filings. A report from Realty Track covers the 100 biggest U.S. metropolitan areas for the third quarter. It lists 77 of those cities reporting a rise in foreclosure at the end of September compared to the previous quarter. Half of the cities in the top ten are in California.

VELSHI: Treasury Secretary Henry Paulson let it be known this week that the U.S. dollar is still strong but rap mogul Jay-Z of all people isn't having any of it. The U.S. dollar is at record lows, and that has Jay-Z flashing euros in his new movie or the video for the new movie "American Gangster." The song is called "Blue Magic." The U.S. dollar is taking a beating of late but it will rebound in the long term.

ROMANS: A new report is challenging the very foundation of the American dream. The Economic Mobility Project conducted a series of bipartisan studies which found nearly half of children born to middle class African American families fell into the bottom income group as adults. This is in stark contrast to the 16 percent of white children who dropped out of the middle class over the same period of times.

VELSHI: Now according to that study, blacks, in particular, would have a hard time calling America the land of opportunity. We'll get into this a little bit with John Morton. He is with the Pew Charitable Trust. John, this is an interesting study. It may not be news to everybody, but there's a strange amount of agreement from what you would traditionally think of as the left and the right on the outcome.

JOHN MORTON, PEW CHARITABLE TRUST: Well, I think it is news, first of all. I think we have long known that in America relative to other countries, we have so-called stickiness at the end, which is to say if you're born into the bottom income group, you're more likely to stay in that bottom group than in other countries. And the same holds true at the top income group. You're more likely if you're born into it to stay there than in other countries.

What we haven't known yet and what these studies say for the first time is that middle income African-American families, children born into middle income African-American families have an almost 50 percent chance of falling down to the bottom 20 percent of income earners as adults. I think that is new and relatively shocking finding.

ROMANS: Yeah, devastating is the word you used earlier to describe it. Provocative is what other people are saying. The fact that once you get into middle class, it doesn't mean if you're an African-American family you'll stay in middle class. You're very careful not to prescribe policy fixes or to say why. This is meant to be a framework and starting point so we can challenge the powers to be to figure out why this is happening and to fix it.

MORTON: That is right and the story here is not just about African-Americans. The three studies that we worked on led by the Brookings Institution are very, very strong studies that look at gender differences for mobility and at family differences by different where you begin and where you end up. And, also, for blacks and whites. I think overall the findings are relatively positive, which is it say that almost two-thirds of families today are better off than they were a generation ago. So, matched families. Looking that children, the income characteristics of the families they were born in to and where they end up as adults. About two-thirds are doing better. That's a fairly good finding. I think some will look at that and say, geez, a third are doing worse and during a time of fairly strong economic growth, perhaps that's not great news. But at least it's good news.

ROMANS: John, that two-thirds you mentioned, I want to point out a fascinating part of the study, the reason why two-thirds of families have higher income today than their parents did is not because men's earnings are going up, in fact they fell 12 percent over the last 40 years. Is because women went into the workplace. We're now a two- income household. That was a large part of the driver, right?

MORTON: That's exactly right. In the first report that came out in May, economic mobility is really a family enterprise. It is no longer a situation where a single, solid income can assure a future generation's prosperity. You're right. Women's workforce participation rates have increased from the low 20 percent to 70 percent over the last 40 years. And so that male incomes for men in their 30s have actually decreased by over 12 percent. So, this is really a story of women entering the workforce, propping up family incomes and that's a big part of the story, absolutely.

VELSHI: All right, John, thank you for this. John Morton is with the Pew Charitable Trust on that study, which, you know, I kind of do hope makes its way into the political discourse. No better time than the year before the election.

ROMANS: That's what the bipartisan agreement is about.

VELSHI: Do something with this.

ROMANS: Figure it out.

VELSHI: All right. Coming up next on YOUR MONEY, why hybrids stand apart from ordinary cars when it actually comes to how much the car will be worth when you go to sell it. You'll want to know more about this and your car on YOUR MONEY. Stay with us.

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VELSHI: Well, if you had $1.5 million lying around --

ROMANS: Of course.

VELSHI: For your new Lamborghini, you're out of luck.

ROMANS: The 2008 Lamborghini --

VELSHI: You don't know how to pronounce it until you're buying one. ROMANS: I know exactly, it is only if you're pronouncing it you can buy one. It is already sold out. The company calls it the most expensive and exclusive car it ever created.

VELSHI: They would know. Just 20 models were sold worldwide, which is fitting for a car that looks straight out of off the set of a Hollywood action movie. Five sold in California alone. When you're buying one of those cars I suppose you're not all that worried about resale value.

ROMANS: I'm sure you know most cars, you buy like a care. Like you and I buy, we wait five years after we drive it off the lot its worth 65 percent less than what we got it for. A car like that only adds in value.

VELSHI: It has its own market. But for the rest of us, we're going to discuss resale value. Peter Valdes-Dapena is with us, he is from CNNMONEY.com. What do the rest of us do?

PETER VALDES-DAPENA, CNNMONEY.COM: The rest of us, I mean, resale value is depreciates and loss of value on the car is actually the single largest expense of owning a car. Think about it --

VELSHI: Putting gas in.

VALDES-DAPENA: Sure, I mean 65 percent of a $30,000 car is a lot of money in five years, but, you know, you have to consider it every car has it. Again, it's like fuel and make it part of your consideration when you're shopping for a car.

Now, Kelly Blue Book did a survey recently. They're experts in used car values and they do a thing every year looking for the cars that hold their value the best. And they found a bunch that hold 50 percent or even a little more than 50 percent of their value, which is remarkably good over five years. Now, again, something to look at, something to consider, it doesn't mean that these are necessarily better cars than one that might lose their value faster.

VELSHI: Let's take a look at some of these.

ROMANS: The Volkswagen Eos, $29,000 to $38,000 is the base range, 5 year retained value 52 percent.

VELSHI: That's pretty good.

VALDES-DAPENA: I like the Eos a lot. Kind of a 21st century version of the old Volkswagen, but this has a hardtop, convertible, plenty of back seat space. Volkswagen doesn't have a good reputation of reliability. They're down near the bottom. But resale value takes into account a lot of things like supply and demand. Volkswagen make excellent cars to drive, they look great and have a harden fan base that loves them and they're just not, there aren't a ton of them out there, it's a supply and demand thing that they hold their value well for other reasons.

VELSHI: Also on the list the old standard, the Toyota Corolla. That car is remarkable. It has been around forever and it is --

ROMANS: Cheaper than the first one, too.

VELSHI: Much cheaper.

VALDES-DAPENA: Much cheaper and there is the good old-fashioned, just a good bread and butter car. It is reliable. Toyota has always had a reputation for solid reliability and, you know a lot of people out there that are shopping for used car that is looking for a cheap car to get me to the office every day and that's a perfect car for them.

VELSHI: The Scion does pretty well, too. Toyota makes them, as well. Tell us about this.

VALDES-DAPENA: They just redesigned that. You remember the old Scion Xb that basically looked like a cardboard box that was painted and put on wheels. They lengthened it out a little bit; add a little more mass to it. I really like this car, myself. It's cheap, it has Toyota behind it.

VELSHI: A lot of cargo space.

VALDES-DAPENA: A lot of cargo space for a small car. It's actually kind of fun to drive.

ROMANS: A mini cooper, I see a lot of those in my neighborhood. The Corvette on here which is an American classic. My dad has a 1959 corvette, roman red is the color. That's something that over some 20 some years has done well and the Honda Civic hybrid. A hybrid on the list.

VALDES-DAPENA: The hybrid was not one of the top ten. The Honda Civic hybrid was the top ten, but hybrids overall are not predicted to hold their value.

VELSHI: Why?

VALDES-DAPENA: Well, as I said, a lot of this stuff, it's not always rationalized. One thing is, people, they're in the used car market are usually looking to spend not so much money. And they're going to be concerned about reliability and they think unreasonably, it's not really something you should be worried about, but people are worried about, what if I have to change the battery? What if it breaks down?

That there concerns about it and also there are coming in a few years a whole bunch of diesel-powered cars coming in this country. Which, if you have been to Europe, all over the place. We haven't seen them here. We're just going to start getting them. Very good fuel economy and they don't have carry and extra backpack and you don't have electric motors. Those are going to be competition for hybrid cars.

ROMANS: Resale value Peter, it's important for some consumers, it's not important for others. Some people want the car they want. Some people want a car that has the reliability they want.

VELSHI: A lot of information to put in the mix.

VALDES-DAPENA: When you go it negotiate on a car, if you know the car will not have good resale value, but you want it anyway make sure that you are getting a good price on that car so you know what you're doing.

VELSHI: Peter good to see you, thank you.

Peter is going to be following everything to do with cars over the next little while. Always fun to have him around. How do you have a car with your name in the color? Roman red.

All right. Coming up on YOUR MONEY, how a clammy sweat soaked t- shirt inspired a booming business. You'll want it see this story. We're coming right back on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: All right. You know, have you seen this underarmour clothing? In a certain demographic everyone has seen it. It started in the locker room of the University of Maryland in the '90s. Kevin Plank, a football player who actually sweat a lot, he had to change --

ROMANS: Is there any other kind?

VELSHI: He had to change his cotton undershirt three times during a game because it got so water logged and it slowed him down. When he graduated he made a new undershirt that kept athletes dry during workouts and games and he turned it into $500,000 a year business. I went to the University of Maryland homecoming game to catch up with Kevin on his old stomping ground. Take a look at this.

(BEGIN VIDEOTAPE)

KEVIN PLANK, FOUNDER * CEO, UNDER ARMOUR: Number one in your heart. The foundation of our company was on a t-shirt that would take a few ounces off of a player during the course of a game. My idea was as simple as an athlete, I didn't like the way my t-shirt felt underneath my equipment. The idea was to create this shirt made of this synthetic material that wouldn't hold moisture and hold the moisture's weight that would wear snug around the body like second skin.

VELSHI (voice over): Did you get immediately that people were saying the same thing you were?

PLANK: Cotton t-shirts like I said were saturated weigh about 2 1/2 to 3 pounds. Our t-shirts dry were 3 ounces and completely saturated because of the material and the way it wears on your body weighs 7 or 8 ounces. So, versus your competition, I could over the course of the game carry around two to two and a half pounds less than my competition. It was about giving the athlete just a little bit of an edge because it's not, people don't lose by miles and so on, they lose by, you know, inches. That's what our product was meant to do. VELSHI: When a guy like me who doesn't have an intimate relationship with athleticism wears one of your shirts, I feel athletic, I feel tough, I feel like a guy. Now, you're marketing to women. Does that affect the guy thing?

PLANK: The reason that we made women's products was because we noticed we were skewing so small on the sizes that it was women buying it and they said, hey, can you make something for us? Again, the first approach that we took at that. We didn't get it right. We didn't get the female athlete right.

VELSHI: Why not? What was the problem?

PLANK: I don't think we talked to enough women at the time. So, it was, it was 2001, 2002, we made our first attempt at launching 11 styles and the concept of shrink it and pink it doesn't work. We said how do we become authentic to the female athlete, as well.

VELSHI: It is your alma mator, you played this field. But now, you're not just watching this exciting game, you're working. Tell me what's happening while you're watching the game.

PLANK: A brand is something that the consumer trusts and that consumer trust is something that builds from the fact that they expect us to be here with our team on the sidelines watching the equipment manager, watching the trainers and how are they dealing with it. How long did it take? Did they have a problem? Is it a strap break, did a shirt rip, did this happen? How do we fix that next time? Was a player restricted by a movement? That's how you get better. It's not sitting behind a desk or behind a computer, its living and breathing it.

(END VIDEOTAPE)

ROMANS: That's cool, shrink it and pink it. Talk to more women. That was a very, sort of made mistakes along the way but learned from them quickly and adapted and saw that idea and took.

VELSHI: He gets it watch a lot of sports.

ROMANS: For many college football players the end of a season marks the last chance for seniors to play for their home crowd.

VELSHI: But we met a guy that took more than three decades to play his final season. It's game time at Sul Ross State University. And number 49, Mike Flynt, is in blocking for the kicker, but this back-up linebacker isn't your typical player. See, Mike Flynt is 59 years old.

(BEGIN VIDEOTAPE)

MIKE FLYNT, LINEBACKER, SUL ROSS UNIVERSITY: I played 37 years ago as a junior and came back my senior season and got into a physical altercation and I was kicked off the team. This past summer we had a reunion, one of the former players. I feel like I could play. VELSHI (voice over): Since Flynt never played his senior season he had a year of athletic eligibility left, so he decided to try out and he made the team. Primarily due to the great shape he is in. After graduating in 1972 he worked as a strength coach for various University athletic programs and later on invented an exercise product. But part of him felt unfulfilled.

FLYNT: For more years than I can remember I regretted not only being able it play my senior year but I felt like I let my teammates down. This was an opportunity for me to come back and make up for those guys I let down so many years ago.

VELSHI: So Flynt is out there playing against kids that are his grandchildren's age for a coach that is eight years younger than him. Despite some minor injuries he's playing in games and looking ahead to his next challenge.

FLYNT: We have the NFL draft -- no.

(END VIDEOTAPE)

ROMANS: And he has a sense of humor. Athletic, he is funny.

VELSHI: All I have in common with him is that we will have the same head of hair when I get to his age.

ROMANS: Coming up next on YOUR MONEY, the numbers you need to know when you are asking for a raise and why just one of them is what you want to get paid.

(COMMERCIAL BREAK)

ROMANS: Overworked, underpaid, everyone thinks they are. We all are. Time to stop complaining.

VELSHI: Absolutely. You can change all of that by just demanding more money. From CNN's Ines Ferre, Espanola is joins us now to explain. She keeps coming back and giving us the most obvious tips about things that people don't do. So tell me, because I'm listening to you. I know what I have to do.

INS FERRE, CNN CORRESPONDENT: I know and this is actually segment, when I told my friends about it, they said, wait a second, I need a raise? Yeah. So this is for you. You haven't had a raise for a while or when you get one, it's average. Well, some experts feel everything is negotiable, even your raise. If you want more money and you know you're worth it, listen to this.

(BEGIN VIDEOTAPE)

HAIG CHAHINIAN, CAREER & EXECUTIVE COACH: First, I say, it's market value. What does a market pay for a role similar to yours? It is critical to know your accomplishments over the course of the year. How did you raise money, how did you help others generate or save revenues? That is critical both for yourself and for your competition and for your boss. FERRE: And when is a good time to ask for a raise?

CHAHINIAN: People a lot of times think during their performance review is the time to ask for a raise, that's when you're reviewing your accomplishments. However, starting that conversation about three to four months prior is the best campaign method.

FERRE: What about for those people that think well the economy is slowing, maybe this isn't the best time.

CHAHINIAN: We can think of all kind of excuses on why not to bring up this conversation. It could be a difficult one. After a mission accomplishment is a time to bring up a raise.

FERRE: What about as people are leaving the company, you've got less people in the company; you're taking on more work.

CHAHINIAN: Yes. I'd absolutely say be aware of what's going on around you. On one hand I might feel that during a period of layoffs, it's not a good time to ask for a raise, but, however, if you find that you're taking on the role of the work of two or three of your colleagues becoming one your job. That is a great time to ask to raise that is great bargaining power.

FERRE: Do you ask for a raise in percentages or dollars?

CHAHINIAN: Yes it depends. It's interesting, I think sometimes a percentage could be easier, a 3 percent raise rather than $30,000.

(END VIDEOTAPE)

FERRE: Now, if a 3 percent raise for you equals $30,000, you might be doing pretty well. Keep the personal stuff out of it. Don't talk about why you need it; I just bought a car, my mortgage, student loans. Keep it all out. Your boss doesn't really care.

VELSHI: That's interesting. A lot of interesting little tips in there that I wouldn't have thought about because it's one of those things, why don't I just take a little time off and get back it this one. Hit it hard. If you've done it well and you succeeded in a project that is a good time to go in there.

ROMANS: Go in there with specifics. I added x percent of shareholder value or I saved the company x amount of dollars and I just want to point out that this better come back here.

FERRE: Connect it to the bottom line. How did you save the company money? The other thing is that some say that sometimes bosses will want to rather give you a bonus rather than a raise.

VELSHI: It doesn't increase the base line.

FERRE: They don't have to give it to you next year, let's say. Your boss might not be the person who actually ultimately decides. You have to make sure you're giving your boss all the information that he needs to give to his boss if that's the way the decision comes down. VELSHI: You know what Ines will come to talk to us about, she told me this, how to deal with gifts at the holiday season for your co-workers and your boss. Can you, should you? You going to tell us about that?

FERRE: I'm going to tell you about, but not today.

ROMANS: In this particular situation gifts among co-workers is --

ROMANS: We worked this out.

ROMANS: We have, actually.

VELSHI: We know what we're going to get each other.

ROMANS: Did I give it away?

VELSHI: They have stay tuned, they have to come back another week to find out about it.

FERRE: I have a gift for you guys.

VELSHI: This is going to be, you'll have to join us for the special gifty edition of YOUR MONEY.

Thanks for joining us of this edition of YOUR MONEY. You can catch Christine every weekday at 7:00 p.m. Eastern on "Lou Dobbs Tonight."

ROMANS: You can see Ali every week day morning on "American Morning." We'll see you back here next week.

VELSHI: Saturday at 1:00 and Sunday at 3:00. See you then.

(COMMERCIAL BREAK)

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