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Open House

Mortgage Meltdown; Safe Toys; Gift Giving; Holiday Tipping

Aired December 22, 2007 - 09:30   ET

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

T.J. HOLMES, CNN ANCHOR: Yeah, Santa, can we do this another time, please?
Oh, Sophia.

RANDI KAYE, CNN ANCHOR: They get better.

HOLMES: This is the first time meeting Santa. Her dad, Anthony, says she started whaling the moment he placed her on Santa's lap.

KAYE: And we even have a vintage photo. I-Reporter Carolyn Thorpe says this photo of herself was taken back in 1957 in Toronto when she was just two. Look at her, she's quivering, it looks like. She says she blames all of her adult traumas on this very moment. But then she adds, she's just kidding, mom.

HOLMES: I can trace back a lot of my adult issues to that moment with Santa.

Well folks, do you have some scared of Santa photos. Send those to us at CNN i-Report. And please make sure the photos you or a family member took. Just go to CNN.com, click on i-Report and upload those photos.

KAYE: Christmas in Iraq. We'll salute the men and women spending the holiday on the frontlines in our next hour. A soldier joins us live from Iraq to tell us about his letter to Santa.

HOLMES: But, OPEN HOUSE with Gerri Willis starts right now.

GERRI WILLIS, CNN HOST: Hello, I'm Gerri Willis and this is OPEN HOUSE, the show that saves you money. Coming up, how to find toys for your children that are both safe and affordable, we're talking less than $40. Then 'tis the season for giving, but who do you give to and how much? It's all about tipping etiquette.

But first, before we get into the holiday spirit, we want to give you a quick update on the mortgage meltdown. Foreclosures decreased by 10 percent last month. That's good news, but overall, the picture is not upbeat.

Take a look at this. On a year-to-year basis, foreclosures have increased steadily. As you can see here, they are up nearly 70 percent from a year ago. People are still losing their homes and, in March, another wave of homeowners will see their adjustable rate mortgage reset. So, we may see another wave of foreclosures after that. And in an effort to regulate the industry, the Federal Reserve, this week, proposed stricter rules for mortgage lenders in an effort to prevent abusive lending to those with weak credit. Now, the new rules would force mortgage companies to show that customers can realistically afford the mortgage they take out. It also requires lenders to disclose hidden fees as well as write their mortgages in English, not the jargon we usually see.

But the plan drew a lot of criticism mainly saying that it's too little, too late. The new regulations are expected to be approved after a three-month period for public comment.

Now, it's crunch time. December 25 is getting closer and closer. And if you're like me, you're not done yet. There's more to do before you run out to the store, though, you'll want to listen to our next guest. Lisa Freeman, she's editor in chief of "ShopSmart" magazine.

Good to see you again, Lisa.

LISA FREEMAN, SHOPSMART MAGAZINE: Good to see you, too.

WILLIS: It is crunch time. I'm worried about getting ready.

FREEMAN: The home stretch.

WILLIS: But, before you grab that circular and go shopping at the mall, what should you do?

FREEMAN: That's right. A lot of times you get those circulars that say 50 percent off, 70 percent off. Oh, my god, I've got to run out to the store, this is like the best price, you know. But many people don't realize is those percentages off are often based off made up original prices. They're not based on the actual MSRP, or manufacture's suggest resale price.

WILLIS: Now, what does that mean?

FREEMAN: Well, every product has a manufacturer's suggested retail price. But, what happens is the retailers, in order to make the sales look bigger than they are, they make up their own original prices.

WILLIS: That's terrible.

FREEMAN: That's right.

WILLIS: But, you don't know when you look at the circular, right?

FREEMAN: That's right. There's no way to necessarily know that. So, what we recommend is do your research before you look at the circular and run out to the store. Go online, do a little search, see what the real price is for that item and see, you might even be able to get a better deal somewhere else.

WILLIS: You say avoid some gift cards. FREEMAN: That's right. We don't recommend gift cards with big logos of credit card companies or banks because they come with lots of fees. You may have to pay them just to buy these cards, and you also -- the recipient may also have to pay fees, for example, maintenance fees, they may have to pay Transaction fees.

WILLIS: They get you coming and going with these.

FREEMAN: They absolutely do and a lot of them also expire. So, they may look great because a lot of these cards can be used anywhere, but you're better off going for the retailer cards like Gap's card or Barnes and Noble's card because those don't have expiration.

WILLIS: You have a little piece of advice we haven't heard before and I think you should tell folks about it. The gift receipt for the gift card.

FREEMAN: That's right, a lot of people don't realize, but when you're giving, not just other gifts, but gift cards also require gift receipts because in case that person loses the card or the card gets damaged or stolen, they're going to need the receipt in order to replace the card.

WILLIS: And they know how much you spent anyway, right? It's not like it's a big secret.

FREEMAN: You're right, absolutely.

WILLIS: Let's talk about -- this is a great idea that I never heard before. Cell phones, there's a way to do some comparison shopping when you're in the store.

FREEMAN: That's right, there's a service called Frcall. You call 1-888-do-frcall F-R-C-A-L-L. And first you have to sign up online, but what you do is, say you're in a store and you're looking at a big screen TV or a blender or whatever, you plug in, you call the "do-frcall" and plug in the unit price and then you can find out, is that a good deal, is that not a good deal? And maybe if it's not a great deal you might be able to use that price information as a bargaining tool.

WILLIS: I love that bargaining chip. Will it tell you what other stores have the item you are looking at?

FREEMAN: Absolutely. It's even going to tell you online prices. So, you can really get an idea of whether this thing you're looking at is a good deal or not so good deal.

WILLIS: I love that. I love that. And you do say don't forget gift receipts. We talked a little bit about that with gift cards, but the devil is in the detail with these receipts because if you don't have these, you may be totally out of luck.

FREEMAN: That's right, a lot of people don't realize that if you don't give someone a gift receipt, and they decide to return the item, they're most likely going to get store credit for the lowest price at which that item sold for. So, that may be half of what you actually paid for the item and you would want the person to get the full amount that you paid for it. So that's a really good reason to always include the gift card. Also it may affect their ability to get a warranty on the item.

WILLIS: You know, you also want to make sure that you're not ripping up that packaging for some of the electronics goods you're giving this year because if you do you may not be able to return that gift.

FREEMAN: That's right, you may not be able to return it or the recipient may end up paying a 15 or 20 percent restocking fee.

WILLIS: Hate that. Hate the restocking fee.

FREEMAN: If they don't want it, tell them don't open it yet.

WILLIS: OK, last-minute gifts, any ideas there?

FREEMAN: Well, one of my favorites, actually, is orchids. If you're like, it's a last minute you need a hostess gift.

WILLIS: That's a lovely idea.

FREEMAN: They're very inexpensive and they make such a lovely gift. Put them in cellophane and, anyway...

WILLIS: You didn't bring me an orchid today.

FREEMAN: Next time.

(LAUGHTER)

WILLIS: Great idea, Lisa. All right, and I'll bring you one, too. OK, thanks for helping us out today.

FREEMAN: You're welcome.

WILLIS: Everyone is destined to have a few holiday returns, and while return policies are getting way more complicated, you can make the process seamless. First, if you have any toys on your child's wish list, double check with the Consumer Safety Commission to make sure you didn't miss any recalls.

Now, their Web site is cpsc.gov. Go directly to the retail store if the product was recalled. And, remember, some stores have separate return deadlines for different categories of products. So, if you bought a digital camera, the return policy may be different than if you bought a sweater.

This year, a number of stores have extended their holiday return deadlines. So, check the store's Web site or call customer service for information.

And make sure you open those packages with care, especially the electronics. You may have to pay a restocking fee of 10 to 15 percent of the product if it's used or opened. If you've had any problems returning gifts, ask to speak to the store manager or even file a complaint with your state's attorney general's office.

Up next on OPEN HOUSE, with all the safety concerns out there we'll show you how to find toys for your children that are safe and affordable.

And take the stress out of the holidays, how to give without losing it.

And how much and whom are you tipping this holiday season? Find out all about tipping etiquette. But first, your "Tip of the Day."

(BEGIN VIDEOTAPE)

WILLIS (voice over): Keep your driveway and walkway slip-free during winter months. Shovel as much snow as possible, shovel early and shovel often. Only use salt on icy spots that can't be removed with a shovel. Use calcium chloride rather than sodium chloride salt, it's less harmful and you can easily find it in most home supply and hardware stores.

While calcium chloride costs three times as much as standard rock salt, you'll only need one-third as much to get the job done. You can also mix salt with sand or kitty litter so you use less of it. That's your "Tip of the Day."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: According to the Consumer Product Safety Commission, over 25 million toys on shelves have been recalled in the past year. With 3.8 million of those found to contain lead. Now, the constant recalls have left many parents worried about buying a safe toy this holiday season, one within their budget. Camille Chatterjee is an editor with "Parenting" magazine. She's joining us here.

Camille, good to see you again.

CAMILLE CHATTERJEE, PARENTING MAGAZINE: You, too, Gerri.

WILLIS: All right, we've got lots of fun stuff here, but first how do parents know they are buying a safe toy?

CHATTERJEE: You know, parents really have to take the onus to do the research themselves. Go online, check out the latest recalls. Every day there are new recalls. They can go to the cpsc.com Web site, they can go to Parenting.com which also had daily recall updates. So, educate yourself before you go into the stores.

WILLIS: And of course, you want to keep costs down. How do you do that?

CHATTERJEE: Exactly, well again, use the Internet, it's your friend. There are all kinds of cost comparison sites like MySimon.com and ShopLocal.com which let you actually see what the prices are at different stores in your neighborhood or online. So, do your research so you're not getting, you know, swindled at the toy store.

WILLIS: Now you know how this works on Christmas morning the kids open the toys and then they play with the boxes rather than the toys. How do you find a toy that they'll actually play with again and again?

CHATTERJEE: Well, you know, the trendiest toys, the ones getting all of the advertising, those aren't necessarily the best bang for your buck because a talking doll, for example, it talks twice, you learn what it says and then the kid doesn't want to play with it.

WILLIS: And then you're done.

CHATTERJEE: Exactly, so the box is open-ended play is what it's all about. Basic blocks, toys that have stood the test of time that kids can play with over and over again and they're doing the play, they're not listening to the play.

WILLIS: Well, we've got a lot of toys, right here. And you mentioned blocks. We've got a block, here. A train set. This is for little, little kids, babies, actually. And this isn't wood it's looks like wood.

CHATTERJEE: It's actually a really durable foam, kids can chew it, it'll be fine. If it knocks into your wall, it won't make a mark and the best thing is it's under $10 for all of these four cars. So, it's a great value.

WILLIS: Wow, all of these are under 40 bucks. We're doing really good with prices. We also a very cool rocket.

CHATTERJEE: The iPlay rocket. You know, we mom tested this. That means we sent these out all over the country and this was the toy of the year that moms and kids loved the most. We did a photo shoot for our toys of the year issues, the kids could not stop playing with this thing. So, it's lots of bang for the buck. Siblings can play with it together. Kids won't get tired of it which is great, for any mom who gets tired of entertaining her kids around the holidays.

WILLIS: So sweet. I really love that.

CHATTERJEE: You get all of those characters for just $40.

WILLIS: All right, we move up to toddler. The world changes, you have Bobbin Bumblebee. What is this?

CHATTERJEE: This is a game that is basically, it's a bumblebee that flies around the game board and your goal is to swat at the bumblebee to keep it away from your honey. It sounds simple, but it's addictive. And toddlers, they're just learning motor skills, so it's really challenging and fun for them to swat the bumblebee before it hits their honeycomb.

WILLIS: OK, we have the Water Wizzler. CHATTERJEE: Yeah, a lot of us remember these from when we grew up and now they're back. Again, they're under $10 and adults will like them, they're fun for desk play, but they're also fun for kids because all you do is push the button, instant gratification and it's challenging, too.

WILLIS: Yeah, I'm not winning. I can tell you that right now. Very difficult.

CHATTERJEE: Sometimes kids can do better than we can. That's the scary thing.

WILLIS: All right, you have something called Hyper Dash. Now, this is as kids get older, 5 years of age, tell me about this.

CHATTERJEE: Hyper Dash is great because it actually gets kids off the couch. You see, this joystick, it's electronic and it calls out the names of colors and numbers. You have little discs you put around your living room or the back yard, it calls -- the joystick will say "red," you run to the red disc. It says "three," you run to the three disk.

And you can actually make it grow with your child, because as the kid gets older, you can program it to do math. So it'll say "five plus three," and your kid runs to the eight disk. So again, lots of play value, it grows with your child, great value.

WILLIS: OK, you've got a really fun foam flyer, here. Tell me about this. This is simple stuff. You know, this is isn't brain surgery, but we also have paints. What's the idea, here?

CHATTERJEE: Well, for $6 you get a box with four of these foam flyers that your kid actually puts together. When he's done he can paint them and when he's done with that he can fly them all afternoon. So again, you have lots of open-ended play, lots of activities in one box.

WILLIS: Cool.

CHATTERJEE: And it's only $6, so you are getting a whole day or two of fun out of this one inexpensive little box.

WILLIS: I love that. That's a lot of fun. Thanks so much for helping us out with this topic today. Great stuff.

Still ahead on OPEN HOUSE, how to navigate through the holidays without losing your cool. It's all about stress-free giving and we'll show you how.

Then from the barber to the mailman, who you should tip and how much this holiday season. We'll break it down for you. But first, your mortgage numbers.

(COMMERCIAL BREAK)

WILLIS: According to a survey by the American Psychological Association, people list a lack of money as the top cause of holiday stress. The second biggest? Gift giving. Trying to find that perfect gift can bring on a huge amount of pressure, but it doesn't have to. Martha Beck is a life coach and contributing writer for "O" the Oprah magazine. She's joining us today from Phoenix.

Martha, great to see you.

MARTHA BECK, LIFE COACH: Thanks for having me.

WILLIS: Now, you have some advice for budgeting on the holidays.

BECK: Uh-huh. Absolutely. First of all, just remember that it truly is your interpersonal relationships that matter at the holidays, as cliche as that sounds, and that there are all kinds of thing you can do and offer that don't necessarily break your budget.

WILLIS: Great. OK, so you know, we've been telling people for a month or so now that you don't want to spend more than what's going to cost you a month, two months to pay off on your credit card. So, we've been advising people to limit their spending and you say it's not just about what you buy, it's also about what you can do. What do you mean?

BECK: Well, if you don't have money, give what's even more difficult to find these days, which is time. For example, last year I gave my best friend the gift of painting her living room. I happen to love doing -- painting rooms. So, it was something that I could do that meant more to her than money and we had a blast doing it. And it cost me maybe 25 bucks.

WILLIS: Wow, oh, that's great. And I'm sure she loved it. You probably had a great time.

BECK: Oh, we painted the whole house. She said it change her life.

WILLIS: All right, you have some unusual advice for getting the right gift. What is it?

BECK: Well, the first thing is people accumulate the things they love. So, when we go out gift giving we think, she's got a million sweaters, I can't get her a sweater. Here's what you got to remember, what people have most of, that's what they want more of. I know it's counterintuitive, but it's true. Check out what they have the most of, buy them something else that's like that. You'll win every time.

WILLIS: That's a great idea.

OK, you also have unconventional advice. You say you don't have to give somebody a gift who gives you one. I would be so embarrassed.

BECK: Well, you need to get over that. That's something you need to work on psychologically, because in our world, we are so interconnected that we may have hundreds of friends and acquaintances. And you just can't exactly balance every one of those relationships. So, what you have to do is be very warm, very connected to the person and not embarrassed by any imbalance that you may perceive, because that's going to get in the way of this connection with the person and that is always primary. So be kind, loving but you don't have to be obsessive.

WILLIS: People worry about getting the right gift, not just spending a lot of money but also, am I buying the right thing. What would you tell them?

BECK: I'd say, get something that makes you happy to give. When you are giving something from a place of joy and, you know, you're thrilled to be giving it, it's always going to have a good effect on the recipient no matter what the object is.

WILLIS: You know, I think that people are always so worried about whether they're spending the right amount. One thing that people can do this year, particularly if you are in a big family or have a large network is exchange names. You know, downsize this year. It's not about what you give at the end of the day. It's about the feeling behind it, don't you think?

BECK: Absolutely. And we forget that so much. If your focus is on things instead of people, you won't have a great holiday and you won't have a great life. If your focus is on people instead of things, the things work themselves out in the long run.

WILLIS: Martha Beck, focus on people instead of things. I love that. Thank you for helping us out today.

Still ahead on OPEN HOUSE, now that you know how to give stress- free, there's one more question. Who to give to and how much? Our holiday tipping guide is coming up next.

(COMMERCIAL BREAK)

WILLIS: Last year, Americans tipped over $26 billion. Now, whether it's the dog walker, the baby-sitter or the mailman, it's hard to know how much to give. But, our next guest is here to tell you how. Amanda Walker is with "Consumer Reports," she joins us now.

Amanda, welcome.

AMANDA WALKER, CONSUMER REPORTS: Thank you. It's nice to be here.

WILLIS: You guys just conducted a big survey asking Americans how they tipped, how much they tipped. What did you find out?

WALKER: We found out that they actually tipped more last year than they did the previous year we did the same poll. About $5 more per tip, and they're tipping more people, so it's not just the people that you think about that you mentioned like the person that delivers your mail or the person that does your hair. It's extended to personal trainers and massage therapists and someone that maybe takes care of an elder parent for you.

WILLIS: Wow. OK, now this is different all over the country, isn't it? I mean, it depends on where you live, what you're tipping, how much you're tipping. Right?

WALKER: Yeah, that's true, we found there were some regional differences. For example, people in the Northeast tended to tip the most. People in the South tended to tip the least. But it's not because they are cheap in the South, it's because they tended to give a personal gift either in addition to a tip or instead of a tip.

WILLIS: I like that. OK, there's a use for my Christmas cookies. OK, let's talk a little bit about gift cards because you say that's a really big trend people giving gift cards instead of cash.

WALKER: Well, they make sense. You feel like it's easy, anyone can use them anywhere they go. But the problem is that especially bank issued gift card comes with a lot of fees, they may have expiration dates. So, you want to be very careful with them. Only use them if you are really out of other ideas.

WILLIS: OK, the last ditch is the gift card.

WALKER: The last ditch. And then let them know, yes, it does have an expiration date or any fees they might incur.

WILLIS: Let's talk about people and how much to tip them. OK, let's start with the mailman. How much do I give the mailman and do I give money to the mailman?

WALKER: You're not supposed to give money to the mailman. Actually, the U.S. Postal Service has rules against it. You're not supposed to give any cash nor a gift that's worth more than $20. So, you do have to be careful, there's some folks you want to check out ahead of time like a teacher as well, there may be rules they may not be allowed to accept cash gifts.

WILLIS: How about the newspaper carrier?

WALKER: Newspaper carrier tends to be $10 or $15. It's probably what you might tend to tip them in any given week.

WILLIS: Alright, and, you know, hairdressers. OK, I know we spend a fortune on hairdressers. How much money do you give them?

WALKER: Well, most people said they give, typically -- men tend to give about $16 and women about $20 or so. But there's a range, as well. So, it can depend on where you go. If you go to a place that's more expensive you probably tip a little more.

WILLIS: You give money to the teacher? I think that's odd.

WALKER: Yeah, some people do but again, you want to call your board of education office and ask if they have any rules against it because it can be considered a bribe, which it might be. So, really you want to ask ahead of time and then consider an alternate gift, perhaps a book or something you've made yourself.

WILLIS: School bus driver? WALKER: A lot of people do tip the school bus driver, say, $20 or so. I mean, this is someone that has the lives of your kids in their hands. But it's more typical in some areas, say the northeast than others. So, that's something if you just moved to a new area you may want to ask your neighbors what they do.

WILLIS: If you don't want to tip somebody, but want to express your gratitude, what do you give them?

WALKER: You can give them a gift card, but if it's somebody you know, you know, think of what they like. So, anything else, you know a book or something you've made. Those cookies sound really good to me. You could give them cash, as well.

WILLIS: All right, well, Amanda, great information. Thank you so much.

WALKER: Sure. My pleasure.

WILLIS: You can hear much more about the impact of this week's news on your money on YOUR MONEY with Christine Romans and Ali Velshi coming up in a few hours at 1:00 p.m. Eastern Time here on CNN.

As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week here on CNN and you can catch us on headline news every Saturday and Sunday at 3:30 p.m. Eastern Time. Don't go away, your top stories are next in the CNN NEWSROOM. Have a great weekend.

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