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Your Money

Getting Your Holiday Debt Under Control; Marketers Plan for Your Spending; Made In America: What it Can Tell You About Toy Safety; Who Should You Tip This Holiday Season?

Aired December 23, 2007 - 15:00   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR: A look at our top stories in a moment, YOUR MONEY is coming up next and here now is a preview.
ALI VELSHI, CNN HOST: Thanks. Coming up on YOUR MONEY a whole hour on how to get your holiday debt under control before you even spend a dime.

CHRISTINE ROMANS, CNN HOST: We are going to tell you how marketers plan on your need for static to buy a bunch of stuff you don't need.

VELSHI: And what the made in America label can really tell you about toy safety.

ROMANS: YOUR MONEY starts right after "Now in the News."

WHITFIELD: Now here is a look at the top stories. It is the last Saturday before Christmas and plenty of you are getting ready to hit the road. More than 65 million Americans will travel this holiday season. And AAA says most will be driving.

New claims that the CIA withheld information about interrogation videos that were destroyed. There were times that members of the 9/11 Commission asked for details on the questioning of al Qaeda operatives. The "Times" says members were told they had been given everything they had asked for from the CIA.

American Eric Volz has left Nicaraguan and gone to hiding after Nicaraguan court overturned his motor conviction. Volz had been found guilty of murdering his ex-girlfriend, despite witness testimony that said he was else where when the slaying occurred. Some Nicaraguans are outraged by the release claiming Volz got special treatment because he is an American.

We'll update the top of stories at the bottom of the hour. Now time for YOUR MONEY.

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 why buy so much stuff at holiday time that you don't really need.

VELSHI: I'm guilty of that.

Plus, those made in America labels and what it says about toy safety.

ROMANS: Later dog walker, yes. Postman, no. Find out who you should tip at this time of the year.

VELSHI: Well between the credit squeeze, the soft housing market, the price of gas, you might be cutting back on your holiday spending this year, if that's the case, and then a couple recent reports say that you are not alone. Thirty five percent of the shoppers surveyed by the Consumer Federation of America say they plan to spend less in 2007, than they did last year. That's up from 32 percent last year. The biggest purchasing drop in the survey's eight- year history.

ROMANS: Just over 30 percent of shoppers in America's Research Group Report expect to back off on how much money they spend. What's more, the same organization says that nearly 50 percent of the people it surveyed, half have higher credit card balances than a year ago.

VELSHI: Now, keeping your holiday debt under control starts before you opened your wallet by planning ahead and prioritizing you're spending in advance. Carmen Wong Ulrich is the author of "Generation Debt" and a finance columnist for "Men's Health." Carmen good to see you again.

CARMEN WONG ULRICH, AUTHOR, "GENERATION DEBT:" Thanks for having me back.

VELSHI: A couple of questions. It might be past the point that people can worry about this now, what are some things people should worry about now before the holidays on how to spend their money?

WONG ULRICH: Keep it cash as much as possible. If you can learn anything from this year to next year, prepare as much as you can. Part of that is making a list of everyone. You know, I don't want to use the word budget, let's call it a list, like Santa's list. How much you will spend on each person and stick to that budget, but gifts are only half of the expenses of the holidays, think about decorations and travel and gas, entertainment, all of those things including ...

ROMANS: Food.

WONG ULRICH: Food, even charity. The average amount that people spend on themselves during the holidays is $99. If the average budget is $800 that is a big chunk that maybe you can take yourself off the list.

ROMANS: You pick something up for grandma and see something nice for yourself. A point that you make that is very important. Someone who loves you and cares about you doesn't want you to go into credit card debt to buy them a gift. A lot of pressure on gift giving, but no one wants you to be in financial trouble because you had to give them a gift.

WONG ULRICH: Right, exactly. Communicate with your family. If you're in dire straits and need to cut down this year, maybe you could make it a kids' holiday and you have lots of nieces and nephews and you say to the adults, the kids are going to get the gifts this year.

ROMANS: That is what we are doing this year. My siblings, we are not going to exchange, we would exchange a name so we wouldn't have to buy everybody a gift and now we're not even doing that, we're exchanging names among the children. It makes it more fun.

VELSHI: That makes a lot of since. You talk about using cash. We had conflicting information over the course of the last year in that if you take out x number of dollars and you spend it, you know you're done. If you put it on a credit card, you have a statement of it, you have a record of it, you got possible better guarantees on the products if you buy potentially if they're toys and they need to be recalled.

WONG ULRICH: Exactly.

VELSHI: Is there an argument for using credit cards instead of cash?

WONG ULRICH: When I say use cash, it's more the idea of being able to spend what you can afford. Saying cash, OK, that's what you have on hand. Keep that in mind. If you use credit cards, great way, like you said to really keep a tally of how much you're spending. Use one card. Make sure it's the one with the lowest interest rate and if you can get rewards, that's great. Pay it off as soon as possible, 30 percent of shoppers are not going to be able to pay off their credit card debt for a year.

Carmine, you say avoid signing up for retail credit cards, why?

WONG ULRICH: Because they are the vein of the credit card world. The interest rates are so high; we're talking about in the 20s and any discount they'll give you up front that is 20 percent, its worth nothing if you can't pay it off in full.

VELSHI: I bet both of you are the kind of people who could sign up for the 15 percent off, if you get it, pay for it. I'm the danger. I'm the guy who says 15 percent off and I never have to pay.

ROMANS: You're the one they want.

VELSHI: If you can, all of this advice is a little different if you happen to be good at paying your bills.

WONG ULRICH: I'm guilty as charged. Way in the past, now just consider it a convenience in terms of paperwork and keeping up. If you can be a real accountant with your credit card bills and be really on top of things. If you can pay it off, especially the ones that say no interest over the year, if you can pay it off on time, it's a winner for you. If you can't, stay away from those cards.

ROMANS: Keep it simple. It doesn't have to be elaborate. Maybe you have to have the "a" list and "b" list sorry to say. Maybe just focus on close family and friends and move on from there.

VELSHI: Or be a bit of a hermit and just don't know people. WONG ULRICH: We don't want to do that.

VELSHI: Carmen, good to see you.

WONG ULRICH: Thanks for having me.

VELSHI: Thank you for being with us. Carmen Wong Ulrich is the author of "Generation Debt."

ROMANS: All right. Up next on YOUR MONEY, what's driving you to spend your hard-earned cash on all that stuff use doesn't need?

(COMMERCIAL BREAK)

STEPHANIE ELAM, CNN CORRESPONDENT: Time for this week's top money stories. I'm Stephanie Elam. Best showing in four years the economy grew close to 5 percent in the third quarter, up from 3.8 percent in the second quarter. The Fed loaned banks $20 billion in a special auction as it tries to help ease the credit crunch. The Central Bank also endorsed a plan to curve abusive lending practices.

Moving to housing news, foreclosures fell 10 percent in November from October, but are up 68 percent from last year. Nevada had the highest foreclosure rate for the 11th straight month and California had the highest number of foreclosures.

Investment firms continue to deal with the sub prime fallout, both Morgan Stanley and Bear Stearns reported their first quarterly loss ever. Morgan on a nearly $6 billion mortgage-related write down. That is on top of a previously disclosed 4 billion. The company is getting a $5 billion investment from China State Investment Fund. Morgan CEO says the results were deeply disappointing and that he won't take a bonus this year.

Bear Stearns took a larger than expected write down of nearly $2 billion on the mortgage meltdown. It's CEO and other top executives will also forego a bonus this year.

Mean while, Goldman Sachs posted better than expected quarterly results but its financial chief says he is cautious about Goldman's near-term outlook. That's your update, now back to YOUR MONEY.

ROMANS: It's the season of giving and a lot of what we're giving is stuff that the recipients, I'm sure that they'd love to get it and it's wrapped very nicely but they don't really need it, you don't have to get it. You don't have is to get stressed out and max out your credit cards in the quest for a perfect gift.

VELSHI: Our next guest thinks it's time to quit spending on what is unnecessary for the sake of ourselves and our credit and our planet --

ROMANS: Save the world.

VELSHI: Lisa Wise is the executive director of the non profit Center for a New American Dream, which works to help Americans consume responsibly. That's what you call rolling the rock up the hill, Lisa. What on earth could we possibly hear now because whatever you have to say, we have advertisers on the other side bombarding people with reasons on why they need to keep spending?

LISA WISE, CENTER FOR A NEW AMERICAN DREAM: Americans are being bombarded with marketing messaging. I think it is up to us to say enough is enough and to really particularly hard during this time of year to slow things down, but I'm actually going to invite all of you to think about what the holidays are about. It is really abut joy, it is about spending time with your family, and it is about quality of life.

Your earlier segment we talked a lot about how to manage your debt, but what if you managed to not spend as much in the first place? I think that is a good place for people to start when they think about consuming less overall.

ROMANS: So interesting you talk about consuming less because during the whole toy industry scandal I was asking toy industries, maybe parents just don't need to buy all these toys for their kids. They were, frankly, aghast. They said, no, this is the American way. We should be able to have what we want for our children; children should be able to have all of these things. You know, is there a rule that we should think about? Some people in my family only give three gifts.

WISE: I think setting boundaries is a really great way to start. Americans have been super sizing their consumption since the 1950s and, frankly, from our perspective and after some polling and nine out of ten Americans are really ready to downsize their holidays and be less materialistic. We don't want to deprive people the pleasure of being able to exchange gifts because that's the joy of the holidays.

What's important right now is to set those boundaries and find some fun, really creative traditional ways of being with your family that isn't about adding more stuff to your lifestyle and adding more things that are obsolete in a number of months. Pick a number of gifts you can exchange, set a spending limit and decide that everything you're going to exchange is eco friendly. Enjoy regifting, there are dozens of ways for us to be really creative.

ROMANS: Regifting, I always give Ali's gifts to someone else when I get them.

VELSHI: I have no issues of regifting; I think it is a great idea. The other thing Lisa that you touch on, I'm looking when you talk about consumption, we don't pull back on consumption very much for our cars when gas is over $3 a gallon. We don't see all of America rushing towards small cars and there is a very specific example of where we can save. It is not a matter of bad habit, its psychology.

WISE: It is. I think we need to ask ourselves, you know, where can we have more of what matters? I mean, there are people in the throws of such busy lifestyles. We're so stressed and I think that everybody would argue part of that stress comes from feeling like we have to have more and more stuff all the time.

We think about the investment of time, time at work to surround ourselves with these things that really at the end of the day don't mean that much. I think the exchange is a higher quality of life for people. Slowing down and enjoying what matters and spending time with your family. Those things come with a much higher reward without the same kind of cost.

VELSHI: Lisa your information is all good. I'm sort of in awe because it's, wow, people can change those kinds of habits, the whole different study. Lisa, thank you for being with us. Lisa Wise the executive director of the New American Dream.

Well coming up after the break, the hidden costs that can come with gift cards. You thought this was just a freebie. Watch out, it might cost you something, we will tell you exactly what gift cards are about when we come back.

(COMMERCIAL BREAK)

VELSHI: One way to reduce holiday stress is to let friends and family pick out their own gifts and giving gift cards takes the guess work out of the holiday. And people end up getting things they really want. I think it's not a bad idea, the trend towards gift cards.

ROMANS: Some people who are a little more old-fashioned and they say you might as well give a check and how personal is giving a check?

VELSHI: They box up the gift cards really nicely.

ROMANS: Make it look like a present.

If they ever redeem those gift cards it's a gift they really want. One study reports, get this, $8 billion worth of gift cards went unused last year. That's about $26 for each person in the United States. Todd Marks is with "Consumer Reports." Todd that means people essentially are not picking up their gift. They're giving free money to the retailers or the stores.

VELSHI: They put in their drawers and just sit there.

ROMANS: Why aren't people really cashing them in?

TODD MARKS, "CONSUMER REPORTS:" It really comes down to four basic reasons. People told us in national survey that we did that, one; they didn't have the time to use them. Two, they couldn't find anything they wanted. Three, they lost them. Four, they forgot about them and there was a fifth, they just expired. So, there are a lot of things that conspire against the consumer. We always tell people, if you're going to give a gift card or get a gift card, use it immediately.

VELSHI: I can't help too many people with the lost and forget, I'm actually one of these people. The expired thing, I have a real position that I don't think they should expire. Do most of them expire? Is it an assumption when you buy or get one that this should expire?

MARKS: We're with you. "Consumer Reports" believes that cards should not come with any onerous fees or expiration dates. A couple classes of cards that is much more apt to have fees. Those are the cards issued by bank or credit card companies like an American Express-type gift card.

They, along with cards that are sold by shopping centers, mall cards that are good for any store within a particular shopping center, those are the ones that are most likely to have onerous things like activation fees, transaction fees, dormancy fees, which means the card actually lose value when you don't use them and expiration dates, in which they can ultimately become useless if you don't use them within a given time frame.

ROMANS: Yet the growth of gift card giving is just incredible. Why are people giving them? What is the advantage of giving them?

MARKS: Well, actually, some estimates point gift card growth projected to be at about $100 billion by 2008. So, you're right. Their sales are skyrocketing and it's -- they're a popular gift because they're a perfect no-muss, no fuss way to shop for the finicky person on your list.

VELSHI: Fantastic last-minute gifts as a result. Merchants have played up this whole idea of making them feel more like gifts than the last-minute thing by virtue the way they merchandise them.

MARKS: Well it is the same thing like CDs, you put something pretty in a nice box with great packaging and it says, I love you in a very subtle, but classy way. Something that cash can't do.

ROMANS: That is true. I know you're not an etiquette expert, although I'm sure you use the right fork at dinner. A lot of people in the etiquette world are still kind of wondering if maybe a gift card is not really a gift.

VELSHI: They're old-fashioned.

ROMANS: Well, that is old-fashioned, but especially if somebody doesn't use it. I don't know. What do you think?

MARKS: Well I will tell you, if you don't use it, you lose it. We tell people, Gift cards are great. Get somebody a gift card to a book store, a restaurant, a hotel. Those are great. Those are the cards that tend not to have any of those ugly fees attached and they don't generally expire. The other thing, if you don't just use it right away, be sure to use it quickly and make sure you buy it for the -- spend the amount of money that is inherent in the card itself.

One of the great things about cards for retailers, they spur loyalty. Get you into the store. Once in the store, you tend to buy things that are more expensive. If you buy somebody a $25 gift card to Borders or Barnes & Noble or go to a Best Buy and give a $25 gift card you'll end up spending maybe $100 or more out of your own pocket.

VELSHI: Todd, good conversation. Thanks for being with us.

MARKS: My pleasure.

VELSHI: Todd Marks from "Consumer Reports."

ROMANS: Ali is not going to get me a gift card this year.

VELSHI: I'm very clear on that. For all the other folks I don't know what to get them, I'll get them gift cards.

ROMANS: I will regift you gift care right away.

Up ahead, safe toys and how to shop for them and American toymaker's take on whether made in the USA is really any guarantee against trouble.

(COMMERCIAL BREAK)

WHITFIELD: Hello, I'm Fredricka Whitfield in Atlanta. Now in the news Christmas travelers on the move. AAA says more than 65 million Americans will travel 50 miles or more this holiday season. And most will be hitting the roadways. Some may find weather quite the problem.

New claims that the CIA withheld information about interrogation videos that were destroyed. The "New York Times" say members of the 9/11 Commission asked for details on the questioning of the al Qaeda operatives. The "Times" says members were told they had been given everything they asked for from the CIA.

American Eric Volz is now in hiding due to reported threats. He was released from custody in Nicaragua and quickly left the country four days after a court overturned his conviction and 30-year sentence in the death of his Nicaraguan girlfriend.

Three young men charged with starting last month's massive Malibu fire are pleading not guilty. Six firefighters were hurt in that blaze and 50 homes were destroyed. Arson investigators say the fire started with an illegal camp fire.

Coming up at the top of the hour, our legal experts will weigh in on the CIA's destruction of those interrogation tapes. Now back to more of YOUR MONEY.

VELSHI: Twenty six million toys have been recalled so far this year. The vast majority of them manufactured in China and that's causing jitters for many consumers this holiday season.

ROMANS: Some concerned shoppers are coming home to products made in the USA. "AMERICAN MORNING's" Greg Hunter is here with more. Most of the toys are made in China, some in other countries, but some toys still made here.

GREG HUNTER, CNN CORRESPONDENT: Yes that is sad, but true. The Federal Trade Commission says that in order to tag an item made in the USA all or virtually all that must be made right here in the United States. Does that made in the USA label actually help when it comes to sales?

Here's one company that says, most definitely.

(BEGIN VIDEOTAPE)

HUNTER (voice over): The assembly line is running 24/7 at this Little Tikes toy plant in Hudson, Ohio. Churning out its most popular toy, the cozy coupe or what Little Tikes executive Vice President Tom Prichard calls ...

TOM PRICHARD, EVP, LITTLE TIKES: One of the best selling cars in America that's made in America.

HUNTER: Instead of in China, where 80 percent of toys sold in the United States are made.

PRICHARD: We have some of the best people right here in Hudson, Ohio, who know how to make the product and they're experts at doing it.

HUNTER: Workers here earn between $15 and $25 an hour, far most than most of their Asian counterparts. Still, the company says those higher wages pay off by creating a product with unique appeal. With $600 million in sales expected this year, Little Tikes is trumpeting the made in USA.

PRICHARD: Made in America, with Little Tikes means safety, quality, it means durability. Hopefully it means a trust that mom understands it's safe.

HUNTER: Marketing experts say the made in the USA cachet goes far beyond Little Tikes.

DENNIS DUNLOP, CEO, AMERICAN MARKETING ASSN: Consumers right now, in particular, equate quality with made in America.

HUNTER: Other popular toys like Slinkies and Crayola Crayons are also still made in the U.S. Consumer advocates say while U.S.-made products are more likely to comply with regulations than toys made abroad ...

RACHEL WEINTRAUB, CONSUMER FEDERATION OF AMERICA: A made in USA label does not equal a safety certification.

HUNTER: Weintraub wants the government to test all toys, regardless of where they're made. Instead of relying on the companies to do so. Little Tikes conducts its own safety test beginning with design. All products are created in wood or foam and then put to the test. This slide set started out a little shaky so they added on a foot. Little Tikes is adding this label, made in the USA.

PRICHARD: It helps moms find the product they're looking for in here.

(END VIDEOTAPE) HUNTER: Little Tikes does make some of its toys overseas, but says the majority, nearly 70 percent are made right there in Hudson, Ohio, and they don't have plans to change any time soon. As for some other toys, Crayola mostly made right here in Pennsylvania, right here in the USA and another favorite we found, another toy, kind of nasty, but always fun to blow bubbles.

Yes made in the USA and let me tell you it is tough to go out and find these toys, because 80 percent of those are made in China alone. You know, China gets a bad rep, but these are American manufacturers over in China.

ROMANS: Tell me why this CEO of Little Tikes decided to keep the bulk of his production here? Most CEOs say they simply don't have a choice.

HUNTER: They have a good relationship with their labor, they get it. That plastic car, for example, that cozy coupe that sells 300,000 a year a huge commitment in terms of resources and also there is a skill to put these together and they're afraid, according to the number two guy who will probably be CEO one day, the number two guy says, you know, it's a big gamble.

You take your operation to China, you don't know what kind of a product or how long it will take you to get that quality back and they make, according to them a top-quality car. We're not the cheapest; we think we're the best.

VELSHI: Good story, thanks, Greg.

ROMANS: All right. They are not ready for a personal China toy cut just yet? We're here to tell you exactly how to tell what you buy from where ever in the world is safe.

VELSHI: Alan Korn is the director of Public Policy for Safe Kids Worldwide and his point is that sometimes it's stuff from China sometimes it's stuff right here in the United States. Alan, what do you do to make sure that you're doing the right things for your kids this holiday season?

ALAN KORN, PUBLIC POLICY FOR SAFE KIDS WORLDWIDE: There has been so much news out there. It has almost like the perfect storm over the past two, three months. Every single day a toy recall. You know, the good news is not withstanding that news and not withstanding all the recalls we had, toys in this country are wildly safe. Children ...

VELSHI: Wildly safe.

KORN: Yeah, they really are.

ROMANS: I don't know about my Thomas the tank engines, Alan; you'll have to sell me.

KORN: I have Thomas the tank engines in my own home, too.

ROMANS: Was that a wildly safe toy that sold millions and millions of copies?

KORN: This one was not. This one had lead on it and it's not good and parents need to know whether or not they have these types of products in their home to get them out. Given the number of toys in the marketplace, there's not that many that are dangerous but that does not mean you caution to the wind. Whenever you've got, iconic brands like Thomas the tank engine, Barbie, Dora the explorer, you know there is going to be a lot of units out there and you really need to be vigilant about getting these things out of the home, off the shelves and out of the day care centers.

VELSHI: All right. You got some very specific points for people to remember if they're still buying their toys for this holiday season. Shop at a reputable dealer, stay away from second-hand shops and sign up for these CPSC recall alerts, the Consumer Product Safety Commission because it's very hard to track when you're buying gifts whether it's going to be recalled.

KORN: That's right. One of the biggest problems is people don't know whether or not there have been a recall or not. They won't catch the news program in the morning or in the evening or on CNN, they'll miss the recall notice and one of the best ways is if you go to the CPSC Web site, which is www.cpsc.gov, you can click on for a recall alert.

That way when and if there is a recall, and there's going to be more, you're going to get a direct notification about whether or not the toy, about the toy that's been recalled and then there's a picture, nice identifying marks, you can check your home or day care to make sure it's not there. Get it out if it is.

ROMANS: Let's talk about picking age-appropriate toys for your child. This is important. It is also important for parents to remember that if you have a 5-year-old and you have an 18-month-old, you're going to have to assume that that 18-month-old has access to those 5- year-old's toys. You have to be careful about that. Tell us how to be sure about the parts aren't too small and how to make sure that you don't have choking hazards in your toy box.

KORN: A very good point. In fact about 20 kids die each year from toy-caused injury. Of those 20, the vast majority are choking or aspiration. And one of the things parents can do this is a small parts tester, a little bit difficult to see. But it's a little tube with a scientifically determined opening on the end of it. If there's any toy component that you buy that fits fully inside this the small parts tester, then you know that toy is not for the 18-month-old that you were referring to.

This is a toy for children 3 and up. I've had children and young children, he's 7 now, but when he was 2 years old he put absolutely everything in his mouth. And I mean everything. Including small parts, which could be choking hazards?

ROMANS: We're going through that now. Something my pediatrician recommends, a toilet paper roll, empty, put two fingers over it, take it to the store with you. If there is something that can slide through two fingers and a toilet paper roll, it is too small for any child under three, four if you want to really be cautious.

KORN: Keep those toys separated. You don't have to go out and buy a small parts tester. The inside of a toilet paper roll, which is larger than this, but pretty good. If it fits inside there, not for children under 3. Separate those toys when buying the toys you'll see a lot of toys, by law have to have to have a label on the front of it. You'll see it right there point of purchase that warns the parent that this toy has small parts and not for children under 3.

You were talking before about toy selection at the point of purchase at the retail store, preferably a reputable one. You take a look for this label and then you know head to another aisle, another section, there are plenty of choices in this country for purchases.

ROMANS: Alan I'm going to jump in there, because I want to really warn parents about the labels, Ali, a congressional panel has done investigation and has actually found that there are Chinese manufacturers that have been slapping labels on with no, you know, the brand will say this has to be appropriate for ages 3 and up. So, the manufacturer will slap on appropriate for age 3 and up with no kind of correlation with actually being appropriate. So parent should be cautious.

VELSHI: Use common sense and use these tests that Alan is talking about.

ROMANS: Outside a reputable retailer, very careful about things like that.

VELSHI: Alan good to talk to you. Thank you for being with us.

KORN: Sure, our pressure.

VELSHI: Alan Korn is the director of Public Policy for Safe Kids Worldwide.

Well, coming up, why your holiday buying ought to start with a spending plan and not a shopping list.

Also, we're going to figure out who deserves a tip at this time of year. And how much you ought to give them. Stay with us on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: The holidays can be extra tough on couples both emotionally and financially. If you can rev down the anxiety by figuring out how much you can spend before you can spend it. Did I say it like I believe it?

ROMANS: Well I don't know if we believe it. Michelle Singletary has some other thoughts on keeping holiday craziness under control when you're in a relationship. She is the author of "Your Money and Your Man." How you and prince charming can spend well and live rich. Oh, please, Michelle, tell us how to not get in money squabbles over the holidays. MICHELLE SINGLETARY, AUTHOR, "YOUR MONEY AND YOUR MAN:" It begins with communicating and setting ground rules. How couples will adhere to all kind of rules on the workplace, but when it comes to their relationship and how they spend money, it's like the wild, Wild West. You spend what I want and I'll spend what I want and then we'll argue in January.

ROMANS: It's his crazy family that is a problem here. They want all these gifts and plane tickets and a mother-in-law with high expectations. It's very clear to me.

SINGLETARY: I have this show on XM radio and this guy called in, Mark, who has this very fine taste and he has champagne taste and his wife beer. He was complaining that he wanted pricy gifts and same thing with the family. I said, listen, you know, you have to remember the reason for the season and not tie everything into what you get, including saying no to those family members who are going to put pressure on you to buy things that you can't afford.

VELSHI: Problem with this, Michelle, this interview that we're doing with you was taped in 1987. It is the same story every year. We're just like; Christine and I are not here. We're on vacation. Nothing changes. Give me something that people can actually do that addresses this.

ROMANS: Besides switching your spouse, we don't recommend that.

VELSHI: Which we've done a few times since 1987.

SINGLETARY: You have time now before the rush of the holiday, before the pressure, before you start putting up all the decorations to sit down at the kitchen table, turn the TV off, after you watch this program, write up a budget first. People do the list first and then that's how they overspend. Write down how much you can truly afford. Here's the way you do that.

Pull out all your bills, your mortgage bill, the car notes, the student loan, the credit card; put them on the table of a reminder as why you can't overspend. Get the newspaper and look at how the foreclosures are. Get the business section and look at all the lead stories. And then maybe that will temper your temptation to overspend.

ROMANS: You know, you have to remember, too, this is my own little pop marriage psychology here. You have to remember you're the team and you're together and then together you should have a game plan for handling both families. I mean, it shouldn't be something that draws you apart.

SINGLETARY: That's exactly right. So many couples are pulled apart by what their family expects and sisters and siblings and you have to be a team. There is no, you know, we. It's us, I mean. When you are married, it has got to be about the both of you. It's not about you any more. My husband and I are like that.

We're so tight when it comes to Christmas. One Christmas we spent exactly $100 for the entire, I mean, everything. For kids and relatives and that was a unified force because we wanted to get rid of all that shopping and busyness and we weren't focusing on the holidays. Some relatives didn't talk to us to Easter, but we didn't care.

VELSHI: You didn't have to buy anything for them the next year.

SINGLETARY: That's what I am talking about. It's a unified front and he didn't go behind me, that Michelle, she's so cheap. I wanted to buy you something.

ROMANS: The little kids and some of the moms and dads aren't going for it. You tell the little kid, Jesus got three gifts, and you're going to get three gifts. You should see the look on their face. It is mutiny.

SINGLETARY: I was at one of my presentations at my church and I said I dare you parents to go home and tell your kids they're not going to get anything because they already have so much and some of you wouldn't close your eyes that night. But you know here's another tip for parents, particularly couples who have children, go in your kids' room and clean the room or the toy area and when you do that, you will be ashamed at how much they already have and how you are now going to add on to that and oftentimes, debt.

VELSHI: I think that makes sense, Michelle. Because it is very hard for people to change their habits and change their thinking and talk about how much they have until you actually take stock of it. I do that in my own life. Do I really need another one of these things? Because I see that I buy them and they sit around.

SINGLETARY: You're right. If you have little ones that are not quite aware of everything. I did this for many years with my little ones, take the top layer of toys out and get the toys from underneath that they haven't played with and wrap those up and put those under the tree. They will never know the difference.

ROMANS: In my case, all he wants is a box with paper in it. I can put oven mitts and anything in there.

SINGLETARY: That's exactly right.

ROMANS: Michelle Singletary, "Your Money and Your Man" how you and prince charming can spend well and live rich.

VELSHI: Just get that as a gift.

ROMANS: Great.

Let's pump up her book sales. Thanks, Michelle.

Coming up next on YOUR MONEY, we'll help you solve one of your toughest problems this time of year. Figuring out who to tip and how much to give.

(COMMERCIAL BREAK) ROMANS: Every year the same questions drive us nuts at holiday time and it has nothing to do with relatives. Who to tip, how much to tip, when is cash appropriate, how much cash is appropriate? You feel like you have $20 bills falling out of your pockets.

VELSHI: I'm waiting for the book, I might actually write it, everybody tips too much. I can't find that one this season. We book Stacie Krajchir, she is the co-author of the "Itty-bitty Guide to Tipping."

ROMANS: She wrote the book, you can't write the book.

VELSHI: She wrote the book. She's here to tell us about tipping. Stacie thank you for being with us.

STACIE KRAJCHIR, "THE ITTY BITTY GUIDE TO TIPPING:" Thank you so much, how are you doing?

VELSHI: This is one of those confusing things for Christine and me and everybody I run into about how many people you actually need to tip around Christmas. What have you got in here? What can you tell us?

KRAJCHIR: The bottom line is that I think we wrote the book to try to demystify the whole craziness of tipping and I think during the holiday season before you start doling out the dollars and freaking out about who to tip, when and how much, really, I think, take a deep breath and ask yourself, who are my team players? And that's kind of everybody who helps simplify your life during the whole year. People you see regularly and who help offer you a service pretty regularly.

ROMANS: Let me ask you about the baby sitter, the nanny, in particular. More and more women working and more and more households have to have a nanny. How much do you tip a nanny?

KRAJCHIR: You know, generally one to two weeks pay and a small gift from your child is appropriate. You know your nanny pretty well; you're giving your most prized possessions for her to watch over. Pay attention to your nanny, her likes and dislikes and, you know, you can also get her that small gift that is about her and what she likes.

ROMANS: If you love your nanny, don't scrimp on the nanny.

VELSHI: One of the guys that work with us in the studio was saying the one you have to take care of is your mailman. He knows everything about you, he controls your life. That is the guy or woman you have to take care of.

KRAJCHIR: Exactly. Interesting thing about the postal worker is it's actually illegal to tip your postal worker more than $20 in, you know, amount that it's worth. You're not supposed to tip them cash at all. You have to think baked goods, manicure, pedicure, foot massage.

VELSHI: For your mailman, that's interesting. I suspect my mailman I see him every day. He might pound me in the head if I give him a manicure gift certificate. That's okay. KRAJCHIR: At the end of the day really it is just something thoughtful. Even a card that says, hey, thanks so much. I really appreciate you.

ROMANS: The newspaper carrier, another one that's a popular, people always worried about giving the kid. A kid doesn't deliver my newspaper, a corporate machine.

KRAJCHIR: There are situations that now with all the technology, you know, they cut out the school newspaper boy. In all honestly, that's not a big tipping situation come holiday unless you're in a smaller town and community.

VELSHI: It goes back to what you said. If they're part of your team. If you know this person and this kid that delivers your newspaper and he gets it to the right place and it's dry, that's probably a better guideline. If these people are important to you, then that might be a guide.

KRAJCHIR: Right. A $10 tip or something small and nice is fine. But, again, like you said, pretty automated these days.

ROMANS: You have doorman buildings in New York City and in smaller towns you don't have some of this tipping. I am from Iowa and I didn't tip anybody until I moved to Chicago. I can't figure out why no one was opening the door and helping me with my package. I want to talk about teacher because everybody in the country, if you have a kid, has a teacher. And in some places it's just not appropriate to give an expensive gift to a teacher. In other places, all the moms and dads team up and buy one gift. What should you do? Gauge what your community does?

KRAJCHIR: I really think that in terms of a teacher, I think it is very competitive. Some regions are very competitive. There is waiting lists and all that. With teachers, keep it simple. Obviously, your kid has friends at school. Why don't you get together with those friends, mommies and get her something that she will really appreciate. For example, a massage. Something that pampers.

ROMANS: Some really expensive ear plugs and a bottle of wine.

KRAJCHIR: Something that helps her tune out and think about herself. Something really nice. I think ganging up together with other parents is a really nice gesture and keeps it simple for all of you.

VELSHI: Fascinating stuff, Stacie, thank you so much.

ROMANS: Now, for this week's edition of "Life after Work."

(BEGIN VIDEOTAPE)

VELSHI (voice over): It's show time. And Sharon Jones is taking center stage at the Apollo Theater in New York. But it wasn't that long ago when she worked under a different set of spotlights, as a prison guard.

SHARON JONES, SINGER: I was at liklikes (ph). Once you were inside, those guys were criminals.

VELSHI: Jones grew up wanting to be a singer but in her 20s the record labels told her she didn't have the right look. She detoured into other jobs. Ten years ago at the age of 40 she had the right sound for a group of 20 something's playing old-school soul music. They were looking for a singer.

JONES: What do these young, little white boys know about funk? Once they started playing, it was like, OK, they know about funk.

VELSHI: So Sharon Jones and the Dap Kings were born. They released three albums and toured around the world and provided music for other big-name artists like Amy Winehouse. Those songs got them more attention in the United States. Now, Sharon finally has the spotlight. And the crowd seems to find her look just fine.

JONES: To walk on that stage and when I heard that roar from the crowd, every goose bump, it was such a great feeling.

(END VIDEOTAPE)

VELSHI: All right, coming up, never get another unwanted catalog in the mail, again. Stay tuned to find out how.

(COMMERCIAL BREAK)

ROMANS: I bought this really fancy pan, right, from a cooking Web site and within two weeks ...

VELSHI: Let me guess ...

ROMANS: Twenty kitchen and cooking catalogs. I didn't even know there were that many specialty catalogs. My mailman can't even shut the mail box.

VELSHI: I walk in and my guy gives me a pile of mail and its all catalogs. The other day I spent more than an hour phoning up each one, the 1-800 number and getting myself removed from the list. It's ridiculous.

ROMANS: You can call some retailers and they would say, if you would like to remove your name from our list, press one. Catalogchoice.org.

VELSHI: Probably the best Web site that I have heard of in months.

ROMANS: Actually some environmental groups have put this together because they think these catalogs are wasteful, unnecessary ink, trees.

VELSHI: Five so you have bathroom reading. But this is all online. It's just wasteful to have all of these catalogs.

ROMANS: Some you get, you never even ordered from them. You can go to this Web site and save the planet and save your mail person or carrier.

VELSHI: Catalogchoice.org.

ROMANS: It will take you off of a thousand catalog lists and so you don't have it sit home when you're sick.

VELSHI: What a waste of time. I like these companies. I just don't need that kind of wastage. It comes to my place, clogs up my mail box.

ROMANS: I have no idea if this is true; I think online shopping makes it worse. They sell your name and you get a bunch of kitchen catalogs.

VELSHI: Thank you for joining us for this edition of YOUR MONEY. You can catch Christine on "LOU DOBBS TONIGHT," every weekday at 7:00 p.m. Eastern.

ROMANS: And you can see Ali every week day morning on "American Morning." We will 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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