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Open House

Candidate's Healthcare Plan; Soaring Gas Prices; Foreclosure Damage; Stimulus Checks; European Vacation

Aired May 03, 2008 - 09:30   ET

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

GERRI WILLIS, CNN NEWS ANCHOR: Hello, I'm Gerri Willis and this is OPEN HOUSE, the show that saves you money. Coming up on today's program, rising gas prices, a prediction of even higher gas prices, and some helpful advice on how you can save when you fill up your tank.
Then we're all about the economic stimulus. We'll tell you when you can expect your money and for some suggestions on what to do with the extra cash. We'll even help you plan a summer vacation with your budget in mind.

We begin with a topic that is all too important to you and apparently the presidential candidates -- healthcare. From no healthcare to employer healthcare to universal healthcare, all three presidential hopefuls are offering prescriptions to fix the system. Here to break it down, CNN medical correspondent, Judy Fortin, in Atlanta.

Hi, Judy.

JUDY FORTIN, CNN MEDICAL CORRESPONDENT: Hi Gerri. Senator McCain unveiled his healthcare plan on Tuesday. It adds up to $3.6 trillion.

(BEGIN VIDEO CLIP)

JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Right now, even those with access to healthcare often have no assurance that it is appropriate care. Too much of the system is built on getting paid just for providing services regardless. Regardless of whether those services are necessary or produce quality care and outcomes. American families should only pay for getting the right care.

(END VIDEO CLIP)

FORTIN: McCain's campaign said the plan would be paid for by eliminating the tax break employers get for offering insurance. Now, McCain's plan is designed to let consumers decide what kind of health insurance they want rather than relying on employers to provide it. It will offer a $5,000 tax credit to families and a $2,500 credit for individuals to help pay for insurance. McCain says this will spark more competition among insurance companies, which will in turn lower costs. Gerri, he says it essentially puts families back in charge.

WILLIS: Now, I assume the Democratic candidates are not in favor of this plan. What do they say?

FORTIN: Well, they had a lot to say, in fact, this week. Democratic rival, Barack Obama criticized the plan saying, "John McCain is recycling the same failed policies that didn't work when George Bush first proposed them and they won't work now."

Now, similar to Bush's proposal last year, McCain's plan would make workers pay taxes on the healthcare premiums their employers pay. So, let's say that you pay $3,000 in taxes on your healthcare premiums. Well, after the $5,000 tax credit, you're left with $2,000. Senator Hillary Clinton also disapproved of McCain's plan. She said it would mean older Americans and those with preexisting conditions could only get coverage in an expensive, high-risk pool -- Gerri.

WILLIS: OK, devil's in the details, here. Lots of plans, lots of details. How do you figure out how each candidate's plan would work for you? What do you need to know?

FORTIN: Well, it can be hard to distinguish between Clinton and Obama's plans because they both aim for some sort of universal coverage. Clinton's would require everyone to get health insurance while Obama would mandate it only for children. Deciding which plan best suits you can be confusing, so here's what the candidates are offering. We're going to break it down for you.

Clinton's plan would guarantee that premiums don't exceed a percentage of family's income. Obama's plan would create a national insurance program that allows people to buy affordable healthcare, similar to the one that federal employees have. And McCain's plan involves working with states to create insurance pools that would cover high- risk individuals.

Now, compared with McCain's $3.6 trillion plan, Obama's proposal is estimated to cost between $50 billion and $65 billion. And Clinton's plan, $110 billion. Gerri, there's a lot of money on the table, there.

WILLIS: A lot of money on the table and a lot of people who need healthcare. Judy, thank you for that.

FORTIN: You're welcome.

WILLIS: Gas prices, in record territory again this week, rising costs at the pump topped the list of economic issues for American families. Forty-four percent say gas prices are a serious problem for them. Now, that's compared with 29 percent who say they're seriously concerned about their job, 28 percent about healthcare and health insurance, and 19 percent about paying for their rent or their mortgage.

Now, rounding out the survey, 18 percent say food prices are a serious problem, 18 percent for credit card and other debt, and 16 percent say they're worried about losing money in the stock market.

AAA is predicting gas prices could hit $3.90 by Memorial Day weekend. Now, that's just a month from now. Robert Sinclair from AAA stopped by and I asked him, is there any chance Americans can break their addiction to gasoline?

(BEGIN VIDEOTAPE)

OK, give me the dollars and cents, here. You're saying $3.90 by Memorial Day. Is that the new floor?

ROBERT SINCLAIR, AAA: Probably because it could go higher than that. We're seeing already some pockets around the country, some cities that are above that, San Francisco, Los Angeles right around $4 a gallon and many stations in the New York area are $4 a gallon and many major cities across the country. So, that...

WILLIS: So where are we going, $3.90 by Memorial Day, but where do we go after that?

SINCLAIR: It's hard to say, the "fundamentals," say that gasoline prices should start going down by then. Demand is actually down three percent compared to last year.

WILLIS: People reacting.

SINCLAIR: Yeah, abut you've got a lot of other things that are playing into the price of gas.

WILLIS: All right, let's get some advice for people out there who are trying to cope with these high prices. We say, get the junk out of your trunk, make sure your car is well tuned. Give me something new. I need a news solution for this problem.

SINCLAIR: How about changing your driving style? Drive as if there's an egg between your foot and the gas pedal and the foot and the brake pedal? Driving gently saves a lot of gasoline. In fact we did a comparison with a local station a couple of years ago where we disabled two -- one identical vehicle and drove a well-prepared vehicle and we drove hard and had had a disabled vehicle and we burned more than double the amount of gasoline in the vehicle that had bad maintenance and the aggressive driving style compared to the vehicle that was driven sedately and in a good state of tune. So, those things are very important. A lot of companies now are realizing that they can get involved by allowing employees to telecommute and things like that.

WILLIS: Yeah, a lot of people out there are finding buddies to drive into work with.

SINCLAIR: Exactly.

WILLIS: Let's talk though, a little but, you are a membership organization. AAA is out there to help their members, consumers, people like me, what do you make of these ideas out there for the gas tax holiday, taxing windfall profits of oil companies? Is it time to really hold oil companies accountable for what's going on here?

SINCLAIR: It may be. We haven't had had that discussion as yet to determine what the policy should be. But one of the things that's being talked about is suspension of the federal tax on gasoline. We think that would be a bad idea.

WILLIS: Why?

SINCLAIR: That money is used to fix the highways and the American Society of Civil Engineers has given the overall infrastructure of the United States a grade of D and the No. 1 part of infrastructure is the highway system. It's crumbling, it was built back in the '50s. We need to spend more money on it, not less.

WILLIS: More money, not less. I think that's what we're all talking about. Robert Sinclair, thank you for your help.

(END VIDEOTAPE)

Coming up on OPEN HOUSE: the new trend in this era of foreclosure, trashing a house. We'll take you to Las Vegas for the story up close and personal.

Then, stimulus checks and you. When they're coming, what you should do with them, and why some countries in Europe are practically rolling out the red carpet for you. America's economy is issue No. 1 here at CNN. Tune in every weekday at Noon Eastern for complete coverage of your house, your debt, your savings, you job. OPEN HOUSE will be right back.

(COMMERCIAL BREAK)

WILLIS: Welcome back to OPEN HOUSE. A quick check first of the housing headlines, a vital component to issue No. 1, America's economy. Housing prices post record decline, 17 of 20 cities in the S&P/K-Schiller Home Price Index posted their largest year-over-year declines ever recorded, ten of those cities posting double digit declines. No housing market recovery before 2010 says the CEOP of Fannie Mae. Fannie Mae, of course, is the largest U.S. source of mortgage finance.

And no relief in the mortgage meltdown. RealtyTrac reports 118 percent spike in the fist three months of this year, that's compared to last year. And there were 650,000 foreclosure filings in the first quarter. That represents one out of every 194 U.S. households, a staggering number. A quarter of those families have already lost their homes.

And going through foreclosure is tough. Losing your home is one of the worst experiences you can go through. Folks dealing with this are bound to experience a wide range of emotions, one of them is anger, and the result is often a nasty, costly mess. CNN's Thelma Gutierrez had the Sin City story.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN NEWS CORRESPONDENT (voice over): Las Vegas realtor, Steve Howell, assesses foreclosures. He says he's seen it all and documents it for the bank. Yards teeming with trash, plumbing that has been pilfered, floors covered with feces.

GUTIERREZ (on camera): Have you ever seen such a thing like it before? STEVE HOWELL, PRUDENTIAL AMERICANA: In the nine years I've done it, no. and I've talked to people, agents that have done this for a lot longer than I have, and they haven't either.

JOE KRAEMER, CENTURY 21: We've had damage inside.

GUTIERREZ (voice over): Agent Joe Kraemer says he's seen the same trend and never knows what he'll encounter when he walks into a foreclosure.

KRAEMER: They took the island, they took all the cabinets, took the bathroom.

GUTIERREZ (on camera): Toilet's gone.

KRAEMER: Toilet's gone. They took the top of the countertop.

GUTIERREZ: Kraemer says it could be frustration, anger and hurt that's taken out on the home.

KRAEMER: And it's the other ones that were eventual, you know, the walls are bashed in and there's so many different aspects that we're running into. It's kind of unchartered territory.

GUTIERREZ: If it's sold as is by the lender, the cost of cleaning, fixing and replacing is up to the buyer. The end result -- the banks lose money because the home has to be discounted and the property is much harder to sell.

KRAEMER: These are one of the rare ones that you see.

GUTIERREZ: Just ask Albert and Fatinmatti Gando who are looking to buy a foreclosure because they could save up to 50 percent. They've seen more than a dozen.

FATINMATTI GANDO, HOME BUYER: I went through the house. It was like weird smell. I couldn't even look at it, I left. I don't want to see it. I don't want to take a house that smells.

GUTIERREZ: But the Gando's are interested in this foreclosure because it's near the strip, under $200,000, and hasn't been trashed.

UNIDENTIFIED MALE: Missing dishwasher, missing stove.

GUTIERREZ: In fact, some lenders are offering a so-called cash for keys program for people who are about to lose their homes.

HOWELL: If they can give us a property in that condition, just kind of take their stuff and go, there is an incentive, if you will.

GUTIERREZ: How much?

HOWELL: It varies. It could be as little as a few hundred dollars to as much as 1,000 or more.

GUTIERREZ: A small price to pay when you consider the cost of this. KRAEMER: There were columns here, the roman type columns. Gone.

GUTIERREZ (on camera): Someone actually took the columns?

KRAEMER: They took them.

GUTIERREZ: So, how much money are the banks willing to pay homeowners to leave peacefully? We're told up to several thousand dollars. But, the cash for keys program is something the banks have been reluctant to publicize. As for the homes that have been ripped apart, you might think the homeowners could be arrested or stopped, but as long as the property is in their name, there is very little the police can do -- Gerri.

(END VIDEOTAPE)

WILLIS: Sad story. Thelma, thank you for that.

Still ahead on OPEN HOUSE, the check, it's in the mail. Well, not quite yet. But if you have direct deposit, you may have already received your stimulus money. What you can expect and when. Plus, advice on what to do with the cash with the cash.

And traveling overseas, hey, it's very expensive these days. We'll tell you what some European countries are doing to lure you in when OPEN HOUSE comes right back.

(COMMERCIAL BREAK)

WILLIS: It's the grand plan to revitalize the economy, stimulus checks for 130 million American households. Direct deposit payments began Monday. The first paper checks are scheduled to be sent out early this month. And the mailing schedule, well, it all depends on your social security number.

What to do with the extra cash and will the plan work? Ryan Mack is the president of Optimum Capital Management and Alan Chernoff is a CNN senior correspondent.

Welcome to you both. Alan, OK, I see all the polling on this and Americans are saying, I'm going to pay bills, I'm going to save it, why a wide margin. How, how is this going to help the economy?

ALAN CHERNOFF, CNN SR CORRESPONDENT: Right, it won't help the economy as much as the politicians in Washington are hoping that it will. Only about one-fifth of Americans say they're actually going to take it and spend it. Three-quarters say they'll either pay off debt or save it. Now, of course, it's easy to say, I'm going to save it, I think more than one-fifth will spend it.

WILLIS: You're questioning the certainty of our viewers. OK, but, really, seriously, some folks will spend some of this money and some of this will go to big oil companies. Look, gas prices are through the roof. This is a big payment for a lot of Americans. Do you think that even if people are spending money it's still not going to go in a way that's going to boost the economy? CHERNOFF: How many of our products are imported? So much of this money will end up not only in the Middle East, but also in China, South America. That's really what's going to happen, here. So, the U.S. economy will get some benefit, not a huge benefit.

WILLIS: All right, Ryan, let's talk about how people actually could help themselves with this money. First off, if you're going to save this money, what are the best vehicles right now? I got to tell you, a lot of money market funds, you know, they're not beating inflation, it's not a great place to go right now if you're trying to make some dough.

RYAN MACK, PRES OPTIMUM CAPITAL MGMT: Well, first of all, talking about those individuals where this funding is going to go to, we have to go back to the basics. You know, let's put together a budget to make sure that we know exactly where our needs are at, first of all, primarily. Second of all, do you have an emergency fund? Do you have three to six months of living expenses?

WILLIS: But Ryan, where do I put that emergency fund money right now?

(CROSSTALK)

MACK: ImmigrantDirect.com has a great one. ING Direct has a great one, HSBC has great ones.

WILLIS: ...little more than some of the others.

MACK: Yeah, Immigrant Direct and IMG are pretty much two of the highest. I think Immigrant Direct is about 3.6 percent, right now. So, while it's not the greatest, it is great for a rainy day fund for emergencies.

WILLIS: Because you can get at it quickly. Now, if I have more time on my hands, I can put this money away. Do you recommend CDs, Certificates of Deposit for banks?

MACK: I don't recommend CDs because interest rates are far too low. I think once you get through the six months of living expenses, then you want to go on to possibly the IRAs, (INAUDIBLE) mutual funds and start utilizing that tax-deferred savings programs that the government has provided for us.

WILLIS: Well, let's talk about the great American problem, and that is debt. You should be paying off debt with this, right?

MACK: Well, like I said, it's two different types of debt, you have the high-risk debt, which is credit cards, cash advances, collections from the IRS, that you owe. You have your low-risk debt, the mortgages, the student loan, the auto loans and whatnot. The high- risk debt is a priority. I don't know how many individuals...

WILLIS: Bad debt, high-risk debt.

MACK: Exactly. They ask me, Ryan, I want to invest in the market and you find out they might have $10,000 in credit card debt. So, you're sitting here saying I'm going to risk -- I'm paying 15 percent in APR and I'm going to risk hopefully getting more than...

WILLIS: This is a really good point because a lot of people make financial decisions that really don't have the long view at heart. So, what you're saying is, get rid of that high-rate, high-interest debt, credit card debt. It's really strangling people, here. And this is a good way to do it because you're getting free money. Some people get it right into their bank account.

CHERNOFF: If you look at the differences in interest rate, you're talking about. Fifteen percent versus the best money market rate of three percent?

MACK: Exactly.

WILLIS: It's a no-brainer. And you can make that comparison.

MACK: Get rid of the credit card debt.

WILLIS: It's a basic arbitrage. All right, OK, so going forward then, Ryan, a lot of people out there, they're worried about the economy, they know they could lose their job. You say have an emergency fund, three to six months, next step, of course, always paying down your credit card debt. What else do I do?

MACK: We have to look at to see how much we can possibly allocate even further to our 401K programs and our company retirement plans. I think the 401K uses dollar cost, average investment strategies, it's a great way to save for retirement.

WILLIS: Thank you, Ryan Mack, Alan Chernoff. Thanks for joining us, great conversation.

Still ahead, visit Europe, pay in dollars, the dollars may be down and out, but that doesn't mean you can't find ways to stretch it overseas. We'll tell you how to make that dream summer vacation a reality.

(BEGIN VIDEOTAPE)

(voice over): New Orleans, Louisiana, the birthplace of jazz. And this weekend marks the finale of the city's annual 10-day Jazz and Heritage Festival, aka, Jazzfest.

The famous festival brings together thousands of musicians, cooks and crafts people from around the globe. Performing this weekend: Jimmy Buffet, the Nevil Brothers and hundreds more. Go to the NOJazzFest.com for a complete list of performers and tickets. But, don't just go for the music, the food fair offers classic New Orleans cuisine from famous Po' Boys sandwiches to fried 'gater with onions. And that's your "Local Lowdown."

(COMMERCIAL BREAK)

WILLIS: Don't call off that summer vacation just yet. What if you go to Europe and pay in dollars forgetting about that lousy exchange rate? CNN's Alphonso Van Marsh explains.

(BEGIN VIDEOTAPE)

ALPHONSO VAN MARSH, CNN NEWS CORRESPONDENT (voice over): The European holiday, Chevy Chase's Griswold family dreamed of in National Lampoon's "European Vacation," is increasingly harder for Americans to afford. A weak U.S. dollar is driving up holiday costs priced in Euros and British pounds.

SIMON HEATH, WORLDHOTELS: Unfortunately there's been a downturn in the U.S. market for people coming back over to Europe.

MARSH: So Simon Heath's WorldHotels group is luring exchange rate wary Americans by getting rid of the exchange rate altogether. Book a room at this property in Madrid, advertised for, say, 200 Euros a night, and Americans who reserve through WorldHotels in the states, pay just $200.

HEATH: In the past, the U.S. travelers have been very loyal to us and helped us get to a position that we're in now, and therefore we want to repay some of this loyalty and offer them cheaper rates.

MARSH: And there are other ways for Americans tourists to protect themselves against a fluctuating dollar. Tour operators say smart travelers choose all-exclusive vacations like beach resorts where prices are often set months in advance.

FRANCES TUKE, ASSOCIATION OF BRITISH TRAVEL AGENTS: With package holidays and tour operatorors, they contract with hoteliers and often pay up front for the beds, as well, so you know that you're locked into that price and that won't change.

MARSH: Same thing with cruise ships. One reason why, despite U.S. economic woes, the head of Britain's cruise industry trade says more than a million Americans cruised in Europe last year.

WILLIAM GIBBONS, DIR, PASSENGER SHIPPING ASSN: You don't have to worry about exchange rate, because you can prebook your cruise in North America, in dollars, pay for you excursions in dollars, as well. Incredibly good value for the money.

MARSH: And here's another tip to stretch the vacation dollar, foreign exchange company, Tavelex, will soon have a new currency card that is purchased in U.S. dollars, but then loaded in Euros or Great British pounds, the currency used here in London. And here's the thing, the currency exchange rate is locked at the time of purchase, so if the value of the dollar goes down, well, no worries. But if the value of the dollar goes up, you're stuck.

Alphonso Van Marsh, CNN in London.

(END VIDEOTAPE)

WILLIS: Those are some great overseas tips. Here at home to get the cheapest airfare, sign up for a fare alert at your favorite travel Web site, they'll e-mail you when the price drops. And don't wait to ask your spouse or a significant other if it's a good deal because you and 300 people are seeing it at the same time and it's a matter of who acts first. If traveling by rail is more your style, make sure you find out about discounts before you book your trip. People over 62, children, students, AAA members can generally get anywhere from 10 percent to 15 percent off. And if you're renting a car, make sure you shop around because rates change daily.

Finally, before you sign up for a rental insurance, check the policy on your own car insurance and find out what coverage, if any, is guaranteed you by your credit card company. You may, in fact, already be covered.

As always, if you have an idea about how to save money, send us an e- mail to openhouse@cnn.com. And if you want to see this project savings again, check out our Web site, CNN.com/openhouse.

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, Saturdays at 1:00 p.m. Eastern and Sundays 3:00, right here on CNN.

Don't go anywhere, your top stories are next on the CNN NEWSROOM, have a great weekend.