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Open House

Maintaining Family Life with $4 a Gallon; How to Slash Utility Bills; Money and Marriage: How to Blend Budgets and Styles to Increase Your Home's Value

Aired June 14, 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 HOST: Hello, I'm Gerri Willis and this is OPEN HOUSE, the show that saves you money.
Maintaining family life with gas at $4 a gallon, we'll show you how.

Then, some household help -- how to slash utility bills.

Plus, money and marriage -- how to blend budgets and styles to increase the value of your home.

We begin though, with inflation, inflation, inflation. It is the economic buzzword of the moment, but all it really means for you is higher prices. So, how can you safeguard your nest egg and still afford life's necessities. Lynnette Khalfani-Cox is a personal finance expert and the author of "Your First Home." Robert Sinclair is with AAA and Amanda Walker is with "Consumer Reports."

Welcome all, good to see you guys. Robert, let's start with you. Gas prices -- everybody is nuts over the gas prices. What can you do at the pump to save a little dough?

ROBERT SINCLAIR, AAA: Probably the biggest thing that you can do has to do with maintenance and driving style. The biggest maintenance item on your car is tire pressure. A lot of us are driving around on underinflated tires and for every pound per square inch that your tires are underinflated, you lose one or two percent of your fuel economy and that's per tire.

So, at least once a month, ideally once a week, check your tire pressure. Also, spark plugs are important, they get fouled over time and can reduce the running efficiency of your engine and the air filter.

WILLIS: I was going to say, is that important?

SINCLAIR: It is important. A dirty air filter is like a marathoner trying to breathe through a straw. The engine works harder trying to draw that air past the dirt.

WILLIS: Not good another words.

SINCLAIR: Not good at all. And the other thing is driving style. Essentially slow down. Drive gently, accelerate gently, those kind of things save a lot on gasoline. WILLIS: Easy stuff, you know, like don't drive look a maniac, you will save a little gas.

OK, Amanda, when we think about saving, sometimes we consolidate trips to the grocery store, but you say there's another way to save at the grocery store. What is it?

AMANDA WALKER, CONSUMER REPORTS: Well, you can save by shopping online, some money perhaps, it depends. You can, if you're really wise about not putting too much into your market basket when you're shopping online, we have a staff who has actually done this. When we compared two different market baskets, one that we got online and one who went to the store to buy, we found that they cost almost exactly the same.

WILLIS: That's interesting.

WALKER: Online as if we went to the store.

WILLIS: Because, the good thing about that, I would think, is that you're not there seeing the cookies, the visual cues, right?

WALKER: You miss the impulse buys and they set up the store with a bunch of impulse buys. So, you miss all those. You can't squeeze the tomatoes, can't see the marbling on the meat, but you can save money, you have to pay for the cost to get it shipped to you. It's about $9.95 that you have. So, that's the extra, but you can save on gas.

WILLIS: What about store brands, though? That's one of my family's favorite ways to save, is that you buy the private label stuff, and sometimes it's even better than the big...

WALKER: We've actually found that in our tests -- people used to be afraid to go down the aisle, that was the aisle you skipped because you felt like you didn't know what was in any of the boxes. They've improved the quality. In some of our tests, we tested store brand paper towels, plastic bags, cereal, all kinds of different items and we found sometimes they're as good or even better and you can save as much as 50 percent.

LYNNETTE KHALFANI-COX, AUTHOR "YOUR FIRST HOME": And I think another tip that people should think about at the grocery store is to shop the perimeter of the grocery store and not go in the center aisles because in the center is where everything is packaged for you, it's nice and convenient, but you're paying for all of that packaging, as well. When you go around the perimeter, you're getting the fresh stuff, the produce, et cetera.

(CROSSTALK)

KHALFANI-COX: You save some extra bucks that way. So, it's a good thing.

WILLIS: Lynnette, I want to get to something important, though, serious stuff. I don't think people realize the hit their 401-K can take with inflation. People don't even think about it, they're just putting the money away, they don't pay attention to inflation, but it could be a real problem.

KHALFANI-COX: Well, we know that inflation essentially is going to erode your dollar's purchasing power. And people are thinking -- some people might be saying I'm retiring in five years, maybe next year or maybe you have 20 years to retirement, but there is no question that you really do have to watch your 401-K assets and everything else you might have, whether that's an individual retirement account or some other assets that you put aside.

The key is not to put everything on auto pilot and just throw money in the account, month after month or quarter after quart, without making sure the circumstances, inflation isn't truly eroding the purchasing power of what you're saving.

WILLIS: All right Lynnette, no auto pilot, got to work on that, walk around the periphery of the grocery store. You got me working here, Lynnette. Thanks, guys. We'll be back to you a little later in the show. We have a lot more to talk about.

The economy is issue No. 1 and we, here at CNN, we're committed to covering it for you. We address all your money concerns every weekday at Noon Eastern and 9:00 Pacific in the "ISSUE #1" headquarters.

Coming up on OPEN HOUSE, could gas prices be taking a toll on your children's after school funds. Then, can you make money flipping homes in this tough market? And how to compromise on budget and style when renovating with your spouse. You're watching OPEN HOUSE.

(COMMERCIAL BREAK)

WILLIS: Welcome back to OPEN HOUSE. First there's a registration a fee, then they hit you up for the jerseys, the equipment, your day to bring the snacks, now, taking the toll on soccer moms and their minivans across the country right now, sky high gas prices.

Here is CNN's Rusty Dornin.

(BEGIN VIDEOTAPE)

DANA SCOTT (ph), SOCCER DAD: All right, I could use somebody else's suitcase.

RUSTY DORNIN, CNN CORRESPONDENT (voice over): For Dana Scott, this is the final trip of a very long gas guzzling soccer season. He's car pooling with his daughter's team 100 miles south of Atlanta for the Georgia State Cup Tournament. For Scott and other parents, the final whistle has come none too soon for their wallets.

UNIDENTIFIED FEMALE: Have a great time, girls.

DORNIN (on camera): Any idea how much you've spent on gas this year. LISA ARKIN, SOCCER MOM: Oh gosh, in soccer, oh, I would say probably, on a weekend, $100, $120.

DORNIN: And how many weekends have you been doing that?

ARKIN: Oh, gosh, every other weekend.

DORNIN (voice over): So, we went along for the ride with Scott while he filled up with the trip.

SCOTT: Run up to about 70, 75.

DORNIN (on camera): This is going to mean some parents aren't going to be able to have their kids in sports.

SCOTT: Oh definitely. You know, we had to think about what we do with our own expenses to be able to accommodate paying the fees for the sports as well as the gas.

DORNIN: For parents like Marie Bledsoe there was no turning back despite the gas pains.

MARIE BLEDSOE, SOCCER MOM: We're already fully committed in sports and it would be hard to back out because of that. Does it put a dent in your pocket? Absolutely. Is it crazy? Yes. Should we all be car pooling more? Yes.

DORNIN: So, what's a parent to do to help trim their losses?

MARY LUTZENKIRCHEN, SOCCER MOM: Not all of us going to games, now. I mean, we chaperone and sometimes parents don't come extra. And like my family, I'll go this weekend, but nobody else will.

SHANNON MOORE, SOCCER MOM: I think because our kids are our priority for us, we'll make it work somehow, but it is a concern.

DORNIN: For some players, state tournaments like this can be a springboard to more prestigious teams in the possibility of college scholarships. So, whatever the penalty, it's the goal that makes every penny spent on gas a smart investment.

Rusty Dornin, CNN, Atlanta.

(END VIDEOTAPE)

WILLIS: All right, joining us once again, Lynnette Khalfani-Cox, Robert Sinclair and Amanda Walker.

Lynnette, you have kids. This is really sad. You can't even get the kids to the soccer practice.

KHALFANI-COX: No, and I have three of them, so I know about this issue. And I think we have to think about two things as parents. One is, let's try not to overscheduled our kids, because a lot of us are harried going from here to there, you know, everywhere, so sometime it's better, I think, to take a little bit of a break from too many activities. One is not too many, but you know, three in a day...

WILLIS: Come on, how do you say, well we're only going to do, you know, the soccer and the piano...

KHALFANI-COX: Not, you know, swimming classes as well. Part of what you do to tell your kids that is that gas prices are expensive right now and if we spend all of our money on gas right now, during the summer months, we won't have money for the holiday season or for birthday gifts, that kind of thing. But also, maybe try to lighten the load. Like she said, not have as many people traveling or as much stuff in the car.

WILLIS: All right Lynnette, let's get some of these other folks in here. Tell me, Robert, what are gas prices coming down?

SINCLAIR: Never more? They might plateau at some point, but there seem to be more factors in place that would make prices go higher rather than make them go lower. In fact, don't forget we're in the hurricane season now we get another Katrina-like event, we're going to be in big trouble. So, we have to be prepared and, you know, soccer moms need to switch to small station wagons rather than big SUVs.

WILLIS: And we're going to use some of Lynnette's tips in saying no to a lot more things, not just the occasional soccer game.

Amanda, you know, we're trying find ways to save anywhere way we can. If your budget goes up in one area, gas, you try to cut back somewhere else, sometimes if you don't have much flexibility. Are there traps out there that the folks who run grocery stores, you know, put out there, hoping we'll take the bait?

WALKER: Yeah. The things at the end of aisles you assume are on great sale, things in the circulars, that's not always the case.

WILLIS: What do you mean?

WALKER: Circular items, they may have some items that are on sale, but some manufacturers pay for placement, so they might not really be sale at all. So, you really have to do your homework on those items ahead of time to make sure you're getting a good deal.

WILLIS: How do I tell?

WALKER: Well, you have to know what the prices are in the area so you know if it is a good price or not. And items at the end of aisles sometimes, they're just trying to -- they often put things that are impulse buys at the end of aisles, also things in the middle of aisles, eye level, are usually the most expensive items, the cheaper items are usually above or below. So you defiantly want to look above and below and look at the unit prices, so you're really comparing apples to apples.

WILLIS: Unit price is the critical thing, right? Where do I find that? WALKER: Well, on the ticket, it should be right bit price, it should have the -- unit price usually is right to the left. You want to look at that. You defiantly want to look at that, because that's how you know if you're getting a good deal. All the different packages, all the different sizes, that's the key.

WILLIS: Well guys, great advice from all of you. Lynnette, Robert, Amanda, thank you so much for helping us out, today.

WALKER: Sure.

WILLIS: Yet another strain on your budget, sky-high energy costs. And with temperatures on the rise across the country, how can you trim your utility bills this summer? Well, I stopped by consumer reports to get some answers.

(BEGIN VIDEOTAPE)

CELIA KUPERSZMID LEHRMAN, DPTY HOME EDITOR, CONSUMER REPORTS: This is where we test air conditioner. We have been testing air conditioners for more than 20 years. And...

WILLIS: This is pretty impressive stuff. All right, let's get to some advice, over here. Just talking a little bit about how to maintain these air conditioners, you say you want to put the units in a shady spot, right?

LEHRMAN: Sure, you want to be sure that the units are in a shady spot, that way they don't have to work as hard. Also if you have a central unit, you want to be sure that that's also in a shaded spot. Same thing, they're not generating as much energy, they don't have to work as hard.

WILLIS: You were saying something really interesting earlier about how you don't want to crank up your AC to high when you first walk into the house. Why?

LEHRMAN: Well, it just uses a lot more energy. It actually doesn't cool the room off any faster. Another thing, on humid days, you want to be sure the fan is set on low, because that draws the air slowly through the unit and that pulls more humidity out.

WILLIS: All right. So also buy the right size, critical piece of information if you're actually buying a unit.

LEHRMAN: Yes, it's always a critical piece because if it is too small, it is not going keep you cool and if it's too big it's going to turn off before it pulls the humidity out. So, all you'll have is a cold, clammy room.

WILLIS: Oh, yuck. OK, let's talk about keeping these air conditioners working well. And we wanted to show folks one of these filters. They come out just like that. Now, tell me what I'm going to do with this once I pull it out.

LEHRMAN: You want to be sure that you vacuum it. You also want to wash it with soapy water, dry it and then put it back in. You'll probably need to do that about once a month. But if you also, again...

WILLIS: Once a month?

LEHRMAN: Yeah.

WILLIS: OK.

LEHRMAN: If you've got an outdoor unit, instead of a portable unit, you want to be sure that there aren't a lot of debris and leaves by those units.

(END VIDEOTAPE)

WILLIS: And now a few more ways to save. Consider ceiling fans and portable fans. Now, both will help you feel cooler, allowing you to set your thermostat higher, thereby saving you money. Just don't keep them on all the time or you'll lose the savings.

Compact fluorescent light bulbs, or CFLs as they're called, though more expensive than traditional bulbs, will save you about five bucks a year each in energy costs. Now, in most houses you about 45 light bulbs, multiply those numbers to equal a savings of $225 a year, simply by making a switch. And that is, although, it may be a minor advantage, CFLs don't get as hot as regular light bulbs and that means less work for your AC and less money out of your pocket, which is what we're all looking for.

We want to know how you save money. Send us an e-mail to openhouse@CNN.com and if you want to check out this "Project Savings" again, check out our Web site, CNN.com/openhouse.

Still ahead on OPEN HOUSE, flipping homes in today's market. Can you still make money? And renovating with your spouse, how to see eye to eye on budget and style. We'll tell you how.

(COMMERCIAL BREAK)

WILLIS: My next guest knows a thing or two about flipping houses and "Flipping Out," that's his TV show on Bravo. So, what is the secret to staying cool and making money in a down housing market? Jeff Lewis joins me now to talk all about it.

OK Jeff, here's what I don't understand, you flip houses. The market is terrible. Isn't this a terrible time to be flipping?

JEFF LEWIS, BRAVO'S FLIPPING OUT: It is not the best time to be flipping. And I still am flipping. I'm not flipping as many houses as I was, say, last year. But I'm also -- you know, I think it is important that I'm investing, I'm still investing. So, there is a lot of great deals out there, right now. And you know, I believe that you always do the opposite of what everybody else is doing.

So, everyone is afraid and they're holding on to their money for dear life and they think that the housing market is going to go down another 50 percent and I simply don't agree with that. I think most of the damage has been done.

WILLIS: So, you're a contrarian. You're out there buying while other people are trying to unload their property. Well, what's the difference, say, between flipping, you know, buying a house, fixing it up as we see you doing right here, and selling it and investing?

LEWIS: The only -- OK, well first of all, the only houses that I'm buying to flip right now are the absolute steals. The ones that I'm buying, 20 percent, 30 percent under market and then I'm, on top of it, I'm adding value. So, they're fixers that I buy under market and I add value. So remember, so if I'm buying something for $400,000 that is, say, worth $500,000, so the day I close escrow, make $100,000 in equity because I've paid $400,000 for a $500,000 house. Now I put money into it.

WILLIS: If someone recognizes that value, I mean. We have to add that caveat, right?

LEWIS: This is a really important point, as well. The fear of what is happening to the market is worse than what is really happening.

WILLIS: Well, I think, you know, people they operate on their gut, so what happens is that prices plummet, and then they start slowly going up again. I want you to talk, though, because you have some great advice, really, for folks out there who are trying to get in the market, maybe haven't been able to buy a house yet, they're dying to buy their first home. You are a consummate negotiator. Tell me about your strategies for negotiating.

LEWIS: Well, first of all, I did want to mention that I think at the end of this year is going to be a fantastic time to buy because everybody knows the real estate market is cyclical. But what they don't know is it's seasonal and I do most of my buying at the end of the year.

WILLIS: Why?

LEWIS: Because people are out traveling for the holidays, Christmas shopping, and they're not looking at houses. But, remember if somebody really needs to sell, they don't take their house off the market during the winter, they leave it on because they need to sell. So, I get most manufacture I deals at the end of the year.

Now, pair it with a pending election. People are going to be concerned about what is happening. We're waiting for the new regime, and so they're going to hold on to their money to wait to see what happens. That's the best time to buy. At the end of the year, in the holidays, in combination with the pending election, is going to be a fantastic time to buy. I expect to pick up several properties at the end of the year.

WILLIS: I love that idea. We talk about foreclosures on this show. And I think people out there, rightly so, are kind of suspect of these deals. It can't be hard to get inside, see what's happened to them. Do you like foreclosures as an investment? LEWIS: I have never purchased a foreclosure in 20 years and I'll tell you why, I find the better deals are buying from the private sellers because banks, they have a lot of money behind them and if, you know, if I go in and I offer 30 percent under what they're asking, the bank is going to say no way. No way, it's worth $500,000.

WILLIS: They say no to a lot of things, right now.

LEWIS: But a seller, a private seller may not be able to refuse if it is their asking 500, they might not be able to refuse my 350 offer because they need the money.

WILLIS: Well, let's get some of your details, because tour show is premiering very soon. What have you got going on in that first show?

LEWIS: Well, season two basically covers how my staff, my business partner and I were coping, we're adjusting to the changing market.

WILLIS: And lots of great comments, lots of interesting stuff. Jeff, we appreciate your time today. Thank you for helping us out.

LEWIS: Thank you very much.

WILLIS: For more on your house, your job, your savings, your debt, logon anytime to cnnmoney.com. Increasing the value of your home without compromising your relationships, believe it of not, it's possible. You're watching OPEN HOUSE.

(COMMERCIAL BREAK)

WILLIS: Money and marriage, it can be a love-hate relationship sometimes, but it doesn't have to be. Carley Roney is the author of "The Nest: Home Design," and she says you can see eye to eye with your partner on budget and style.

Carley, great to see you.

CARLEY RONEY, "THE NEST: HOME DESIGN": Thanks for having me.

WILLIS: All right, OK, so you know how this works. You try to bring your style together and your spouse is stainless steel everything and you're like, oh, no, natural woods, that's what I want to see. How do you blend those styles and keep in mind what's actually affordable?

RONEY: Well, this is so important right from the beginning to understand what kind of -- what priority decorating is for you. Are you going to spend $2,000 to update your home or are you going to spend $20,000?

(CROSSTALK)

WILLIS: I'm going to tell you, in the market place it has to be $2,000. RONEY: It is and it's going to be bad for everyone. So, how are you going to spend that $2,000? Prioritize, first of all. I always say start in the living room. High impact environment, public, you want to have some easy updates there and you know you can blend styles with your partner, don't go for florals, go for something more graphic. Graphic patterns are hot right now, so do that. You know, and agree on those items, agree on what's important -- is it about the couch for you?

WILLIS: And you say re-evaluate old pieces. I love the stuff you have here, which is really pretty and instead of being kind of stuffy, kind of flowery, you've got really graphic, big, bold designs.

RONEY: Well, it's so important that the woman doesn't come in and say I'm going to decorate. You have to do it together. You can like, sit down, have a beer, look through some catalogs, figure out which other's styles are. So, instead of the florals, we're saying go for the sort of graphic printed pillows and pillows. And pillows are an inexpensive update. You know, add a lampshade, little ways to make...

WILLIS: Change things up and make them feel different. I know, a lot of people think about whether they should buy art or not and how much should I spend? And I feel like, I think a lot of people think the more I spend, the higher quality I'll get. But that's not necessarily true.

RONEY: You know what? We have some really inexpensive art ideas. One of our best ideas is go to an old bookstore, get a great art book and frame a series of prints that would work together. Also, when the two of you are blending styles, actually put all of your photos together in similar frames, as you see in this photo, they look like they're working well. This is framing wallpaper. It's just great ways to make kind of accent.

WILLIS: Pretty.

RONEY: Yeah. And you don't want to necessarily invest in art you're going to have in a lifetime now. Just some cute, fun things and they're all do-it-yourself ideas, very inexpensive.

WILLIS: All right, I spend all of my time, virtually, in the kitchen. And you can spend anything you want to fixing up the kitchen. What's your advice, there?

RONEY: You know what? It is about paint and blending colors. Like, paint one bold colored wall that's high impact in the kitchen. You can experiment, there. This shows us like a floor runner and it coordinates colorwise. Pick a high impact color for your kitchen. You also can use your accessories to update your space.

Get all blue kitchen countertop. It is it only costs $100 to update key things like your toaster and your mixer and suddenly you have a sense of high impact style without completely renovating your space. You should never renovate unless you're really going to be somewhere for a long time. WILLIS: And you got to make sure you get on the same page so you don't have that argument, right?

RONEY: Yeah, it's so easy to argue about these types of things and it's not worth it. It's your home, have fun together, it's part of the fun of it.

WILLIS: I love that idea. So, have fun. Carley Roney, thank you for that.

RONEY: Thank you so much.

WILLIS: Well, our goal on this program is to save you money. If there's one thing you should remember from today's show, beware of the circular when looking for savings in the grocery store, not all of the deals in your circular are really good savings. Some manufacturers pay to be in the circular and sometimes there's no real discount.

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 Sunday's at 3:00, right here on CNN.

As always, we thank you for spending part of your Saturday with us. Don't go anywhere, your top stories are next in the CNN NEWSROOM. Have a great weekend.