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Open House

Flooding in the Midwest; Getting off the Grid: One Self- Sufficient Family; How to Spot and Avoid Hidden Fees; Going Green and How Much It Will Save You

Aired June 21, 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.
Getting off the grid. We'll introduce you to one family that's growing its own food and making its own fuel and these folks are making money doing it.

Plus, we help you spot and avoid hidden fees and how to score a cheap airline ticket.

We begin, though, in the Midwest where folks are still dealing with historic flooding. To put that in perspective, the administrator of FEMA declared it the worst flooding since Hurricane Katrina. Families in Cedar Rapids, Iowa are getting a chance to return to their homes after a devastating flood submerged that city last week. But the recovery process is moving slowly, testing the community's patience.

CNN's Jim Acosta has that story.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN CORRESPONDENT (voice over): It was a flood of frustration as thousands of people stood in long lines at police checkpoints to re-enter their neighborhoods. Men, women, even children were given wrist bands to quickly go home and carry out whatever they could in plastic bags. Carla Morford (ph) didn't know whether to laugh or cry.

CARLA MORFORD, FLOOD VICTIM: We're safe. We've got our kids. We got our pets.

ACOSTA: One detective admitted they are making it up as they go along.

DET. BRAD NOVAK, CEDAR RAPIDS POLICE: It's been compared to a 3,000 year flood, 2,500-year flood. So something with that rarity of an event, there is no playbook to go by.

TRACY MURPHY, FLOOD VICTIM: That's my house right there.

ACOSTA: We gave the Murphy family a ride home.

UNIDENTIFIED MALE: I don't know how safe it is to go in.

ACOSTA: That is, what's left of it.

T. MURPHY: My whole entire life is gone. I don't know what we're going to do.

ACOSTA: Holding back tears, Tracy frantically grabbed all the family photos she could find.

T. MURPHY: Everything can be replaced but your photos can't.

ACOSTA: Like scores of other homeowners here, she was told she didn't need flood insurance. Guess what the insurance company is telling her now.

T. MURPHY: They said because it's a flood, that they're not going to help us.

ACOSTA (on camera): What's going to happen to this town?

T. MURPHY: I don't know. Is the government going to come in and buy all these houses, knock them down?

ACOSTA (voice over): There is going to be plenty to knock down and clean up from this grain silo that split open in the rising waters to this fuel tanker pinned under a highway. But, for many of the people who live here, it's the smaller things that matter most.

CANDICE RIBBLE, FLOODING VICTIM: House, our home.

ACOSTA (on camera): But, everybody is out safe?

RIBBLE: Everybody is out safe now. Now they are.

ACOSTA (voice over): Jim Acosta, CNN, Cedar Rapids, Iowa.

(END VIDEOTAPE)

WILLIS: It's a sad story. And as you heard in Jim's report, some folks in the Midwest were told they didn't need flood insurance. Now the reasons are complicated, but one factor everybody should think about is this. In many cases, the federal government flood maps are decades old, some haven't been redrawn since the early 1970s and that spells big trouble for many homeowners who live in flood-prone areas and may not know it.

Look, just because you don't live near a body of water doesn't mean you've escaped the risk. Think about being flood insurance if you get large stagnant pools of water after rainstorms. And look, if developers have changed the land around your home dramatically, say they built a big retail store or a condo complex you may want to consider flood insurance. That's because paving over raw land changes the flow of water and your home could be more vulnerable.

You can also check out floodsmart.gov for the very latest information including updated digital maps, where available. Now, you have to buy flood insurance from the federal government through an insurance company. Your premiums will vary based on what kind of risk you represent. Most of those policies cost about $600 a year.

Important news for homeowners worried about foreclosure. Hope Now, a mortgage industry alliance group has developed a new set of formal guidelines supposed to speed up the process of getting help to homeowners at risk. One of the major principals that lender and mortgage servicers have agreed to abide by, is issue a decision in 45 days about whether to modify a delinquent loan. Now, these new rules may quiet critics that Hope Now moved too slowly to aid troubled homeowners.

And another twist on the ongoing housing crisis, at least 300 people have been arrested for alleged mortgage fraud in cities across the country as part of an FBI and Justice Department investigation that began March 1. Government officials tell CNN the fraud cases total about $1 billion. The cities include Miami, Houston, Chicago, San Antonio, and Baltimore.

Suspects were allegedly involved in mostly small-scale schemes, including reverse mortgages, which as you know, targets seniors and house flipping.

Up next on OPEN HOUSE, grow your own food, make your own fuel. Imagine all the money you'd save. We'll show you one family who does just that.

Then those pesky, nasty hidden fees and how to avoid them. And with oil and gas prices near record levels, how to save this summer when you're out and about. You're watching OPEN HOUSE, the show that saves you money, on CNN.

(COMMERCIAL BREAK)

WILLIS: Welcome back to OPEN HOUSE. What if you could be completely insulated from the economic mess? You grow your own food, make your own fuel. Well, it's happening.

Thelma Gutierrez spent the day with a family that is completely self-sufficient. Take a look.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): This is quite possibly one of the few households in America where rising food prices are not an issue.

JUSTIN DERVAES, URBAN HOMESTEADER: You just stay at home and you grow your own food in your backyard.

GUTIERREZ: Where high energy costs are not a concern.

ANAIS DERVAES, URBAN HOMESTEADER: We try to cook outdoors using the sun and free energy.

GUTIERREZ: Where sky high gas prices haven't hurt one bit.

JUSTIN DERVAES: It takes vegetable oil, heat and some chemicals and makes biodiesel.

GUTIERREZ: Meet the Dervaes, a family of four who live off their land, every horizontal and vertical inch they can find. In their back yard -- their front yard ...

JUSTIN DERVAES: In our driveway, we've got strawberries.

GUTIERREZ: Even the driveway of their three bedroom in Pasadena, California.

JUSTIN DERVAES: One of our biggest crop is edible flowers.

GUTIERREZ: That's right, even their landscaping is edible. The Dervaes' urban home is a working farm on a tenth of an acre.

JUSTIN DERVAES: Getting a little rabbit's taste out of it.

GUTIERREZ: They sell to local chefs.

JUSTIN DERVAES: They may call for three pounds of salad, we pick the three pounds of salad. No waste, no mess. That cuts down on overhead.

GUTIERREZ: Anais Dervaes says her family has been living green way before green was in. Their home is paid for and they live on about $25,000 a year. What they don't sell, they eat.

(on camera): So what can you actually cook in here?

A. DERVAES: Anything that can be cooked in a normal oven can be cooked in a solar oven. And here we have some homegrown potatoes that we harvested and that we're cooking up for dinner tonight.

GUTIERREZ (voice over): The sun also powers their home and heats their water.

A. DERVAES: You're looking at our homemade, outdoor solar shower.

GUTIERREZ (on camera): This is the shower you use in the summertime?

A. DERVAES: Yes. And it's heated with a simple black garden hose, and then the water percolates down and water's our edible landscaping.

GUTIERREZ (voice-over): The Dervaes pick pets like chickens, ducks and goats that contribute.

JUSTIN DERVAES: Right now, they're just -- they're pets, and they eat up our waste greens. So, we call them composters.

GUTIERREZ: Even their toilet gives back.

A. DERVAES: You'll wash your hands with the new water. That water will go in and fill your bowl. GUTIERREZ: Just when you think you've seen it all.

A. DERVAES: This is our bicycle-powered blender.

GUTIERREZ (on camera): Isn't there a side of you that ever just wants to get out of bed, go in, turn on the blender, make whatever you need to make?

JORDANNA DERVAES, URBAN HOMESTEADER: I don't really know another way. In a sense, I've grown up like this.

GUTIERREZ (voice over): Jordanna Dervaes says as a kid she was picked on for living green.

JORDANNA DERVAES: Right when I began to accept being different and unusual, then I started becoming hip.

GUTIERREZ: In 10 years, she says they went from the crazy family on the block, to the envy of their neighborhood.

Thelma Gutierrez, CNN, Pasadena, California.

(END VIDEOTAPE)

WILLIS: I'm impressed by them, but I don't think I would want to do it.

Well now, you may think going green and saving green are two things impossible to do at the same time, but there's some eco- friendly improvements you can make around your house that will save some cold hard cash. Joining me now is Jessica Jensen, she is the founder of Low Impact Living.

Jessica, you know, we talk about going green all the time on this show. But we're really going to break it down in this segment. Bingo, bango, bongo. CFLs, we talk about them all the time, LEDs, lighting that is greener. Tell me how much they cost and how much I can save?

JESSICA JENSEN, FOUNDER, LOW IMPACT LIVING: Right. They're huge energy savers and a lot aren't familiar with LEDs, which are a newer form of lighting. They are even more efficient than compact fluorescents. Compact fluorescents will run you, depending on the type, between $6 to $10 a bulb. Leds are quite a bit more expensive, but last much, much longer, they're more in the $20 to $25 range.

If you change out all of the lighting in your house with even compact fluorescents you can save $250 a year and if you do your outdoor lighting as well, it can be over $300 a year. So, it pays for itself really quickly and it's a great energy saving technique.

WILLIS: OK, and that's easy. Everybody can do that. You're going to replace those bulbs at some point.

JENSEN: Do it in an afternoon, right.

WILLIS: Water heater jackets. Now, I didn't know there were little jackets for water heaters. Tell me about that.

JENSEN: Yes, cute little accessories for water heaters. You can get a nice silver insulating jacket for a heater, very easy to install. They cost about $25 to $30 and they can save you $50 to $75 a year in energy costs.

WILLIS: OK.

JENSEN: And if you live in a colder climate, possibly even more. So, again, a very simple project to do, save a lot of money.

WILLIS: Programmable thermostats.

JENSEN: Programmable thermostats are wonderful devices that cost you about $50, pretty easy to install, maybe a slightly more challenging product than a water heater insulator, but still, something anyone can learn to do and they save a ton of energy. If you live in a more temperate climate like California, probably in the $80-a-year range, if you live somewhere very cold, like Minnesota, $300 or more.

WILLIS: Insulation, now my husband and I just did this this past winter, made all the difference in the world. Talk about the typical cost and what you can save.

JENSEN: Right. So insulation, a lot of people think it's only for winter, but of curse, it's very, very helpful in the summer. It'll make your house more comfortable year-round and save you a lot of energy and money. Probably doing an insulation project is somewhere in the $1,000 to $2,000 range, but I tell everyone to check with your local utility and city government because there are amazing rebates available. We got $400 back from our city for our insulation project.

WILLIS: Wow.

JENSEN: Yeah, I mean, it's significant money. And then again, depending on the climate you can save $80, $90 in a temperate climate, probably over $300 in a more cold climate.

WILLIS: OK, I want to cover two things quickly -- we don't have a lot of time left -- solar panels and solar screens. Start with the solar panels.

JENSEN: So, solar panels are for generating electricity for your home. A solar panel project for an average sized home is quite expensive, somewhere in the $20,000 to $40,000 range. So, very few people can afford it. Again, there are rebates available, but it will cover all of your electricity needs. So, basically free power from the sun.

WILLIS: All right.

JENSEN: Solar screens are screens you put over your windows, much easier, costs about $200 to do your entire home, cuts the heat coming into your home in the summer, dramatically, can probably save about $100 a year.

WILLIS: I love -- never heard of solar screens, it's new to me.

JENSEN: A lot don't know about them. It's just a screen alternative and a great energy saver.

WILLIS: And I'm thinking, maybe I'll turn off my AC this year after I do all these improvements.

JENSEN: There you go.

WILLIS: Jessica, thanks so much for helping us out. Great information.

JENSEN: Thanks very much.

WILLIS: Still ahead on OPEN HOUSE, hidden fees, where they're hiding and how you can steer clear. And let you in on a secret. We'll tell you where and when and where to snag the cheapest airline tickets. That's all coming next.

(COMMERCIAL BREAK)

WILLIS: Hidden fees, they're everywhere, we don't have to tell you. And we've got some ideas for how you can save money, more money than you can think. Janet Bodnar is deputy editor of "Kiplinger's Personal Finance" and joins me from Washington.

Janet, great to see you again.

JANET BODNAR, KIPLINGER'S PERSONAL FINANCE: You too, Gerri.

WILLIS: I tell you this topic just really gets me going.

BODNAR: I know.

WILLIS: It makes me crazy.

BODNAR: Maddening.

WILLIS: And they hide these fees, hoping you don't notice. Let's start with banks and credit cards, notorious for piling on those extra fees. What are they?

BODNAR: Well, the most egregious ones, I guess, are the ones that make people the maddest. Although, maybe we could reason -- if you pay your bank cards late you're going to get hit with a fee of about $40. If you overdraw your checking account, that's going to be $28. But then there are smaller things too, the out of network charges or the monthly fees on your checking account.

WILLIS: Wow. That adds up, $238. That's a lot of money.

BODNAR: Yes, but you can save it by first of all, good behavior. If you just pay the bill on time and don't overdraw the account you're going to save money on those fees. But you should know the smaller fees, if you notice them, and that's key point No. 1, if you just call up the bank or the credit card company and say, hey, what is this? I usually don't do this or I have very good behavior, this was a one-time thing...

WILLIS: I love doing that. They hate to turn you down.

BODNAR: Can you take this fee off? And it works. They do.

WILLIS: They hate to turn you down.

BODNAR: Right, and you have leverage. You can always go to another bank or another credit card issuer.

WILLIS: I love doing that. OK, let's go into cell phones and the phone companies. You say you can save $832. How do I do that?

BODNAR: Well one thing, a lot of people will cancel their contracts or want to cancel their contracts before they're up. And you know you're going to get hit with a fee, $200 or so. But there are Web sites on-line where you can trade your contract so that you can get the remainder of the money out and give it to someone else who wants a shorter term contract. So, that's a way to save big time.

Also, you know, if you've got kids and they're charging a lot of -- I do this, my husband goes crazy. You know, and there's a lot of overage charges. First of all, look at your bill, because there may be hidden stuff on there from game downloads...

WILLIS: You have to scrutinize line by line-by-line-by-line.

BODNAR: You do. If you can decipher it, that's the way. And then again, call them up. Of you know, if the kid is overcharging on text messages or something, there may be a cheaper alternative or make the kid pay for those text messages.

WILLIS: I love that. You know, they're soaking up your money, you might as well soak up some of theirs. Rental cars, rental cars you don't need to pay for all the insurance, right?

BODNAR: That's right. You don't need to. This is -- these fees are usually given to you up front, but they can be very hefty. So, as long as you know what you are getting into you can make smart decisions. And usually the collision damage waiver, which is the insurance fee, you know, usually you are covered on your own auto insurance policy for anything that happens to the car, plus your credit cards may pick up some of the deductibles. So, if you've got coverage you don't need to pay for extra coverage.

WILLIS: All right, let's talk about hotels. Now, I am telling you, these resort amenity fees make me crazy. You know, they're high, they're really expensive, they expect you to pay them. What do I do?

BODNAR: Well, you know, this was one that I wasn't even aware of when we were working on this story. This is the amenity fee or the resort fee that they'll charge because they have a golf course or because they have a spa or a swimming pool. WILLIS: But, I may not use that.

BODNAR: Exactly. And again, they're on there because they figure if you'll pay up they might as well charge you the fee. So, it's really important to read the bill and to go to the manager, even ahead of time, and especially if you're a frequent guest or you travel on business, because they want your business back. So if you say, I'm not using this, how about getting rid of this fee, they will very often be very gracious and do it.

WILLIS: Janet Bodnar, great, great, great information. Thank you so much.

BODNAR: Oh, my pleasure, as usual.

WILLIS: Well, do you have an idea on how to save money? We want to hear from you. 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.

Well, we all could use a vacation now and then, but flying is so expensive these days. Grab a pen and paper. How to get your hands on a cheap, cheap ticket, that's coming up next.

(BEGIN VIDEOTAPE)

WILLIS (voice over): Boston, Massachusetts, home of the 2008 world champion Boston Celtics. And check out what you can do for free in Boston, the Freedom Trail is one of the best known tourist activities and won't cost you a penny. Take this 2.5 mile walk to visit 16 historic sites. Try out sailing at the Boston Sailing Center. Once a month take a ride around Boston's harbor for absolutely no cost.

And if you're looking for something you'll never forget, visit the Museum of Dirt. That's right, dirt. It contains more than 300 vials of dirt from celebrity homes and other exotic locations. That's your "Local Lowdown."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: It's another sign of the troubled economy that parents and kids might find hard to swallow. Cereal prices are going up again. But you may not see it reflected in the sticker price of your favorite brand. Kellogg is shrinking the size of its cereal boxes by 2.4 ounces. So, it's an indirect way of raising prices. General Mills reduced the size of its boxes last year, Kellogg has to cut back to offset the soaring costs of grains and oil.

Airlines are feeling the pinch from soaring oil costs and they're raising ticket prices and adding fees as a result. In this tough economy, a lot of folks are looking for bargains. Before he took off on vacation, though, I spoke with Aaron Smith from cnnmoney.com.

(BEGIN VIDEOTAPE)

WILLIS: OK, before we even talk about this, can you please tell me about your shirt? What's up with that?

AARON SMITH, CNNMONEY.COM: Well, I'm going on vacation after the show. So, I just want to be ready.

WILLIS: Oh well, you look ready to go. So, let's get the benefit of some of your advice? What are the best days to fly?

SMITH: Supposed to be Tuesday and Wednesday are actually the slowest days for business travelers. So, what you want to do is the opposite of what the business traveler is going to do. They want to fly out on Monday morning, they want to fly out on Friday night. So, if you're flying out in the middle of the week, there's going to be less demand and you're going to find a cheaper fare.

WILLIS: That's a really great idea. Now, but you can also sort of apply this idea to the seasons that you travel in as well, right?

SMITH: Yes, you can.

WILLIS: How do you do that?

SMITH: And you would want to fly during the fall, specifically between Labor Day and Thanksgiving. You've got the post-summer, pre- holiday thing and not that many people are flying at that time so that means a better fare for you.

WILLIS: I've done that before. You do save money doing that, particularly to Europe. Let's talk about time of day. Now, do most folks travel after work, in the morning?

SMITH: Most of the business travelers fly in the morning. You have to think of it in terms of Monday through Friday, 9:00 to 5:00 kind of schedule. So, you fly at a time that would be most inconvenient to someone who has to adhere to that schedule, that would be around lunchtime.

WILLIS: OK, well, that's making a lot of sense. All right, so I've gotten a lot of great ideas on when to fly and what time to do it, but you have something really strange you say about travel packages.

SMITH: Yes.

WILLIS: You like to buy those even if you're not going to use the hotel or the car.

SMITH: Yeah, well if you buy the travel package you might actually save money on a flight even if you're not going to use the rental car or the hotel.

WILLIS: Wow, you mean it's less even if you include those two things?

SMITH: Sometimes. The airlines are just trying to unload these packages and it's generally a last-minute flight kind of thing.

WILLIS: OK, great ideas. All right, so when I'm out there and searching for the right flight, tell me what else you do to get the very best deal. If there was one thing could you tell people today, this is what's going to get you the best fare, what would it be?

SMITH: You want to go against the flow. You want to do something like what I'm doing -- going to Florida in June. Which not everyone wants to do, so that's why I get a cheap flight. Another thing that you can do is go to a Colorado ski mountain during the summer and there just isn't so much competition for the fares and you're able to get a better deal.

WILLIS: Aaron, you're going to have me going to Alaska in the heart of winter, but great ideas, great advice. Hey, have a great vacation, too, OK?

SMITH: Thank you. I will.

WILLIS: Thank you.

(END VIDEOTAPE)

WILLIS: Nice shirt.

Now, if you're just joining us, don't worry, we're going to give you the very best tip out of today's show that is going to save you money.

Now, if you look closely and knock out some of the hidden fees banks and other businesses charge you, you can save more than $2,700 each and every year. That's what we call saving money. Usually all you have to do is ask and the fees will be removed.

You can hear 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 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.