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Open House

Low-Cost Life; Kitchen Changes; Renovation Savings; Online Bill Pay; Winter Auto Nightmares; Recessionistas

Aired December 27, 2008 - 9:30   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 savings you money. And it is tough times out there and this show is all about how to live a low-cost life and protect your bottom line. So, grab that pen or paper. Chances are you or someone you know can save a whole lot of money by watching the next 30 minutes.
We begin with the basics. There are some very simple steps you can take to lower the daily costs to you and your family. Cathy Bowen is a specialist in consumer issues, a professor at Penn State University and she co-authored "Bouncing Back when Your Income Drops."

Cathy, welcome.

CATHY BOWEN, ASSOCIATE PROF, PENN STATE UNIV: Thank you very much.

WILLIS: All right. I want to start with a great point you make about buying food and just sort of being rational when you go to the grocery store. You say plan meals ahead of time. Tell me about that.

BOWEN: Right. If you plan meals ahead of time, most times you can take advantage of the specials for that week and that will cut your cost. Takes a little bit of effort, but in the long run you will save money.

WILLIS: Now, you say something very controversial about food and planning meals for the family. You say plan them in advance, but you also say eat less. You're going to make me eat less, Cathy?

BOWEN: Oh, that has double advantage. You eat less, you spend less money, but you also may be healthier by doing so. Eating less usually means you're not going to be over consuming which in this country eating too much leads to other health problems, so by eating less, you can save yourself money on food as well as healthcare costs.

WILLIS: All right, and of course, you can always reduce waste because a lot of food simply ends up in the trash can. Let's talk about -- you mentioned grocery specials, but what about buying generic?

BOWEN: Generic brands can cut your costs on the food bill, as well. And I would suggest if you have picky folks in your household, buy generic product for those items that are going to be mixed with something else like in a casserole or a soup. They may not be able to pick it up that you have a different brand than you purchased in the past. And oftentimes generic brands are actually packaged by some of the same companies that prepare the major brands. So you just -- it's just the difference in the labeling.

WILLIS: Sometimes there's no difference at all, you're just paying more for the brand name.

Let's go to something else. I know you want to talk about housing and buying furniture. And goodness knows, if there's any place you can negotiate right now, it's buying furniture. Tell us about that.

BOWEN: Right. Buying furniture, if you know you're going to be in the market for a particular item, look for sales. I mean, if you really compare or study the markets, there are certain times when product will go on sale. January and February are often times where major appliances go on sale.

Things like washers and dryers for sure always go on sale in March. August is also another time where you have furniture sales. So, if you know you're in the market for something, start planning in advance. Shop around, look at prices and then you can make a better decision for your pocketbook.

WILLIS: Why do I have to buy so many kinds of cleaning products? Can't I double up on some of those?

BOWEN: Yes, you don't have to buy those specialty products. This is one way consumers with save a lot of money. For instance, a basic product like ammonia can be used for cleaning in the kitchen, can be used for cleaning the bathroom and even in the laundry. So, think all- purpose or multipurpose when you start to buy cleaning products. You don't need the specialty ones with the fancy smells in them sometimes to do the jobs.

WILLIS: Right, exactly, and quickly here, you say drop collision insurance on older cars. Tell me about that. How much can I save?

BOWEN: A lot. But, again, that's a consumer decision you have to make. Check with your insurance agent. If you're driving a very old car it perhaps does not make sense to carry collision coverage because the value is so low that it doesn't make sense for you, as a consumer. I would suggest consumers really talk this over with their agent to make sure this is a decision they can handle.

WILLIS: Cathy Bowen, great tips. Thanks for helping us out. We appreciate it.

BOWEN: You're welcome.

WILLIS: Contractors are looking for work. Suppliers are overstocked. Why now just might be the perfect time for that home remodel. But first, easy changes to implement around your kitchen to save you some cold, hard cash.

(BEGIN VIDEOTAPE)

(voice-over): Think you're going green washing dishes by hand? Wrong. Using a dishwasher for a full load of dishes saves 35 percent more water than hand washing. That's not the only way going green in the kitchen can save serious cash.

(on camera): Here we have a refrigerator with a regular fridge up here and the freezer down. That's one of the new design styles. In fact, it's more energy efficient than the side-by-side, 15 percent more energy efficient. So, if you want to cut bills, get a refrigerator like this.

(voice-over): What about cooking that casserole? A gas oven with an electric ignition is 50 percent more efficient than that electric oven. And make sure to check energystar.gov to find the most efficient appliances all over your house.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: Consumer spending on home improvements down double digits after peaking last year and that means renovations are on sale. Here to tell you how to get the best bang for your buck is Donna Rosato, she is senior writer for "Money" magazine.

Donna, great to see you.

DONNA ROSATO, SR WRITER, MONEY: You too, Gerri.

WILLIS: I've got to assume those people out there who make their living redoing kitchens and baths and doing additions, they are probably pretty desperate right now. They are probably willing to take a price cut.

ROSATO: Yeah, it's the silver ling in the dismal real estate market for the consumer, anyway, that those contractors, you know, even a year ago you had to wait six months for them to return your phone call probably want to take that phone call right now.

WILLIS: Exactly, I'm finding it myself. OK, let's talk about some of the projects actually cheaper, right now.

ROSATO: Yeah. There are a number of products. I would say that, in general, the products that are going to be the cheapest are the things that are tied to what has made them costly in the past -- in recent months. The price of oil has come down and you see the price of oil...

WILLIS: What does the price of oil have to do with my renovation?

ROSATO: What does it have to do with your renovation? Well, oil is a big component in things like asphalt, so if you're going to repave your driveway and vinyl siding, if you're going to replace the siding on your house. If you're going to replace the roof -- there's tar on your roof, you're going to replace that. So, the price of commodities coming down has really reduced the cost of the building materials that you might need for your home remodeling.

WILLIS: That's important to know because components are such a big part of the price tag, obviously. And it's interesting to see the list of things you can actually negotiate on. Let's talk about investments, though, renovations that really have a high payback. And this is an interesting list of not necessarily what you would expect.

ROSATO: That's right. Today, when home prices are going up quickly, you got to pay back quicker for any investment you made in a home renovation.

WILLIS: It didn't matter what you did, it seems like you would get something back.

ROSATO: That's right because home prices are going up and when you sold your home, those renovations are going to pay off. That and home prices aren't climbing as quickly so the kind of renovations that pay off now, it's the smaller projects, it's not the big room additions, but it's the smaller projects that actually naturally don't cost as much that are going to give you bigger bang for your buck.

WILLIS: Can I just say, I recently redid my kitchen and what I did was I refaced the cabinets rather than putting in new cabinets. I cut my price tag in half, in half. And it made a big difference, I'm happy with the results and it certainly didn't cost as much.

ROSATO: I believe that. You know, when you look at the projects that are going to give you the biggest bang for your buck, you're going to recoup most of the investment, it's the updating the kitchen, it's the sprucing up the bathroom. It is not adding a brand new room, updating, adding a whole bathroom.

WILLIS: Now, a key to having a successful renovation is negotiating with the contractor. So, let's talk a little bit about the steps you want to take. And I have to say, one of the big mistakes I see people make time and again is they will take the very lowest bid, they'll get a bottom basement bid and they will take that. That's always a mistake, it seems.

ROSATO: Right, the lowest bid isn't necessarily what you want to take. What you want to do is get at least three bids from contractors and get them to spell out down to the detail of the brand they're going to use on the cost of the renovation.

You want to make sure everything is included in this. You want a detailed price list and then compare those three. And ask them, if one is significantly lower than the others, find out why. Is there something that's not in there, do they not have insurance, is there something lowering the bid significantly that you need to know up front?

WILLIS: All right, and names from friends and family always a great place to start. Always a great place to start with you. Donna Rosato, thank you so much.

ROSATO: Thanks, Gerri.

WILLIS: Organic products are supposed to be better for you and your family but, hey, they usually cost more, as well. So, which items are worth the investment and when are you just getting ripped off?

(BEGIN VIDEOTAPE) (voice-over): They say organic, Urvashi, but you look all through this store and you can buy organic anything: organic grapefruit, organic kiwi, you name it, grapes, mangos, it's everywhere. But, at the end of the day, what really pays to buy organic?

URVASHI RANGAN, SENIOR SCIENTIST, CONSUMER REPORTS: It's a great question. And people don't have umpteen dollars to spend, and there's often a premium associated with organic.

WILLIS: As much as 50 percent, right? I mean, a lot of money.

RANGAN: That's absolutely right. Yes. And there are some ways to cut that. You can shop at local farmers' markets, as well.

But if you're going to prioritize your organic dollars, you're buying say, for health reasons, but there's also certain vegetables and fruits that typically contain higher numbers of pesticide residues and higher levels conventionally. And so, if you want to get the most value for your organic buck, buying organic versions of those can be really helpful.

WILLIS: So, what's on the dirty dozen list? Which wouldn't you buy and which would you buy, Urvashi?

RANGAN: Well, for example, apples have been shown to have very high pesticide residue levels, peaches, as well. So, those are great examples of fruits that you might want to choose organic.

WILLIS: Wow, this is awesome. So, what does it mean when meat is organic? Does that have any real meaning?

RANGAN: Yes. Actually, organic meat production is very significant in terms of value added. The animals don't eat animal byproducts, they don't receive antibiotics, synthetic growth hormones, steroids.

They eat all organic diets from vegetables that were grown organically. So, there's a lot of value to having it.

WILLIS: So, you say that when you eat seafood, you really take your chances, right?

RANGAN: Well, I think that a lot of people are looking for, say, more natural seafood than not. Here are the key labels when you're trying to decipher that: "Wild caught" means that a particular seafood was fished from the ocean. "Farm-raised" means that it was generally raised in a fish farm.

WILLIS: So, Urvashi, when I'm picking up cleaning supplies, there are lots of labels that are confusing. I don't know if they're marketing labels or they actually mean something. Are these meaningful or is it just a marketing gimmick?

RANGAN: A number of cleaning products make a lot of natural claims. And if you see something that sounds vague or just meaningless, treat it as such. Take the product, flip it over. You're going to need to do some additional work. WILLIS: So, if something says "natural," for instance, there are no standards for what that has to mean. If something says "nontoxic," there are no standards for what that has to mean.

WILLIS: So many of them, the No. 1 ingredient is water, that's natural, right? Does that count?

RANGAN: That's a great question and, in fact, water is exempt from, say, organic certification. So, for product labeled as organic or maybe even natural, there's no one water that's more natural than another.

WILLIS: So Urvashi, you say that it is critically important to buy organic when buying baby food. Parents spend so much money on baby food. Why is it so important to make sure you've got that organic label when you're shopping?

RANGAN: Scientific studies have actually shown that children who eat fruits and vegetables that are organic and drink organic juice actually have less pesticides floating in their bodies than kids who don't.

WILLIS: I think the issue for so many parents is maybe shopping organic doesn't fit their budget. They worry that they're paying more for each and every one of these jars they buy.

RANGAN: It's true organic can often carry a hefty premium, but if you shop around, especially for baby food, sometimes you'll only spend a few more cents on the dollar for every jar of baby food.

WILLIS: So, more, but maybe just a little more, particularly if you're willing to shop around and for a lot more value.

(END VIDEOTAPE)

WILLIS: Protecting your bottom line. Tips to properly winterize your car and dress your family for less, but first, saving money now by paying bills the smart way.

(BEGIN VIDEO CLIP)

(voice-over): The average household receives 20 bills every month.

ROSSANA SALARIS, ELECTRONIC PAYMENTS NETWORK: With electronic payments, you can save $150 a year. And that is late fees, anywhere from $25 to $75 per bill, and with stamps, envelopes and checks.

WILLIS: And since the payments are deducted from your bank account automatically, you always pay on time. Check with your utility providers, health club and credit card companies to see if they offer financial incentives for direct payment. And you'll be helping the environment.

SALARIS: Up to 18 million trees a year can be saved and over 390,000 cars can be taken off the road if all of us paid our bills electronically. (END VIDEO CLIP)

(COMMERCIAL BREAK)

WILLIS: It is every driver's winter nightmare, feet of snow on the car, locks frozen shut, a battery that just won't start. Taking some precautions, though, now can save you a whole lot of money down the road. Here with some great advice to make sure you're not left out in the cold Robert Sinclair with AAA.

Welcome Robert, great to see you.

ROBERT SINCLAIR, AAA: Nice to see you.

WILLIS: All right. So, you say that some five million people will be stranded on the road this winter, that's scary enough. But then you say there are a couple of things that people in particular call about in the winter -- tires and what else?

SINCLAIR: Dead batteries. Without a doubt the top two items we get calls are flat tires and dead battery.

WILLIS: How do I avoid the dead battery?

SINCLAIR: Well, really, a battery last two years, three on the outside. So, if it's old or you let it go dead a couple of times, that means it has less power and when the cold gets to it -- worse in the winter because the chemical reaction slows down that makes the power. When it gets down to zero you're losing about 60 percent of your battery's power. So, you need a good one. If it's old, get a new one.

WILLIS: OK, and what about the tires? Because this is really true. The other day got cold all of a sudden and my tire was practically flat.

SINCLAIR: That's right, because you haven't been checking your tire pressure. All right?

WILLIS: I'm guilty as charged.

SINCLAIR: Heat expand, cold contracts, when cold weather hits the air in the tire contracts. For every ten degrees of outside air temperature you lose two or three pounds about two or three pounds of air pressure. So, you really need to stay on top of it in the wintertime.

WILLIS: Because, that's the worst. You know, if you have a flat tire. It's just embarrassing.

SINCLAIR: And we're at that time of year where it's going to happen.

WILLIS: Yes, absolutely. Let's talk about salt for just a second. OK, what do I need to be worried about? Because it sort of builds up on everything, it seems to -- makes the car look like heck, but there are other things to be worried about. SINCLAIR: Sure, well salt is going to attack the metal in the car. So, it really becomes important to wash the car, especially getting down in the joints of the doors and trunk and that sort of thing. Most cars are warranted for many, many years against rust. But still, you have to do everything you can for the protection. And also the rubber products, the windshield wipers, in particular. You should think about changing those every year because, the salt is going to attack them and degrade them.

WILLIS: This is getting expensive.

SINCLAIR: An ounce offer prevention.

WILLIS: OK, who needs to get snow tires? Does everybody need to get snow tires?

SINCLAIR: If you live in an area of the country where it gets more than an inch of snow in the wintertime, you need snow tires. All- season radials are misnamed, they should called three-season radials, spring, summer and fall. But for really hard snows, more than an inch, all-season radials are useless, you need a dedicated snow tire. A radial snow tire is something that says M&S on the side, it says mud and snow and it's got a little mountain symbol. That's what you should look for.

WILLIS: What about, OK, there are other fluids that can go wrong. Do I need to be replacing radiator fluid? What am I doing?

SINCLAIR: Oh yeah, your radiator fluid. It's important, it keeps the engine from boiling over in the summer, but freezing up in the wintertime. You add 50/50 mix of antifreeze and water. You can buy it premixed these days, but also remember, this water is running around the inside of a metal part and that can rust from the inside. There are rust inhibitors in antifreezes, that's why it feels kind of greasy to the touch and that lasts maybe two or three years. You should change it.

WILLIS: OK, you have a great idea for door locks. Quickly, what is it?

SINCLAIR: Spray some WD-40 in there, disperses the water that might freeze and keep you from getting inside your car.

WILLIS: Can I say, there is a bit of good news here that is actually saving me money? And that is lower gas prices. Robert Sinclair, thank you for that.

SINCLAIR: Oh, you're welcome.

WILLIS: OK, Times are tough, but that doesn't mean you have to dress like it. We will show you how to look good in a bad economy. But first, another money-saving tip to safeguard your bottom line.

(BEGIN VIDEOTAPE)

(voice-over): Did you know that some of your home appliances are energy vampires? That's right. Some home electronics use energy even when they're turned off, like your TV or stereo system. The phantom energy loads can add up to 20 percent to the amount your family pays for energy each month. The worst offenders, computer components, like the printer and fax machine draw a lot of energy. But, it's the little things like your cell phone charger, your answering machine and the clock on your microwave that really add up.

You could save hundreds of dollars a year by plugging these devices into power strips so you could shut them off at the touch of a button. The down side, having to reset that flashing clock when you set it back in.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: You know the old saying, when times are tough, the tough go shopping. Well, that might not be the wisest choice right now, unless you know how to dress like a recessionista. Our Lola Ogunnaike hit the stores to show you how.

(BEGIN VIDEOTAPE)

LINDA WELLS, EDITOR IN CHIEF, ALLURE MAGAZINE: A recessionista is someone that wants style and takes pride in finding style for a low price. And right now, we're all recessionistas.

LOLA OGUNNAIKE, CNN NEWS CORRESPONDENT: You call yourself a trued recessionista. Why?

KAREN ROBINOVITZ, RECESSIONISTA: I am personally on like double secret shopping probation, severe lockdown. Credit cards are completely off limits. And I don't really want to sacrifice glamour and the joy I have from shopping.

OGUNNAIKE: So what are some of your recessionista tricks?

ROBINOVITZ: OK, well, first of all, you can get a lot of great stuff on line. And I got these at chiconomic, you know, Google search.

I got these at smartbargains.com. I know the name smartbargains, you wouldn't think you can find great things. You can find great things. Feel this. It is like delicious. Even though it is cheap, you want to make sure you are getting value. This is a Target scarf. Like, I run my ring over it and I'm like, OK, it is not pulling, it's not catching. This looks good. This is Gap, this is Target.

OGUNNAIKE: And I'm going to target.

Oh, these wraps, only $27.99.

KEISHA JAMES-GRAFTON, MANAGER, TARGET: Only $27.99.

OGUNNAIKE: Two of them. Oh my god, with the ruffle, I'm dying. This is killing me.

JAMES-GRAFTON: $29.99, shopping on a budget.

OGUNNAIKE: So, it could be really tight or a little loose.

JAMES-GRAFTON: Or you can leave a little room and with the way you move, it sways with you.

OGUNNAIKE: Sways with you. I like that. It could be tight before dinner and then a little looser after.

(LAUGHING)

Does it look like too '70s?

JAMES-GRAFTON: I like it over here.

They look at the merchandise. In their mind, they think, I am going to pay a lot of money for it. When they pick it up and look at the price, it's like, it's a done deal.

(END VIDEOTAPE)

WILLIS: Oh, is that all the dresses? OK, well, Lola Ogunnaike, she's here right now wearing one of the dresses that you saw her snag on the cheap. So you can dress for less, even the fellas. We have to talk about fellas to be even-handed. I know there are a lot of fantastic dresses, but give me your tips on getting the best deals, Lola.

OGUNNAIKE: Well, for the guys, the guys can go to Zara, they can go to H&M, as well. They have huge men's floors and there's a lot of cheap stuff to be had. Why by a starched shirt for $300, I mean, you can go to the Gap and get a great starched shirt. That applies for both men and women. Recessionistas, they don't spend a lot of money on starched shirts. They skim on denim. Don't spend 250 bucks on denim. Go to Old Navy.

WILLIS: Terrible, terrible. OK, but I like the tip about shop your closet. What do you mean?

OGUNNAIKE: Because people have a lot of amazing pieces in their closet that they've forgotten about. So, pull out that old cardigan, throw some new buttons on it and you've got a whole new look.

WILLIS: And you've got to like update things, but you don't necessarily have to buy a whole new outfit.

OGUNNAIKE: No, buy some key, critical pieces. Spend money on classics. Spend money on boots, spend money on a great bag, spend money on a nice priceless turtle neck. But for the trends, really go to places like Target, H&M, Old Navy. You can still up your wardrobe with all these little bits that update your look, but again, on the cheap.

WILLIS: And you can negotiate. I'm already doing that in the stores, and they are starting to listen and drop their prices.

OGUNNAIKE: They are. WILLIS: Lola, thank you.

OGUNNAIKE: Thank you.

WILLIS: As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back last week, right here on CNN. You can also catch us on HEADLINE NEWS every Saturday and Sunday at 3:30 p.m. Eastern Time.

And you can hear much more about the impact of this weeks' 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. Don't go anywhere. Your top stories are next in the CNN NEWSROOM. Have a great weekend.