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Your Bottom Line

How to Hang On to Your House; Job Advice: The Best Places to Send Your Resume; Going Back to School Online; How to Keep Your Hard Earned Cash Away From Scams and Charges

Aired March 07, 2009 - 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 YOUR BOTTOM LINE, the show that saves you money.

Every weekend, we're here to help you save, protect and build your money. And it's tough out there. And the two things so important to you, your job and your house could be headed for a tough stretch. We have important advice on jobs and how to hang on to the biggest investment of your life. YOUR BOTTOM LINE starts now.

We'll get to your jobs in just a minute, but first, details of President Obama's foreclosure prevention program are now public. You can see them at hud.gov. Look under the tab that says "Making Home Affordable." And here's the big picture, the plan has two initiatives. The first is for people underwater in their mortgage. Who qualifies? Well, if you are current, but can't refinance because of falling home prices, you could be in line for some help. The loan must be held by Fannie Mae or Freddie Mac. Ask your lender.

Now, what it does for you is it allows you to refinance into a loan with lower monthly payments or avoid a big fat rate reset. There's no principle reduction but you could save money over the life of your loan.

Now, the second imitative is designed to help lower monthly payments for homeowners at risk of foreclosure. These loan modifications work by reducing interest rates. The new interest rate is in place for five years, after that it resets higher each and every year for five years. This program also includes a new provision that would eliminate borrower's second mortgages.

Now, you qualify, if you're behind on mortgage payments. The mortgage must be for your primary home, it can't be an investment. The monthly mortgage bill must be more than 31 percent of your monthly gross income. To get ready, here's what you'll need: Put together the proof of your income, these are your W-2s, your most recent income tax return, second mortgage documents if you have it, credit card payment proof. This is critical and information on other loans including student loans, car loans, whatever you got.

Now, whether or not you can afford your house is critical to your financial health, but so is your job, if you're lucky to have one these days. If you don't, or you're looking to trade up to a better job, you'll want to listen up. Jennifer Merritt is the career editor for the "Wall Street Journal" and Manisha Thakor is a personal finance expert and auditor of "On My Own Two Feet." Great to see both of you guys.

You know, there's a lot of conversation about the best places to go for jobs. And I think all of us have had the experience of sending out resumes to a million different places and nothing happens. That seems to be the old fashioned way to do it. Manisha, what's the new way to do it?

MANISHA THAKOR, AUTHOR, ON MY OWN TWO FEET: The new way is to remember that your time is money. And I think people need to be really strategic. I suggest going to trade organizations or reading blogs and writing to people who are talking specifically about the area of your interest. You do not have time to send out 100 resumes to somebody who's receiving 100 resumes.

WILLIS: Right, Jen, what do you say?

JENNIFER MERRITT, CAREER EDITOR, WALL STREET JOURNAL: You know, I think you have to start out with your personal network. So, look at your Rolodex of friends, acquaintances, people you have known for years and just try and reach out to them, see what you can find. See if they know someone who knows someone. And then, definitely, look online. There are a lot of sites out there right now that are looking to help people. There's one called Job Angels and it's just a group of people who are looking to help other people find work.

WILLIS: You know, some of those Web sites are better than others. I'm hearing a lot of complaints about the big aggregator Web sites that they're not personal enough. What do you make of that -- Manisha.

THAKOR: Well, I think connections are absolutely everything and this brings in another suggestion that I have as a financial literacy advocate, I rarely tell people to spend more money, but this is one time when I will. You need to be connected. You need to make sure that you've a good sell plan and a good Internet plan, right now. You don't need to worrying about about minutes. Talking to your friends in your network is one of the most valuable things you can do now right now.

WILLIS: All right, we're going to go to Allan Chernoff, right now, he's a CNN correspondent. And he's at a job fair where he's talking to folks who are looking for a jobs.

Allan, what's going on there?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Gerri, 3,500 people registered here at the Keep America Working Job Fair. This is a tour, basically, that Monster.com is organizing. The first one, kicking off in New York City, but they'll be going across the country through the entire year.

This is an opportunity for people to make a personal connection. Of course, it's nice to look through the Internet, send your resume that way, but here, this is an opportunity to meet face-to-face, connect that face to the resume. A great opportunity. And in fact, here's one of the job hunters. Tom Harran (ph) has been walking through the room.

And Tom, how's it going?

TOM HARRAN, JOB SEEKER: It's been helpful in my job search, I think.

CHERNOFF: You're looking for customer service, that's your experience?

HARRAN: Yeah, 13 years in customer service.

CHERNOFF: Now Tom, I also understand that in this financial environment, with the stock market simply falling, falling, falling, you're facing a little bit of a hard time. Do you have a question for our personal financial experts?

HARRAN: I do have a question. After your 401(k) is gone, what then?

WILLIS: Well, we'll hand this over to Jennifer. You know, this is the problem that people are facing. They are tapping absolutely everything. What do you do to find money when you're unemployed? And for goodness sake, if you have a tapped out 401(k) and it's gone, where can you turn?

MERRITT: You know, for a lot of people you really need to look for alternatives. If you've got experience, like this man does in customer service, look to a community college. See if you can take on some adjunct teaching. There's -- community college enrollment is up something like 30 percent. It's a good place to start. You may need to ask your friends and relatives, but before you do that, look and see what kind of job you might be able to get, even if you have to take a little bit of a step back for now, it's income, it brings money in.

WILLIS: All right, well Allan, I want to thank you, but before we go, I want to say, if you can stay away from the 401(k), do. And it's always a great idea, if you can even find part time work to pick that up, as well. I know it's a tough time out there. Finding a job is really difficult. And as Jennifer just said, sometimes it pays to actually look outside your field of expertise.

Allan, thank you so much for that report and we wish the best to Tom, obviously, who is looking for a job out there.

All right, guys, let's move on to a couple other questions that I know people like Tom are really looking for, here. It's how do I go from being one kind of employee and one kind of job to another job? How do I transform myself -- Jennifer.

MERRITT: You know, the first thing you need to do is figure out what skills you have. Write them down. Sit down somewhere for a few hours and figure out what you're really good at and what you bring to the table. Then, go do some research, figure out what fields are hiring now and how you can apply those skills. Then you've got to tap everyone you can to try and figure out how you can move into that field.

It's a little hard and sometimes you may need to go and take a course or may need to have someone help you revise your resume in a better way so that translates. But fist, it starts with figuring out what your skills are and how you can sell them to someone else.

WILLIS: Manisha, a lot of people are trying to do this right now. I think sometimes it takes being really aggressive, really dramatic, maybe even moving to a different part of the country to transform yourself, just get that job. Do you advise that?

THAKOR: I do. I mean, I think that one of the things, particularly for living on the coast, right now, things can be very tight. You often forget in the heartland of America, many costs are much lower, property taxes are lower, home costs are lower, and jobs are plentiful in certain pockets of the county that you might now have thought about living in before. So, be creative, be open.

WILLIS: All right, guys, great information. Jennifer and Manisha, stick around, one concern for so many of you out there is the cost of college. Find out how some folks are getting that degree for fewer dollars.

(COMMERCIAL BREAK)

WILLIS: Well, with jobs disappearing fast, people are looking to retrain or retool their careers. For many that means going back to college, but not in the traditional sense.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Janice Barnwell always hoped to return to school one day to earn a graduate degree.

JANICE BARNWELL, EARNED MBA ONLINE: It was something that I just felt I had to do.

WILLIS: But, as a single mom who works full time, that dream was put on hold, until she found a solution, getting her degree online.

BARNWELL: One of the key things to doing this MBA online was that I could go to class everywhere and anywhere, whether I was on a business trip, at work, on a lunch break or at home and I could do it anytime.

WILLIS: Janice is part of a growing trend, people turning to online schools to save time and money.

VICKY PHILLIPS, CEO, GETEDUCATED.COM: But there has been a significant increase. Online education is growing between 12 percent to 20 percent as of this past Fall compared to the previous Fall.

WILLIS: Vicky Phillips, CEO of GetEducated.com, a Web site that rates online schools and degrees, says the spike is a direct result of the tough economy. PHILLIPS: The reason being is that when people are unemployed, they tend to go back to school and start looking for how to retool themselves, how to do it quickly and how to do it cost effectively.

WILLIS: Janice says she saved around $25,000 by getting her degree online. But the savings didn't stop there.

BARNWELL: So, I didn't have to drive there and considering gas prices fluctuating, I saved a lot there in addition to babysitting fees that I would have had to pay someone to watch my daughter while I attended classes.

WILLIS: In a time everyone is looking to save, the way people look at education is changing.

PHILLIPS: For the first time, online education has created a national marketplace. When you have 12,000 different online degree and credential programs to choose from you can literally compare cost, compare prestige, you can actually for the first time, shop online for a college degree the way you would shop for any other big ticket item.

WILLIS: For her, in addition to paying half of what a traditional MBA would cost, it also took her far less time to complete her degree online. And she said that's paying off already.

BARNWELL: I felt like being online and doing this MBA program was a preliminary setting for what I would be doing real life. It helped me to navigate and be able to transition into the functions that I currently have to, in my job.

(END VIDEOTAPE)

WILLIS: Here's another fact you may not know, the majority of regular old bricks and mortar colleges, they offer online programs, so you definitely want to check it out and a great way to do that is to go to the Web site, GetEducated.com. Great place to go, definitely check it out. They have all kinds of tools including something they call "best buy" which will help see rankings of individual programs.

So, if you know what area you really want to look in, you're looking for a specific degree, you can actually sort on that, like a masters in health care, say, and you get all kinds of listings from universities all over the country. Not only do they tell you where these programs are, but also how much they cost. I mean, check it out. It's fantastic.

Another thing this Web site does is tell you about the frauds out there. And let me tell you, they are everywhere. Check out the "Diploma Mill Police," this is a listing, a tool you can use to find out whether the people you're working with are actually on the up and up or not. Many of them, sadly, are not.

So, let's check out and example of this. OK, you may have heard of this school, Regis University in Denver, Colorado. This is a legitimate school. But guess what? There's another university with a similar name called St. Regis University. Is it legit? No, it is not. Guess what? This university, a diploma mill fraud, actually handed out 10,000 diplomas that were complete fabrications. You want to make sure you don't do that.

So, to check it out, go to this Web site, GetEducated.com. and if you want to know more about this topic or others, go to YOUR BOTTOM LINE, that's our show Web site. You can find everything we talked about on the show today.

Joining us once again, Jennifer Merritt of the "Wall Street Journal" and personal finance expert Manisha Thakor. Welcome back, guys.

We want to talk more about jobs, really zooming in on this idea of how do I change my identity. Jennifer, let's talk a little bit about how do you decide what those skill sets are that are really going to pay off that you have?

MERRITT: You know, you should look around and see who is hiring and health care is hiring, green technologies are hiring, and that's only going to get bigger with the stimulus bill, as well as government agencies. A lot of times, all of those functions have the same sorts of jobs that you did in another career that you can translate it into those skills. You just need to really figure out how to best present yourself, first off.

WILLIS: Present yourself and also maybe get some extra education.

You know, Manisha, my friends are telling me, I can't go back to school, how can I pay for that? But you have some ideas.

THAKOR: Yeah, and I'm so glad to hear that people are thinking about the cost of education because for years we didn't. My rough rule of thumb is 10 and 10. What you want to make sure if you get an education is that you can pay back the cost of that education in 10 years or less, spending no more than 10 percent of your annual income each year paying it back.

If that seems like too many numbers, here it is in plain English: For a $50,000 education, you want to make sure you're making at least $50,000 a year. The situation you want to avoid is spending $100,000 on a graduate program to get a job that pays $30,000 a year.

WILLIS: Happens every day of the week. I see people make that mistake all the time. All right, Manisha, Jennifer, thank you so much for your helped today.

All right, in this economy, everyone wants to protect their cash, but there are a lot of folks out there looking to take it, sometimes without you even noticing. What you need to know to fight for your money.

(COMMERCIAL BREAK)

WILLIS: Extra fees, charges, scams, businesses are using all kinds of tricks to get at your hard-earned cash. What's new about that? Well, I'll tell you what's new. We have David Bach here, he's going to tell you how to avoid all that. He's the author of the new book, "Fight for Your Money."

David, welcome, you're a great friend of the show, great to see you.

DAVID BACH, AUTHOR, FIGHT FOR YOUR MONEY: Gerri, good to see you, thank you.

WILLIS: You know, you talk about the recession and businesses are using this as an excuse to get at your pocket. I want to start by talking about debit and credit cards, because people are paying $30 billion in late fees, overdraft fees. This is crazy. You know, you complain about how much money we're giving these banks.

BACH: It is truly unreasonable and if you just break it down. And we all know this but we're not thinking about it consciously. You just think about your debit card. The average person uses a debit card now for $20, $20-40. When they go to take the money out, they're spending $3 or $4 now on ATM fees. But the trick with these debit...

WILLIS: You mean if you use them out of network?

BACH: Just out of network. But the trick with these ATM cards...

If you use your bank's ATM, you're OK.

BACH: You're OK. There are banks, by the way, which will credit back all those fees. But when you look at the ATM industry and debit card industry has done, we're using more debit cards now than credit cards and it's pushing us into overdraft fees. So, what's happening is people will go and use a debit card for a cup of coffee at Starbucks, a bite to eat at McDonald's and they're used it four or five times and they have gone over the limit and they get hit that day with maybe a couple hundred dollars in over the limit fees, because it's 30 bucks a time.

WILLIS: Every time you use it.

BACH: So, maybe you spent $10 and the next thing you know that day, by not being aware of what's happening to your account, you just had $100 in over the limit fees.

WILLIS: All right, I got to say, you need to know how much you have in your checking account. And now a lot of these banks will send it to your telephone, your cell phone, and you can find out when you're on the road buying the Starbucks.

I want to talk about taxes because this is coming up and a lot of people are thinking, do I hire the accountant? Do I actually just use Quicken? What do I do? You have some interesting advice, here.

BACH: Well, here's the real key for fighting for your money, in every category. If you look at taxes. Taxes, for us, if we take charge of our taxes this year, it's one of the fastest ways for us to create our own economic stimulus plan. So rather than hoping the government is going to give us money back, the key -- and we know this but people don't do it, Gerri, is itemize our tax deductions, the fastest way to do that is to get professional accounting advice.

In the book, I talk about two different types of agents, enrolled agents, which tend to be former IRS agents...

WILLIS: And are cheaper than expensive accountants.

BACH: They're cheaper, they know what they're doing, and also CPAs. You want somebody that has five to 10 years experience, but everyone who's making over $50,000 a year, in my opinion, should be looking to do itemized tax deductions. My experience is you'll get 1,000, 2,000, in some cases, $3,000 more back. That's money in your pocket that fighting for your money.

WILLIS: And you can always deduct your accounts charge. I mean, you don't have to pay the full fray (ph), that's the good news, there. All right, well, that's interesting. I would never have thought you would have said that because you can get free software and it really does guide you through the process.

BACH: You know, it does, if we're busy. I got to tell you something, when it comes to your taxes, I think you hire professional. But here's the key, if you go to one of these big agencies, what they're going to do, Gerri, is try to get you to sign up for what's called a refund anticipation loan.

WILLIS: Oh, no, no, no.

BACH: Give is a -- we'll loan you money against your tax return. Do not do it, that's up to 500 percent annually in fees. Say no to that.

WILLIS: Say no to that, it's way too expensive. It will cost you too much.

BACH: And they make a billion dollars a year off that.

WILLIS: Oh my goodness. All right, well, David Bach, thanks for that. We appreciate your time.

BACH: Thanks for having me, Gerri.

WILLIS: Well, "limited time offer, call now," we've all heard that one before, "you can order from your home phone and pay in three easy installments", that's what they say. And downed times, infomercial products are a booming business.

(COMMERCIAL BREAK)

WILLIS: (INAUDIBLE), the testimonials and the key points, it all costs less than $20. Infomercials, they're nothing new, but their recent success proves even in a recession, many people are happy to act now.

CNN's business correspondent Stephanie Elam reports.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT (voice-over): You've seen the commercials on CNN and other networks.

UNIDENTIFIED FEMALE: Call now and get the Pedi Paws for your pet for only $19.99.

UNIDENTIFIED MALE: Order your 12-compartment Shoes Under today.

UNIDENTIFIED FEMALE: A $30 value, all for only $10. Don't wait, call now!

ELAM: They're everywhere, infomercial products and in a bad economy, these gadgets and gizmos are booming.

A.J. Kubani, president and founder of Telebrand, a direct response company that markets popular products, like the Ped Egg and Get A Grip, says the economic downturn are good for business.

A.J. KUBANI, TELEBRAND: Last year, for example, when the recession started, our business tripled and already, this year in January we were 20 percent over last year, so we're expecting another record year this year.

ELAM (on camera): How do you take this lift in your business and translate it into putting it back into the company.

KUBANI: Well, we feel this is a really good opportunity for us to maximize our sales, so we're very active looking for new products to put on TV as quickly as possible. We don't know how long this recession is going last, but it's a good time for us.

ELAM (voice-over): With many people opting to stay home over going out, traveling or shopping at the mall, frugal consumers are becoming a captive audience for direct marketers who are benefiting from a soft advertising market. That means more eyes and more sales.

KUBANI: I like to say we get beach front property at trailer park prices.

ELAM: And many buyers see no harm spending 10 or 20 bucks to make life at home more satisfying, so says clinical psychologist, Dr. Jeffrey Gardere.

JEFFREY GARDERE, CLINICAL PSYCHOLOGIST: You have to understand that the pitch people who do this stuff, they are excellent at what they do. They make you feel good. They entertain you.

UNIDENTIFIED FEMALE: Now I feel safe and confident.

GARDERE: The products, the infomercials are placed right after or in between the news where we're hearing about the bad economy or more foreclosures.

UNIDENTIFIED MALE: Now, that's super strong.

ELAM: Still, "Consumer Reports" says despite the soft, cozy and bright things a product may promise, buyer beware.

UNIDENTIFIED FEMALE: Just pay separate shipping and handling.

TOM MARKS, CONSUMER PRODUCTS: When you're considering an infomercial product, be realist being, don't expect the world and also look at two key things: What is the return policy for this product and what is the shipping cost?

UNIDENTIFIED MALE: Stop throwing your money away.

ELAM: Not all are bad deals, but you do get what you pay for.

UNIDENTIFIED MALE: The complete Ped Egg package, just $10.

ELAM: And it seems Americans are willing to part with some of their hard-earned cash if it means they can snuggled, smoothed, and stuck up.

UNIDENTIFIED MALE: Just stick it up, pull the cord...

ELAM: Stephanie Elam, CNN, New York.

(END VIDEOTAPE)

WILLIS: Well look, if you absolutely, positively must buy infomercial products -- and who am I to say you don't need a Snuggie -- well then for goodness sakes, pay for it with a credit card. You might be surprised to hear me say that if you've listened to our show for any period, because I am such a fan of cutting your credit card debt not adding to it.

But here's the bottom line, paying for items you buy sight unseen makes more sense with a credit card because you can always dispute charges. A little consumer protection you might now otherwise know about. Also, check out the shipping charges before you buy. That's how they really get you.

As always, we thank you for spending part of your Saturday with us. YOUR BOTTOM LINE will be right back next week, right here on CNN. You can also catch us on HLN every Saturday and Sunday at 3:30 p.m. Eastern Time.

And you can hear much more 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.

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