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Your Bottom Line

Taking a Closer Look at the State of the Housing Market; What Insurance You Can't Afford to Live Without; Internships Are Not Only for Students in This Economy; Making the World a Better Place One Book at a Time; Growing Your Own Food at a Discount

Aired March 28, 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.

Coming up, a closer look at the state of the housing market and what it means to the value of your home.

Protecting your wallet and your family, what insurance you can't afford to live without.

And you think internships are only for students? Not in this economy. How to get your foot in the door at any age. YOUR BOTTOM LINE starts right now.

Few home sales were up in the month of February, that according to the Commerce Department, sales rose 4.7 percent last month, but were still the second worst on record.

Joining us now with a look where the market is headed is Hilary Kramer, an AOL money coach and author of "Ahead of the Curve" and Amy Bohutinsky with Zillow.com, she's joining us from Seattle.

All right ladies, all lady panel today. I love that. Let's talk about these housing prices because we've also got some existing home numbers which are impressive. Existing home sales up five percent in the last month. That's really some good news out there as I mentioned, new home sales are up. Amy, I want to turn to you. Are these real glimmers in the housing market?

AMY BOHUTINSKY, ZILLOW.COM: You know I would call this a small glimmer. Unfortunately it's not the big glimmer we're looking for that's going to help us near a bottom and turn this around.

A lot of this activity is investors, scooping up foreclosures. But what we're not really seeing yes is a mass of buyers. The families, the first-time home buyers coming back and saying, I'm no longer am skittish, I'm ready to jump back in the market. We just haven't seen that and we really need to see that to say that things are starting to improve.

WILLIS: Well, Amy, you know, the good news here is that mortgage rates at bargain basement lows and I've been looking at it, well under five for some buyers.

But I'm kind of getting two messages here, and Hilary, I think you can speak to this. Talk to Fannie Mae, just this week, and they are saying it's going to take 90 days for the mortgage industry really to ramp up and to be able to deliver the kind of services that people need to get these mortgages. Are we going to be on a constant delay because the industry downsized so much?

HILARY KRAMER, AOL MONEY COACH: Well, the industry is trying quickly to make up for lost time, and there's a lot of vamping up that taking place because there's $2 trillion that's expected for refinancing this year and, yes, there might be a two-month delay, but the good news is, the federal government's programs and awful the stimulus, that's what causing us to see low interest rates and we will see new home buyers go into the market, of course, it's also regional.

WILLIS: Amy, you know, you look at this all the time and there has been a lot of good news for homeowners out there in terms of the stimulus, a lot of government money going to people. Are you hearing that this is really going where it needs to go? Have the gates opened yet or are we still waiting?

BOHUTINSKY: You know, we're really still waiting. The big factor here is the economy and whether people are willing to jump in. The bottom line is that people without jobs or people in fear of losing their jobs just don't make a purchase like a big new home. And a lot of people are saying, I'm going to wait, I'm skittish about the job situation, here.

So, the economy and housing market here are really going to go hand in hand to get people's confidence back up to help them take advantage of some of the very low rates and some of the incentives, like the first-time home buyer credit of $8,000. That's great, but people have to be willing to make the big purchase first.

WILLIS: They have to be willing to make the purchase and a lot of people are going to refi right now, because those rates are so, so fantastic.

I want to talk a little about what you need if you're going to do that refi. We have a list of the documents, the information that you're going to need to take to your banker. Of course, the refi application, two years of tax returns, one month of pay stubs, three months of tax statements, and, of course, you need all of these details to get to your banker so you can get that loan.

And what I've been telling people all week, frankly, Hilary, is let's get that stuff together right now. If you think there's a reason to refi, you got to get on it. Who should be taking advantage of this?

KRAMER: Everyone who right now is employed, who has a home that's still above water should take advantage of it because it means extra money in your pocket, extra money you can spend, extra money that will help stimulate the entire economy. This is a once in a lifetime opportunity, and everyone who can take it should, and on top of that, as we all know, eight years ago this is exactly the kind of list of items one needed to walk into any mortgage banker. It was just in the last five years that it was a no-document mortgage system and look where that got us. So, put it all together. If you've done taxes, it's all on your computer, print it out, bring it in.

WILLIS: You have that information, anyway.

KRAMER: That's right. That's right.

WILLIS: All right, so you see what we're talking about here, historic opportunity, lowest rates in decades.

OK, Amy, I want to get to your list. An interesting list of cities, of locations, places to go to find the best deals out there. Let's start with those first-time home buyers. We've got Gainesville, Florida, Minneapolis, Minnesota, Fort Collins, Colorado. Now, why do you think those markets in particular are so very attractive?

BOHUTINSKY: Well, there's a couple of factors here, first of all, affordability. When there's a first-time home buyer $8,000 tax credit is means a lot more on a $200,000 home versus say an $800,000 home.

WILLIS: Right, right, right, but what about these locations -- Amy.

BOHUTINSKY: Specifically it's employment and job security and first-time home buyers want to be in places that they know they're going to be employed. So, we're talking cities that are near universities, that are near government, that have diversity in the job base, in areas like health care and technology. These are places that have low lower than usual unemployment rates right now, there are jobs for people. And again, these are places that are affordable.

WILLIS: I want to show your investor locations, as well. You have Bridgeport, a couple places in Connecticut, Stanford, Stamford, pardon me, San Diego, D.C., lots of names here, of places that are absolutely great deals, but I know, Hilary, that you have some words of caution here.

KRAMER: That's right. To me, when you're going to be an invested, the most important point is invest where you know the area, where you're local to be able to go and make repairs, collect rent. I mean, if you're an investor, it's so important, also because you have a network and colleagues and friends you can find out the truth about that particular investment, whether it be a house or commercial property. Don't just jump because it's a good area, and to take a ride out three or four hours from your home and make a purchase.

WILLIS: Amy, I need you to respond quickly. Any other bits of advice here?

BOHUTINSKY: The other thing, you want an economy where there are renters and lots of jobs for the renters, because as an investors, you're thinking longer term than a couple years ago. You want to hold on to the home seven or more years. So, you want people to be a little rented in the interim. So, just like first-time home buyers, we're talking markets where there is diversity in the job economy, where people are coming in for jobs and renting.

WILLIS: All right, Amy, Hilary, great information. Thanks to both of you for being here.

Having insurance can keep an accident from turning into a financial catastrophe. Make sure you're covered with our insurance expert.

(COMMERCIAL BREAK)

WILLIS: When it comes to insurance, it's hard to know exactly what you need. Here to break down the basics and help you keep covered is Dave Evans, he's a certified financial planner and the senior vice president of the Independent Insurance Agents and Brokers of America. Boy, is that a mouthful. He's joining us from Washington.

Dave, welcome. Great to see you.

DAVE EVANS, IIABA: Thanks for having me, Gerri.

WILLIS: All right, so I talk to people about this all the time and some folks out there now are cutting their coverage so much that I'm afraid if something happens they're not going to have the money they need.

EVANS: You're right on. In these times it's important to watch your experiences, but you don't want to put yourself in a position that you have a catastrophic loss and then when things recover, you're having your future paycheck garnished the rest of your life.

WILLIS: Oh, terrible. OK, let's talk about what you really need to cover, here. You say, yes, home values have come down, but you can't cut your bill on the basis of that, because replacement costs have not declined as much. Describe this to me. Help me understand.

EVANS: Well, most people think that, you know, their insurance should cover the value of their house, and that's a logical thing, or condo, but the reality is, that their insurance needs to replace rebuilding that, and even though housing prices have decreased with the general economic malaise, the reality is the cost of building materials and the like are still high and maybe you can you get a deal on labor, but the reality is that you really want to make sure that you still can replace the cost of replacing your home.

WILLIS: Wow, that's great advice. OK, a lot of people now, they're out of work, they're working from home, maybe have a home- based business, doing some consulting. What do they need to know about their coverage?

EVANS: Well, if they have a home-based business, their homeowner's policy is designed to cover things from a personal standpoint, not a business standpoint. So, if they had someone come and visit them for a business call and they slipped and they fell, that liability, that cost, would not typically be covered under a homeowners' policy. So, they need a rider, it's not expensive, it's just something that they need to get in touch with their agent and say look, I have a business now and working out of the house.

WILLIS: All right, so when you say not expensive, you mean 50 bucks, you mean 100 bucks, what are we talking about?

EVANS: Yeah, well if it's a typical home-based business where you don't have any kind of heavy lifting or anything like that, it's more like people visiting it is going to be something in the range, it might be a hundred bucks of 200 bucks. Not a big cost.

WILLIS: OK, let's talk about medical coverage for just a minute. So many people out there, we were mentioning before, unemployed. So, what do they do now? You say this interesting thing, you say don't go to the doctor if you're afraid of losing your job, but isn't that exactly the right thing to do?

EVANS: Well, the first thing, and just as we're all aware, under the stimulus package, if you're covered under a federal law known at COBRA, going back to last September, if you lose your job between last September and the end of this year, Gerri, under the law, up to two- thirds of your insurance premiums will be paid under this stimulus law. So, the first thing is if you've lost a job and you either are or aren't paying for health insurance, check into what the law will pay for you now.

To your point, though, you do have to watch your expenses whether you have insurance coverage or not. There is a tendency when people have more time on their hands to sometimes go to the doctor at times when they wouldn't necessarily do that, just because, quite frankly, they are less occupied in terms of what they're doing.

WILLIS: Dave Evans, thank you so much for that great information, great advice. We appreciate your time.

EVANS: Great. Thanks for having me, Gerri.

WILLIS: The bottom line, trying to figure out the replacement cost of your home? The Web site AcuCoverage.com can providing a detailed estimate. And when it comes to auto insurance, more drivers than ever are underinsured, and for that reason, you won't want to cancel your coverage. Save money by grabbing all at the discounts you can and drop extras like towing and rental car privileges.

If you're looking for a job now you need all the help you can you get. We've got advice to take some of the guesswork out of the job hunt.

(COMMERCIAL BREAK)

WILLIS: If you're in the market for a job right now, no matter what your age, an internship just be the place to start. Here with some tips on how to land that spot that could get you your next full- time job is Brad Karsh, he's the president and founder of JobBound.

Brad, welcome, good to see you.

BRAD KARSH, JOBBOUND: Good to see you, as well.

WILLIS: You know, I read a statistic recently, that, in fact, 60 percent of employers who bring on interns actually end up hiring them. And you say this is a great place for adults to start. But I got ask you, isn't that embarrassing to be the 45-year-old intern?

KARSH: It's probably not the ideal situation, but we're, let's say, in some desperate times now and it might require some desperate measures. So, there have been instances, certainly, where people, especially if you're looking to switch industries or change fields, where people will go back from the beginning and in many cases the beginning is an internship.

WILLIS: But, can I make money doing that? I mean, don't really want a 10-week interview? I really want to make some money at this point.

KARSH: Exactly. And the thing about internships, some are paid, some are not paid. But, in this environment right now, even just getting your foot in the door is absolutely critical. So, an internship in many ways, while perhaps not the most paying or even paying at all at the beginning, can lead you, as you just heard, 60 percent of them can lead to full-time jobs, which of course, are paying. So, I advise you to think of it as an investment in your future.

WILLIS: Obviously an investment. But, how do I start the conversation about money?

KARSH: Typically a company will say whether they pay for an internship or whether it's one that they're expecting you to work at for free. So, usually they'll bring it up. It they don't, when they do give you the offer, you can obviously ask, what's the salary situation here, how does it work?

What I recommend people do is if they are doing an unpaid internship and obviously we all want money, wait until you've been there, let's say, a month or so, you've proven yourself, you've added value to the organization, then I think it's much easier to go to that corporation and say...

WILLIS: Obviously, it shouldn't be your first question out of the door. Right? Like, oh, can we turn this into a money-making proposition? But let's talk about networking, because that's really how you get the best jobs, is it also how you get the best internship.

KARSH: It sure is. Networking is the best way to get into any organization, so tapping into contacts that you have, using social media, even going back to your career center and finding alums that work in industries or fields that you're interested in, that's going to be the way to go.

WILLIS: Great ideas. Brad Karsh, thank you so much for that.

KARSH: Thank you.

WILLIS: Time now for the bright side, CNN business correspondent, Stephanie Elam, profiles a company that aims to make the world a better place one book at a time and it might also mean a good deal for you.

(BEGIN VIDEOTAPE)

XAVIER HEGELSEN, FOUNDER BETTERWORLD BOOKS: There's some great stuff in there, I that I promise you.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT (voice-over): And with more than two million books in this Mishawaka, Indiana warehouse at any given time -- there's bound to be something for everyone.

HEGELSEN: We bring a lot of stuff in, even in whole truckloads, so we'll bring about 50,000 pounds of books in at once, drop it in the bay here and then put it on the shelves.

ELAM: The books are donated by libraries, book stores and college campuses from across the country. Xavier Hegelsen and his partners Chris "Kreece" Fuchs and Jeff Kurtzman, were frustrated that when they were in school, the bookstore wouldn't buy back their used textbooks, so they tried selling them on half.com. It worked and the idea took on a whole new chapter.

HEGELSEN: We just thought, wow, like there's all these books out there that the books stores are just saying no I don't want it, but there's totally value in those books, you just got to get them and efficiently get them up on the Internet and someone will buy them.

ELAM: Every day, BetterWorld they bring in 40,000 to 50,000 books, sending just as many out.

HEGELSEN: We've sold orders up to 5,000 books at once and we sell a lot of single book orders, or our average order is three or four books.

The cheapest they find would be $3.48 with free shipping.

ELAM: The BetterWorld founders built the company on the foundation of the broke college student, so textbook deals remain at the heart of the business.

HEGELSEN: We have gone to great lengths to build a business where we bring in tons and tons of college text books. What's cool about us is we price them at market level, so you may be getting a $100 book for $10 and that happens every day here.

ELAM: But sadly, not every book has a home and at the back of the building is the last stop. It's the place books go to die.

HEGELSEN: These will typically be recycled, turn into pulp which will in turn be into cardboard, recycled napkins, any recycled paper products you see.

(END VIDEOTAPE)

ELAM: Investing in the environment and education. Better World Books says it donates five to 10 percent of its revenue back into the hands of libraries and literacy programs around the world, from Books for Africa, Room to Read, and World Fund, to the National Center for Family Literacy and Invisible Children.

And Gerri, BetterWorld has started selling new books as well. The company says the traffic on its Web site is up 150 percent, just over the last seven months. They also say they're on track to grow their revenue by 50 percent this fiscal year.

WILLIS: Sounds like a fascinating company. Thanks for bringing it to us.

And it shouldn't have to cost a lot to be entertained. Joining the growing ranks of people who are trading goods and services, instead of money, it's a way to cope with tough economic times. Here's some Web sites that will let you in on the action.

Check out SwapTree.com. Now, on this site, you can swap books, movies or video games with other members. You can even find free stuff online from your community. Go to freecycle.org, where members post things they don't want anymore, this site points you to free cycling groups right where you live.

Then, try SwapThing.com where you can even trade things like school uniforms. And finally CraigsList.org has a bartering tab on its Web site where you can swap or sell your unwanted items. And you can check out our show page at CNN.com/yourbottomline. Read show transcripts, check my top tips and you even send us an iReport.

Everyone's looking for a cheap, healthy dinner and it may surprise that you could find it in your own backyard.

(COMMERCIAL BREAK)

WILLIS: Well, spring has sprung and so have seed sales. The ailing economy is forcing folks to think ahead and plan to grow their own food at a discount this summer.

Adrienne Bennett of our Maine affiliate, WABI has today's "Local Lowdown."

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Need some dirt?

ADRIENNE BENNETT, WABI REPORTER (voice-over): Green thumb or not, seed sales are up this spring. Owner Johnny's Selected Seeds in Winslow is hotspot for gardeners this time of year. Owner Joanne Matuzas says they have seen about a 50 percent increase in home gardening sales compared to last season.

JOANN MATUZAS, OWNER, JOHNNY'S SELECTED SEEDS: I believe the economy is affecting people. People want to save some money. BENNETT: Between 15,000 and 20,000 packets are packaged daily. Fennel is one of Matuzas' favorites.

MATUZAS: It's something you pay big bucks for at the store and it's easy to grow.

BENNETT: Agway True Value is seeing the same growth in seed sales, up 38 percent.

BRENT BURGER, OWNER, AGWAY TRUE VALUE: And we haven't even some close to peak season yet.

BENNETT: Shoppers say it's about savings.

UNIDENTIFIED MALE: Vegetables are expensive, so the more you grow, the better off you are.

BENNETT: Quality.

UNIDENTIFIED MALE: The smell, the taste.

BENNETT: And satisfaction.

UNIDENTIFIED FEMALE: The best thing is going out and picking it.

MATUZAS: People want to be self-sufficient.

BENNETT: Agway True Value owner Brent Burger hopes to spur more growing by giving. This spring, Seeds for Deeds will kick off. Each non-perishable food item brought into Agway True Value stores will get you a free packet of vegetable seeds.

BURGER: And the idea behind this is that we ask for those who receive seeds if they choose to plant an extra row in their garden and then continue the cycle of giving by donating some of their fresh produce back to food pantries in the fall.

BENNETT: While many may have spring fever already, fair warning, old man winter hasn't left quite yet. Planting too early could spoil your efforts, but there's still plenty to prepare for.

MATUZAS: Plot out your garden, you can come up with a rotation crop, you can buy your seeds.

BENNETT: Adrienne Bennett, WABI, TV-5 News, Winslow.

(END VIDEOTAPE)

WILLIS: First Lady Michelle Obama is even getting in on the action, going organic and planting an 1,100 square feet garden on the White House southern lawn. She's enlisted a group of local fifth graders to help her plant the fruits and veggies hoping the experience would spark discussions with their families about healthy eating habits. Hey, there's even a beehive to generate some homemade honey.

All right, iReport.com asked to see your homegrown fruits and vegetables and you sent some great shots of recession friendly and ecofriendly gardens. Let's take a look.

All right, so Eric Ritchie (ph) here, here's his garden, take a look at this, looks like he's got some cabbage, there. He's in Rhode Island and he shares his extra produce from his garden with a local homeless food shelter. Great stuff, there.

We also want to check out Mary Moses' (ph) garden. Check out that the tomato, really beautiful. Her toddler helped her grow these tomatoes and she shares these with her community, you can see more of her stuff right here. Excellent stuff.

And Pam Price in San Antonio, here's her garden, looks like she's just getting started this year. You can see the beds laid out here. She blogs about it to organize victory gardeners at her Web site.

And it's not just iReporters. I grow herbs and tomatoes every single year, saves me money, but bottom line, don't dig up your whole backyard the first year, plant only those foods your family really likes to eat and foods that are expensive to buy at the grocery store. Potatoes are out, strawberries are in. Make sure you don't spend too much on fancy tools, either. You only need a shovel and a metal rake to get started.

And check with a local farmer landfill to see if they'll give you free organic fertilizer instead of paying an arm and a leg for it at the garden store. For more tips on starting your own garden, check out GrowIt.umd.edu.

As always, we thank you for spending part of your Saturday with us, YOUR BOTTOM LINE will be 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 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.

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