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Your Bottom Line

Understanding Your Taxes and Smart Ways to Use This Year's Refund; Important Information That Could Help You Get a Job; How to Save at the Grocery Store

Aired April 11, 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.

Understanding your taxes and smart ways to use this year's refund, important information that could help you get a job and how to save big time at the grocery store. From your house to your jobs to your savings and your debt, this is YOUR BOTTOM LINE.

You can't put off the inevitable much longer. April 15th is tax day, it's going to be here before you know it. Here with some last- minute tips for filing tax returns, Barbara Weltman.

Barbara, good to see you again.

BARBARA WELTMAN, TAX ATTORNEY: Thanks a lot.

WILLIS: A lot of people are e-Filing, 20 percent more this year than last year. A lot of people want to do it from their home computer. Any down sides there?

WELTMAN: Well, there may be an issue. We don't know because of the volume this year if everybody's going to be able to get their return in on time. What's going to happen if you file at the very last minute? A word to the wise, file as early as you can.

WILLIS: All right, let's talk about extensions because so many folks out there either they lost a job this year, they're working fewer hours, they have less money. How do we extend the time that we pay our taxes? And you can go as long as three years to pay your tax bill this year, but how do you make that happen?

WELTMAN: OK. Well, there are two issues. One is getting an extension to file your return so that you avoid late filing penalties. The other is dealing with the taxes that you owe. And there are a number of things you can do to deal with your tax payments. One is you can charge your taxes to a major credit card.

WILLIS: We hate that solution, now, that costs you money. They're going to charge you a couple percentage points. So, try to avoid that if you can.

WELTMAN: Yeah, it's not a great way to earn frequent flier miles. However, the IRS did rule this year that you can deduct the convenience fee you pay to the credit card company if you itemize.

WILLIS: But, you're still not getting all your money pack.

WELTMAN: No. So, that is not a great solution for everybody. You can ask for an installment payment agreement and if you meet certain conditions, you can get this automatically and as you mentioned earlier have up to three years to pay off your taxes.

WILLIS: And that's easy-peasy and you basically set a schedule and you pay over time. It's really the best solution, I think, for so many people out there who are really struggling to pay their taxes.

Now, there are some other benefits out there with the IRS which is kinder and gentler this year. They really haven't defined what that means. But, for example, if you were involved in the Midwest floods, you have a little extra time to file.

WELTMAN: You get an automatic extension and you don't have to file anything to get it.

WILLIS: OK, great news. All right, and jobless benefits, you know, the double whammy of jobless benefits is not only are you unemployed, but then you have to pay taxes on those benefits. How does that work? And they actually changed it this year.

WELTMAN: Well, they changed it for 2009, but for 2008 all unemployment benefits are fully taxable. For 2009 you'll be able to exclude up to $2,400 in unemployment benefits from income.

WILLIS: Now Barbara, you say that if you missed out on stimulus checks last year you might be eligible this year. How does that work?

WELTMAN: Well, you want to look for the recovery rebate credit. If you have a child, for example, and you didn't get the full credit, if you had a child in 2008, didn't get the full credit, see if you get it this year on your 2008 return. There's a new line for it, there's a work sheet in the instructions to figure out if you're entitled to any additional money.

WILLIS: And of course the most common problems out there, people aren't signing their returns and they don't add the numbers up right. It's easy enough to figure that out.

WELTMAN: Well yeah, some are the basics, signing and dating your return and, of course, if you file your return electronically you're much less likely to have any kind of math errors.

WILLIS: All right, avoid those mistakes at all costs. Barbara, thanks so much for that.

Now that you have a tax plan it's time to think about that refund. Well, hopefully. Let's find a smart way to use that money. "Kiplinger's" joins us now. Kimberly Lankford joins us now from Washington.

Kim, great to see you.

KIMBERLY LANKFORD, KIPLINGER'S: Oh, thank you for having me. WILLIS: Can I just start by saying it's just not a great idea to have a refund because what you're doing is giving the government the use of your money instead of you having it, so really you want to change your withholding, right?

LANKFORD: Exactly. For the future, if you did get a big refund this year, psychologically it sounds great, but you want to adjust your withholding for next year so you get your money in your paycheck every month instead of waiting for the end of the year.

WILLIS: Yeah, why give Uncle Sam a free loan, that's what I say.

All right, so the average refund about $2,740, $3,000, right around there. That's a lot of dough. And in this economy there are great ways to use that money. What's your first suggestion for people out there who are thinking, hmm, what should I do for this money? Flat panel TV or saving for retirement?

LANKFORD: I think this year people aren't quote thinking as much about going out and spending all the money, but we have thought of five very key things you could do to help stretch that money and make a difference in your finances for the future. The first, most important thing is to build up your emergency fund.

Over the past year people have really had to dip into those emergency funds if they've lost their job, if they've lost money in their investments and a lot of them haven't even been keeping that three to six months of money, of your expenses, in that emergency fund. We now are recommending six to 12 months of expenses in that liquid account earning a little bit of interest you can access if you really need it.

WILLIS: Maybe a money market account, a way to set the money aside. Let's talk about high interest rate debt. My favorite thing to do is to pay down credit cards because that costs you money going forward, the interest rate just continues (INAUDIBLE), you pay more and more for that debt. Is that a good thing to do with it -- Kim.

LANKFORD: That is exactly a great thing to do. We say as soon as you have a little bit to that emergency fund then really focus on paying down that high interest debt because in this economy you cannot afford to spend money on things that get you nothing in return. That's exactly what those high interest rates are. So, paying down a high interest debt of about 18 percent is just like getting an 18 percent return on your investments which is really hard to do these days, so that can outstretch your money further.

WILLIS: OK. You know, a lot of people out there have lost so much ground on their retirement and my heart really goes out to them because they sure didn't make the stock market fall. They're trying to rebuild. That's certainly a good use of the money now, saving it for that day when you retire, you need that money day-to-day.

LANKFORD: And you can use some of that money from your refund to help rebuild your account in some of these great tax advantage plans that are going to help stretch your money so much further. If you get a refund or have any extra money before Wednesday, before April 15, you can still contribute to the 2008 IRA. If you've already done that you can contribute any time now through the year 2009 IRA. If you qualified for a Roth you can get that money tax free in retirement making it so much more valuable.

WILLIS: All right, and of course the 529 plan, I mean, come on, if you've got kids, you're trying to save for college, that's a great place to put money.

LANKFORD: That's exactly right and so many people are juggling college and retirement so if their regular money is going to retirement, that's where this extra money from your refund could really help. You can get a state tax deduction about half the state and then that money can be used tax free for college costs.

WILLIS: Yeah, it's a great idea. Savingforcollege.com, a great Web site to use if you're trying to figure out how to use those 529 plans. Kim, thanks for the help, today. We appreciate it.

LANKFORD: Oh, it's my pleasure.

WILLIS: Now for more tax advice or to read up on the day's economic news as it affects YOUR BOTTOM LINE, logon 24 hours a day to CNNmoney.com.

Reentering the workforce can be a challenge, but there's one very important piece of advice you need that could make your job application process a whole lot easier.

(COMMERCIAL BREAK)

WILLIS: Lots of folks take time off between jobs for one reason or another, but explaining that gap in your resume to perspective employers, that can be tough. Here with solutions for you, Carla Harris, she's the managing director of Morgan Stanley and the author of "Expect to Win." And Tory Johnson is the founder and CEO of Women for Hire which produces career fairs for women.

Welcome to you both, great to see you.

TORY JOHNSON, WOMEN FOR HIRE: Thank you.

CARLA HARRIS, MORGAN STANLEY: Thank you. Thanks for having us.

WILLIS: All right, I want to talk to you guys a little bit about how you fill this gap in your resume. Because this is happening to women who are getting back into the workforce, it's happening to people who were in retirement and now we're saying, boy, I've got to go get some more money, I've got to work. What do you put on those lines in the resume?

JOHNSON: Well, I would say the first is to be able to account for that time is absolutely important and, you know, not to just assume that no one's going to care that you haven't worked in six years. So you have to be able to account for the time and most people have not just been sitting home on the couch doing nothing. A lot of the people who I talked to who are looking to get back, have been doing things like volunteering and so they -- it's about helping them to not simply diminish that.

Oh, that was just unpaid work. Oh, that was just with my kid in school. But rather to say, OK, so where were the success there that I could potentially leverage in business terms? So when start talking to people about that and they tell me one of the things I was responsible for was recruiting volunteers. I say, great, you increased the volunteer pool by 20 percent by implementing these new outreach efforts. Let's start talking in business terms.

WILLIS: That's fantastic. Right, yeah, you've got to learn how to translate that into money speak. Carla, I want to turn to you. What would you say folks should do? You know, they've been out of the workforce, they don't have anything to put on that resume. What's your suggestion?

HARRIS: I'd say they absolutely have something to put on the resume. And as Tory said, it really is about how you market it and you want to use words that are attractive in the environment that you are looking to get into now.

So did you manage a process? Did you manage people? Were you able to motivate people that obviously don't report to you because you weren't in a reporting environment? That is something that's very valuable in the work environment, being able to motivate people that don't report to you.

So, being able to underscore those types of experiences that you have had and be able to articulate how they translate into the seat that you're looking to get is going to be the most important thing you can do on paper and as you are sitting across from that person interviewing.

WILLIS: Carla, I want to talk to you a little about how women deal with this unemployment and how they deal with employment. It seems to me, and reading in your book, which is fascinating, by the way...

HARRIS: Thank you.

WILLIS: How women approach the work place. They're all about, like, doing the right thing, giving the right answer, it's like they were in school. They're not networking necessarily, they're not going that extra step you need to really have a great career. What would be your advice to them?

HARRIS: Yeah, the advice that I'd have is first of all, as you approach the new opportunity and you're getting back into the work place, you have an amazing opportunity actually to create the perception that you want to create when you're walking into your new seat.

That's one of the things I talk about in "Expect to Win" is that you can manage the perception, you can train people to think about you in the way you want them to think about you which is critical to your success and the best time to do that is when you're just starting out into a new job.

Think about how you want people to describe you when you're not in the room because those -- that's when all the important decisions will be made about your career when you're not in the room: compensation, new opportunities, as well as promotion. So, think about how you want to think when you're starting in that new seat.

The networking is critical, Gerri. Because, obviously, it's not just about what you know, it's about who you know and having a mentor and a sponsor in your environment particularly a sponsor will be key especially now as seats are shifting, jobs are shifting, job descriptions are being written for the first time as people are thinking about new opportunities in this environment that we're in. Where a sponsor can recommend you for new opportunities even within the environment if you are changing your seat.

WILLIS: And that's a great idea.

Tory, you know, how do you develop that relationship? Maybe you're new to the workforce. Maybe you just graduated. How do you find those people to guide you along the way?

JOHNSON: Many times they're right around us. And I'll tell you one thing that's also especially important for somebody who is either getting into the workforce for the first time because they're a new graduate or especially somebody who is re-entering after time off, having those relationships is essential and not relying on just submitting your resume onto the job boards. Because when someone sees a six-year gap in experience or you haven't worked in a long time, they're going to skip over that resume. It's just a reality.

You know, when you've got a big stack of resumes and you're looking through them, you're not going for the person who's been out. So, how does that person get that foot in the door through those relationships? By using online social network is a very easy way, also tapping into the parents of your kids' friends, looking at the people that are right around you.

You know, oftentimes the people are right in front of us, but we tend to be a little bit intimidated about crossing this personal relationship into a professional zone and I say like, do it. There are no boundaries except the ones that are in your own mind.

WILLIS: It's really seven degrees of separation, here. You really want to use that network as much as you can. Tory, Carla, thank you so much for being with us. Really appreciate it, great information.

JOHNSON: Thank you.

HARRIS: Thank you very much.

WILLIS: With two million people out of work since the beginning of the year, it's easy to feel helpless, but there is help out there if you're unemployed. Walgreen's just rolled out what it's calling its "Take Care" program. Now, this program offers free, as I said, free health care services at its Walgreens clinics if you're a patient.

To qualify you must have lost your job on or after March 31 and have no health insurance. You can get treatment for things like colds, allergies or strep throat.

If you don't have a college degree or you've been out of work for a long time, your local Goodwill organization is also a great resource. Goodwill organizations, they train folks for free for jobs in I.T., health care, retail, banking and even landscaping. To find one in your area, go to goodwill.org.

For free retraining and career resources, the Department of Labor has Web sites at CareerOneStop.org and CareerVoyages.gov (sic).

Got a question about us, maybe about your house, your debt, your savings, your job, log on anytime to CNN.com/helpdesk and click on the link to send us an iReport. We are, after all, the show that saves you money.

Looking to fill up your shopping cart for less, how to stretch your family's grocery budget and get the most for your money.

(COMMERCIAL BREAK)

WILLIS: Well, groceries are a huge part of your family's budget, and with food prices on the rise, you need more than just coupons these days to help you save money.

Tod Marks, senior editor of "Consumer Reports" is here with strategies for shopping smart.

I love this segment, Todd, it's awesome and you know the most about this. First off, I just want to touch on the survey of 32,000 people you did who tell you exactly what the best supermarket chains are. What are they?

TOD MARKS, CONSUMER REPORTS: Well, they're the ones that tend to stand out in "Consumer Report's" survey every three years when we do this project. It's Wegman's, it's Raley's, it's Harris Teeter, it's Publix. These are stores that got it all together. They have quality perishables, they are clean stores, they offer great service, but they're not so great all the time when it comes to price.

The perfect store really doesn't exist. We find stores that, again, excel at the basics of service and quality meats and baked goods and produce items and that are really sparklingly clean stores, but they tend to be more expensive. The stores that have a better price profile tend to fall down somewhat in the quality area. So, the perfect store has yet to exist.

WILLIS: All right, well we'll keep looking, though. I know, Tod.

Now, you did this cool thing where you actually went out and tried to reduce your grocery bill.

MARKS: Yes.

WILLIS: You cut it by 50 percent.

MARKS: Yes.

WILLIS: Help me understand what you did to get the price down. This would really help a lot of people out there, right now.

MARKS: You know what? I wanted to see how much you could save by employing different strategies. First thing I did, we created a shopping list of 30 identical items and we shopped for them in four different ways. We shopped one as an impulsive shopper, we bought whatever tickled our fancy on that list. We didn't pay attention to the flyer, we didn't use a bonus card, we didn't go to manufacturer's Web sites for the Sunday inserts to get coupons. You know, we basically bought whatever we wanted. Then we...

WILLIS: I'm guilty of that sometimes, Tod. You know, everybody does that.

MARKS: Shame on you.

WILLIS: But you also kind of, you know, you know, stepped it up. And then you started looking for, for example, for supermarket brands. You started shopping around going to some of the big warehouse clubs.

MARKS: Right, right.

WILLIS: Tell us about the actual savings you got and where you found them. I know one of your theories here, shop high, shop low, what does that mean?

MARKS: Well, that's a different -- that's a strategy for shopping. That's where, you know, supermarkets are in the real estate game. And prime selling space is right at the eye level and, and you know, a lot of times manufacturers will pay for product placement. Products that tend to be kind of more impulse tend to be put in those eye-level prime selling spaces. The commodities are up high or down low.

WILLIS: All right, Tod, great information. We really appreciate your time. You know, you and I have to go shopping together.

MARKS: I'll teach you a thing or two.

WILLIS: Thanks Tod.

MARKS: My pleasure.

WILLIS: The economy, well, it has taken a toll on the value of your home, your savings, your debt, and now your health.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: I see a lot of things happening in the mouth directly as a result of the economy. It's the first time in my 25 years of practice that I'm really seeing that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WILLIS: Just last month more than 650,000 people filed for unemployment and that pushes the nation's unemployment rate to 8.5 percent, the highest in more than 25 years. A new study by Health Services Research found that an increase in unemployment means fewer preventive care visits, but skipping the doc's visit today could mean a major financial headache down the road.

(BEGIN VIDEOTAPE)

WILLIS: When was the last time you went to the dentist?

UNIDENTIFIED FEMALE: Three years.

WILLIS (voice-over): According to a recent poll, more than one- third of Americans did not visit a dentist last year and the numbers are even worse for those making less than $2,000 a month. More than half reported skipping their visits.

(on camera): Did you forget or did you just not want to go?

UNIDENTIFIED MALE: Who wouldn't to go to the dentist?

DR. GREGG LITUCHY, DENTIST: People are so stressed that they're breaking their teeth more from the stress and grinding their teeth, they're chipping their teeth. I see a lot of things happening in the mouth directly as a result of the economy. It's the first time in my 25 years of practice that I'm really seeing that.

WILLIS (voice-over): Among the afflicted, television marketing executive Jamie Blank.

JAMIE BLANK, TELEVISION MARKETING EXEC.: I'm here for a regular checkup today, but I have been clenching my teeth a little bit and I don't know if it's my own neuroses or stress, but I think the doctor is going to check out today, you know, my jaw because I have been having some pain.

WILLIS: From teeth clenching to chipping, grinding and bad breath, today's economic grind is leaving a sour taste in people's mouths. If you can't afford an appointment with your dentist, doctor Lituchy says start by stepping up your home care.

LITUCHY: Great brushing twice a day. You have to floss once a day to get the plaque that causes decay between the teeth. And it's so important that I'm telling my patients to add a third regimen to their home care which is to rinse with an anti-cavity fluoride rinse.

WILLIS: And when you need seek professional help, Dr. Lituchy suggests checking out a dental school instead.

LITUCHY: It'll costs you about one-fifth of what it would cost you to go to a regular dentist because they really need to practice a patients.

(END VIDEOTAPE)

WILLIS: Now of course, for some of you, a visit to a dentist would be a luxury. According to a recent survey by the Deloitte Center for Health Solutions, a quarter of you out there, they skipped health care of any kind because you couldn't afford care or you weren't covered by insurance. Now, if you fall into that category, know that there are some places to go to for free, access free federal clinics at Ask.hrsa.gov/pc where you can get checkups and dental care. Many drug makers sponsor patient assistance programs for people who can't afford their meds, head to RxAssist.org also.

And a bad economy is forcing people to re-evaluate and prioritize even the basic necessities like health care. One place where people are having to make fewer of these tough choices is Nebraska. The state has one of the lowest rates of unemployment, debt and foreclosure, earning it the top spot on the "Happiness Index," a new survey by MainStreet.com.

Financial happiness seems to be prevalent throughout the Midwest, Iowa, Kansas, also enjoy relative good economic conditions while states that fared well during the boom like California and Florida, they rank near the bottom.

The most unhappy place, financially, speaking is Oregon. But experts say that state could make a comeback due its high demand for environmentally friendly jobs. The survey is about a 180-degree twist on the well-known "Misery Index" which looks at the most financially miserable places in the U.S.

As always, we thank you for spending part of your Saturday for us. YOUR BOTTOM LINE will be back next week, right here on CNN. And you can also catch us on HLN every Saturday and Sunday at 3:30 p.m. Eastern Time. And you can hear much more on 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 in the CNN NEWSROOM. Have a great weekend.