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Personal Finance Questions Answered by the Dolans; The Dow Recovering; Christmas Spending
Aired October 17, 2009 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Hello. I'm Fredricka Whitfield.
Lots of different messages about your money and the nation's economy this week. There was the Dow surpassing the 10,000 mark only to dip below 10,000 Friday. Some of your 401(k)s have seen a small rebound, and then it's not even Halloween yet, but some of us find it a bit scary that retailers are rolling out huge holiday perks. So how will you be spending this holiday season?
We're going to delve into and dive into all of your dollar dilemmas. We're already getting some mixed reviews from you about how you're going to be spending this holiday season, how you make sense of the national economic picture, and what about your own personal finances. So we all hope to get smarter about our money this hour, but most agree there are a lot of mixed messages. So we hit the streets, and this is how you're assessing all this economic news.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Good for the economy, like raising the money up so you can spend more, more during the holiday season that's coming up.
UNIDENTIFIED FEMALE: I do think it's very important for the economy, especially since we have been on a downfall lately, the last two years we have been going LIKE through this recession type of thing. So for it to be at the highest point it's been at the whole year, I think it's excellent.
UNIDENTIFIED MALE: I think it's a peak for the economy, but I also think people are going to be sticking with their same old, same old. That's what we've done so far. Keep investing in our 401(k) and keep the money flowing in because we're buying low. As it grows, it's helping us out.
UNIDENTIFIED FEMALE: It means something great. It actually means that change, you know, is going to be coming very soon.
UNIDENTIFIED MALE: I believe the economy is getting better. I believe there's more jobs coming. I believe - I see a change. I personally see a change, and I see that things are going to get a lot better in the future.
(END VIDEO CLIP) WHITFIELD: OK. So you heard from folks there who have a lot of different assessments about how to make sense of all of it. So we're going to try to break it down. Just take a look right here. This is the message that many of you are saying. Is the economy better? Some of you say, yes, it is. Some are saying they will be spending more, and is there more in the 401(k) programs? Will the future be brighter?
So all of those things are going to be assessed this hour. We're going to have Daria and Ken Dolan who are going to be joining us from West Palm Beach. They're going to make you laugh as they are making me laugh all the time. Our Josh Levs is also here in the NEWSROOM. Josh, I'm sorry, this is funny to me already.
JOSH LEVS, CNN CORRESPONDENT: I just got to tell you, no one is laughing at me, but something funny is happening. I was not plugged in on that one.
WHITFIELD: They're going to make money kind of funny and fun.
LEVS: They're great.
WHITFIELD: So I'm kind of laughing before we even heard from them because I know what they're going to be saying about what people are assessing. So in general let's talk about how people are already weighing in on the bounce in their 401(k)s or how to make sense of the economic picture nationally.
LEVS: Look, the idea here, and this is great, is that we have ahead of us between now and when the clock hits 5:00, an hour of financial advice for you. We're going to be joined by the Dolans who have a lot of great information and we're showing your questions and I'm going to give you some resources from CNN Money as well to try to tackle some of your biggest questions.
Let's zoom in on the board. I'll give you a sense of what you've been writing about and then I'll show you how to join the discussion throughout the show. It's coming right here. This is what we're asking you about. We're calling it dollar dilemmas right here. And you can see - this is from our blog, CNN.com/fredricka or CNN.com/josh. We're also following you at Facebook and Twitter.
Here's an example here. Let's go over to this one. We have an example right here. Why are we to believe that this traditional way is the only way? People talking about they feel a lot of people are investing wrong in general throughout the United States. Philipe Crusoe here on Facebook, "There will be no Christmas shopping without new extended unemployment benefits."
We pulled up some questions here. People are asking, "what are the best stocks to buy if you're just getting started in the market? My 401(k) has taken a hit." This person goes on to ask, "What do I do to recover my 401(k)? Where do I find someone I can trust?" I have already pieced through more than 100 questions. We got a handful that are already set for our guests throughout this hour. And let's show the graphic so everyone knows how to join in. Our address is right here, cnn.com/josh, Facebook, and Twitter, Josh Levs CNN. And Fred's up there too, Facebook.com. You can see Fred's page there as well. We're following all of those throughout the show. Going to get lots of your questions and a lot of advice, Fred.
WHITFIELD: Excellent. Well, drum roll please. We're going to hear from Ken and Daria Dolan on all of this coming up. We're going to first delve into the economic picture. There they are - the national picture. How do we make sense of it? Do we get alarmed?
Hello. Glad you made it. And we also want to know about those 401(k)s. Many of us have been afraid to even look at our 401(k) statements because it has really been pretty depressing. But then all of a sudden in the past couple of weeks a nice little bounce. How to make sense of it? Do you reassess or do you try to take advantage of it in other ways? Ken and Daria Dolan right after this.
(COMMERCIAL BREAK)
WHITFIELD: All right. Now back to our focus this hour of "Dollar Dilemmas." A few interesting things happened in the economic sphere this week. The Dow hit over the 10,000 mark. It dipped back down below 10,000 come Friday. But unemployment rates are still pretty dismal, and then a lot of folks got a nice little jolt in the arm when they saw their 401(k) statements that some have actually seen a nice little rebound after hitting a pretty nasty hit earlier in the year.
So joining us from West Palm Beach, Florida, to help break down all of this, to make sense of it, oh so good to see you - Ken and Daria Dolan, joining us from West Palm Beach.
DARIA DOLAN, PERSONAL FINANCE EXPERT: You have no idea how happy we are to see you, Fred.
(LAUGHTER)
WHITFIELD: I don't think you're as happy as I am. All right. Let's get right -
KEN DOLAN, PERSONAL FINANCE EXPERT: Fred, Fred, let me just say one thing. We're very excited to be with you, truly, with you and Josh and the gang at CNN because there are millions and millions of Americans who are dazed and confused, don't know which way to turn, don't know if the information is good, don't know if their financial planner is telling it straight.
WHITFIELD: Exactly.
K. DOLAN: We have nothing to sell. Let's get to it.
WHITFIELD: Oh, perfect. This is why we've invited you, because you are combining your financial expertise on radio, television shows. You can also, you know - folks can find out more about you at dolans.com, but you all come with your Wall Street experience and also your financial planning experience all wrapped up into one.
K. DOLAN: It's all yours.
WHITFIELD: Perhaps at the top of hour you heard from a lot of folks that we hit - well, we didn't hit them, but we hit them up with some questions on the street, and they had this to say about the economic picture. Some of them said, yes, the economy is better. I'm asking you, are they right? Is the economy better overall?
K. DOLAN: Hold on. Let me say one thing. I know I'm yakking a lot. Fredricka, the economy is only as good as you feel comfortable with your finances and how the situation looks for you and your family. Forget all the economic gobbledygook. How are you making it next week?
WHITFIELD: OK. And so once you answer that question, if you're making it next week, might you want to spend more this holiday season because we heard from some of the folks at the top of the hour that they feel a little bit more comfortable about spending more this holiday season. Good idea?
D. DOLAN: The only way I would recommend that anybody spend more this holiday season or for that matter spend anything this holiday season is if they've got a good stash of money in savings. They've got their retirement plans under control -
K. DOLAN: Pay cash.
D. DOLAN: And they can pay cash or they can pay off the charge when the bill comes in full. If not, I respectfully submit, I love all of you out there, but you got no business buying gifts.
K. DOLAN: One quick comment, Fredricka. A good friend of ours in Ohio, great research firm, big research firm, I just read their report as I was waiting here. And they said that big Research says there's going to be more needs than wants. You're not going to get the Blu Ray, kids. You're going to get the blue jeans.
WHITFIELD: That's good. OK. Let's talk about those 401(k)s. We've heard from folks on the street. That was a very line. Folks on the street who said, you know what, I'm excited to see that my 401 (k) is seeing a little bit of a rebound, but now what? What do I do? Do I reassess? Do I actually use this as an opportunity to dip in, borrow a little bit, pay off that bad credit card debt? What do I do.
K. DOLAN: Good question.
D. DOLAN: OK. Me first because I have been battling this battle for 20-odd years with financial planners and brokers. It was always my belief that people should have been putting nothing but guaranteed into 401(k)s. We're not trying to make double our money. We're just trying to make the money grow. That old steady drop in the bucket. So for all the people who had all the stock mutual funds and all the stocks and IRAs -
K. DOLAN: Down 31 percent. D. DOLAN: Who were down 40 percent last year.
K. DOLAN: Or some were.
D. DOLAN: This is why you can't take advantage of it from a tax standpoint, but you sure can end up having to postpone retirement when the markets go down, and we never know when they're going to go down and whether it's going to correlate with our retirement.
K. DOLAN: We say conservative choices, Fredricka. Haven't you learned anything?
WHITFIELD: I'm learning from you all the time.
K. DOLAN: I don't mean you, Fred.
WHITFIELD: I don't know. I'm learning and still taking copious notes. And then that full screen one more time because this is kind of an indirect response to the people that we heard from at the top of the hour. They talk about the future being brighter.
D. DOLAN: Well, the future may be brighter for them because they've got a job that they're not worried about losing or they've just been rehired and maybe are making money like they did before, although that's unusual, too. Because people who are being rehired are ending up taking less income than what they had before they lost their job. I think in this environment with what the government is spending money on you need to conserve every last buck you have -
K. DOLAN: Cash is king.
D. DOLAN: Because at the rate the dollar is being destroyed with all this fake money.
WHITFIELD: Wow.
D. DOLAN: You're going to need more dollars than ever when the inflation finally kicks in.
WHITFIELD: Great. So you all have set the stage now because we've got loads of questions and comments that have come our way via Facebook blog, that's where our Josh Levs come in. OK. So Ken and Daria, Josh, are ready.
LEVS: They're ready.
WHITFIELD: Sock it to them.
LEVS: They got the gloves on. You both rock. Let's get right to it.
K. DOLAN: Hey, Josh.
D. DOLAN: Hey, Josh.
LEVS: Hey, everybody. All right. Let's get straight to it. This is from James. Interesting question. He wrote us this. He says what are the best stocks to buy if you're just getting started in the market? Where should someone look?
K. DOLAN: All right. We are not great - great question, Josh. We are not great fans of major stock investing now for anybody, especially not a beginner, but if you really want to do it, then buying shares of stock in a company that you understand. If you're a heart surgeon, don't talk about franchising. If you're in the franchising business, look at franchising. If you're in medical devices, understand the company that you want to own.
Peter Lynch, our dear friend, my college classmate, said buy stock in a company that can be run by an idiot because sooner or later an idiot is going to run it.
LEVS: That's great. Let's go to the next one. This is interesting, too. This is a question about a 401(k) comes to us from Rosalind. She's basically looking for an adviser. "My 401(k) has taken a hit like most. I don't know how to go about making intelligent changes. How do I find someone I feel comfortable enough with to talk about my investments?" We got this via blog. How do you fix that one?
D. DOLAN: If you don't feel comfortable enough, then you're not going to be able to sit down as an equal with somebody and discuss it rationally, and what's going to happen is you're going to get the typical story of, oh but you need to have all this growth in there, which I say is absolutely wrong.
Do your growth with the capital you may have accumulated outside of retirement plans and invest in the guaranteed or as close to guaranteed choices in that plan as you can get. Short-term bond funds. If they have a guaranteed investment contract. And don't talk to anybody because they're going to sell you a bill of goods on a new bull market.
K. DOLAN: Educate yourself first, otherwise you're a lamb to the slaughter. How can you evaluate investment alternatives with anybody if you don't understand what they are. That's step one.
LEVS: All right. (INAUDIBLE)
WHITFIELD: That's excellent. OK. That helps us out on that long-term future planning. Let's talk about short-term future planning. Because right around the corner the holiday season and we're already being bombarded with the signs. The retailers are upping all -
(CROSSTALK)
K. DOLAN: Buy, buy, buy.
WHITFIELD: Buy, buy, buy and layaways now, too. I can't wait to hear from Ken and Daria. What do we do about this holiday spending.
K. DOLAN: Layaways are back. (COMMERCIAL BREAK)
WHITFIELD: All right. The Dolans will be back with more advice about your "Dollar Dilemmas." But first, let's take a quick look at the top headlines. Pakistan today launched a long awaited offensive in south Waziristan. That area is a stronghold of Taliban insurgents. Troops say they've captured a key village. At least four Pakistani troops and a dozen insurgents are reported dead.
In this country, H1N1 swine flu vaccine will be in short supply for at least two more weeks. The government hoped to have 40 million doses available by the end of the month, but thanks to production delays, they now expect no more than 30 million doses.
(BEGIN VIDEO CLIP)
RICHARD HEENE, FATHER OF FALCON HEENE: I want your questions in the box. I'll get right back to you, OK?
(END VIDEO CLIP)
WHITFIELD: All right. So much for that major announcement Richard Heene had promised. He emerged from his home in Colorado only to tell reporters to put their questions in a box and that I'll get back to you. Earlier this week, the Heenes claimed their six- year-old son floated away in that balloon right there. The boy turned up safe at home. But Heene denies the whole thing was a hoax.
All right. So we're going to focus on "Dollar Dilemmas" again. So will those Christmas stockings be a little lighter this year. We're looking at what you're saying and what you can do to manage the holiday spending.
Plus, you hear economists talking about signs of recovery all the time. So how does that match up with your personal financial picture? More with the dynamic duo of the Dolans.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back. We're focusing this hour "Dollar Dilemmas." Doesn't it seem like it's getting earlier, the pressure to spend, to make plans for that holiday spending, and how can you resist with all these retailers offering these great deep discounts, and, yes, layaways are now back.
So we've got the Dolans with us. We've got our Josh Levs with us, and we've also been asking you out on the street. So is this a time for a major overhaul in spending or might you be going about your holiday spending a little differently this year?
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I plan to spend a whole lot this holiday season. A lot. My boys want a lot.
UNIDENTIFIED FEMALE: Even though we wouldn't probably like to admit we want to spend less, we will probably be spending less because of the recession.
UNIDENTIFIED MALE: Definitely be spending more. I have a little more money saved up.
UNIDENTIFIED MALE: A little less. The reason why is because I got four children,. So, you know, even though the economy went down for a bit, since it's coming back up, it's going - I'm going to spend a little less just because of the economy.
UNIDENTIFIED MALE: We'll probably be spending about the same. I think we always try to stay within the realm of similarity of each year.
UNIDENTIFIED FEMALE: I have to spend less money.
UNIDENTIFIED FEMALE: And how come?
UNIDENTIFIED FEMALE: Well, you know, we like to go out to eat and everything, and we just really have to cut all these things because we really need to save a lot more money.
(END VIDEO CLIP)
WHITFIELD: All right. So what's the best advice as we approach the holiday season? It's hardly even Halloween and scary, we're already talking about the holiday season of shopping. So let's welcome back our Josh Levs here in the studio, fielding all of your questions and your comments as well as from West Palm Beach, Florida, the Dolans, Ken and Daria Dolan.
Folks are used to hearing you and seeing you on television, radio, as well as at your website, dolans.com. All right. So what's about the best advice? Let's talk about it. How do people and should they perhaps take advantage of these early sales?
K. DOLAN: You know, I found out - excuse me -
D. DOLAN: Isn't that funny. I thought I was going to talk. Go right ahead. Go right ahead.
K. DOLAN: I couldn't believe I read that the Mall of America, Macy's at the Mall of America, in the start of winter has closed down 40 percent. I think people are looking at the holidays very differently than they have in a long time.
WHITFIELD: You mean looking at it because they can snatch up all these sales, take advantage of the deep discounts?
D. DOLAN: Well, I think that's in part the situation, but I do think that the retailers will be very fortunate this year if they do the same volume of business -
K. DOLAN: They would be thrilled.
D. DOLAN: - they did last year, because we GOT higher unemployment than we did last year, and there are an awful lot of people who maybe didn't worry about jobs last year who are now worried about jobs.
K. DOLAN: Exactly right.
D. DOLAN: And if you have a job and if you have a little money in your pocket, let's look at this list one more time. There are layaways. Yes, they're back. So should you take advantage of the layaway plans? Does that mean you're going to manage your spending a little more as you approach the holiday shopping?
K. DOLAN: We're back in the '50s -
D. DOLAN: You will definitely manage your spending in a much more responsible way than, unfortunately, too many people have done in the past. So I love the concept of layaway. I think it's the best thing that's come back from the old days.
K. DOLAN: Sears -
D. DOLAN: That I've seen in a long time.
K. DOLAN: Yes, Sears and K-Mart started that. I think it's going to be quite successful. One in five shoppers have started shopping in September.
WHITFIELD: Wow.
K. DOLAN: Slowly but surely pacing themselves. And I will predict here, next year, small community banks, not the too big to fail guys, but small community banks, the smart ones will initiate the old Christmas club all over again.
WHITFIELD: Oh, really? That would be fine then.
D. DOLAN: They'd be foolish to miss the opportunity.
WHITFIELD: Before that time then back to our list, how do you calculate your holiday spending? How do you come up with the best formula?
K. DOLAN: Here is the formula, Fredricka Whitfield.
WHITFIELD: What?
K. DOLAN: Here is my list of people that I want. A lot of people have cut their list way back. Like distant relatives, next door neighbors, friends at work, maybe not. Who I do want to shop for? What is my budget. Match up the prices. That's it. When you go shopping, especially last minute, bring cash. It's easy to take a card, don't worry about it. I'll pay it off next September. Shop with cash on your list, name, dollar for dollar.
D. DOLAN: And if you are still paying off credit cards from last holiday season -
K. DOLAN: Some people are doing it.
D. DOLAN: Don't shop at all.
WHITFIELD: OK. So, josh, you got questions coming from people. Are they talking about shopping?
LEVS: Ken and Daria, I love how it's basically impossible to stump you guys. Pretty much -
WHITFIELD: They have an answer for everything.
LEVS: So much fun.
K. DOLAN: What do you got, Josh?
LEVS: Well, let's zoom in on our board. Because there's actually a tweet I got that talks directly about something that Daria was just mentioning. This comes from Philippe from Facebook. There will be no Christmas shopping without new extended unemployment benefits. You all follow this pretty closely. Talk to me. What's the outlook right now for people facing continued unemployment heading into the holidays? What do you see?
K. DOLAN: I'm going to give you a statistic, Josh, that's going to blow your head off.
LEVS: Oh, oh.
K. DOLAN: One out of three people who lose their jobs cannot survive more than four to six weeks.
WHITFIELD: Weeks.
K. DOLAN: Please err on the conservative. If you have lost your job or, in fact, have a problem, cut back.
D. DOLAN: But I will, to answer your question, Josh, hello -
WHITFIELD: Isn't it easier said than done.
D. DOLAN: I think it's pretty much a no-brainer that they're going to pass the extension of the benefits. I mean if they're going to bribed senior citizens with 250 bucks, they can extend the unemployment benefit.
WHITFIELD: We're probably talking about 15 million people unemployed. It's a huge number.
LEVS: It's a huge number. There's different ways to slice it. Really quickly, let me just toss out an interesting one at you and then we'll get some more after the break this. But this one did come in from Twitter. I think it's interesting.
"I'm wondering what a recent college grad can invest in to make money while we scrounge for jobs and save up for grad school?" Really interesting question. Not just (INAUDIBLE), what do you invest in these days but is it a good idea? K. DOLAN: Josh, let me just say, and I don't want to get this Twitter guy or gal mad, the last time you want to be investing money and risking is your little nest egg that you may have gotten for graduation, et cetera. Get that in a short-term CD or even a money market account which are horrible rates. All of a sudden you find a job and you need clothes, you need an apartment. What are you going to do? Sell a mutual fund at the wrong time?
D. DOLAN: I will say this, if you don't have college debts that you have to pay, if you're not going to have to pay off student loans and you do have some money put aside, what you can start investigating are areas of the market, number one, in companies that you're familiar with, and, you know, if you were just starting college I'd be telling you go learn Chinese, but if you're graduating from college, learn about the Chinese economy and what China needs and that's the area you want to be investing in because they got more people than anybody else.
K. DOLAN: Check the cover of "Fortune" magazine now, China.
WHITFIELD: So this is a lot of stuff, you guys. I mean, there's just a big picture out there with your personal finances. You're talking about your 401(k)s. Talking about unemployment, unemployment benefits that might be dwindling, and then you've got the message coming from the national picture with the nation's deficit which is increasing and at the same time some other analysts are saying, you know what, the recession is over.
K. DOLAN: Oh, please, Fredricka!
WHITFIELD: I want you all to make sense now, the nation's economic outlook versus the personal economic outlook. Why are they not in sync? All that straight ahead.
(COMMERCIAL BREAK)
WHITFIELD: We're talking this hour about "Dollar Dilemmas." So the nation's economy sends one message. The Dow hitting past the 10,000 mark, but your personal finances say something else. So we hit the streets and we ask people, what makes you hopeful about your economic future?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The Dow is going up. The economy is turning around.
UNIDENTIFIED MALE: Being blessed just to be working right now, you know, to be able just to hold a job right now. I am secure with my position at my company. We haven't had any layoffs. We haven't laid anyone off. So, so far, so good.
UNIDENTIFIED FEMALE: President Barack Obama, though others are against him, I'm really rooting for him. I think he has our best interests at heart. UNIDENTIFIED FEMALE: Entrepreneurship, I think, is going up. And I just opened my own business right now. So I'm thinking that's going to be a new beginning for a lot of people.
(END VIDEO CLIP)
WHITFIELD: Interesting. So people, for the most part, want to be very hopeful. Ken and Daria Dolan are back with us, out of West Palm Beach, the dynamic duo of all things dollar and cents. And our Josh Levs also fielding a lot of your questions.
So, you guys, let's talk about these mixed messages. We're hearing about the unemployment figures, where we're talking about job losses are still pretty significant; 15 million people in all who are still unemployed. And then 00 let me see if I can do this right. And then -- oops, that's not what I want there. Forget that picture there. That's the weather picture. That's somebody else's department.
K. DOLAN: Fredricka, what are you doing?
WHITFIELD: I'm playing with this board, which is so fascinating. We're talking about an increase in the federal deficit now of 1.42 trillion. This is pretty depressing. There are a lot of folks who say, you know what, I'm a little uplifted that things might be bright around the corner. Why should we be?
D. DOLAN: Well, here is the problem, as I see it: number one, the last time we had a 1.4 trillion dollar deficit in this country, it was at the end of World War II. There was sort of a reason to have that big a deficit. The difference being, at the end of World War II, although American citizens could no longer hold gold, the country could still pay off to other governments or to people that they were obliged to repay, who were holding dollars -- the government could pay in gold.
We have no gold backing this money that's being printed. And this does not bode well for the economy.
WHITFIELD: So it's not right then -- it's not right then, I'm hearing from you, that people should think that just because the national picture says one thing, that my personal finances should be in sync.
K. DOLAN: No.
(CROSS TALK)
K. DOLAN: That's a good point, Fred.
D. DOLAN: Because of all the money that the Fed is creating and throwing around and putting into society, either through the banks --
K. DOLAN: Money supply.
D. DOLAN: -- that are too big to fail, or the car companies, or --
K. DOLAN: If a bank is too big to fail, it's too big.
D. DOLAN: All that money that's been floated out there, with nothing to back it up, has gone directly to creating what could potentially be new bubbles in the stock market and in the commodities market. Because you can't have that kind of an up-movement without a bubble, with unemployment at 9.8, headed towards ten, and 23 percent increase in foreclosures in the third quarter alone.
K. DOLAN: And, Fred, we're not harbingers of gloom, Fred. All we're saying, America, just be careful. There will be better times. But don't drink the Kool-Aid that we're there yet.
D. DOLAN: Don't forget, the economists who were telling you the recession is over --
(CROSS TALK)
WHITFIELD: They say, yes, the recession is over, and really now we're on the road to recovery.
K. DOLAN: Hold on. Fredricka, let me say one thing. From the movie the "Beautiful Mind," with Russell Crowe, "conviction is the luxury of those on the sidelines." If I'm an economist, and maybe I'm in cash or something, I can tell you anything I want. Conviction is the luxury of those on the sidelines.
It's my money. I'm going to be careful.
WHITFIELD: OK. Josh, what are people saying about their money and what kind of questions do they have for Ken and Daria right now, at this juncture, when they try to make sense of the national picture, and their personal finances.
JOSH LEVS, CNN CORRESPONDENT: Oh no, Fred. Ken is adding new movie lines to his repertoire. We're in trouble now.
WHITFIELD: He's on a role.
LEVS: Watch out. Pretty soon, he's going to break into a monologue. Let's do this. I'm on a mission here to get to as many questions as I can. I want to get to this from Jill, because I have chosen ones that I know will set you up to give advice to a lot of people that are asking.
Here's Jill: "I'm 45, single, have an S-Corp, with a partner who is 65. No employees. My partner may retire in a few years. We both would like a pension from the company. I have an IRA, but would like something that lets me put away more money."
In a case like that, a lot of independent operators out there, small business, people who don't have any retirement money at this point, not enough to live on, what should she do?
K. DOLAN: Jill, Jill, Jill, write this down: Publication 333, Tax Benefits for Small Business. The tax shelters for small business people are unbelievable. Solo 401(k), Kio (ph) plans, simple IRA. Get to it now. If you put money it at the right time and the right place, you'll have plenty. Publication 333, Jill, get it Monday.
WHITFIELD: Wow.
LEVS: That's really that promising? That's great. Let me get to one more during this block, if we can. This comes to us from Arlene, also interesting. A lot of people asking about reverse mortgages. She says that she's short about 25,000 in equity. "The home next door previously sold for almost 400,000. It was repossessed and sold a few months ago for 165,000. Would you advise us to borrow 25,000 or to forget a reverse mortgage all together," guys?
D. DOLAN: First off, you have to be over 62 years of age to qualify, both parties have to be, in order to get. Let's assume this person who is writing is over the age of 62. Here is the problem: if you are still married, and in your 60s as opposed to in your middle 70s and maybe widowed, and you're starting to need money from the house now, what will you do when ten years have gone by, or five years have gone by, and the cost of living continues going up?
If you're starting to take the money out now, maybe you should investigate selling the house, and down-sizing to something that's more affordable.
WHITFIELD: That is so tough right now, trying to sell your home and then you're not going to get what you hoped to get.
D. DOLAN: But you're not going to get out of a reverse mortgage what you would have gotten either.
K. DOLAN: It's an option worth considering. It works for some, doesn't work for others.
LEVS: Very slim circumstances. You got it.
WHITFIELD: Thanks so much. We are talking about how scary it is to even think about the holiday season, when we're not even quite at Halloween. The Dolans are saying start thinking New Year's now, resolutions.
But don't wait until New Year's. Make your money resolutions now.
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WHITFIELD: Struggling to keep your head above water? That's a figure of speech. But for a business in Cedar Rapids, Iowa, the meaning is literal. Not only is it fighting the effects of the recession, it's fighting the aftermath of a flood.
CNN's senior correspondent Allan Chernoff reports.
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ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Baseball team shirts are back in production at Bimm Ridder Sportswear, a minor miracle for this company that supplies souvenirs to major and minor league ballparks. Flood waters overwhelmed Cedar Rapids last year, including the Bimm Ridder factory.
(on camera): The flood waters in the old factory rose 6.5 feet high, submerging all of the equipment. Two giant dryers were destroyed, as were the electronics in three of these printers. In all, a million dollars of equipment was shot. Must have been devastating.
GARY FICKEN, PRESIDENT, BIMM RIDDER SPORTSWEAR: It was very devastating. Thank goodness for boxed wine. That was my salvation.
CHERNOFF (voice-over): Gary Ficken had no flood insurance and little federal aid was available. For six months, he ran Bimm Ridder from the basement of his home while outsourcing production.
FICKEN: Everybody kind of just sat next to each other along this wall.
CHERNOFF: Ficken sought advice from apparel printers who a decade earlier had also rebuilt after flooding.
FICKEN: Who better to get advice from than somebody who's already lived through something like this?
CHERNOFF: The company relocated to this new factory on higher ground, and invested heavily in new equipment. Bimmm Ridder now carries seven times the debt it had a year ago. Ficken has a lien against his home to secure a 900,000 dollar government loan. And he's taken a 20 percent salary cut.
While the flood waters of Cedar Rapids have receded, Gary Ficken is still swimming upstream.
FICKEN: The last thing you need is a leak on top of your new equipment or on top of new inventory.
CHERNOFF: But Gary Ficken plans to keep plugging leaks and complete Bimm Ridder's turn-around, so he and his 18 employees can keep their heads above water.
Allan Chernoff, CNN, Cedar Rapids, Iowa.
(END VIDEOTAPE)
WHITFIELD: No doubt it's been a tough year economically for millions in America. But 2010 is just over two months away. Are there better times ahead? Questions for the Dolans, who say make those resolutions now.
(COMMERCIAL BREAK) WHITFIELD: We're addressing your Dollar Dilemmas. You know how every New Year, we make resolutions about our money? Well, the Dolans, you know them as Ken and Daria Dolan -- you also know them for their website, Dolans.com -- they say October is not too early, let's start thinking about resolutions now.
They're back with us from West Palm Beach. Let's look ahead. Josh Levs is with us as well, fielding a lot of e-mail questions and blog comments. So, Ken and Daria, you all say, you know what, it is not too early to start thinking resolutions right now. Don't wait until January.
D. DOLAN: Exactly.
WHITFIELD: Let's begin with start saving.
(CROSS TALK)
D. DOLAN: You plan those resolutions now, so that you know exactly which ones you're not going to live up to.
K. DOLAN: Don't say that. Don't say that. Also --
WHITFIELD: Start saving, but how much? How do you determine?
K. DOLAN: Americans are the worst savers in the world, Fredricka, the industrialized world. They say 10 percent would be great. Forget 10 percent. I would be thrilled if you could put five percent aside. And what's -- you know what it's going to buy you? It's going to buy you peace of mind. It's going to buy you emergency money. Cash is king.
WHITFIELD: And then you say cut the incidentals. Make extra mortgage payments. Get out of debt, period, is the bottom line.
D. DOLAN: Yes, exactly. Although on the mortgage payments, I would rather see you put that extra money into savings than put it on a house that may yet go down further in value.
WHITFIELD: Really? I thought that extra mortgage payment really could help --
D. DOLAN: It's great if you have enough equity in there that you're not upside down on the loan. But if you're upside down on the loan, then you might as well just wait for things to settle down, and save it for a rainy day.
WHITFIELD: OK. And then there's more on your list of New Year's money resolutions that we're going to start in October however. Contribute max to retirement plans like a 401(k). Can we see that? There we go. Save on energy. Explain that. And upgrade your work skills.
K. DOLAN: Well, let me -- you do energy. Would you do energy?
D. DOLAN: Sure. K. DOLAN: I have to ask first. You do energy first.
D. DOLAN: The winter could be very, very cold in many parts of the country. So you need to now, in October, be looking at ways that you can cut down on the expense of heating your home. Make sure that you get programmable thermostats.
WHITFIELD: You can lock in your rate with a lot of these energy companies now, too.
D. DOLAN: Absolutely. And if you're having trouble with a very expensive month, see if you can do a monthly pay, averaged out over the entire year.
K. DOLAN: And I love this one, Fredricka Whitfield. I love this one, upgrade your skills.
WHITFIELD: I like that, too.
K. DOLAN: Because nowadays, the successful people don't have one job when they work. It's two jobs and it's three jobs in the same job. It's called -- well, I got to do something else I haven't done before. Good, job security. Learn all you can about your job, because more people are going to be laid off. We're predicting 13, 12 -- 12 percent unemployment, as much as 12 percent. And I don't want you to be a statistic.
WHITFIELD: I don't either. And the last couple points, something everyone can afford to do in your resolutions, you say, volunteer to help others. These are resolutions of your personal issues. And have dinner at least once per week with your family. Wouldn't that be something?
K. DOLAN: I love that.
D. DOLAN: You know what? Preferably home cooked, with everybody involved.
K. DOLAN: I love this thing on TV. I prepared dinner, in six bags. It's beautiful. It's so heartwarming, Fredricka.
WHITFIELD: What have you been hearing from people on this? Resolutions, planning ahead.
LEVS: People have can a family tradition right after our 4:00 hour is done on Saturdays, have a nice dinner with your family. Obviously, keep it on CNN.
D. DOLAN: Or in this case, maybe a good stiff drink.
LEVS: Just for us. We are getting a lot of questions for you guys. Really interesting.
K. DOLAN: Josh, we can go until midnight if you want. We're free.
WHITFIELD: We know you can.
LEVS: Are you kidding? You guys are like Pop Rocks poured in a giant bottle of Coca-Cola. It's incredible. Let's zoom right in. I want to show everybody this one from Crystal Riley, who is asking, "when do you expect the housing market to make a full recovery."
Now, I said earlier I can't stump you. Maybe I can. What do you all think?
K. DOLAN: Josh, right now, one in every 132 homes in America is either in foreclosure or in some phase of foreclosure. I would say the answer -- if you wanted an answer from me, I would say, in a macro sense, five to seven years. It will be faster than that in some areas, Miami, Florida, Arizona, Southern California, and some of the Midwestern states. It could be -- Nevada, it could be many more years.
WHITFIELD: We'll see a rebound.
K. DOLAN: He said full recovery. Rebound we hope will start in a couple years.
WHITFIELD: Yes.
LEVS: It will be partial, but you're saying full recovery that far off.
K. DOLAN: I really do, Josh.
LEVS: A lot of people agree. Real quickly, show everyone how they can join the discussion online. We have a screen that will show you because this keeps going after the hour. We're posting links to the Dolans. We're also posting links to CNNMoney stories. And people are discussing with each other. CNN.com/Josh or /Fredricka. Same place. Facebook.com/LoshLevs. Twitter as well.
Keep them coming. We still have ten minutes left in the hour.
WHITFIELD: We do.
LEVS: Keep getting more from you.
WHITFIELD: This is free great advice from the Dolans. So we're going to try and get all of your questions answered before this hour is up. We'll be right back with some final thoughts.
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WHITFIELD: All right, your Dollar Dilemmas solved with the Dolans. You like that alliteration? They're back with us from West Palm Beach. Josh Levs also here in the studio, with some final thoughts, questions coming from folks who have sent them via blog, Facebook, you name it. Josh, what do you have?
LEVS: I'll show you one that's interesting. We have a lot of young people who join us for the show, and also especially via Twitter. Let me show you this one right here. It's an interesting Tweet. "Some good sources of financial aid for upcoming college freshman."
Let me show you, before I toss this at the Dolans, I wrote a story about this. If you just Google "Find College Scholarships CNN," you will get my story come right out, with links to good websites. You also have a video here that shows you some key websites to use.
But I do want to toss this at Ken and Daria. We have done so much coverage about how a lot of these programs out there that offer financial aid are depleting, are being hit by the economic crisis. Do you all see any tricks of the trade, and any kind of light at the end of the tunnel here for kids who want to go to college.
D. DOLAN: You know, financial aid got more difficult because the government basically forced all the private lenders out on the assumption they were making too much money in the deal. And so they all decided if we're not going to make what it costs us to do it, we're out of here.
K. DOLAN: It's going to be tougher.
D. DOLAN: Now the government is sort of the only source to turn to.
K. DOLAN: Two good sources, Josh. Number one is FinAid.com. And a spectacular book by Cal Chany, "How to Pay for College Without Going Broke."
There's money there. Don't let anybody tell you that there isn't. It's just going to be a little harder to find it. But billions goes unclaimed every year.
LEVS: Wow, yes, that's interesting you just gave us a book. I'll check this out as soon as we're off the air.
K. DOLAN: Very good. It's a great book. Wonderful.
LEVS: Listen, early on in this hour we talked about 401(k)s. There are some people out there who missed a little bit of that. We're getting a lot more questions about 401(k)s. I have one here from Sepanta on a graphic. Let's see if we can go to that. She's asking for this basic piece of advice that a lot of people want to know. "In this economy, how much do you put in a 401(k) or 403(b). Is it just the amount your employer will match" or do you put --
K. DOLAN: What a great question. I love it, Sepanta.
D. DOLAN: You definitely want to at least, if your employer is still matching your 401(k) contributions -- you definitely want to put in up to that limit, because otherwise --
K. DOLAN: Free money.
D. DOLAN: You're throwing free money right out the window. Beyond that, it depends on, you know, was your spouse working and is your spouse now unemployed. Would that extra money be more important to our daily lives? And maybe making a car payment or something, than getting in the 401(k)? That's personal.
But, by all means, if there's a match, go up to that limit at the very basis.
K. DOLAN: Free money.
LEVS: But if you have a car payment, put it there instead?
D. DOLAN: The excess.
K. DOLAN: Absolutely.
LEVS: It sounds like, from what I'm being told, I can get to one more. This is kind of quirky, but we got it from Peter. He really wants your take on this. I can understand why. Who wouldn't want the Dolans' take. Let's give it to you.
Peter is suggesting that to solve national health care issues, there should be a national Lottery game, like Mega Millions or Power Ball, to help pay for national health care. This is a financial issue. It affects a lot of families out there.
K. DOLAN: Josh, I love the idea, because then you could join other states who, in fact, have made billions on the Lottery. And we have nothing to show for it. So great. Let's do it for the country. And we'll have nothing to show.
I'm in. I got a ticket. Two bucks, I'm in.
LEVS: Oh, man.
WHITFIELD: A couple more comments I'm seeing on my blog. This from Michael Armstrong, saying "you hit the needle on the head about Christmas. Will the holidays put the market in the black or will they fall in the red? The way I see it is there's not enough employed shoppers to rebuild the market."
Do you think, Ken and Daria, he's making a pretty good point there, that retailers -- it's not just shoppers that need to be concerned, but the retailers that really might be in trouble.
D. DOLAN: The retailers really need to be concerned.
K. DOLAN: Heavy online.
D. DOLAN: Exactly. You're going to see that what do they call it, Black Monday, I think, which is the Monday after Thanksgiving --
WHITFIELD: Black Friday.
K. DOLAN: Black Friday. You're thinking of Black Monday in the stock market.
D. DOLAN: I guess so. But anyway, I think that, if you see any volume, it's going to be from the online sales.
K. DOLAN: Online, dollar stores, and the clubs.
WHITFIELD: Interesting stuff. All right, you guys have made us smarter. We knew you would, in the field of money and all things dollars and cents. Ken and Daria Dolan, thank you so much. Dolans.com, so we can learn more about your advice on a regular basis. Josh Levs, thanks so much.
Of course, thanks to you at home, sending all your questions and comments via our blogs and Facebook as well. Much more news straight ahead.
I'm Fredricka Whitfield. I'll be back tomorrow.
Up next, a Louisiana justice of the peace under fire for refusing to marry an interracial couple. Don Lemon has that. Plus a poignant story related to the San Francisco earthquake 20 years ago. All that after this short break.
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