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CNN Live Saturday
Dollar Signs: How To Become A Millionaire
Aired September 11, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KELLY WALLACE, CNN WALLACE: And welcome now to "Dollar Signs," where we help you make the most of your money. Do you want to become a millionaire? Who doesn't? My guests today are going to tell you how, even if you make just $25,000 a year. David Hinson is an investment expert and the founder of Wealth Management Network. He joins me here in Washington. And Russell Pearlman is a senior writer for Smart Money Magazine in New York. Gentlemen, thanks so much for being here today.
DAVID HINSON, WEALTH MANAGEMENT NETWORK: Thank you for having me.
WALLACE: David, I want to begin with you. You say if you want to be a millionaire, you kind of have to focus on being a millionaire. What does that mean?
HINSON: That's right. You have to focus, and you have to focus on it as if it's one of the most important goals of your life. It has to be just as important as anything else that you're trying to achieve. So the key in creating wealth and the key in becoming a millionaire is consistency, discipline, and planning. And if you're consistent, and you're disciplined, and you plan, you actually can achieve that status.
WALLACE: Russell, some skeptics out there might be saying, "Oh, come on, $25,000 a year. How can I become a millionaire with that kind of salary?"
RUSSELL PEARLMAN, SMART MONEY MAGAZINE: No, I absolutely agree with David. You have to put yourself into the right mindset, that it is doable. It's doable on $25,000 salary. It's doable on higher salaries like that. You just need to get into the discipline of savings.
I did some research this week, and if you were to save 9 percent of your salary -- so $200 a month from $25,000 a year -- and you save that, you invest it at what the average return of the stock market has been over the past 75 years, if you start at 22, you will have a million dollars when you retire at 67.
WALLACE: Well, let's first now, go to the phones. We have Greg from South Carolina. I think Greg is on the line, asking about if real estate is still a good investment. Good afternoon, Greg.
CALLER: Good afternoon.
WALLACE: What's your question? GREG: Yes, basically, I wanted to find out if real estate, at this time in America, is still a sensible way of investing your money, as opposed to just taking your cash that you make each day and just putting it into an investment savings and hoping to get a decent return.
WALLACE: David, real estate still a good way to go?
HINSON: Yeah, that's a very good question. Real estate is a very, very important part of your asset allocation when you start thinking about creating wealth. The numbers that I ran show that if you simply begin by saving so you can buy a home -- buy a home as soon as you possibly can. Over the 40-year life cycle, the 40-year span that you'll actually be working, you actually can turn that home into an investment, because you'll continue to pay down the mortgage, you get tax advantages from the home.
But also, you get very good appreciation. And even at the historic appreciation rate of real estate, which is about 4 percent, over time, over that 40-year working period, you'll end up with a nice chunk of money.
WALLACE: We have another call, and let's give this one to Russell. We have Dean from Tampa. Good afternoon, Dean, what's your question?
CALLER: Yes, good afternoon, folks. I just recently completed the Peter Lowe (ph) Executive Coaching Program, with the help of my coach Duane Kirby (ph). I'd like some advice on a 37-year-old man who has no family, no bank account, makes $25,000 a year, but definitely wants to invest not only for myself, but for the family I hope for the future.
WALLACE: All right, so some personal tips here, Russell. What's the advice?
PEARLMAN: Well, I think you just have to, again, you have to get into the discipline of saving, whether it's forced savings out of your paycheck or taking something out of your checking account each week and moving it to savings. It's just getting into the mindset of saving as much, as early as possible.
Because through the magic of compounding, the more you save early, you know, will make up a huge difference 10, 20, 30 years down the line. As I said, it can be as low as $200 a month, and you can wrack up cash very fast, regardless of your marital status, regardless of how many children you have, and frankly, regardless of the income you make.
WALLACE: How important, David, is it to get started early? I remember having a boss in my early twenties who said, "Save, save, save." Well, I'm not in my early 20s anymore, but how important is it, or was it, to start saving back when I was in my early 20s versus now?
HINSON: Yeah, if you can save early, absolutely, it's the best way to go. It makes it easier over time, because of the magic of compounding. What's interesting is that wealth creation is really a function of psychology. How do you think about money? How do you think about wealth? There is a difference between wealth and money. And so saving early and starting early is critical.
WALLACE: All right, David Hinson, Russell Pearlman, sit right there. We have a lot more. Again, you can get involved too. You can e-mail your questions to us at DollarSigns@CNN.com, or call us at 1- 800-807-2620. Send in those e-mails, get on the phone. We'll be right back.
(COMMERCIAL BREAK)
WALLACE: And welcome back to DOLLAR SIGNS. Our topic today should be a popular one: How can you become a millionaire on a salary of $25,000 a year? Joining us today, investment expert David Hinson here in Washington, D.C., and Smart Money Magazine's Russell Pearlman. They're here giving us lots of good advice.
Let's first go to the phones. We have Tina from Mississippi with a question. I understand, Tina, you're nearing retirement. Good afternoon.
CALLER: Yes. Hello?
WALLACE: Hello. What's your question?
TINA: Well, I'm 54, and I have about $200,000 saved in CDs, and tax shelters, and annuities. And I want to know, how can I become a millionaire by the time I retire at 67 or 68?
WALLACE: All right, Russell, how can Tina become a millionaire?
PEARLMAN: Well, in your case, Tina, I think the million-dollar goal is noble. But I think what you want to do is, since you probably only have 10 to 12 years of working life, you want to make sure you have enough for, hopefully, the 30, 40, 50 years of happy retirement that you will have.
So you want to make sure, instead of taking, you know, particularly risky investments, you'd probably want to stay into a lot of fixed income and a lot of low risk stock investments, because that, more than the million-dollar goal, will help you over the long run during your retirement.
Focusing on a million dollars is a great idea, and you've done a great job reaching over $200,000 so far. But I think the best thing you can do is make sure your asset allocation is aligned so that you're not putting a lot of your investments in particularly risky stocks or other types of investments. You just want to make sure that your investment money will keep coming in as you are retired.
WALLACE: OK, David, let's have you field this next question from Tom, from Michigan. Good afternoon, Tom, what's your question?
CALLER: Yes, I was curious. I am a student in Michigan, and I only make $10,000 a year. And I was wondering how it might be possible for me to even become a half a millionaire, you know.
WALLACE: That's fair. So we're talking $10,000, not $25,000. Can Tom become at least a half a millionaire?
HINSON: Yes, I'm convinced Tom can become a half millionaire.
WALLACE: Oh, do tell.
HINSON: Yes, really, Tom, if you're making $10,000 a year, you're probably underutilizing your skills. Not to say $10,000 a year is bad, but I would suspect that you have some skills and talents that you're not utilizing that could probably generate $10,000, $20,000, $30,000 of additional income.
WALLACE: I guess he's in college, so possibly, part-time work.
HINSON: Well, it could be part-time, but he's not going to be in college forever. He's going to be in college for another, hopefully, three more, four more years. But after he leaves college, is he begins to save aggressively, just as we were saying, if he builds a plan, a very defined plan that will help him become a millionaire, he will get there. He's young enough.
WALLACE: All right, he is young enough. Lots of interest out there. Ron from Pennsylvania on the line. Good afternoon, Ron, what's your question?
CALLER: I have a home that's paid for, cash, and I have an equity loan, a small... it's $75,000. I have around 20-board on it, and the rest is sitting there. I'm 64-years-old with a lot younger wife, and what should I do... set that off or try to invest it? It's a very low interest rate of 375 equitable. That's a variable rate.
WALLACE: Russell, what's your advice there?
PEARLMAN: Well, it depends on what type of financial situation you and your wife have. I suggest since the loan is relatively low, just keep paying it off and use the money from the equity to use in other investments that probably can pay you better than the 3.75 percent a year. In fact, a 10-year treasury bill will pay you 4.2 percent a year, so right off the bat, you'd be making several basis points of profit just by that.
WALLACE: We have another call, talking about debt. How do you even go ahead and save when you're fielding a lot of debt? We have Tricia from North Carolina on the line. Tricia, good afternoon, what's your question?
CALLER: Good afternoon. I would just like to know... I'm in my 40s. Most of my paycheck goes to bills. I want to be able to secure money for the future, and what's the best way of going about doing that?
WALLACE: David, why don't you take that?
HINSON: Well, yeah, that's an issue that a lot of people are facing throughout America -- a high debt load, not necessarily a high income. The conventional wisdom would be to begin to pay down your debts. What I encourage you to do is to pay down the minimum debts, but begin to drive assets. Begin to try to put away as much as you can.
Don't focus as much on debt payment now, but rather, focus more on driving your assets, putting away money, saving and investing. And over time, as your assets grow, they will position you to actually be used as a base to pay down your debt.
WALLACE: All right, good advice.
PEARLMAN: Tricia, I just wanted to interrupt there also...
WALLACE: Go ahead.
PEARLMAN: ... is that if you have a lot of credit card debt, you want to try to at least move that credit card debt to the lowest interest rate credit card possible. So at least if you're still going to keep debt, you're not wracking up hundreds, or even thousands of dollars of interest charges, which is just pretty much money thrown out the window.
So if you look and you have a credit card that's paying, you know, a 20 percent interest rate, try to find another credit card that perhaps only pays 12 or 10 percent. You'll save yourself a lot of money every month.
WALLACE: All right, Russell, David, sit right there. Great advice -- one more segment coming up. So if you have any questions, e-mail those to us, DollarSigns@CNN.com, or call 1-800-807-2620. Two experts here to answer your questions, so write them or call us. We'll be right back.
(COMMERCIAL BREAK)
WALLACE: Welcome back to DOLLAR SIGNS. We're talking about how to make you a millionaire. Joining us here in Washington, D.C., David Hinson, and in New York City, Russell Pearlman. They're answering your questions about investing and obtaining wealth. We're going to go right back to the phones. We have Rita on the phone from Virginia. Good afternoon, Rita, what's your question?
CALLER: Hi. My question is, what advice do you have for people who did save and have had their savings wiped out by medical expenses, and now have to start all over again? I'm 59, but I know this question also affects younger people, and people older than I am.
WALLACE: Good question, Rita. David...
HINSON: Yeah, that's an excellent question, Rita. When you've had your savings wiped out, unfortunately, there's not much you can really do but begin to rebuild. The good news is that you're still young enough to where rebuilding is possible. You're going to have a long life expectancy. Hopefully, you're in good physical condition and you're in good health now, and that you'll have an opportunity to begin to rebuild.
But you have to start now, really, really looking at rebuilding. Focus on managing your budget, managing your expenses down as best you can. Put away as much as you can as quickly as you can, and simply just rebuild. It's a simple solution.
WALLACE: OK, Russell, why don't we have you field this call from Cindy in Kentucky. Good afternoon, Cindy, what's your question?
CALLER: Yes, I am 29-years-old. My husband and I just filed bankruptcy, and we have two small children. Is it smart to invest in bonds -- or I don't know what I should be investing my money in?
WALLACE: Russell...
PEARLMAN: Well, I think you're still young enough that you can have a healthy mix of both stocks and bonds, at this point. It also depends on how fast you need that money. If you don't think you're going to need that money until your small children are ready for college, I think you can be a little more aggressive in your investment style.
Again, your small children... you might not need it for another 15 years, until they're ready for college or ready to go out on their own. I think it's still OK to invest in stocks and bonds, because -- stocks and bonds -- because your time horizon is long enough that you can smooth out any bumps in the road with investments.
WALLACE: And Russell, just generally, dealing with bankruptcy, I mean what do you do if you filed for bankruptcy to kind of move ahead and start saving?
PEARLMAN: Well, I mean, you want to clean your financial house in order as quickly as possible, pay down those debts. Obviously, that bankruptcy mark is going to stay with you for a while on your credit reports.
But again, it just gets down to once you start accumulating money through a paycheck, you just have to force yourself to put some money aside, whether you ask your company to do it through a 401K program, or whether you just say you take home a thousand dollars... you decide, look, I'm going to take $100 out of my paycheck and put it in a separate account, and that's going to be my investment in savings.
That's the way to go, just getting into the discipline and the mindset that, you know what, the more you do now, the easier it's going to be 10, 20 years from now.
WALLACE: OK, let's take what might be one of our last calls. Vivian from New York. Vivian, what's your question?
CALLER: Mine is a little bit of a different situation. I'm quite young. I'm in my early 30s. I just sold my business, and I have a nice nest egg at the moment. I haven't faced a lot of challenges that I hoped to face, which is raising children, buying a home. And I wanted to know how I can deal with this money that I have now so that I can be secure through all those challenges that I have to face in the future.
WALLACE: David...
HINSON: Yes, excellent question. The real key here is planning. There's nothing more important right now for you to do than to sit down and think about all of the things that are important to you, all of the desires that you have relative to funding your kids' education, relative to purchasing a home, relative to putting away money, and lay them out in a plan.
And I would encourage you, actually, to go and hire a financial advisor to assist you in building the type of plan that you need to achieve all of your goals.
WALLACE: We just have under a minute left. Let me ask both of you, Russell first, then David, how do you sacrifice, or what sacrifices should you make? Russell, should you kind of do a budget and look for areas where you're spending money, where you don't need to spend money every month?
PEARLMAN: Yeah, you should look for redundancies in your own budget. If you find that you have two or three cell phones, and you still have a landline phone, and you find you don't use that landline phone, drop it. I mean, that will save, you know, $50, $60 a month, and that can go towards either paying off other debts or retirement savings. You know, find redundancies. Before you start like dropping the $5 mocha lattes, look for things that you can actually cut that you're paying twice for.
WALLACE: David, last word.
HINSON: Yeah, I think more important than trying to cut your costs is actually to increase your income. I think it's important to commit to being wealthy, commit to being a millionaire, have the mindset of a millionaire. And if you do that, then you'll begin to do the things to generate income, and then put that income away and form a savings, so then you can become a millionaire.
WALLACE: Gentlemen, great advice. David Hinson with the Wealth Management Network and Russell Pearlman, senior writer for Smart Money Magazine, thanks for some excellent advice today. We appreciate it.
HINSON: Thank you.
PEARLMAN: Thank you.
WALLACE: And that is all the time we have for this edition of DOLLAR SIGNS, but stay with CNN. Up next on "PEOPLE IN THE NEWS," a look at the life of Osama bin Laden. Then at 6 PM Eastern, on "CNN LIVE SATURDAY," remembering the victims of September 11th. Fredricka Whitfield will talk with one mother whose son was onboard flight 93.
And at 7 PM Eastern, the "CAPITAL GANG" takes a look at questions surrounding President Bush's service in the Texas Air National Guard. I'll be back after a quick break with today's top stories.
(COMMERCIAL BREAK)
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Aired September 11, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KELLY WALLACE, CNN WALLACE: And welcome now to "Dollar Signs," where we help you make the most of your money. Do you want to become a millionaire? Who doesn't? My guests today are going to tell you how, even if you make just $25,000 a year. David Hinson is an investment expert and the founder of Wealth Management Network. He joins me here in Washington. And Russell Pearlman is a senior writer for Smart Money Magazine in New York. Gentlemen, thanks so much for being here today.
DAVID HINSON, WEALTH MANAGEMENT NETWORK: Thank you for having me.
WALLACE: David, I want to begin with you. You say if you want to be a millionaire, you kind of have to focus on being a millionaire. What does that mean?
HINSON: That's right. You have to focus, and you have to focus on it as if it's one of the most important goals of your life. It has to be just as important as anything else that you're trying to achieve. So the key in creating wealth and the key in becoming a millionaire is consistency, discipline, and planning. And if you're consistent, and you're disciplined, and you plan, you actually can achieve that status.
WALLACE: Russell, some skeptics out there might be saying, "Oh, come on, $25,000 a year. How can I become a millionaire with that kind of salary?"
RUSSELL PEARLMAN, SMART MONEY MAGAZINE: No, I absolutely agree with David. You have to put yourself into the right mindset, that it is doable. It's doable on $25,000 salary. It's doable on higher salaries like that. You just need to get into the discipline of savings.
I did some research this week, and if you were to save 9 percent of your salary -- so $200 a month from $25,000 a year -- and you save that, you invest it at what the average return of the stock market has been over the past 75 years, if you start at 22, you will have a million dollars when you retire at 67.
WALLACE: Well, let's first now, go to the phones. We have Greg from South Carolina. I think Greg is on the line, asking about if real estate is still a good investment. Good afternoon, Greg.
CALLER: Good afternoon.
WALLACE: What's your question? GREG: Yes, basically, I wanted to find out if real estate, at this time in America, is still a sensible way of investing your money, as opposed to just taking your cash that you make each day and just putting it into an investment savings and hoping to get a decent return.
WALLACE: David, real estate still a good way to go?
HINSON: Yeah, that's a very good question. Real estate is a very, very important part of your asset allocation when you start thinking about creating wealth. The numbers that I ran show that if you simply begin by saving so you can buy a home -- buy a home as soon as you possibly can. Over the 40-year life cycle, the 40-year span that you'll actually be working, you actually can turn that home into an investment, because you'll continue to pay down the mortgage, you get tax advantages from the home.
But also, you get very good appreciation. And even at the historic appreciation rate of real estate, which is about 4 percent, over time, over that 40-year working period, you'll end up with a nice chunk of money.
WALLACE: We have another call, and let's give this one to Russell. We have Dean from Tampa. Good afternoon, Dean, what's your question?
CALLER: Yes, good afternoon, folks. I just recently completed the Peter Lowe (ph) Executive Coaching Program, with the help of my coach Duane Kirby (ph). I'd like some advice on a 37-year-old man who has no family, no bank account, makes $25,000 a year, but definitely wants to invest not only for myself, but for the family I hope for the future.
WALLACE: All right, so some personal tips here, Russell. What's the advice?
PEARLMAN: Well, I think you just have to, again, you have to get into the discipline of saving, whether it's forced savings out of your paycheck or taking something out of your checking account each week and moving it to savings. It's just getting into the mindset of saving as much, as early as possible.
Because through the magic of compounding, the more you save early, you know, will make up a huge difference 10, 20, 30 years down the line. As I said, it can be as low as $200 a month, and you can wrack up cash very fast, regardless of your marital status, regardless of how many children you have, and frankly, regardless of the income you make.
WALLACE: How important, David, is it to get started early? I remember having a boss in my early twenties who said, "Save, save, save." Well, I'm not in my early 20s anymore, but how important is it, or was it, to start saving back when I was in my early 20s versus now?
HINSON: Yeah, if you can save early, absolutely, it's the best way to go. It makes it easier over time, because of the magic of compounding. What's interesting is that wealth creation is really a function of psychology. How do you think about money? How do you think about wealth? There is a difference between wealth and money. And so saving early and starting early is critical.
WALLACE: All right, David Hinson, Russell Pearlman, sit right there. We have a lot more. Again, you can get involved too. You can e-mail your questions to us at DollarSigns@CNN.com, or call us at 1- 800-807-2620. Send in those e-mails, get on the phone. We'll be right back.
(COMMERCIAL BREAK)
WALLACE: And welcome back to DOLLAR SIGNS. Our topic today should be a popular one: How can you become a millionaire on a salary of $25,000 a year? Joining us today, investment expert David Hinson here in Washington, D.C., and Smart Money Magazine's Russell Pearlman. They're here giving us lots of good advice.
Let's first go to the phones. We have Tina from Mississippi with a question. I understand, Tina, you're nearing retirement. Good afternoon.
CALLER: Yes. Hello?
WALLACE: Hello. What's your question?
TINA: Well, I'm 54, and I have about $200,000 saved in CDs, and tax shelters, and annuities. And I want to know, how can I become a millionaire by the time I retire at 67 or 68?
WALLACE: All right, Russell, how can Tina become a millionaire?
PEARLMAN: Well, in your case, Tina, I think the million-dollar goal is noble. But I think what you want to do is, since you probably only have 10 to 12 years of working life, you want to make sure you have enough for, hopefully, the 30, 40, 50 years of happy retirement that you will have.
So you want to make sure, instead of taking, you know, particularly risky investments, you'd probably want to stay into a lot of fixed income and a lot of low risk stock investments, because that, more than the million-dollar goal, will help you over the long run during your retirement.
Focusing on a million dollars is a great idea, and you've done a great job reaching over $200,000 so far. But I think the best thing you can do is make sure your asset allocation is aligned so that you're not putting a lot of your investments in particularly risky stocks or other types of investments. You just want to make sure that your investment money will keep coming in as you are retired.
WALLACE: OK, David, let's have you field this next question from Tom, from Michigan. Good afternoon, Tom, what's your question?
CALLER: Yes, I was curious. I am a student in Michigan, and I only make $10,000 a year. And I was wondering how it might be possible for me to even become a half a millionaire, you know.
WALLACE: That's fair. So we're talking $10,000, not $25,000. Can Tom become at least a half a millionaire?
HINSON: Yes, I'm convinced Tom can become a half millionaire.
WALLACE: Oh, do tell.
HINSON: Yes, really, Tom, if you're making $10,000 a year, you're probably underutilizing your skills. Not to say $10,000 a year is bad, but I would suspect that you have some skills and talents that you're not utilizing that could probably generate $10,000, $20,000, $30,000 of additional income.
WALLACE: I guess he's in college, so possibly, part-time work.
HINSON: Well, it could be part-time, but he's not going to be in college forever. He's going to be in college for another, hopefully, three more, four more years. But after he leaves college, is he begins to save aggressively, just as we were saying, if he builds a plan, a very defined plan that will help him become a millionaire, he will get there. He's young enough.
WALLACE: All right, he is young enough. Lots of interest out there. Ron from Pennsylvania on the line. Good afternoon, Ron, what's your question?
CALLER: I have a home that's paid for, cash, and I have an equity loan, a small... it's $75,000. I have around 20-board on it, and the rest is sitting there. I'm 64-years-old with a lot younger wife, and what should I do... set that off or try to invest it? It's a very low interest rate of 375 equitable. That's a variable rate.
WALLACE: Russell, what's your advice there?
PEARLMAN: Well, it depends on what type of financial situation you and your wife have. I suggest since the loan is relatively low, just keep paying it off and use the money from the equity to use in other investments that probably can pay you better than the 3.75 percent a year. In fact, a 10-year treasury bill will pay you 4.2 percent a year, so right off the bat, you'd be making several basis points of profit just by that.
WALLACE: We have another call, talking about debt. How do you even go ahead and save when you're fielding a lot of debt? We have Tricia from North Carolina on the line. Tricia, good afternoon, what's your question?
CALLER: Good afternoon. I would just like to know... I'm in my 40s. Most of my paycheck goes to bills. I want to be able to secure money for the future, and what's the best way of going about doing that?
WALLACE: David, why don't you take that?
HINSON: Well, yeah, that's an issue that a lot of people are facing throughout America -- a high debt load, not necessarily a high income. The conventional wisdom would be to begin to pay down your debts. What I encourage you to do is to pay down the minimum debts, but begin to drive assets. Begin to try to put away as much as you can.
Don't focus as much on debt payment now, but rather, focus more on driving your assets, putting away money, saving and investing. And over time, as your assets grow, they will position you to actually be used as a base to pay down your debt.
WALLACE: All right, good advice.
PEARLMAN: Tricia, I just wanted to interrupt there also...
WALLACE: Go ahead.
PEARLMAN: ... is that if you have a lot of credit card debt, you want to try to at least move that credit card debt to the lowest interest rate credit card possible. So at least if you're still going to keep debt, you're not wracking up hundreds, or even thousands of dollars of interest charges, which is just pretty much money thrown out the window.
So if you look and you have a credit card that's paying, you know, a 20 percent interest rate, try to find another credit card that perhaps only pays 12 or 10 percent. You'll save yourself a lot of money every month.
WALLACE: All right, Russell, David, sit right there. Great advice -- one more segment coming up. So if you have any questions, e-mail those to us, DollarSigns@CNN.com, or call 1-800-807-2620. Two experts here to answer your questions, so write them or call us. We'll be right back.
(COMMERCIAL BREAK)
WALLACE: Welcome back to DOLLAR SIGNS. We're talking about how to make you a millionaire. Joining us here in Washington, D.C., David Hinson, and in New York City, Russell Pearlman. They're answering your questions about investing and obtaining wealth. We're going to go right back to the phones. We have Rita on the phone from Virginia. Good afternoon, Rita, what's your question?
CALLER: Hi. My question is, what advice do you have for people who did save and have had their savings wiped out by medical expenses, and now have to start all over again? I'm 59, but I know this question also affects younger people, and people older than I am.
WALLACE: Good question, Rita. David...
HINSON: Yeah, that's an excellent question, Rita. When you've had your savings wiped out, unfortunately, there's not much you can really do but begin to rebuild. The good news is that you're still young enough to where rebuilding is possible. You're going to have a long life expectancy. Hopefully, you're in good physical condition and you're in good health now, and that you'll have an opportunity to begin to rebuild.
But you have to start now, really, really looking at rebuilding. Focus on managing your budget, managing your expenses down as best you can. Put away as much as you can as quickly as you can, and simply just rebuild. It's a simple solution.
WALLACE: OK, Russell, why don't we have you field this call from Cindy in Kentucky. Good afternoon, Cindy, what's your question?
CALLER: Yes, I am 29-years-old. My husband and I just filed bankruptcy, and we have two small children. Is it smart to invest in bonds -- or I don't know what I should be investing my money in?
WALLACE: Russell...
PEARLMAN: Well, I think you're still young enough that you can have a healthy mix of both stocks and bonds, at this point. It also depends on how fast you need that money. If you don't think you're going to need that money until your small children are ready for college, I think you can be a little more aggressive in your investment style.
Again, your small children... you might not need it for another 15 years, until they're ready for college or ready to go out on their own. I think it's still OK to invest in stocks and bonds, because -- stocks and bonds -- because your time horizon is long enough that you can smooth out any bumps in the road with investments.
WALLACE: And Russell, just generally, dealing with bankruptcy, I mean what do you do if you filed for bankruptcy to kind of move ahead and start saving?
PEARLMAN: Well, I mean, you want to clean your financial house in order as quickly as possible, pay down those debts. Obviously, that bankruptcy mark is going to stay with you for a while on your credit reports.
But again, it just gets down to once you start accumulating money through a paycheck, you just have to force yourself to put some money aside, whether you ask your company to do it through a 401K program, or whether you just say you take home a thousand dollars... you decide, look, I'm going to take $100 out of my paycheck and put it in a separate account, and that's going to be my investment in savings.
That's the way to go, just getting into the discipline and the mindset that, you know what, the more you do now, the easier it's going to be 10, 20 years from now.
WALLACE: OK, let's take what might be one of our last calls. Vivian from New York. Vivian, what's your question?
CALLER: Mine is a little bit of a different situation. I'm quite young. I'm in my early 30s. I just sold my business, and I have a nice nest egg at the moment. I haven't faced a lot of challenges that I hoped to face, which is raising children, buying a home. And I wanted to know how I can deal with this money that I have now so that I can be secure through all those challenges that I have to face in the future.
WALLACE: David...
HINSON: Yes, excellent question. The real key here is planning. There's nothing more important right now for you to do than to sit down and think about all of the things that are important to you, all of the desires that you have relative to funding your kids' education, relative to purchasing a home, relative to putting away money, and lay them out in a plan.
And I would encourage you, actually, to go and hire a financial advisor to assist you in building the type of plan that you need to achieve all of your goals.
WALLACE: We just have under a minute left. Let me ask both of you, Russell first, then David, how do you sacrifice, or what sacrifices should you make? Russell, should you kind of do a budget and look for areas where you're spending money, where you don't need to spend money every month?
PEARLMAN: Yeah, you should look for redundancies in your own budget. If you find that you have two or three cell phones, and you still have a landline phone, and you find you don't use that landline phone, drop it. I mean, that will save, you know, $50, $60 a month, and that can go towards either paying off other debts or retirement savings. You know, find redundancies. Before you start like dropping the $5 mocha lattes, look for things that you can actually cut that you're paying twice for.
WALLACE: David, last word.
HINSON: Yeah, I think more important than trying to cut your costs is actually to increase your income. I think it's important to commit to being wealthy, commit to being a millionaire, have the mindset of a millionaire. And if you do that, then you'll begin to do the things to generate income, and then put that income away and form a savings, so then you can become a millionaire.
WALLACE: Gentlemen, great advice. David Hinson with the Wealth Management Network and Russell Pearlman, senior writer for Smart Money Magazine, thanks for some excellent advice today. We appreciate it.
HINSON: Thank you.
PEARLMAN: Thank you.
WALLACE: And that is all the time we have for this edition of DOLLAR SIGNS, but stay with CNN. Up next on "PEOPLE IN THE NEWS," a look at the life of Osama bin Laden. Then at 6 PM Eastern, on "CNN LIVE SATURDAY," remembering the victims of September 11th. Fredricka Whitfield will talk with one mother whose son was onboard flight 93.
And at 7 PM Eastern, the "CAPITAL GANG" takes a look at questions surrounding President Bush's service in the Texas Air National Guard. I'll be back after a quick break with today's top stories.
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