How can you get more green in your pocket-and stay upbeat despite the gloomy economic news? We sat down with Carmen Wong Ulrich, the host of CNBC's On the Money for some talk therapy.
How did you become a money expert?
My dad was very into personal finance—I had my first checkbook when I was 12. Then, I ended up at Money magazine early in my career. That's when I realized that my psychology degree gave me an advantage. After all, finance isn't just about numbers. It's about getting people to understand how important managing money is to their lives.
How does money affect a person's health?
When you're stressed out about money you eat more, you sleep less, you exercise less. It also comes out in your relationships—it affects everyone who depends on you. But if you can take control over it, you can change your health and your quality of life.
With the economy the way it is, how can we avoid feeling stuck and continue to make progress toward our goals?
In this climate, what's going to move you forward is to adapt and adjust. You've got to see what has to change in your own personal economy so that you can achieve your dreams. It may be living a bit below your means. It may mean changing your idea of retirement. For instance, I have a friend in his 50s who ran his own company, sold it and became a high school art teacher. He's a lot happier than, say, my dad, a retiree who hasn't found a second career.
How can the average person get control over his finances?
For starters, collect receipts for what you spend every day in an envelope. At the end of a month, pull together the receipts, your bills, your ATM receipts, every place your dollar goes. Sit down and tally them up. Light bulbs will go off in your head about what you can change. Every time you open your wallet or click online to buy something, you know the ramifications. It can be a really powerful exercise.
Do you have any tips for cutting health care expenses?
For prescription medicines, always ask your doctor about generics. If it's coming out of your pocket, shop around for prescription drugs just like you would for any other big-ticket item. Retailers like Costco or Wal-Mart have very competitive prices. There are also websites like drx.com and pharmacychecker.com where you can comparison shop. Also, do not pay for hospital costs with a credit card—once you plop that card down, you owe. Tell them to bill you, then pore over the bill, and ask what each cost represents. Or negotiate it down. For example, you're charged $20 for a box of tissues and you can say "No, I'll give you $3." One place not to scrimp: health insurance. Try not to go a day without it—it's too much of a risk. Become a member of a union or professional group to lower your costs, or go to your state insurance department's website to find out about high-risk insurance pools for people with pre-existing conditions. The last option is high-deductible insurance. You'll pay all the costs up to $5,000 or $10,000, but at least if there's an accident you won't go bankrupt.
Is there any good news about this economy?
Absolutely. Even in the downturn, we have the opportunity to learn about our money. We have been gorging ourselves on credit-credit cards, no-money-down home buying, adjustable rate mortgages. These things weren't investments in our financial fitness; they were instant gratification—like cheap junk food. Certain things will keep you financially fit no matter what the economy's doing. A solid 20 percent down on your home. A 30-year fixed rate mortgage. Not getting into credit card debt unless it works for you. You need good debt, like a good mortgage or student loans. Just like in health, there are things that are good for you in moderation but bad for you in large amounts. Like red wine—a glass or two is OK; a whole bottle will get you in trouble.
