What's the Best Way to Protect Your Wallet? The housing market is in shambles, oil and food prices are skyrocketing, and the U.S. dollar is slouching. But the financial choices you make can safeguard your checking account — even in tough economic times. Author and economist Julianne Malveaux offers big-picture financial advice.
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What's the Best Way to Protect Your Wallet?

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What's the Best Way to Protect Your Wallet?

What's the Best Way to Protect Your Wallet?

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Now turning to economics, the housing market is in a shambles. Oil and food prices are skyrocketing. The U.S. dollar is slumping, and stocks are on a bumpy ride. Gloomy economic news is most of what we hear these days, but the choices that you make can transform your relationship to money, even through these tough economic times. Here with some big picture advice is author and economist Julianne Malveaux. She is also the president of Bennett College. Great to have you on again.

Dr. JULIANNE MALVEAUX (President, Bennett College; Economist, Author): Good to be with you, Farai.

CHIDEYA: So before we dig into some practical methods that you can help turn around your economy, let's get a good picture of what's going on. Many experts say that we're already in a recession. Do you agree with that?

Dr. MALVEAUX: The data don't suggest that we are. But for African—Americans in particular, you know, when some people have a cold, other people have a fever. We have seen negative growth. We have seen high unemployment rates. We have seen the impact of gas prices over $100 a barrel. And so I think that whether we're in a technical recession or not, people are feeling the pinch of an economy that is not doing well.

CHIDEYA: So when you think about the fact that people have to live their lives and there's all these other big decisions that are being made on the federal level and in the business community, what should we pay most attention to as we watch the news, listen to the news, read the news? What should we be looking at? Interest rates? At, you know, government policies in terms of getting a sense of what's going on with the big picture?

I think that people should be paying attention to how all of this works for them. Of course, interest rates are important and the Fed does not have very more arrows in their quiver. When you start cutting interest rates below 3 percent, I think, certainly, gas prices, I think the whole issue of the home mortgage market, all these things are important. But in a very short run, Farai, you have to pay attention to how it matters to you. In other words, you've got people who are seeing their food prices rise by 30 percent. You've got people who's commute is 20 percent more expensive. And so the macro is very important but the micro for individuals is even more important.

CHIDEYA: Well, let's dig into that. The Washington Post reported that goods and services have gone up about 4 percent since last year. You mentioned a couple of different items, gas for commuting and food. Why are some of these going up, and how profound is it?

Dr. MALVEAUX: Well, the gas piece, you've got essentially a Middle Eastern market that's not include to produce more. Meanwhile, you have a Chinese market that's inclined to demand more. So you have more people looking for less stuff, and the prices go up. In terms of food, I think you have something quite similar. You have an import/export market, and you have things like eggs, Farai. There was a piece in the Post yesterday that talked about eggs and how eggs have gone up by 30 percent. Well, that's a kind of staple food. Bread, milk, other things that have gone up because, partially, we are exporting -partially, the supply and demand thing is unbalanced.

CHIDEYA: We're feeling the pinch. It doesn't look like prices are going down any time soon. Experts are always giving tips about how to maximize your 401K, save on travel, pay down credit cards. But what about things that are like eggs, bread, milk? How do you assess the ways that you can cut back on - not cut back on the necessities, but maybe get them at a rate that's a little bit more comfortable for you? What should you start looking at in terms of budget planning?

Dr. MALVEAUX: Those were the two words: budget planning. Look at how you're spending, what you're doing about it, what you can economize on. Look at bulk spending, places, you know, the Wal-Marts and the Costcos and - not endorsing those that at all, but places where you can certainly get bulk spending. Oftentimes, that's difficult. Go in with a neighbor. Go in with a friend -looking at just ways that you can save 50 or $100 a month, because that $100 a month is $1,200 a year.

There are lots of other big things. As you say, everyone's got tips about their 401K and other things. But the bottom line for an individual family or an individual person is how are you able to take the hit and not end up in the hole? How are you able, essentially, to juggle what's happening with your necessities to make sure that you don't end up in more debt? And we see about $17 billion worth of new debt in our society. We see credit card debt that's crazy.

The other thing I would tell people is be careful about your credit cards. Don't use them as necessities. Those are some of the kind of things that people can juggle.

CHIDEYA: Just briefly, you mention go in with someone if you're going to a big bulk retailer. Do you mean literally? Like, say, okay here is the enormous, enormous pack of toilet paper, and instead of buying the whole thing, I'm just going to go in and someone else will take half off my hands?

Dr. MALVEAUX: Absolutely. I mean, oftentimes - here's the thing that really kind of baffles me about our country. The people who need the bulk spending most are so far away from it. So you want to get the 24 rolls for some cheaper price, but you've got to spend all this money. Go in with a friend, divide it up. You take half, I take half, and we'll just split the price. So those are -I mean, it's creative. It seems fundamental and rudimentary. But it might make a difference in the long run. And that's what we're really looking at, is that if you think the economy is going to turn down, and we see that it is, how can you protect yourself?

We can have a very high-minded conversation about what's going on. And then the micro is, how does it affect you? And then when you've figured that out, you go through your budget. You look at what you're spending and you say, what can I do to make it better for me? And that's one of the things, Farai, that you can do. You can say, let's go in with a friend on this. Let's buy in bulk and split it in half, those kinds of things.

CHIDEYA: All right. Well, Dr. Malveaux, we are going to go ahead and take a break, but I know you're able to stay around with us. We're grateful for that. And just ahead, we've got more economics talk with Julianne Malveaux. And our Bloggers' Roundtable digs into the indictment of the Detroit Mayor, plus the evolution of the conversation about Obama's race speech.

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CHIDEYA: This is NPR News.

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CHIDEYA: This is NEWS AND NOTES. I'm Farai Chideya. We are talking with author and economist Julianne Malveaux about ways to make sure you get the most out of your money in these tough economic times. Welcome back.

Dr. MALVEAUX: Good to be with you.

CHIDEYA: So let's put this in the context of what a lot of urban neighborhoods look like, which is that you don't have a lot of grocery stores. You have public transportation, which can be better or worse, depending on where you live. You don't have a lot of the larger retailers with the deeper discounts that are clustered in the central cities. And if you live in a rural area, well, you know, you obviously have a long way to travel sometimes to get to some of the bigger stores. So what are ways if you don't have, for example, your own transportation, that you should think about strategizing about how you buy, what you buy, and where you buy it?

Dr. MALVEAUX: Your car-pooling, your basically being creative with neighbors, your having conversation about how people can help each other. We're in a situation right now, Farai, where - as I said - the macro looks grim, but the micro looks even grimmer. If you're someone in the situation that you described, in an inner city, not near any grocery stores, you've got to figure out how to make it work. The neighborhood mom and pop, they may mean, well but they're charging, you know, maybe 40 or 50 percent more than you might pay at a grocery store or at a bulk discount store.

So people have got to be creative. And that's the thing with this economy is that you're doing a great service to have this conversation about the creativity that people can bring to the table. We don't have to lay down and take it. In other words, you don't have to pay those extra prices. You can do things to make sure that you essentially fight recession, if that's what it is, back.

CHIDEYA: Do you think that there is - I mean, a lot of places, for example, like churches and community centers do try to bring people together and deal with economics, as well as whatever else they deal with. But do you think there needs to be more of that? Do you think there needs to be more organization so that people can find ways just to, you know, exist day to day on the bottom line?

Dr. MALVEAUX: You know, Farai, I think that cities can do more to create the kind of spaces that are economically empowering, or you get economies of scale. Why do these great bulk retailers go to suburbs where people don't need those economies, but not to inner cities where people really do? And that is a question that I always raise when I look at the ways that we organize commerce. What can we do to make it easier for people who live in inner cities to enjoy scale economies? And so we need activists, legislators who are prepared to make the case to these retail establishments that there are reasons why they should be in inner cities.

CHIDEYA: When you think about the big picture, too, of housing, it strikes me that a lot of people right now are seeing their housing costs or their housing values diminish. How is that going to shape their ability to spend on things ranging from college education for their kids to just the necessities? I mean, is this home crunch, even if you're not moving or not trying to move, going to affect overall issues in your family?

Dr. MALVEAUX: It absolutely is, and you hit me where I live when you talk about college pricing. Certainly, what's going to happen is if you see neighborhood property values go down, people are going to have less home equity to use for other things. But additionally, you'd really - this is a time when activist lawyers need to step in to make sure that no one is being taken advantage of. And we know that there are tens of thousands of people around the country who are being taken advantage of because they've got into bad deals.

And so these bad deals are going to affect all of their spending decisions into the next year, two years, three years, five years. And so, there certainly is a case to be made for consumer activism around what's happening in terms of property ownership.

CHIDEYA: Well, Dr. Malveaux, thanks so much.

Dr. MALVEAUX: Thank you, always.

CHIDEYA: That was author and economist Julianne Malveaux. She's also the president of Bennett College, and she spoke to us from our NPR studios in Washington, D.C.

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