Lemondrop

If you don't know Maria Bartiromo, you may be living under a financial rock. In 1995, she became the first journalist to report live on a daily basis from the floor of the New York Stock Exchange.

With that, she became a household name, complete with the nickname "Money Honey," notable for her looks in a heavily male-dominated field. Today, she's the anchor of CNBC's "Closing Bell" and managing editor of "Wall Street Journal Report With Maria Bartiromo," where she interviews major players in the financial and business worlds. For those of you who aren't tuning into CNBC, yes, that was her with multiple cameos in "Wall Street: Money Never Sleeps." (She's even in the trailer.)

Now, two years after the awful financial crisis of 2008 that probably has left someone close to you unemployed (or at the very least underemployed), Bartiromo decided to share the details of what really went down in her new book, "The Weekend That Changed Wall Street." She talked with Lemondrop recently between tapings to gave us the lowdown on the lessons we can learn from the mess on Wall Street, why women should never be afraid of personal finance, and why she's always rather enjoyed her nickname.

Lemondrop: Why write this book right now when you can just talk with the players on your show every day?
Maria Bartiromo: I really felt we were dealing with such an extraordinary moment in time for our economy and our financial markets. I felt fortunate to have a front row seat, since I was able to interview the insiders morning, noon and night before, during and after the crisis. Since I was so close to the story, I felt I should document it.

I really did not want to do it right after the weekend of September 15, 2008, I wanted to take a step aside and give it some perspective, which is why it just came out now. I feel good about it because I didn't only look at the weekend when Lehman Brothers declared bankruptcy, Merrill Lynch was sold, and the government took 80 percent of AIG. I came out of that weekend and looked at the following year and a half, when the change happened and took effect, whether it be empowering the new sheriff in town, giving us much more regulation, changing the perceptions of financial services and of debt.

How do you see people looking at debt and investing in general now? I found, as I read your book, that it sounded like a great mystery novel -- except that it did happen and our economy collapsed.
Well, that's what I mean that it's an extraordinary moment. You can't write this stuff. It did happen. I think there really is a different perception of debt – it's one of the biggest changes since the financial crisis. You look today and you've got people hoarding cash. We now have a 5% savings rate – and we had a negative savings rate when we were looking at boom times. You've got corporations today hoarding cash, sitting on 2 trillion dollars on their balance sheet, and they're not spending it – they want the wiggle room and to have money in reserve. People are realizing that you can't borrow forever. Across the board, as an individual and as institutions, people are trying to ensure that they have a nest egg, so they're not in the position they were during the financial crisis.


But aren't the banks not willing to lend to individuals so businesses can expand and grow?
Right now banks are being very selective in who they're lending to -- they don't want to be left on the hook for the loan. They're going with borrowers they know, who will pay back in time with interest. It's definitely tougher today to get a loan. Another reason that banks and businesses are sitting on cash is because of uncertainties because of policies. 2011 is still murky in terms of what kind of a year we will see. People are worried about higher taxes, policies in financial regulation reform, and they're looking at higher health care expenses so they don't want to put extra heads on the payroll because of these uncertainties.

With our 24-hour news cycle, why couldn't we predict this?
It's difficult to recognize a bubble when you're in it. We're an optimistic society. We saw home prices rising, and thought they'd continue to go higher. In 2006, there was no justifiable reason the prices were soaring so high, when you look back. It was just a mania. The regulators and others in Washington said 'this is the American dream to own a home. Let's make it as easy as possible.' The lenders said 'you don't need to prove that you have a job. We're going to make it as easy as possible.' The reporters were watching the markets go higher, so why wouldn't they continue to do so?

And then you have the actual individuals who said they didn't have a job and didn't have the wherewithal to make all the payments, but they did it anyway. You can point fingers all around, but at the end of the day, we were in an optimistic society, and many people missed the cracks in the ceiling. They were visible to some hedge fund managers and short-sellers, but you could go back to various bubbles and have the same mentality. In the dot com boom, anything with a dot com on it soared. That's one lesson we can all walk away with – maybe I should be more of a contrarian. Back to fundamentals – if it looks too good to be true, it probably is. These are tools to help us when the next bubble comes along.

Short of keeping all of our money in our mattresses, how do we normal people move on? I hear people saying they need to save, but they're afraid to invest. How do we move forward?
I am a professional woman and always looking at my own financial life. I have girlfriends who come to me and say "great shoes, love the hair, but I have no idea what you're talking about." They write off financial management as if it doesn't matter, and that is the worst thing to do. If you look at these matters and don't understand it, so you say you don't want to be involved in it, you're doing yourself a big disservice. You need to understand that this stuff isn't brain surgery – I didn't come from a financial or business background with my family. I learned it and anybody else can.

The most important thing to remember when dealing with money is that you have to pay yourself first. You have to have a nest egg and save money. This is the biggest mistake most people make with their money – they forget that retirement matters and they live paycheck to paycheck. I don't care if you're putting away $20, $100, or $1,000, but every two weeks, every pay period you should be putting something away, because you will need it. Then you put your money into buckets – maybe the first is the wedding you want to give on your daughter someday, maybe one is the country home you've always dreamt about, and the third is just mad money for a treat. This has nothing to do with retirement – retirement money isn't to be touched. But savings is one of the easiest ways to get your arms around your own financial life.

You have the time now to have a plan for the long term. You can start saving a little money and over time it will become a much bigger chunk than you thought.

It's important to learn the lessons we've all suffered from the financial crisis and that is "debt is bad." The only debt I recommend is a mortgage. That is IT. You should not be carrying high credit bills – you will never get out of debt if that's the case. Do not spend what you don't need. I follow this rule very strongly. I never had a credit card – only my corporate card and a debit card. I recently got an American Express because you pay it all when the bill comes. Credit cards make everything you buy more expensive with those interest rates.

And investing?
Young people have got to be investing. The best asset class over the long term will be stocks. You're buying into corporations that have exposure all around the world, which over time, give the best returns. You should not be looking at investing overnight. ETFs (exchange traded funds), which are like mutual funds, but traded on exchanges, are a good way to get exposure to the stock market in a diversified and transparent way. It's different than mutual funds, where every time your broker makes a move, you get charged.

How do people know who to trust, really? For all the financial advice out there, it's hard to know who to go to for help when there's so much info out there.
Start with a large bank with a franchise name and operations all over the world, and a balance sheet with high capital. Like the JP Morgans, Bank of Americas, Citigroup. I recommend savings accounts, debit cards through them, and making sure you have a stock brokerage account. I recommend discount brokerages, like a Schwab or a Fidelity and TD Ameritrade.

With the new year approaching, what do you think the future holds for our market?
2011 will be a tough period for the economy. Business managers are still uncertain about what their businesses will look like. Unemployment will still be an issue for some time to come. With the new congress, we have an opportunity to have a more balanced government. Perhaps we won't see the anti-business rhetoric, or too many expensive projects getting through. People are very concerned about health care. Companies feel that its too expensive. That did put a bit of a dent in some business managers plans in terms of creating new jobs. It's an issue we're still dealing with. I think the markets are happy with the change in congress, they're rallying. But it's all about fundamentals – and the fundamentals are still fragile. I would not be surprised to see some pullback.

I've always wondered what you thought of your nickname, "Money Honey." What did it take to get past that and be seen as a serious figure in the broadcasting world?
I think it's very simple. Hard work and understanding your subject matter. I never had a problem with not being taken seriously. I've always felt that my viewers know who I am and expect a certain tone from me with interviews. The Money Honey thing never bothered me. In fact, I've always been humbled and flattered by it. Of course, no one's calling me up and saying, "Hello, Money Honey?" It's something the tabloids came up with so I just let it roll off my back. I think the people I'm speaking with -- business people or those with an economic-minded mentality -- they're expecting me to interview the top people in business and heads of state and ask them the questions that need to be asked.

What advice would you give to young women trying to make their own names in this economy, sans tabloids?
For a young person coming up in the world, it's very simple. First, don't make it difficult, just work hard, since there are no short cuts. Second, love what you do. You have to love what you do in order to work hard. Don't take a job because you think it'll make you a lot of money --take a job because you absolutely love going to work every day. Third, the only thing we have in our life is your reputation -- so protect it. Do the right thing -- don't try to do the right thing, just do the right thing. That's what has driven me.


Stephanie Jo Klein is a freelance writer who contributes to Lemondrop and Shape. She does not hide money under her mattress, but does have a Roth IRA that is finally back to its pre-crash levels and she hopes it keeps going upwards.