Why Losing Weight Is Both a Blessing and a Curse

There are very few people who aren't happy to discover they've lost a few pounds, but when you're on a budget, this lost weight can bring mixed feelings. On one hand, losing some weight you'd been wanting to shed can be a great relief, but on the other hand, when your clothes no longer fit, you're faced with the expensive proposition of having to buy new ones.

Even if you only bought the bare minimum of clothes to get by until you saw if they weight would stay off or if you'd lose even more weight (a practice I recommend), just to buy a couple of pairs of pants and a couple of shirts to wear to work can easily cost $100 or more (unless you're one of those gifted people who can actually find cool clothes at Goodwill--I'm not). To replace an entire wardrobe ranging from PJ's to formalwear can cost a couple thousand dollars, even on a budget. Sure, you can get by for a while with baggy clothes, but wearing clothes that are too big for you can make you feel unattractive and keep you from making the best impression on the people around you in certain situations. They can also make you feel a little too comfortable with your new weight, making it easy to start putting the pounds back on. I've found that quickly buying new clothes that fit my new weight is a good way to help keep lost weight off, because I'll notice right away if I start gaining it back.

A few months ago, I bought several pairs of new pants after realizing that my entire pants wardrobe consisted of three pairs of jeans, one of which was days away from developing significant holes. No sooner had I bought four pairs of dress pants and two pairs of jeans than I unexpectedly lost just enough weight to make all my new pants too big. Fortunately, I had enough Gap coupons saved up to get one new pair of jeans for $30, and I stumbled across a killer sale to get another pair for $10. The dress pants, though, will have to wait. Most of my sweaters also became too big, but I was able to get two new ones using Christmas gift cards. My goal is to spend no more than $400 on clothes this year, a goal I think is pretty reasonable since my wardrobe already contains everything I really need, and I goal I think is necessary because I like to buy new clothes.

Even if you've managed to avoid spending money on weight loss programs, diet pills, and gym memberships, weight loss can still end up costing you money! There isn't really any ideal solution to this problem, so you'll just have to decide what works best for you.

Photo by wader

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Ten Ways Working More Can Cost You More

You've probably heard before that it doesn't always make sense for both adults in a household to work because the second spouse's income is all taxed at the marginal rate. When childcare costs are factored in, there can be little-to-no financial motivation for both parents to work. But did you know that taking a full-time job instead of a part-time job, or taking a higher paying full-time job instead of a lower paying one, can often be more expensive than you realize, even if you're single and childless? Here are some ways that working more can actually wind up costing you more.

Overtime. Most full-time employees are not paid for overtime because they are salaried, and higher salaries often come with the expectation of frequent overtime work. Recent college graduates working at large consulting firms might work so many hours that what looked like a good salary when they signed up ends up being comparable to minimum wage when you divide that salary by the insane number of hours worked. By contrast, when you work part-time or get paid hourly for your full-time work, your employer will be very reluctant to keep you around for more than eight hours in a day lest they have to pay you time and a half. Being paid hourly means that your free time truly belongs to you, and that when it doesn't, you're compensated for the inconvenience.

Taxes. A common myth is that your take home pay can actually go down when you get a raise that bumps you into a higher tax bracket; however, this is not true. Because we have a marginal tax system, your first several thousand dollars of income is not taxed at all, your next several thousand dollars are taxed at 10%, your next several thousand dollars are taxed at 15%, and so on. That means that if you get a pay raise that bumps you into the next tax bracket, only a small amount of your income, not all of your income, will be taxed at the highest rate. So while moving into a higher marginal tax bracket does not put you at risk for a lower overall income, it does mean that you get to keep less of each additional dollar you make. At some point, the extra money may not be worth it to you. When considering getting a second job or changing jobs to increase your income, don't look at the gross pay you are offered, but rather at what you will actually be taking home For most people reading this article, that will be 75% of the gross pay if you live in a state with no state income tax, and 75% plus your marginal state tax rate if your state does have an income tax. Suddenly, that extra $5,000 a year is only an extra $3,750 at most. It depends on your individual circumstances, of course, but the amount of work you'll have to do for that extra, more heavily taxed money will not always be worth it. The more money you make, the higher your marginal tax, and the greater the disincentive to do more work.

Plane tickets. When you have a traditional Monday through Friday 9-5 schedule, it's often impossible to get the best deals on plane fare. The demand for plane tickets created by all the people who want to get out of town on any given Friday night and return on Sunday night often means you'll automatically pay more for tickets. To add insult to injury, if your job expects you to work frequent overtime (for free, because you are salaried), you may find it difficult to ever plan a trip far enough in advance to get a good deal. Some may argue that weekday plane tickets are priced higher for the business traveler, and this is sometimes true, but business travelers often buy their tickets at the last minute to accommodate their ever-changing schedules, while vacationers plan ahead and secure the lower fares that are specifically targeted towards them. Your lack of flexibility and inability to travel on weekdays really is costing you a significant amount of money if you fly a lot. You'll also find that it is almost impossible to use your frequent flyer miles when you want to use them for as long as you're on the 9-5 schedule.

Other travel costs. Hotels and all the other costs associated with traveling are more expensive when demand is high, and everyone who works a typical schedule tends to get the same holidays off, which means that traveling during Thanksgiving, Memorial Day, and other holidays will always be overpriced. Not only do you pay more, but you'll often have a less relaxing trip due to the crowds.

Happy Hours. I've never understood the purpose of happy hours. Who are they designed for? Aren't they supposed to be for those of us who are stressed out from wearing uncomfortable clothes, conforming to corporate etiquette, and bending over backwards for our bosses all day? But it seems that happy hours are always at times that you just can't make unless the bar is located on the same street as your office (and it's not). Even then, you might only mange to order one drink before the clock strikes 6:00 or 7:00. Earning a salary means you'll tend to pay full price for drinks and food when you go out.

Matinee shows. Those who work from 9-5 won't ever catch a matinee movie on a weekday without playing hooky. (Of course, movies are so expensive these days that you're better off buying a subscription to Netflix and watching movies at home on your own schedule.)

Lunch with co-workers. Sometimes it seems like it's impossible to be a real part of the office crew if you bring your own lunch. In order to get to know people outside of the office, it often becomes necessary to go out for lunch (which easily costs $10 these days) or go out for drinks after work.

Office gift funds. I suppose it technically isn't mandatory to contribute to the office gift fund for an upcoming co-worker's birthday or to participate in Secret Santa exchanges during the holidays, but we all know that in order to be a "team player" you'll have to fork over money for these sorts of things. Whatever happened to the good old days of elementary school where you brought your own cupcakes for your birthday?

Work attire. Work clothes don't have to be expensive, but no matter how good of a bargain you get, you're still spending money that you would undoubtedly be keeping in your pockets if your job didn't require you to leave the house.

Commuting. For most people, owning and operating a car daily is a lot more expensive than they realize in both the long and short term. Driving to and from work can also be a major time leech, especially if you regularly have to sit in traffic. While you may be able to decrease your commute costs drastically by using public transportation or carpooling (does anyone carpool anymore?), commuting is probably not your idea of an enjoyable or relaxing time no matter what. Even if you're listening to an audiobook, wouldn't you rather be lying in your bed or going for a walk while you listen to it instead of crammed into a smelly subway car?

There are many factors to consider when choosing one job over another, but particularly if you're the type of person who just wants to make enough money to live comfortably and have plenty of time left for the other important things in your life, you won't always come out ahead by taking the highest paying job you can find (especially if you let your expenses increase each time your income increases). When I first graduated from college, I used this reasoning to take a lower paying restaurant job that was half a mile from my apartment instead of taking a higher paying office job that I would have had to commute to. Because I did not have to buy a car, pay for insurance, buy gas, get oil changes, repair my car, buy nice work clothes, or spend much money on groceries (at least half of my meals were either subsidized by or free from the restaurant), I was able to have a job I loved, take days off when I needed them, not waste any time commuting, and get by on a little over minimum wage while still putting $275 a month into my savings account (and no, I was not on any kind of public assistance).

Holding down a full-time salaried job from 9-5 (which, of course, is really 8-5, 8:30-5:30, 9-6, or some other variation thereof) costs more money and time than the average person realizes. Whether you're an aspiring stay-at-home parent or you're just perpetually exhausted by the daily grind, know that you may be able to scale back your job while reaping even more benefits than you had already considered.

Photo by Sies van Gijtenbeek

Why I Rejected Your Resume

I recently reviewed about 250 resumes for a job I posted online. I was horrified by most of the responses I received. If you avoid the pitfalls I describe below (and they're very easy to avoid), you'll easily set yourself apart from most job applicants out there and put yourself at the top of any potential employer's list.

1. You Capitalized Practically Every Word.
2. I asked you to name your attached file a certain way, and you didn't do it.
3. I asked you to include a cover letter, and you only sent your resume.
4. You put that stupid "Objective" section at the top of your resume because some resume template you downloaded from the internet made you think that was a good idea. I already know what your objective is. You want to get paid.
5. You not only included an "objective" section, you wrote that your objective was "to obtain a position that utilizes my skills." Was that really the best you could come up with?
6. You noted that you type 50 words per minute. Is that supposed to impress me? At that speed, you're basically telling me that you know how to use a keyboard. In 2008, I should hope so!
7. You misspelled your former employer's name.
8. You misspelled your own name.
9. You wrote that you have references available upon request. (Okay, I didn't actually reject your resume for this, it just annoyed me.)
10. You don't know how to use a comma.
11. You don't know how to use a dash.
13. You addressed your cover letter, "Dear Sir," when my job posting did not indicate my gender. Unfortunately for you, I am not a sir.
14. You don't know how to use an apostrophe.
15. You don't know the difference between "it's" and "its."
16. Instead of using your real name as the name people see when they receive an email from you, you used "Bridgette X." What are you, a stripper?
17. You couldn't be bothered to create a professional-looking email address to send out resumes, preferring to use your "cheekymonkey669" screen name.
18. You are "detail orented."
19. You used a bunch of cliched terms to describe yourself like dynamic, driven, motivated, self-starter, team player, and detail-oriented.
20. Your idea of a cover letter is one paragraph of regurgitated job application nonsense in the body of an email.
21. You don't seem to know what job you are applying for.
22. You appear to be grossly under-qualified for the position, and your cover letter makes no mention of how you intend to compensate for this.
23. You are overqualified.
24. You clearly have a solid grasp of grammar, punctuation, and spelling, but you did not bother to proofread your resume and cover letter. If you don't care enough to make your resume perfect, what kind of work will you do for me?
25. You applied for a professional job as if you were filling out a form application for the Gap.
26. None of the sentences in your cover letter have a subject.
27. You think that "oversee" is two words.
28. You wrote about the job you are still at in the past tense.
29. You are clearly not interested in the position being offered, but you've sent me your resume anyway to make yourself feel better about how many jobs you've tried to apply for.
30. You didn't put a comma after "sincerely." How are you going to write professional letters to my clients?
31. You don't live anywhere near my office and didn't mention anything about relocation in your cover letter.
32. The verb tenses in your resume are all over the place: "handling cash accounts, meets customer expectations, provided excellent customer service."
33. Your email says, "Please see attach." It's "attached" or "attachment," genius.
34. You want me to pay you $218,000 per year plus a performance bonus.
35. Your resume is seven pages long.
36. You included a photo with your resume.
37. Your cover letter is a generic waste of electronic paper that you have probably sent to 100 other employers. It does not indicate any specific interest in the position with my company.
38. The filename of your attached resume is ridiculously long.
39. You forgot to put your name on your resume.

Photo by paul goyette

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Your Car is Not an Investment

In order to justify expensive purchases, many people, including plenty of otherwise very intelligent folks, like to refer to certain types of spending sprees as "investments." Luckily for me, from the time I was about four years old, my father took any opportunity he could to tell me that anything that loses value after you buy it is not an investment. To pass along a bit of my father's knowledge and help you be more honest with yourself about your own spending habits, here are some of the purchases I most commonly hear people lie to themselves about by calling them "investments."

Cars. A car loses value the second you drive it off the lot, and a $50,000 new BMW doesn't get you to work any more effectively than a $2,000 used Honda. Even if you're buying an antique that you expect to retain or increase its value, it costs an incredible amount of money to insure and maintain a vehicle -- money that you'll never get back. The only situation where your car might be considered an investment is if it is required for your line of work--and I don't mean buying a Mercedes because you work in commercial real estate, I mean buying a truck or cargo van for a physical labor job that requires you to haul around a lot of equipment. Even then, you'd be wise to get a used vehicle.

Clothes and shoes. If you buy expensive sneakers, they will not help you become a successful professional basketball player with a multi-million dollar contract. And, unless you work in an appearance-obsessed industry such as fashion, that expensive interview suit is no more likely to land you the job than an inexpensive one. I may not be turning any heads in my $50 polyester interview suit, but I've gotten hired about five times while wearing it.

Comic books and collectible toys. Most toys, most of the time, do not go up in value. Even if one toy out of 100 does, it probably won't go up by very much, and you probably won't even break even after the expense of the other 99 toys, let alone make a profit from your purchases. Also, the notion that any comic book or toy will become more valuable with the simple passage of time isn't really true.

The advent of eBay has also driven down the price of collectibles by lifting geographic difficulties on acquiring items. The market is a lot bigger now, and items once considered rare can be easy-to-find online. The most likely outcome of collecting comic books and toys with the hopes of making money one day is that you'll end up with a closet full of bulging boxes and shelves full of dust-coated figurines. Just ask all the people who lost their wits in the Beanie Baby craze of the late 90's.

An undergraduate degree from a prestigious university. A college degree is certainly one of the best ways to increase earning potential for many people, but will a degree from a prestigious university really give you greater earning power over the course of your lifetime and make up for its higher cost? This debate will probably never end, but I'd argue that the flexibility and peace of mind that come from graduating debt-free or with a small, manageable amount of debt may outweigh the supposed benefits of having a prestigious name on your diploma and $80,000 in student loans. Private school degrees don't necessarily carry more weight than public school degrees (in Los Angeles, a degree from the University of Southern California, a private school, is not really looked upon any better than a degree from the public UCLA) and neither degree will have carry any special weight if you move to the East Coast after school. Some of the highest ranked, most expensive private schools in the country actually have no name recognition whatsoever outside of their immediate geographic regions.

Glasses. Yes, glasses are necessary for most people, and they can certainly contribute to your financial success in many ways if you can't function without them. However, glasses can be purchased cheaply online or at Costco. Don't justify the purchase of a $300 pair of glasses by calling them an investment.

Computers. A computer is certainly a great thing to have, but these days you can get a basic, very good desktop computer and monitor for $400 and a laptop for $500 if you watch the ads and time your purchase. Unless you are a graphic designer or other professional requiring a specialized computer, don't tell yourself that the $3000 top-of-the-line model will help you get ahead in life somehow.

Ultimately, there's nothing wrong with buying any of these things, or even spending a lot of money on them if you can afford it. The important thing is to be honest with yourself about your purchase when thinking about what you really need, why you're buying it, and how much money you really can afford to spend.

Photo by 1LB

Ten Ways To Improve Your Foreign Language Skills

Knowing a foreign language can increase your earning potential in many job situations by giving you an advantage over your fellow co-workers: the ability to reach out to a client base who may not speak English. You might also want to improve your foreign language skills to navigate an international city with ease on a business trip or vacation. Regardless of your motivation, learning a foreign language doesn't have to involve the kind of five-days-a-week, two hours a day commitment that you were expected to make when you were in school. Arguably, one of the easiest and most effective ways to pick up a foreign language is simply to integrate it into your daily activities as much as possible. Here are some ways to make learning a new language painless, particularly if that language is prevalent in the United States (like Spanish).

1. For vocabulary and basic phrases, download a free language software program like Before You Know It Lite. Their software comes in 64 languages (as of this writing) and include over a dozen lists. If you like the free software, you can buy the paid version for a mere $40 per language. The paid version lets you create your own vocabulary lists and comes with an additional 60+ lists. It also has several other language learning modes, such as advanced pronunciation practice (if you have a microphone for your computer). Even the free version pronounces the words accurately and clearly, which is a big help. I have been using this program in my quest to learn German, and it's been a big help. It's also saved me the time, expense, and clutter of making flashcards from index cards.

2. Make better use of your cable package. Most cable television packages include some foreign language channels. Where I live, there are plenty of channels in Spanish and Korean. You may even be able to special order a channel in your target language. You can also watch foreign language TV online for free. For German-learners, the Deutsch Welle website offers a variety of TV programs.

3. Take advantage of podcasts. Podcasts are free and its easy to find podcasts in your target language through iTunes. There are foreign language podcasts geared towards teaching language basics, understanding the news, learning slang, understanding jokes, and more.

4. Don't toss your instruction manuals. Many manuals come in multiple languages, making it easy for you to compare the English with your target language and learn some new words.
5. Pay attention to the labels on products like shampoo and prepackaged foods. Many companies have turned to multi-lingual labels, especially those who distribute their products in Canada or Spanish-speaking regions of the United States.

6. Shop at ethnic grocery stores. Here, you're more likely to find imported products with labels exclusively in foreign languages, or in both a foreign language and English. You'll probably also save some money.

7. Read foreign newspapers online. Newspapers have a fairly low-level vocabulary that is often easier for a language newcomer to understand than, say, a poem or short story. Papers also have a wide variety of articles, so you can try to read something about a topic that actually interests you, which will make the process more fun and make it more likely that you'll remember what you've learned.

8. Sign up for language classes. Community colleges, language schools, and night classes at local universities may offer language classes with schedules that accommodate adult obligations.

9. Participate in a language exchange. Through websites like Craigslist, you may be able to find a foreign exchange student, dual citizen, or other person who would love to have you help them improve their English skills in exchange for teaching you their native language. The downside of these exchanges is that people without instructor training don't necessarily understand the needs and challenges of the foreign language learning process, but on the plus side, it's free and you're more likely to learn every, colloquial usage rather than the strict by-the-book version of the language.

10. Rent foreign movies with subtitles. If you have the patience, watch the movie once with subtitles, so you understand what's happening, then again without subtitles, to focus on making sense of the language. Some TV shows, like Sex in the City and The Simpsons, are also dubbed in foreign languages: if you buy the DVDs or use the SAP button on your remote control while the program is being broadcast on television, you can take advantage of this extra feature.

When it comes to learning a foreign language painlessly, these ideas are just the tip of the iceberg. Stay tuned for future posts with even more ideas for improving your foreign language skills, and let me know which tips work for you!

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Nielsen Email Scam?

Dear Special Consumer,

You are invited to become one of the lucky few that have the opportunity to influence what manufacturers and retailers make and sell. By joining ACNielsen's Homescan Consumer Panel, you will represent millions of Americans, and so your opinion will make a huge difference in the consumer marketplace!

What It's All About
ACNielsen is the world's largest and most prestigious market research company, with its Homescan Consumer Panel representing consumers all across America. Manufacturers and retailers count on the data Homescan panelists provide to help them make decisions on what products to develop or improve and what to keep on or remove from store shelves. It doesn't matter whether you buy a little or a lot, your opinions count!

scaning products

scaning products

What Panelists Do
Using a small, state-of-the-art hand-held scanner (which ACNielsen will provide to you at absolutely no cost), you and members of your household will scan the UPC barcodes on all of your purchases. Then, once a week, you'll transmit your purchase information to us via the scanner.

Panel participation only takes about 20 minutes each week. It's fast, easy, and fun!

It's Easy to Earn FREE Gifts and Great Prizes!
Here's your opportunity to make your consumer voice "speak" for millions of Americans, while earning points toward fabulous, name-brand gifts. Panel members also have the chance to win cash and other terrific prizes!

So, join now to represent millions of Americans and have a chance to win BIG prizes!

scaning products


Please e-mail me.

Your opinions will make a difference in today's consumer marketplace, so don't delay! Join now!


scaning products

Lynne Morrison
National Director
Homescan Consumer Panels
6800 Jericho Tpke, Suite 102E
Syosset, NY 11791-4401

- Please do not reply - This account is not configured to receive emails -

My comments:
1. I question whether this email is for real or part of a scam. If it is for real, why are they contacting me by email, not mail, and how did they get my email address? This was sent directly to my personal address, not to any business address that I have published on the internet.
2. If this is real, why can I not reply to this email? I checked out "proxydirectmail.com." the domain from which this email supposedly originated, but there is nothing at this domain.
3. If this is real, does this company actually think that I would be willing to transmit data about all of my purchases to them? And not only take the time to do that, but do it for free? You want to invade my privacy, and you don't want to compensate me for it. Gee, that sure does sound "fast, easy, and fun!"

In order to investigate question 1 further, I did a couple of things. First, I checkd out the links in the email. I did NOT click on the links in the email, which is a major no-no unless you want to find yourself caught in a phishing net. Instead, I moused over the links, read the link addresses in the bottom of my browser window, then typed the addresses into separate browser windows.

The first website linked to was homescansignup.com. I went to this website. It looks like a legitimate website, but the first thing it asks me for is my control number. It says, "Your control number can be located on your questionnaire to the right of your name and address." Well, I don't have a questionnaire, and the email does not contain my name and address. Warning sign #1. On this page, I see that Lynne Morrison is listed as the contact for this research panel. That's the same person who "signed" the email I received. The contact information in the email also matches the contact information on the website.

I also went to the ACNielsen website. Everyone has heard of Nielsen, I think. They do the TV ratings. That's all I really know. When I was a kid, I always wanted my family to be chosen get one of those set top boxes. We never did. Anyway, acnielsen.com is a legit site. It is linked to from the nielsen.com site.

Then, I searched Google for "acnielsen email scam." I came up with nothing.

I'm still not sure what to think about the legitimacy of this email, so I sent it directly to Nielsen via a contact form on their website. The email does not phish for any of my personal data--at worst, it would have me confirm that the email was sent to a working email address when I clicked the unsubscribe link at the bottom or when I merely opened it. But I already get spam and my spam filter detects it successfully, so that isn't much of a threat for me. The email doesn't actually allow me to sign up for the program they supposedly want me to sign up for, though. At best, it would allow me to email my questions to Lynne Morrison.

So let's say this study is legitimate and that Nielsen has just chosen a really stupid way of contacting me. I managed to find a photo of the Homescan device on Flickr, so I guess the program exists. So what about my third complaint about a company wanting permission to invade my privacy for free?

You could say that my credit card companies already know every purchase I make anyway, and it's not like I'm buying anything scandalous, so participating in a program like this isn't really an invasion of my privacy (I guess if I choose to participate, that nullifies the "invasion" part, doesn't it?). Data about my purchases is already floating around in the universe. But if I am going to take the time to scan my purchases and transmit the data to a research company, I should be compensated. Not by being entered in a sweepstakes that I will never win or by receiving "brand name gifts" that I probably have no interest in (Pepsi t-shirt, anyone?), but with cold, hard cash. Doesn't Nielsen make its money by selling the data they collect to other companies who use that data? If so, then why would I want to essentially work for a multinational corporation for free? If I want to volunteer my time, I can think of a lot more worthy causes.

Problem is, lots of people out there probably do think it would be neat to get to "share their opinions." Well, guess what. You already share your opinion every time you make a purchase. You already "influence what manufacturers and retailers make and sell." It's called capitalism. You shouldn't waste your time participating in unpaid consumer research, especially when there are plenty of consumer research studies out there that do, in fact, pay, often to the tune of $50 an hour or more.

There's also the issue that, by only counting my future purchases, this survey would fail to take into account many of the products I use most frequently because I buy them in bulk. I have so much shampoo, conditioner, deodorant, and dental floss that I won't have to buy any for the next two years. Would this study look at my data and assume that I am a very un-clean person, or think that I wasn't transmitting the data for all of my purchases? Wouldn't this skew Nielsen's results? I guess they've been around long enough that they probably have a way of compensating for this. If I came up with this problem in five minutes, I'm sure their panel of researchers thought of it long ago.

What do you think of this email and this program?

photo by bchow

How Lifestyle Inflation Can Sneak Up On You

Many of us know that a good way to increase net worth is not to start spending more every time we get a raise. For me, this means that in my monthly budget, it says "Income" on one line, and then below that, it says "Raise." I don't even consider the raise money to be part of the income I have available to spend each month; I save it all.

Even if you make a concerted effort like I do to avoid lifestyle inflation, it can still sneak up on you in subtle ways. You get a nice new pair of pants, only to get them home and find that you don't have a single shirt that is nice enough to go with them. You've already gotten attached to how great you look and feel in the pants, so returning them isn't an option. Suddenly, you have to buy a couple of nice shirts to go with the pants. Then nicer shoes. Then a purse. Then coordinating jewelry. Before you know it, that great clearance bargain you got on your new pants has turned into a $200 spending spree and a growing dissatisfaction with your old clothes that just don't look that nice anymore compared to your new digs.

Here's another example. I used to decorate my walls with 4x6 photos of friends and places I'd visited. I used masking tape rolled up and stuck to the back of the photos and had them printed with white borders so that they looked a little nicer, sort of like they were framed. But then I actually bought a picture frame. I decided that black was a good color to match the photo I wanted to frame. Once I bought that one frame, photos attached to the wall with masking tape didn't look good anymore. I bought a bunch of black frames for my other photos. Then, with all the black frames, I had to buy new black bookcases to match. Even though I purchased the frames and the bookcases for as little money as possible, it still cost me a good $300 in the end. I'm not dissatisfied with how I spent the money or how my apartment looks, but this is a great example of how one seemingly insignificant purchase can have a much larger impact on your wallet.

One way to avoid lifestyle inflation is to choose friends who don't own a lot of showy possessions. This way, you won't feel like your belongings are inferior when you spend time with them. If the people you regularly spend time with don't drive showy cars or have a 42 inch LCD TV, you're less likely to start coveting these items yourself. I've never consciously chosen friends who spend money similarly to me, but it seems that the people who invite me to do expensive things eventually realize that I've declined their invitation one too many times and we simply stop spending time together. Most of the time, it's even easier than that: we tend to choose friends who share our values, and if you value frugality, you're likely to attract like-minded people.

Another way to avoid lifestyle inflation is to make your purchases count. When you buy something new, make sure it is of high quality and will last a long time. If you buy a good computer in the first place, you're less likely to get dissatisfied with it after a year and want to run out and buy a new one. You'll be satisfied enough with what you have that the hassle of researching a new purchase and transferring all of your existing files and programs to a new computer won't seem worth it. If you buy comfortable, durable shoes, you probably won't give a second thought to visiting a shoe store more than once or twice a year (if that). You'll save money on shoes, and you'll save even more money by avoiding the store. Staying away from stores is also a great way to keep your desire for new things at bay.

Surprisingly, it is possible to make purchases that do constitute lifestyle inflation but that won't have longer reaching consequences on your wallet. For example, if you have an older iPod and want to upgrade to a newer one, you can do so relatively inexpensively if you sell your older iPod on eBay or Amazon to offset the purchase price of the new one. If you don't use a bunch of accessories with your iPod (like armbands, skins, and such) there won't be any additional ongoing expenses associated with the purchase of your new iPod that you didn't already have from your old iPod (such as iTunes downloads). In this example, upgrading your iPod can be cheaper overall than buying a new pair of pants from the clearance rack.

If you want to avoid lifestyle inflation, you need to consider the full impact of the purchases you make, even the ones that seem relatively insignificant. That being said, I also believe that you should spend some of your money on things you enjoy. The goal here is not to deprive yourself, but simply to be aware of the real cost of your purchases so that you can make fully-informed decisions about how you want to spend your hard-earned money.

Photo by d_vdm

eBay Changes Fees, Seller Rewards, and Feedback System

When I logged into my eBay account last week, I got a message about changes to fees, seller rewards, and feedback. These changes go into effect today, February 20. Here's the full scoop, copied and pasted from their website, followed by my thoughts on some of the changes.

Seller Update: Fees, Rewards & Standards

eBay buyers want value and selection from sellers they can trust--and good sellers deserve rewards for delivering great customer service. That's why we're making a number of important changes that may affect you:
  1. Reduced Listing Fees
    You asked, we listened. We're reducing Insertion Fees and adjusting Final Value Fees to lower your up-front cost to sell on eBay. You wanted free Gallery, now you've got it--plus more feature discounts.
  2. Rewards for great sellers
    There will be discounts and incentives for those who satisfy customers best. Who decides who gets rewarded? Customers do, by giving sellers high Detailed Seller Ratings (DSRs).
  3. Feedback Changes
    Significant changes coming soon will increase buyer confidence and showcase good sellers.
Lower insertion fees, free gallery, and cheaper Picture Pack: Free gallery is a smart move. This will encourage small-time sellers (maybe--was 35 cents per listing for gallery that much of a deterrent?) and help level the playing field between us and the big guys. However, merely lowering the fee for Picture Pack isn't going to win back people like me who use third-party listing services. Personally, I have quit listing anything directly through eBay because of their fees and annoying listing interface. About eight months ago, I started using a service called Auctiva because they store your listings and photos forever (on eBay, they expire after sixty days, which is a real pain sometimes), they provide extra-large photos, and you can put a ton of photos in your listings for free. They also don't charge you to schedule listings. Unfortunately, their listing interface is at least as bad as eBay's. The lower insertion fee thing only applies to a few categories, like books and movies, and the change is pretty insignificant compared to. . .

Adjusted Final Value Fees: As far as I can tell, eBay has used tricky wording here to make you think that they are lowering final value fees when they are actually raising them quite significantly. If you click on the link and examine their new chart, you'll see that for auctions, final value fees are increasing from 5.25% to 8.75% on listings with a closing price of $0.01 to $25.00. They've increased the final value fee for all other closing prices as well.

Buyers will only be able to receive positive feedback: What a horrible idea. This change puts sellers almost completely at the mercy of buyers when it comes to leaving feedback. Buyers can cause problems for sellers by taking forever to pay or being overly picky about an item after purchasing it. Sellers should have a recourse against these types of buyers to keep them on their best behavior.

Overall, it appears to me that eBay's new changes are making them a much less seller-friendly company. I plan to continue selling with them, but my opinion of them has been substantially reduced. Considering that eBay is nothing without its sellers, I really think they should treat us with more respect.

What is your impression of eBay's recent changes? Am I overreacting? Share your thoughts in the comments.

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Phone Etiquette Tips

As someone who has answered a great deal of business phone calls, I've had the opportunity to observe a lot of bad phone behavior. Apparently, most people didn't have the benefit of my mother teaching them how to answer and make phone calls as soon as they were old enough to talk. Bad phone etiquette can put you at a real disadvantage in the business world if you inadvertently offend your existing and potential clients. Here are some basics of making a phone call that Miss Manners would be proud of.

1. When the person on the other end says, "hello," don't say, "is this Amy?" Even if you think it is, in fact, Amy, you should not assault the person on the other end of the receiver by presuming to know her identity, especially when she has no idea who you are. You should say, "Hello, this is Carlos Mencia, may I please speak to Amy?" This way, if the person who answered the phone was, in fact, Amy, she will be mentally prepared for the call because she knows who you are. She will also immediately like you due to your good manners.

On the other hand, if you want to fluster or annoy the person on the other end of the phone, or trick them into talking to you when they might be trying to avoid you, barking their presumed name at them and hoping they confess their identity is probably a good way to accomplish your mission.

2. Respect the receptionist's need to do her job. When calling a business, always state your name and, ideally, the company you are affiliated with. The whole reason the business has a receptionist is so that everyone else at the business can choose whether to interrupt whatever they're doing to accept a phone call from a particular person. Any receptionist who tells a co-worker or boss that she doesn't know who is on the other end of the line of a phone call will get fired in short order. Also, don't assume that you have called the business enough times that the receptionist should recognize your voice. With all the calls the receptionist answers each day and no face to put with a name, she probably does not recognize your voice unless you have made a special effort to endear yourself to her.

To summarize, if Carlos Mencia were calling the President and he wanted to be polite and efficient, he would say, "hello, this is Carlos Mencia from Comedy Central. May I please speak to President Bush?"

3. Always endear yourself to the receptionist. She is the gatekeeper. You will never get anyone's private cell phone number or any other favor you need by being rude to her.

4. Do not barrage the receptionist with questions about the schedule of the person you're trying to get a hold of. It's none of your business, and her job is to keep it that way. Besides, even if President Bush is returning from lunch at 2:00, that doesn't mean he wants to talk to Carlos at 2:00. "Please ask President Bush to call me back as soon as possible," will suffice.

5. Don't make calls with your phone on speaker. Everyone can tell when you have them on speakerphone, and most people hate it. Not only is the extra background noise and the decreased ability for the caller and callee to hear each other obnoxious and frustrating, the use of speakerphone also signals to the person being called that he or she is not important enough to get the caller's undivided attention for a few minutes. Implying that your customers are not important is a poor way to handle any business transaction.

6. Compose yourself. In most cases, the person on the other end of the line probably hasn't done anything to merit being subjected to your bad mood or your panic attack. Definitely don't use profanity.

7. Please do not treat the receptionist like she is stupid. Maybe she has chosen to answer the phone despite her strong educational background because she doesn't want to deal with all the additional stress, overtime, and sleepless nights that your supposedly much more important job subjects you to.

8. When placing business calls outside the office, don't broadcast your cell phone conversations for the whole world to hear, especially when discussing information that the person on the other end of the line would consider sensitive or confidential. Not only is such behavior rude to the people in your vicinity, it is also disrespectful to the client.

I suspect that, in theory, most of us are aware of these rules, but in the day-to-day stress of the workplace, it's easy to let them fall by the wayside. Don't let yourself slip, and your manners and finesse will impress everyone you interact with by phone.

Photo by Balakov

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How Increased Income Has Changed My Spending Habits

I'm always proud to tell people that my total monthly expenses today are pretty close to what they were when I got my first real job after college. Some things, like my rent, have gone down, while other things, like my discretionary spending, have gone up. All of this has me convinced that I could take a drastic pay cut without suffering any loss in quality of life, but I'm not sure that's really true. They say that as income rises, spending rises to match it, after all. Though I track all of my expenses diligently with a budget and can prove on paper that I can get by on less, there's more to consider: the way I think about money has changed. I thought I would explore the way the spending decisions I make now are different than the decisions I made back then.

1. I can afford, and own, a car. I used to be so happy about being able to get to places outside of walking range without a car that I could gloss over the downsides of taking the bus, like being squished with 110 total strangers into a bus with space for 75, tolerating horribly uncomfortable seats, and enduring unbelievable travel times. Those former inconveniences have now become pretty intolerable to me, especially because I moved 15 miles away from work and am not willing to spend 4 hours a day on the bus (no exaggeration). While I do own a relatively inexpensive vehicle in terms of purchase price, insurance, and maintenance, it is still several times more expensive than a monthly bus pass.

2. Returning habits. I used to return anything and everything that didn't meet my expectations, even if it was only a $2 bottle of juice. Now, the amount of refund I would get has to be worth the amount of time and hassle involved in taking it back to the store. Nowadays, I'm more willing to just let a bad purchase go. However, I still return most things, even items worth less than $10--I just make sure I do it in a way that's very convenient to me, like writing a company a letter about a defective product and having them mail me a replacement instead of exchanging it at the store.

3. Decreased clothing costs. This one is fairly surprising. Once I upgraded from my studio apartment to a one bedroom and owned enough to feel that getting renter's insurance was a good idea, I realized just how much money I spent on clothing and that my wardrobe was the most expensive thing I owned even though I rarely spend more than $20 on one article. My clothing costs have dropped drastically since I made that discovery (by more than enough to pay the renter's insurance premiums, in fact).

4. I no longer limit my lodging options to hostels and friends' couches when I travel. A few years ago, I saw nothing wrong with sleeping in a co-ed dorm with total strangers, but now that I can afford the extra peace of mind that comes with being able to lock my door at night, I opt for a private room almost every time. The thing is, I've never felt unsafe in any hostel. In my poorer days, was I just letting myself have a false sense of security since I couldn't afford anything else?

5. I still have a grocery budget, but I no longer buy only the things I need for that week. Now, I buy things that I think are good to have around, even if I don't have an immediate use for them. This makes impromptu cooking a lot easier, but may not be the wisest choice from a financial standpoint since I still haven't used any of the balsamic vinegar I bought two months ago. I also no longer weigh my produce to see how much it will cost, nor do I add up my groceries as I put them in my cart, and I've increased my grocery spending by about $60 a month. The increased spending was actually a conscious choice, because I love food. Of all the things I could spend my disposable income on, I think it is a wise decision overall to put a small amount of money towards a lot of affordable luxuries instead of blowing much larger amounts of money on fancier clothes or gadgets.

6. I buy soda in cans instead of bottles. A two liter bottle of soda is a much better value than canned soda, but I love the cold can and drinking a soda at the peak of fizziness. The best value of all, of course, would be to give up soda and drink water, but like I said, affordable luxuries are important to me.

7. I donate a smaller percentage of my income overall. This is just an ugly truth. I still have a hard time giving money to something intangible. I have found a few solutions to help me increase my giving, though. I almost always give money to a cause a friend asks me to support, because not only has someone saved me the work of selecting a cause in the first place, but I can show support for a friend at the same time, and supporting a friend is something I can actually observe the effects of immediately and firsthand. Also, when I find a cause that moves me, instead of sticking to my monthly donation budget, I just give whatever amount I feel compelled to give. Kiva also works well for me, because I can give more knowing that I will eventually get that money back. I also try to support small, local causes (like restoring historic buildings) who need the money badly and will have a hard time getting it from non-locals who are not invested in the cause.

8. I'm more likely to buy food at airports. I hate, hate, hate spending $10 on one of those tiny pizzas that barely satisfies even my small appetite. But I also hate eating nothing but protein bars and cheese puffs for 8 hours, so now that I have more money, I'll treat myself to a hot meal at the airport sometimes even though it's a ripoff.

Many of the changes in my spending habits that have come with increased income are arguably not positive or necessary, but I think one of the reasons we are so likely to spend more as we earn more is not simply because the money is there, but because we need an incentive to keep going to work and making the sacrifices that often some along with a bigger paycheck. If I were making $200,000 a year (which I'm not) and sharing a two bedroom apartment with four people, eating ramen, and walking 3 miles each way to the grocery store, I would have to wonder why I was working so hard for all that extra money. I could tell myself it was for things like early retirement and future travel all I wanted, but I would really need a tangible daily incentive.

A bigger paycheck can equal less stress and more fun, and it's hard to remember accurately how I really felt when I was making less money, but I really don't think that the extra money I make now has had a significant effect on my overall happiness, aside from the freedom that comes with not feeling shackled to a specific job/industry/income level. So if your income is low, don't despair--after you're comfortably meeting your basic needs with a little money left over for fun and savings, the extra money probably won't make as much difference as you think it will. On the other hand, if you're thinking about downsizing your paycheck to change directions in life, you can probably swing it more easily than you think you can. I hope that by sharing my thoughts on my income and spending habits, I've inspired you to think about your own in a slightly different and helpful way.

Photo by gen gibson

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How to Save on Eye Care

Eyeglasses and/or contacts are a necessity for most of us--a necessity that can be quite expensive. Here are some tips for keeping your vision care costs down.

Don't assume that national chains or mall stores are cheaper. The most expensive eye experience I ever had was with Lens Crafters. The cost of my exam, contacts, and glasses exceeded $600 (by contrast, I could have gotten the same thing at Costco for closer to $300). I have also heard that Pearle Vision is expensive, though I haven't used them myself. Though you might expect an eye shop in a mall to be less pricey than an eyedoctor who has a private practice, mall shops can be just as, if not more, expensive.

However, sometimes national chains can bring you major savings on eye care. If you have a Costco with an optical center in your area, the cost of joining Costco (about $50/yr.) will be more than offset by the money you'll save on eye exams, glasses, and contacts. My last eye exam at Costco was $45, with optional additional fees for things like having my eyes dilated or photographed. Most eyedoctors don't give you any options on what services they include in your exam, and the default seems to be the most thorough and most expensive exam possible. A thorough exam is good for your eyes, of course, but for many people these high costs prevent them from visiting the eye doctor at all. Having the option of a less thorough but more affordable exam helps more people keep their eyes healthy. Even if you choose all of Costco's services, your total exam bill will only be $75.

Do a time/money analysis before going with the cheapest option. Costco may be one of the cheapest options out there, but you may also end up spending an above-average amount of time waiting . . . and waiting . . . and waiting. Depending on your situation, you might be better off visiting a private eyedoctor and/or optical shop. If you need your glasses in time for an upcoming trip, for example, you might want to get them made at a one-hour place. Even if Costco promises to have your glasses back in two weeks and your trip isn't for three weeks, if the glasses come back and the prescription is too strong or too weak, you'll have to get them redone and there won't be enough time to get them back by the date you need them. Costco will re-do your glasses for free if the prescription ends up not suiting you, but it can be a real hassle because the turnaround time is two weeks and there is almost no way to speed up that timeline. Costco's eyedoctors are considered independent from Costco's labs, so if the eyedoctor makes a mistake with your prescription, the store won't put a rush on your glasses re-do order. They'll only put in a rush order if it's their lab that made the mistake.

Buy your glasses online. This option can save you a ton of money, though it's not for the even remotely image conscious (how many frames did you have to try on last time before you found a pair that didn't look utterly ridiculous, let alone good?). EyeGlassDirect, Zenni Optical, Goggles 4 U and 39 Dollar Glasses are some of the most popular sites for getting glasses made. Some of these discount eyeglass websites even include in their low prices (or charge a very low fee for) things that other stores make you pay a lot of extra money for, like anti-glare or scratch-resistant lens coatings, sunglasses tinting, and thinner lenses.

Many sites also give you the option of mailing in your existing frames, which avoids the whole "will they look good on me?" problem. You could even go to a store, pick out frames you like, and just get the lenses made online.

One excellent use of online glasses stores even for someone who has a hard time finding frames she likes would be for prescription sunglasses. Personally, I don't wear my glasses enough during the day to justify the expense of $90+ prescription sunglasses from a brick and mortar store, but if I could get them cheaply online, even if they didn't look perfect, at least I wouldn't be blinded by sunlight on days when I had to wear my glasses. Again, I could send in a pair of old frames that I already like and get the sunglasses made from those. You can find more online glasses sites (with reviews, commentary, and even discount codes) at Glassy Eyes.

If you wear contacts, don't wear daily disposable lenses if you can avoid it. If you're wearing daily disposables because your eyes won't tolerate anything else, great, but if you're wearing them for the convenience of not having to clean your contacts, you may be spending a lot of extra money just to avoid a task that takes no more than sixty seconds a day. Also, the extra contacts probably cost more than the cleaning supplies you'll need for reusable lenses. These days, there are contacts that you can wear for a day, a week, a month, two months, or more. The options are such that you can retain some of the flexibility of disposable contacts (like having extra pairs around for emergencies) while achieving some of the savings of longer-wearing lenses.

Use saline instead of eye drops. If you find yourself needing to moisten your eyes during the day, keep a travel-sized bottle of saline at your desk and use that instead. Basic moistening eye drops are incredibly expensive per ounce compared to saline, and both products accomplish the exact same thing. Travel products are a rip-off per ounce, too, but they're still less expensive than eye drops, and you can easily refill that travel bottle with less expensive saline.

Forego contacts. People with contacts still need to have glasses, but people who only wear glasses don't need to buy contacts. Guess which is cheaper? Even with the possible added expense of prescription sunglasses for those who choose to avoid contacts, the fact that glasses can last much longer than any pair of contacts can result in significant savings.

Keep your most recent pair of old glasses when you get new ones. This way, if you need a spare for any reason, you already have one. They may not be as stylish or effective, but they don't cost you any extra, and they'll be better than nothing in a pinch. For glasses that are too old to do you any good, look for charity donation options in your area. I've seen bins at optical stores and grocery stores for this purpose.

Open a health savings account (HSA). Using a health savings account to pay for your eye care expenses means that you're using pre-tax dollars, which can stretch your paycheck quite a bit further. Keep in mind that HSA's must be used in conjuction with high deductible health plans, which means that they aren't the best money-saving option for everyone. You can learn more about HSA's here.

Don't expect laser surgery to save you money in the long run. If you have this procedure done, all those ongoing glasses, contacts, and contact supply expenses disappear, saving you a ton of money, right? The checkup expenses won't go away, though -- you'll still want to visit your eye doctor regularly to make sure your eyes are healthy, just as you'd visit any other doctor regularly to catch and potential problems before they've had a chance to get serious. And of course, the surgery is so expensive that, unless your insurance is covering it, you really won't save any money in long run. On the other hand, if your insurance is covering it, this option could save you a few bucks.

Know when to skimp and when not to. For years, I "cleaned" my contacts by storing them in a case in saline (which is really just soaking your contacts, not cleaning them at all). My eye doctor was horrified when I told him. "How often do you clean that case?" he asked. Realizing that I washed my car more often than I washed my contact case (and the ramifications of a dirty car are far less severe than the ramifications of putting dirt and bacteria in your eyes), I switched to Clear Care (no affiliation or endorsement implied), which is a more expensive solution than saline ($9 - $11 per bottle) and puts your contacts out of commission during the six hour cleaning process, but, unlike saline, really cleans your lenses by fizzing up and removing all the protein, bacteria, and other debris that your contacts accumulate throughout the day. It also helps my two month disposable lenses last for about four months since they get really clean each night and feel comfortable to wear for longer. Though I may spend more on contact solution than I used to, I spend less on contacts, which is a greater savings.

Taking proper care of your eyes has bigger implications than the cost of contact solution or even the cost of contacts, of course. The health of your eyes, and consequently your ability to earn a living and continue living your life as you know it, is what's really at stake. Like most precautionary measures, I will probably never know if using a better contact cleaning method saved me from terrible eye infections or even blindness, but then, that's not the kind of thing I want to learn the hard way.

I still save money on contact supplies by purchasing Target's house brand of saline for $2 a bottle (for those times when I need to rinse my contacts midday or take them out for just a couple of hours). Costco actually has free saline at their optical centers, but dispensing saline from their gigantic jug that's kept out in the open where kids can run their grubby fingers all over it doesn't seem very sanitary or safe to me.

Though managing your eyesight can be expensive, there are ways to decrease your costs. Don't neglect your eyes in the name of saving money -- use these tips to keep eye care affordable and your eyes healthy.

Photo by Daniel Y. Go

Valentine's Day Sales Are Coming

While most folks are looking forward to a romantic evening (or lamenting that they are spending Valentine's Day alone this year), those of us who are particularly frugal are getting excited about the great sales that will be available as soon as the frenzy passes. It seems like only days ago that I wrote about taking advantage of post-Christmas sales, and now another great sale is upon us.

Here are some items you can score fantastic deals on this February 15th.

Candy: Just because it has a red and silver wrapper on it doesn't mean it stops tasting good today. Grocery stores and big box stores are great sources of all variety of half-price candy today. I often have good luck at Target.

Gift wrap: Valentine's Day isn't the only holiday where the colors red and white factor in heavily. If you missed the post-Christmas wrapping paper sales, stock up now. Much Valentine's D ay wrapping paper can be used for birthdays and other holidays if you steer towards solid colored items. In addition to reds and whites, you're also likely to find lots of pink and silver items.

Candles: Unlike Christmas or Thanksgiving, Valentine's Day candles don't tend to have season-specific scents. Most people don't want the scent of evergreen or cinnamon wafting through their home in August, but unscented or vanilla candles are usable throughout the year. Candles can also make great gifts. (Some people consider them cop-out gifts, but I actually like candles, so feel free to buy me one!)

Cards: Cards are one of the most commonly purchased Valentine's Day items. If you purchase all your Valentine's Day cards a year in advance, you can get them for half price. Don't forget to buy cards for your kids' classroom exchanges, either: as long as you stick with something generic and stay away from cards with this season's hottest cartoon characters, you should still be able to use the cards next year.

Dinner: If you can put off your Valentine's Day meal out until tomorrow, you'll avoid the crowds, the inflated prices, and the limited menus.

Valentine's Day can be an expensive pain in the butt, or it can be a great savings opportunity. The choice is yours!

Photo by Today is a Good Day

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Gas Stations: Cash Discount or Cash Back Credit Card?

Personally, I think it's a pain to pay cash at a gas station. I don't like trying to predict how much I'm going to spend on gas and either not being able to fill my tank all the way or having to go back in and get change. A gas station isn't exactly the type of place I want to to extend my visit.

If you live somewhere that has a gas station chain that has one price for paying cash and another, higher price for paying with a debit card or credit card, you might have wondered whether it's worth it to get the small cash discount, especially if you have a cash back credit card. Here's an easy chart to help answer your question. Which payment method will allow you to come out ahead depends on the price of gas, the percentage cash back your credit card gives you on gas purchases, and the discount the gas station gives you for paying cash.

Actual Gas Price at $3.10/gal. with Cash Back Credit Card
1% back - $3.07
2% back - $3.04
3% back - $3.01
4% back - $2.98
5% back - $2.95
6% back - $2.91

Of course, this still doesn't account for the hassle and extra time involved in paying cash.

Photo by ^riza^

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Understanding Closing Costs

If you're a potential first time homebuyer, you may be confused about those mysterious closing costs--the expense that means that when you thought you'd finally saved up enough for a down payment, you really hadn't. Closing costs can add 2% to 5% to the purchase price of your home, which is especially painful if you live somewhere with high housing costs.

So what are closing costs? Here's a rundown. Keep in mind that this is just a sampling of fees you may need to pay. Depending on your location, lender, and other factors, you may encounter a lesser or greater list of fees.

Credit report: For around $50, the lender will check at least two of the major credit reporting agencies (Experian, Equifax, and Transunion) as well county records (to make sure you don't have any judgments or tax liens). Basically, they want to check out your financial background to make sure you're a good candidate for a loan.

Loan origination fee: This is a fee that lenders charge you when you acquire a mortgage. Think of is as a start up fee. It includes both the cost to complete the loan paperwork and points. In a nutshell, points are a fee you can pay in exchange for a slightly lower interest rate. They're also often a major source of profit for lenders and not always a good deal for consumers. One point is equal to one percent of the loan principal.

Application fee: Yet another fee that covers the cost of processing your loan. You can expect to spend $450 to $600 on this.

Appraisal fee: If you're paying all cash, you don't have to get the property appraised, but if you're taking out a loan to make the purchase, an appraisal will be required. The lender has to protect its interest--they want to make sure the property is worth about what you'll be paying for it so that if you default on your loan (quit making your mortgage payments), they'll be able to recoup their losses when they take away your house and sell it. The appraisal can also benefit you by telling you if the seller is asking a fair price for the property. Appraisal fees will probably run you $300 to $400.

Property inspection: This is optional, but you'll definitely want to have it done (to learn why, check out my article on home inspections). A property inspection will cost you $300 to $400 and will help you learn what condition your property is really in before you make the most expensive purchase of your life.

Title search and insurance: This is another fee you can avoid if you're paying all cash, but skipping this step could really hurt you later on. A title search makes sure that no one else claims a right to your property, and the insurance protects you if something unexpected pops up after you're the new owner. The fee for both will be about .75% of the cost of your house. How could anyone else claim a right to your house, you may be wondering? One example: the previous owner of the house passed away and someone later tries to claim that they are the rightful heir of the property.

Private mortgage insurance (PMI): When you put less than 20% down on a property, most lenders will require you to purchase this insurance (another option is to get a second mortgage, but that's beyond the scope of this article). You may have to pay a year's worth of premiums in advance. This expense will vary depending on your location, but $1,000 is a reasonable ballpark figure here.

Prepaid homeowner's insurance: Lenders generally require that you pay one year's worth of homeowner's insurance in advance.

Prepaid property taxes: You may have to prepay property taxes for the time period between closing and your first mortgage payment. Also, your lender may require you to prepay one or two months' worth in addition to this amount. They may even require you to let them charge you extra to take control of your property tax payments on an ongoing basis. The good news is that property taxes are prorated for the month that you move in, meaning that the seller pays property taxes for each day that she still owns the property, and you don't start paying property taxes until the day you become the owner.

Recording and filing fees: These fees are for recording the deed of trust or mortgage (what it's called depends on where you live) and filing other legal documents.

Tax service fee: A really obnoxious fee of about $75 that is used to notify the lender if you default on your property taxes.

Transfer tax: A fee due to the county when the property is transferred. There may be an additional transfer tax levied by the city. Sometimes transfer fees can be split with the seller.

Garbage fees: Miscellaneous fees involved in processing everything listed here, such as courier and filing fees.

Other expenses you could encounter include attorney fees (if any major problems develop), assumption fees (if you're taking over someone else's loan), escrow company fees (if the title company does not handle escrow), and survey fees (if you are purchasing a house that has easements or the property lines are not clear for any other reason).

To get a sense of exactly what fees you'll have to pay in your area and what they'll add up to for a home in your price range, contact a lender or a real estate agent who works in your city. If you're new to buying a home, I also highly recommend getting a book or two from the library that will help you learn all of the new terminology you'll encounter and help you understand the purchase process. In my opinion, if you completely rely on information from lenders and real estate agents, you risk, at best, not catching a mistake, and at worst, getting ripped off at some point in the purchase process. Understanding what's going on will not only make things less stressful, but also help you protect yourself.

Beware American Express Card Upgrades!

One day when I logged into my Amerian Express account, I got a message that I was pre-approved to upgrade my Business Gold card to a Business Platinum cardt. "What the heck?" I thought. "The card might have some benefits that my existing card does not. I'll sign up." I clicked on the link, entered my account information, noticed that the card was apparently going to entitle me to free domestic companion airfare up to four times a year (sweet!), and was about to submit my application when I read this:

"By entering my name below and submitting this acceptance form, I certify that I have read, met and agreed to all the terms, conditions and disclosures linked to this acceptance form. I understand the annual fee for the Basic Card is $395. The annual fee for each Additional Card is $200 per Card. "

"Yikes!" I thought. "How can they make it that easy to trick me into blowing $395 on something I don't need? I better warn people about this." So I am. Beware seemingly benign offers to upgrade your credit card!

That being said, even with the very expensive annual fee, this upgrade might be a good value for some people. Here's everything you get with the platinum card. Below are a few benefits that caught my attention.

-Four complimentary domestic airfare tickets annually with a qualifying ticket purchase of $299 or more.
-Airport club access: complimentary access to private airport lounges for you and up to 2 travel companions.
-Platinum Business Concierge: 24-hour assistance for your personal and business activities.

Overall, there is not enough fine print to determine whether this card is a good deal.
Here are the possible issues I see with the benefits I mentioned above.

-What is a "qualifying ticket purchase?"
-Are there private airport lounges available at all airports, or only some airports? Do you still have to pay something to get in? Does having the platinum card only "pre-qualify" you for entry to these clubs, or does it give you free entry? How many times per year can you use the clubs? What do these clubs offer?
-Keen! I get a personal assistant available 24 hours a day for only $395 a year? What can they do? (And how horribly little are they getting paid by American Express?)

While this card may provide some valuable benefits to some people (particularly the plane tickets) that are worth more than the annual fee, for me the annual fee and the probable hassle of actually taking advantage of these benefits aren't worth it. If any readers have this credit card, I would love to hear about your experiences with it, or any other experiences you've had with using American Express benefits.

Photo by Pat+

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