10 Hidden Costs That Can Derail Your Budget Travel Plans

Your bags are packed, your airline boarding passes are ready to go, and your kids are bouncing off the walls with excitement. Even better, you’re proud of yourself and your shrewd vacation planning this go-round. Thanks to your carefully crafted vacation budget, this trip has already been saved for and paid off. What could go wrong?

Ask anyone who travels often enough, and they’ll tell you a whole lot can go wrong –  even if try to plan for everything. Vacation budgets are especially fickle and hard to stick to for several reasons, but mostly because you can’t plan for the unknown. If you’re traveling somewhere new, for example, you may not know about that toll road up ahead, or the fact that the free state park you’re visiting charges $25 for parking.

Or maybe you really did plan for everything — but the especially hot weather means more cold drinks and snacks for the kiddos. Or you plan to cook cheap dinners in your condo, but pure vacation exhaustion sends you running for the closest restaurant each night for your evening meal.

Trust me, it happens to the best of us.

10 Hidden Costs that Can Derail Your Travel Budget

Still, it’s possible to plan for some of the unknown and hidden costs you’ll face if you know what’s out there and have a better idea of what to expect. And if you’re savvy enough, you might even be able to work around or avoid some hidden expenses altogether.

Here’s a strategy we suggest wholeheartedly: Hope for the best, but plan for the worst.

And as you craft the budget for your upcoming vacation, try to think beyond the best-case scenario. What could go wrong? And which parts of your trip have the potential to cost more than you planned? Here are some of the hidden costs you should watch out for:

Airline Taxes and Fees

Flying this year? Make sure to check your ticket for the cost of airline taxes and fees. When you travel domestically, you’re generally only required to pay $5.60 per leg in fees mandated by the federal government. But for international flights, the fees, taxes, and fuel surcharges can easily add hundreds of dollars to the cost of each ticket.

When you pay for airfare, you won’t necessarily notice since taxes and fees are built into the cost of your ticket. But when you score “free” flights with airline miles, that only covers the cost of the ticket — you’ll have to pay for any taxes and fees levied on your particular flight separately.

If you don’t watch out, airline taxes and fees can knock your travel budget completely off track. And while there’s no way to avoid paying them besides changing your travel plan altogether — flying through Iceland instead of London, for example, can save you hundreds of dollars in departure taxes — you do have the option of shopping around for cheaper flights. When you’re using airline miles, on the other hand, it’s smart to search for award fares ahead of time to see what your taxes and fees might look like.

The best way to plan for these fees is to be aware of them in the first place.

• Related: No, You Don’t Have to Fly to Earn Airline Miles

Checked Baggage Fees

If you don’t know your airline’s policy on checked luggage, you could be in for a rude awakening when you pony up to the counter to check in for your flight. Different airlines have different fees for checked baggage. While a few airlines, such as Southwest, still let you check one bag for free on domestic flights, others charge $25 or more for every bag you check.

For a family of four, the cost of checking one bag each can easily surge over $100 each way. If you don’t plan for this added expense, it can send your vacation budget into a tailspin before you even get off the ground.

Research your airline’s policy ahead of time, so you can pack lighter, stick to carry-on baggage only, or at least plan for the expense.

• Related: The Best Airline Credit Cards

Hotel Resort Fees

If you stay at hotels and resorts often, you’re probably already aware of “resort fees.” If not, you might be shocked when you learn what a resort fee is – and what it isn’t.

By and large, resort fees are unavoidable add-on fees charged by hotels and resorts. Most of the time, they include negligible benefits like access to an on-site gym or pool, plus Wi-Fi access that should probably be free anyway.

The kicker is, hotels aren’t usually required to include these fees in the nightly rates they advertise. Often times, you won’t find out about the resort fee until you scan the fine print. And in the worst-case scenario, you won’t find out about it until you’re required to fork over an extra $20 to $70 per night when you check into or out of your hotel.

• Related: Best Hotel Rewards Programs

Foreign Transaction Fees

Credit cards are by far the most convenient form of payment when you’re traveling at home or overseas. First, most credit cards offer zero liability on fraudulent purchases, making credit a smart alternative to use your bank-assigned debit card. And since credit cards will automatically exchange currency when you make purchases abroad, they can save you from the hassle and expensive commission fees of trading in your American dollars for foreign money.

Before you travel abroad with credit, however, you should make sure you pick up a credit card that doesn’t charge foreign transaction fees. If you don’t, you’ll likely be on the hook for additional fees that add up to 3% or more to the cost of every purchase you make.

• Related: Best Credit Cards with No Foreign Transaction Fees

Snacks and Convenience Food

Even when you plan for everything, kids can dream up some pretty crazy ways to spend your money. They’re hot and can’t find a water fountain – so obviously, you need to spring for a lemonade. Or they’re tired of sitting in the airport and the McDonald’s in the terminal is calling their name.

You can bring snacks with you through airport security and directly onto the plane, but not drinks. With some forethought and planning, some basic snacks in your carry-on can help you avoid a situation where you’re required to buy overpriced airport food.

And if you’re driving, you have no excuse not to plan ahead when it comes to snacks. Pack a small cooler with plenty of snacks and drinks for everyone and you’ll avoid overpaying for gas station snacks and convenience foods.

• Related: Road Trip Tips: Keys to a Cheap Summer Adventure

Stroller Rentals

The thought of renting a stroller at a place like Disney World sounds entirely preposterous until you actually arrive at Disney World. Once you land within the park’s shiny gates and find yourself in the thick of the crowds, having your kid being tucked away where they can’t disappear makes a lot more sense. If it’s stiflingly hot or your kids are small, you may even want to save them some footsteps as well.

If you don’t plan ahead for a stroller at your favorite theme park, brace yourself. At Disney World in Orlando, Fla., for example, renting a double stroller will add a staggering $31 per day to the cost of your trip. It can cost considerably less at smaller and less expensive resorts, but you can avoid these added costs altogether by bringing a stroller from home if you have one. And if you don’t have one, borrow one!

Entry Fees and Parking

You can often hit up state parks and historical sites for free, but even some seemingly free attractions cost money. You might be required to make a donation to get into a museum or historical church, or pay a tax on your way out. Other times, attractions you want to visit are free to enter, but it costs an arm and a leg to park your car for the day.

The only way to prepare for entry fees and parking costs is to do as much research online as you can ahead of time. You might encounter a surprise fee regardless, but you’ll be best prepared to handle it if you plan for the worst and scour the internet for information on fees before you go.

• Related: Profound Life Experiences… on a Budget?

Sunscreen

A cheap beach vacation is possible if you plan ahead. Drive your car to the closest beach you can find, rent a nearby vacation condo off VRBO or Airbnb, and cook your own meals to keep costs at a minimum.

But don’t forget to plan for sunscreen. At up to $12 per container, you can easily spend $12 per day just to keep your family safe from the sun’s harmful rays. When I take my family to the beach or the water park, for instance, we can easily go through one can of sunscreen or more per day.

If you don’t plan ahead, these costs can easily take you by surprise. And if you end up having to buy sunscreen when you arrive on vacation, you may go broke trying to stock up. At resorts in some destinations in Mexico, for example, sunscreen sold on-site regularly goes for more than $30 per bottle. If you’re checking a bag for your trip, you can avoid getting gouged by buying extra sunscreen at home and bringing it with you.

• Related: 25 Ways to Save On Summer Travel

International Data and Roaming Fees

Plan on bringing your phone on an international trip? That’s perfectly fine, but it could cost you big-time. Depending on where you go and which carrier you use, you may be required to pay international data and roaming fees. And for some destinations, you might need to buy a SIM card for your phone to work at all.

For our family’s trip to Italy last year, we opted to purchase a $200 SIM card so we could use the internet freely and without restraint. This was enormously helpful as we desperately needed the “map” function on my phone — but also convenient since we could upload photos and I could keep up with work email while we traveled.

If you’re dreaming up an international trip, it can pay to plan ahead and look for the best deal on data and phone service before you go. At the very least, make sure you know your phone provider’s charges for international data and roaming so you won’t return home to the rude surprise of an expensive phone bill.

City Taxes

While most taxes are included in your room fee at American hotels and resorts, some cities abroad charge special or extra taxes on tourism. Most of the time, you won’t be asked to pay these taxes until you check into your hotel or check out and settle the bill.

These taxes are wide and inconsistent, existing in some popular European cities and not at all in others. In Rome, for example, extra city taxes are imposed on each paid night’s stay, and the charges increase based on the quality of hotel you book. Nightly fees at a one- or two-star hotel are just €3, for example, but you’ll pay €7 per night to stay in a five-star hotel.

In Barcelona, on the other hand, extra hotel taxes range from €0.45 to €2.50 per person, per night. Generally speaking, you won’t be required to pay these taxes until you check out of your hotel – that’s when they get you.

While you can’t avoid extra city taxes, you can plan for them. Make sure you research any cities you plan to visit ahead of time, taking special care to note how much these fees will add to the cost of your trip. Once you’re aware of the fees, you can make your peace with them and add them to your travel budget with everything else.

To Avoid a Vacation Budget Fail, Plan Ahead

Creating a travel or vacation budget takes some time and requires some research, but it’s absolutely worth it. By planning ahead for the many costs you’ll encounter, you can make sure your vacation remains affordable and free of any expensive surprises.

Just remember, travel comes with its share of hidden costs. While you should do your best to plan ahead, you should also give yourself a bit of a buffer in the event of unexpected expenses.

What kind of travel expenses have caused your travel budget to fail in the past? What would you add to this list? 

Related Articles:

• The Southwest Airlines Companion Pass: A Gold Mine of Free Travel
• Eight Things to Pack for a Frugal Vacation
• Why I’ll Never Feel Bad About My Vacation Spending

The post 10 Hidden Costs That Can Derail Your Budget Travel Plans appeared first on The Simple Dollar.

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Why Expenses Really Matter When It Comes to Your Investments

So, how exactly does an investment house make money?

Let’s use Vanguard as an example. You can go there, sign up for an investment account with them, and buy shares of one of their funds and they don’t charge you a fee for doing so. Your fund rises almost exactly with the stock market. A few years later, you sell those shares – again, with no fee for doing so – and pocket some profits.

Where does Vanguard make money in that picture?

They make money by charging expenses directly to the investment. Throughout the year, they withdraw a little bit of the value of the investment you’re holding and keep it for themselves.

Let’s say, for instance, that you own shares in a fund that has $10 billion in total assets. During the year, they might withdraw, say, $8 million from that fund to pay the employees, keep the servers running, and so on. All that you actually see is a very slight gradual downtick in the value of the investment. In fact, the expenses are usually charged so slowly that you barely notice the change…

But it’s a real change, and it can be very expensive.

Those withdrawals done by the investment house have to be disclosed to the investor and they’re almost always listed as an “expense ratio.” It’s the percentage of the annual assets that the company pulls out in a year in order to pay for all of those costs. In that example above, where the fund has a value of $10 billion and they take out $8 million a year for expenses, the fund would have an expense ratio of 0.08% – a pretty good ratio, I might add.

Expense ratios are one of the very first things that I look at when considering an investment, and in the remainder of this article, I’m going to show you why it’s so important.

A Baseline Investment Example

Let’s start off looking at a very basic investment example. Let’s say that a company offered an investment with a 7% annual return and 0% expenses. I’ll tell you this – if that fund existed in the real world, my money would be there in a heartbeat. It’s also a pretty good analogy for the long term stock market, as a 7% annual return over the long run is what most models predict for the future.

I decide to contribute $5,000 a year to that investment over the next 40 years. I start this year with $5,000 at the start of the year and repeat that for the next 39 years. What will I wind up with?

At the end of the tenth year, my balance will be $73,918.00.
At the end of the twentieth year, my balance will be $219,325.88.
At the end of the thirtieth year, my balance will be $505,365.21.
At the end of the fortieth year, my balance will be $1,068,047.85. Pretty sweet; I’m a millionaire.

Unfortunately, expense ratios are going to change this picture, and not in a good way.

Investment Example With 0.1% Expense Ratio

Let’s take the above example and slightly tweak it. Let’s add a 0.1% expense ratio to that fund. We’ll assume, for ease of calculation’s sake, that the expenses are withdrawn at the end of the year.

In this example, at the end of the tenth year, my balance would be $73,471.93. Compare that to the balance I would have with no expense ratio, $73,918.00. After ten years, a 0.1% expense ratio will have cost me $446.07.

At the end of the twentieth year, my balance in this example would be $216,563.51. Compare that to the balance I would have with no expense ratio, $219,325.88. After twenty years, a 0.1% expense ratio will have cost me $2,762.37.

At the end of the thirtieth year, my balance in this example would be $495,244.13. Compare that to the balance I would have with no expense ratio, $505,365.21. After thirty years, a 0.1% expense ratio will have cost me $10,121.08.

At the end of the fortieth year, my balance in this example would be $1,037,993.60. Compare that to the balance I would have with no expense ratio, $1,068,047.85. After forty years, a 0.1% expense ratio will have cost me $30,054.25. Ouch.

As you can see, even a tiny 0.1% expense ratio has rather large financial implications over the long haul. It shaves about 3% off of the overall total over a forty year stretch, which is enough to actually affect quality of living in retirement, at least a little.

Many Vanguard funds have an expense ratio in this ballpark, which is one of the big advantages of their investing strategy. By just following extremely simple strategies (buy everything, follow the average), Vanguard keeps the expenses low.

Investment Example With 0.5% Expense Ratio

If we bump things up to about 0.5%, we’re getting into the realm of some of the better mutual fund offerings from all sorts of different companies. These aren’t bad investments at all in the grander scheme of things. Let’s take a look.

Let’s use the original example – 7% annual return, 40 years, investments at the start of the year – and add a 0.5% expense ratio to that fund. We’ll assume, for ease of calculation’s sake, that the expenses are withdrawn at the end of the year.

In this example, at the end of the tenth year, my balance would be $71,715.88. Compare that to the balance I would have with no expense ratio, $73,918.00. After ten years, a 0.5% expense ratio will have cost me $2,202.12.

At the end of the twentieth year, my balance in this example would be $205,894.67. Compare that to the balance I would have with no expense ratio, $219,325.88. After twenty years, a 0.5% expense ratio will have cost me $13,431.21.

At the end of the thirtieth year, my balance in this example would be $456,940.20. Compare that to the balance I would have with no expense ratio, $505,365.21. After thirty years, a 0.5% expense ratio will have cost me $48,425.01.

At the end of the fortieth year, my balance in this example would be $926,640.74. Compare that to the balance I would have with no expense ratio, $1,068,047.85. After forty years, a 0.5% expense ratio will have cost me $141,407.11. Wow.

At a 0.5% expense ratio, retirement savings are taking a major hit, big enough to change one’s long term plans significantly. About 14% of the balance has dissipated due to that expense ratio, which is going to seriously alter your plans.

But it’s going to get more painful yet.

Investment Example With 1.0% Expense Ratio

At a 1.0% expense ratio, you’re looking at investments that are perhaps a bit more pricy. Usually, these are heavily promoted “prestige” funds from investment houses.

Let’s continue to stick with the original example – 7% annual return, 40 years, investments at the start of the year – and add a 1% expense ratio to that fund this time. We’ll again assume, for ease of calculation’s sake, that the expenses are withdrawn at the end of the year.

In this example, at the end of the tenth year, my balance would be $69,583.01. Compare that to the balance I would have with no expense ratio, $73,918.00. After ten years, a 1% expense ratio will have cost me $4,334.99.

At the end of the twentieth year, my balance in this example would be $193,375.10. Compare that to the balance I would have with no expense ratio, $219,325.88. After twenty years, a 1% expense ratio will have cost me $25,950.78.

At the end of the thirtieth year, my balance in this example would be $413,608.23. Compare that to the balance I would have with no expense ratio, $505,365.21. After thirty years, a 1% expense ratio will have cost me $91,756.98.

At the end of the fortieth year, my balance in this example would be $805,415.39. Compare that to the balance I would have with no expense ratio, $1,068,047.85. After forty years, a 1% expense ratio will have cost me $262,632.46.

In that situation, you’re probably not retiring when you originally planned to retire – it’s simply not going to work out. The expenses have drained literally a quarter of your retirement savings at this point, which means that your annual withdrawal is going to drop by a quarter, too (unless you want to risk running out of money). You’re either going to be working for quite a few more years or you’re going to have a part time job in retirement or you’re going to have to accept a lower standard of living. That’s the reality of it.

But it gets worse yet!

Investment Example With 1.5% Expense Ratio

When you start getting above a 1% expense ratio, you’re usually in the domain of investments that are being heavily promoted by investment advisors that are getting a cut out of those expenses. I personally wouldn’t touch these with a ten foot pole, but they’re out there. Let’s see how painful they are.

Let’s continue to stick with the original example – 7% annual return, 40 years, investments at the start of the year – and add a 1% expense ratio to that fund this time. We’ll again assume, for ease of calculation’s sake, that the expenses are withdrawn at the end of the year.

In this example, at the end of the tenth year, my balance would be $67,517.26. Compare that to the balance I would have with no expense ratio, $73,918.00. After ten years, a 1.5% expense ratio will have cost me $6,400.74.

At the end of the twentieth year, my balance in this example would be $181,703.79. Compare that to the balance I would have with no expense ratio, $219,325.88. After twenty years, a 1.5% expense ratio will have cost me $37,622.09.

At the end of the thirtieth year, my balance in this example would be $374,818.33. Compare that to the balance I would have with no expense ratio, $505,365.21. After thirty years, a 1.5% expense ratio will have cost me $130,546.88.

At the end of the fortieth year, my balance in this example would be $701,417.47. Compare that to the balance I would have with no expense ratio, $1,068,047.85. After forty years, a 1.5% expense ratio will have cost me $366,630.38.

There you have it. At the forty year mark in a 1.5% expense ratio investment, a full third of your money is gone to expenses. Poof. You may not even be able to retire at all at that point.

The Impact of Returns Versus Expense Ratios

As you might be able to guess, there’s a bit of tension between annual returns and expense ratios. A fund that has a higher annual return than another fund can get away with a somewhat higher expense ratio and still be beneficial for you as a customer. The trick, of course, is to find that fund that actually has a long-term history of a higher annual return.

Let’s look at the numbers to see how that works.

An 8% Baseline Investment?

For this example, let’s tweak the baseline investment from earlier. We’re still investing $5,000 a year, but now it has an 8% annual return, over 40 years, with a 0% expense ratio.

In that case, at the forty year mark, your investment would be worth $1,398,905.20. Remember, in the initial example, the annual return was 7% and we wound up with $1,068,047.85. So, just by bumping the return up from 7% to 8%, we increased our total return by $330,857.35.

If we toss in a 0.1% expense ratio, our forty year total goes down to $1,358,375.12, a loss of $40,530.08 compared to no expense ratio.

If we use a 0.5% expense ratio, our forty year total goes down to $1,208,392.96, a loss of $190,512.24 compared to no expense ratio.

Now, here’s where it gets interesting. If we use a 1% expense ratio (with the expenses removed at the end of the year), our forty year total drops to $1,045,489.98, a loss of $353,415.22 compared to no expense ratio. Why is this one interesting? This is the point where the return is actually lower than a 7% investment with 0% expense ratio, which would give us $1,068,047.85. Part of that comes from exactly when the expenses are withdrawn throughout the year and when the returns come in throughout the year, of course.

If you have a 1.5% expense ratio, your year-end balance is $906,114.04, which is again somewhat comparable to a 7% annual return with 0.5% expenses, which would give you $926,640.74.

The Impact of Expense Ratios

To summarize all of this, what you’ll notice is that the annual return of a mutual fund or index fund minus the expense ratio gives you a good idea of what your annual return will be for that investment. It’s not a perfect result because it varies depending on when the expenses are withdrawn and so on, but it will get you fairly close to the right number.

However, when in doubt, go for the fund that has the lower expense ratio. So, if you’re looking at two investments, when one has a 7% annual return and a 0.5% ratio and the other has an 8% return and a 1.5% ratio, you’re better off with the lower return and drastically lower expenses.

That’s because, year in and year out, the annual returns are going to jump up and down, but the expense ratio is going to stay the same. Thus, in a bad year, the expense ratio becomes increasingly more important and a high expense ratio is really going to pinch you badly, choking off the returns. You gain some of that back in the good years, but in a volatile investment, it’s generally not quite enough.

How Can You Find Out Expense Ratios

When you’re choosing between investments of a similar type, two pieces of information you’re going to want to know are the average annual return and the expense ratio. Both of those numbers should be easily available in the summary of an investment; if they’re not, tools like Yahoo Finance or Morningstar will help you quickly find that data.

As I mentioned above, the simplest way to use that information is to take the average annual return and then subtract the expense ratio from that, then use that number to compare different funds. If they’re pretty close, go with the one that has the lower expense ratio; if they’re still really close, go with the one that has the longer history.

Final Thoughts

Expense ratios are extremely important when you’re investing. As you’ve seen, a bad expense ratio can gobble up a lot of your money over the long haul. While you’re almost always going to have to settle for at least a small expense ratio, there’s a world of difference between a 0.1% expense ratio and a 1.5% expense ratio. Over the course of many years saving for retirement, the difference is hundreds of thousands of dollars.

Another important thing to remember: expense ratios and annual returns aren’t the only thing you should be considering while investing. You should also be considering risk, which you can figure out by looking at the annual returns each year for the last several years. Do those jump up and down a lot? Such investments are fine for the very long term – more than ten years out – but as you get closer to your goal, you’re going to want investments that don’t jump up and down each year, even if that means a lower average annual return. That’s because you don’t want to hit your deadline at the end of a very bad year because that will really hinder you going forward.

Expense ratios are mostly useful for comparing very similar investments, ones with similar rates of return and similar volatility. When I’m looking at investments like that, expense ratios are almost always the tiebreaker. I virtually always go for the investment with the lower expense ratio.

So far, using this strategy seems to have worked well for my family. We have most of our long term savings and investments with Vanguard in investments with very low expense ratios that strive to simply match the market by owning a little bit of everything. That strategy has worked like a champ, and low expense ratios are a big part of the reason why.

Good luck!

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Traditional Advice is WRONG: Here’s How Much You Actually Need to Save for Retirement

I’m generally an even-keeled guy. I don’t get worked up about much. I understand that different people have different perspectives, so I try to be respectful when others disagree with me. Having said that, there are indeed certain things that piss me off.

For instance, I get mad-dog lathered up at traditional retirement advice, such as this from a recent article at Business Insider (echoed here at The Wall Street Journal):

So how much are you supposed to be saving in order to finance 20 to 30 years post-work? The commonly accepted rule of thumb is that you’ll want about 70% of your former annual income — at least — to continue living at or near the style to which you’ve been accustomed.

Let me be blunt: This rule of thumb is asinine.

This “rule” (and most retirement calculators, both on the web and from financial planners) estimates how much money you’ll need by using your income as a starting point. The 70% ratio is commonly used, but plenty of places use 80% or 90%. Regardless the percentage, estimating your retirement spending from your current income is ludicrous. It’s like trying to guess how much fuel you’ll use on a trip to grandmother’s house based on the size of your vehicle’s gas tank!

• Say you make $50,000 a year but spend $60,000. In this case, your income understates your lifestyle by $10,000 a year. If you based your retirement needs on your income, you’d be screwed.
• On the other hand, if you’re a money boss who saves half what she earns, you’d only spend $25,000 of a $50,000 salary. Basing your retirement needs on your income would cause you to save much more than you need. You’d be working long after the point at which you could retire safely.

Predicting how much you’ll need in retirement based on income makes zero sense. (Zero!) It’s one of those pervasive financial rules of thumb — such as “buy as much home as you can afford” — that does more harm than good. There’s a real danger that if you heed this advice you won’t have enough saved in retirement. If you’re a money boss, you run the risk of saving too much, meaning you’ll miss out on using money to enjoy life when you’re younger.

Instead of estimating your retirement needs from your income, it makes far more sense to base them on spending. Your spending reflects your lifestyle; your income doesn’t.

So, how much will you spend in retirement? It depends. For many people, expenses drop when they stop working. They drive less. The kids are out of the house. The mortgage is gone. And, ironically, they no longer have to save for retirement. Meanwhile, other expenses increase. (Most notably, health care costs tend to balloon as we age.)

That said, it is possible to get a general idea of how much you’ll need in the future. According to the 2016 Retirement Confidence Survey: about 38% spend more in retirement than when they’re working. 21% spend less, and 38% spend the same. Past iterations of this survey have shown that roughly two-thirds of Americans spend the same (or only slightly different amounts) during retirement as they did while working.

Translation: In general, your pre-retirement expenses are an excellent predictor of your post-retirement expenses. That’s why I prefer this rule of thumb: When estimating how much you need to save, assume you’ll spend about as much in the future as you do now.

Forget the “70% of your income” bullshit when planning for retirement. Use 100% of your current expenses instead.

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How to Minimize or Eliminate Many Repeated Household Buys

Many of the household supplies that we buy at the store are simply replacements for other things, often sold to us in a slightly altered form and advertised as being more “convenient” than “old fashioned” methods. However, the truth of the matter is that they’re mostly just more expensive and the “convenience” that they offer is minimal, if not nonexistent.

If you dig into the reality of many specific household product purchases, there are many smarter ways to get the same effect at a much lower cost. Here are some of my favorite strategies for minimizing or eliminating common household purchases.

Paper towels Sure, paper towels can be really useful for cleaning up a mess in a pinch, but once you use them, they’re gone. You toss them in the trash and before you know it, you’re replacing the roll. Replace a few rolls and before you know it, you’re headed back to the store.

A much better approach is to simply have a “rag drawer” in your kitchen. Grab a rag when you have a mess and you’ll find that it absorbs much better than a paper towel, works really well with soaps and the water from your sink, doesn’t fall apart while cleaning, and when you’re done, you just toss it in with the dirty clothes. Having a drawer full of rags is a perfect substitute for paper towel use and turns that recurring expense into a very rare one.

Paper plates Paper plates are a convenience many people turn to in situations where they’re serving a lot of people or serving outdoors, where more expensive and fragile ceramic or earthenware plates can easily be broken.

Instead of using paper plates, which hit the trash and can never be used again, buy a large bundle of plastic plates for those occasions. Bring them out for picnics and set out a bin for people to throw their dirty plates into, then just run them through the dishwasher. If you’re going on a picnic, you can stow a few plates in your basket for clean eating, too. You’ll never have to buy a stack of paper plates again.

Paper napkins Many people use paper napkins to clean fingers and faces after a meal or to help with minor spills or drink condensation. While a paper napkin can certainly handle such things, putting them out for every meal is a recurring expense.

Avoid that recurring expense by getting a handful of dark cloth napkins and using them for every meal. When you’re done, just toss them in the laundry. Sturdy cloth napkins last for hundreds of uses, completely eliminate the need for paper napkins, and actually look very classy on the dinner table. (One great strategy for keeping them clean is to keep a small laundry basket in the pantry to toss rags and napkins into after using them and then wash a bunch of them at once in a single load.)

Paper or plastic cups Again, these tend to be useful if you’re serving drinks to a lot of people, but again, they tend to end up just thrown away at the end of the event.

The simple approach, again, is to just buy a large quantity of plastic tumblers and keep them in storage for big events. After the tumblers are used, you can just run a bunch right through the dishwasher and drop them straight back into storage.

Window cleaner Many people buy bottles of window cleaner in order to clean all of the glass surfaces in their home. It works well in many cases, but do you know what works similarly well?

Vinegar.

Yep, humble white vinegar. When you run out of your current spray bottle of Windex, hang onto the bottle and then fill it with equal parts vinegar and water and then a drop or two of liquid dish soap, shaking it thoroughly to mix. You’ll find that this mixture does a wonderful job of cleaning windows hand in hand with a clean cloth. Plus, it’s far cheaper to just buy a giant jug of vinegar than to buy much smaller containers of window cleaner.

Laundry soap I’m often stunned at how expensive laundry soap is. Even the cheaper brands can cost as much as a quarter per load; more expensive options can reach half a dollar a load just for the cleaning substances. That’s ridiculously overpriced, considering that most of the things we wash really aren’t all that dirty to begin with. You don’t need heavy duty stuff to get a bit of sweat or a few marks of dirt out of a garment.

I’ve experimented with homemade laundry soap many times in the past and I’ve come to the conclusion that the best solution is a powder made of equal parts borax, washing soda, and soap flakes (which you can either buy as a box or bag of flakes or make yourself by grating a bar of ordinary soap). Just add a teaspoon of that mix to any load of laundry and it’ll come out wonderfully clean.

Laundry softener What about good old laundry softener? You add it to a special tray in your washer just before you wash your clothes (or else add a sheet to your dryer for the same effect) and your clothes theoretically come out wonderfully soft to the touch and wonderful to put on.

The thing is, you can actually soften your clothes quite well by doing the same thing with vinegar. Yep, humble white vinegar, again. Just add a capful of white vinegar to the softener slot on your washing machine and you’ll have very similar results to that expensive fabric softener. As with the window washing fluid above, you can easily just buy a giant container of vinegar for the same price as a small container of fabric softener and get almost the same effect.

Dish soap Dish soap is a wonderful thing. It takes away the grease and food particles that can coat our dishes and even help take off some of the hard burnt-on materials, leaving our dishes and silverware amazingly clean.

Of course, you can easily make your own. Just take four cups of water, bring it to a boil, add 3/4 cup soap flakes, stir it until the soap flakes are dissolved, add 1/4 cup washing soda and 2 teaspoons of glycerin, stir it some more, then add it slowly to an empty dish soap bottle when it’s just barely stopped boiling. Let it sit for 24 hours and you have some great dish soap. If you only have a small bottle, halve this recipe, and you may need to add a little more water depending on the type of soap that you use.

Again, if you buy the ingredients at the store, you’re going to have them in such tremendous bulk for this recipe that you won’t be buying any more for a long while and you won’t need to buy dish soap again, either.

Toilet paper One final strategy, one that might be way “out there” for some people in the United States, is to simply minimize or completely eliminate toilet paper use through the use of a bidet. A bidet is simply a device that provides cleanliness with targeted jets of water rather than with toilet paper and, speaking from experience, it actually works rather well. It’s just unfamiliar, since it’s a device that has never really caught on in the United States, though they are common in the rest of the world.

A bidet eliminates the vast, vast majority of toilet paper use, requiring only the tiniest bit for drying afterwards, as there is no real use for cleaning. Given that it only uses a very small amount of highly targeted water, there’s very little cost in using a bidet. Bidets are actually pretty easy to install on any toilet with a simple attachment that can be installed with a screwdriver and a few minutes of work; in fact, this specific model comes highly recommended for both installation and use.

Final Thoughts

Each of these strategies either entirely eliminates a common household purchase or else replaces it with another item or two that can be stretched to incredible lengths. In either event, your routine costs for household products will drop if you use any of these strategies, and the more of them you use, the lower your regular grocery store bills will become.

Good luck!

The post How to Minimize or Eliminate Many Repeated Household Buys appeared first on The Simple Dollar.

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How Much Does Lasik Cost?

In the olden days—meaning, before the very late ‘90s — people without perfect vision had two basic choices for dealing with their sight problems: eyeglasses or contact lenses. Both came with benefits and drawbacks, but neither solved the essential problem, allowing the four-eyed among us to function without corrective lenses.

Then, Lasik was approved in the United States. By 2011, over 11 million Americans with myopia (nearsightedness), hyperopia (farsightedness), and astigmatism (blurred vision), had laser eye surgery, according to CRST Europe. The surgery, which corrects vision problems due to refractive errors by reshaping the cornea, offers a life without lenses for many patients who undergo it.

But, it’s not without risk — or expense.

How Much Lasik Costs, Out of Pocket

As with all medical procedures, your price tag for Lasik surgery will vary, depending on your location, doctor, and type of vision or medical insurance. On average, however, Lasik cost between $2,100 and $2,200 per eye in 2014, according to All About Vision, which notes that patients who would need surgery for both eyes should double the cost to get an accurate estimate (no bulk discount here).

Does Insurance Cover Lasik?

In most cases, Lasik is considered elective surgery, similar to a cosmetic surgery — which means that many insurance companies won’t cover the costs. Lasik.com reports that some vision plans negotiate discounted rates with providers, but the majority of patients should be prepared to pay out of pocket for most or all of their Lasik surgery.

The exceptions to this rule are rare, and involve a lot of negotiating with insurance — but if your job requires you to have perfect vision (think active military in certain roles), or you have trouble tolerating lenses for medical reasons, you might be able to persuade your insurance company to cover the surgery.

Can Lasik Save Me Money in the Long Run?

Lasik providers often advertise their services by comparing the cost of surgery versus the cost of glasses and/or contact lenses over the course of a lifetime. The trouble with this comparison is that the very patients who are best suited for Lasik are also the ones likely to spend the least on lenses; the ideal Lasik patient is one with a stable prescription, among other characteristics.

If you’re willing to stick with eyeglasses, and don’t feel the need to upgrade your frames every year, it would probably take you a very long time to spend enough money on glasses to make Lasik a better financial alternative. In addition, most vision plans kick in for new glasses every year or two, further reducing the cost of simply sticking it out.

That said, there’s a certain priceless appeal to being able to see without assistance. And contact lenses are a different story. If you wear contacts, even the savings offered by vision insurance probably won’t completely offset your costs. And if you don’t have insurance, your annual expenses could be quite steep: Very Well estimates yearly costs for daily disposable contact lenses at $440 to $760. At that rate, you could “pay” for your Lasik procedure in saved contact lenses costs in about a decade.

Other Variables to Consider

Of course, the problem is that there’s no guarantee that your Lasik results will hold up for a decade—or even that you’ll wind up with perfect vision for any length of time after the procedure.

About 5% of patients reported being dissatisfied with the results of their Lasik surgery, according to an NPR piece from a few years ago. Further, WedMD says that “most patients enjoy improved (not necessarily perfect) vision without their old glasses” — meaning that you could go through the expense and effort of getting laser surgery, only to wind up still needing your glasses after it’s through.

Beyond that, as with any surgery, there are risks (they’re shooting a laser at your eyeball, after all). The FTC cautions that Lasik might not be suitable for patients with dry eye or conditions like glaucoma, lupus, diabetes, or certain diseases of the eye.

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Twelve Things I Should Have Considered More Carefully Before Buying My First Home

Several years ago, my wife and I were in a bit of a personal bind. We lived together in what was about the tiniest two bedroom apartment you can imagine, with a small baby and another one on the way. We were already forced into being pretty creative with arrangements with even one baby in the home, but two? It was pretty clear that we needed a bigger place.

We considered a bigger apartment, but there were honestly none available that were even remotely reasonably priced in the location that we wanted (roughly midway between our two jobs), and my wife didn’t want to live in the city near either of our jobs.

With that, we started house hunting. And, to be honest, we somehow managed to stumble into a pretty good house for our needs at a fairly reasonable price.

Looking back, however, I recognize that we were able to find that house due to pure, unadulterated luck. We did many things wrong during our house search, our move, and our early days of home ownership.

If I somehow had it to do all over again, I would have made some smarter decisions and considered some things that I didn’t pay any attention to. But, unfortunately, I don’t have a time machine.

Instead, here are the twelve things I most regret not considering or doing during the whole process of moving from an apartment to a house. Perhaps they’ll find their way to someone in the same situation I was in ten years ago.

#1 – An apartment offers more benefits than you think.

It is really really easy to get caught up in the glow of all of the potential benefits of home ownership. You can build equity! You don’t have a landlord skulking around! Once you pay off that mortgage, you won’t have any kind of monthly payment any more (well, you’ll still have property taxes and association fees and insurance…)! You can do whatever you want with the property – if you want to knock out a wall, go for it! If you want a fuchsia room, go for it!

The thing is, there are actually a lot of benefits to living in an apartment that people tend to overlook due to a “grass is greener on the other side” effect.

For starters, when you live in an apartment, you don’t have to do maintenance on the property. If something goes wrong, call the landlord. If it’s your house, you’re either going to be fixing it yourself or calling a repairperson and, in either case, you’re going to be spending money on parts (at the very least) and labor (if you bring in help).

For another, rental insurance is far cheaper than homeowners insurance on even the cheapest of properties, and you don’t have things like property taxes or association fees, either.

For another, tasks like mowing the lawn and cutting weeds and trimming trees aren’t even on your radar. They’re just taken care of. You don’t have to spend the time on those tasks or pay for the equipment required.

Those things all mean expenses when you’re living in a home, expenses that people often don’t look at when they compare a mortgage to apartment rent.

Before you ever consider buying, you really should spend some serious time looking at a good “rent versus buy” calculator, like this one from the New York Times.

You need to run the numbers over and over and over again and make absolutely sure that the financial benefits you’re getting from buying a home are greater than the financial benefits you’re getting from renting. Looking at the raw numbers removes the emotions and the “grass is greener” factor from the picture.

#2 – A 20% down payment is incredibly important.

If you don’t have a 20% down payment, you are going to wind up handing a lot of money to the bank to make up for it.

Here’s the reality of the situation: if you come to a bank without 20% of the cost of the home you want to buy already in hand, the bank is going to see you as a risk, as someone not serious about buying a home, as someone who might dump a house on them after not making many payments which leaves them swallowing almost the full cost of the house if they have to foreclose.

What the bank will do is not give you a loan unless you sign up for mortgage insurance. Mortgage insurance will amount to about 1% of the total balance of the mortgage each year; it will be tacked on to your mortgage payment. You can essentially think of mortgage insurance as adding a +1 to whatever the interest rate is on your loan – if it’s a 3.5% loan, you’ll effectively be paying a 4.5% interest rate.

That mortgage insurance is going to stick around until your remaining principal on the loan is less than 80% of the value of the home – and the bank won’t exactly be friendly about this, because they won’t let you remove the interest rate until they’re absolutely sure it’s less than 80% of the lowest possible value of your home.

Why do they do this? It’s insurance for them against a homeowner – you – who might not necessarily follow through on the mortgage. Why would they think that about you? It’s because you tried to borrow a lot of money without bringing much of your own to the table, as demonstrated by not having that 20% down payment.

So, the real impact of not having a 20% down payment is that for the first, say, third of the time you’re paying off the mortgage, you’re going to be effectively tacking on an additional payment each month, one that will add up to 1% of the value of the home over the course of a year. If you’re buying a $250,000 home, that means your mortgage insurance will cost you $2,500 a year until you get rid of it. It’s just gone – poof.

You can avoid this entirely by just saving up a 20% down payment, which you can do by being a little bit smart with your money. That’s actually really good practice for the realities of home ownership, because to be able to make home ownership a success, you need to be smart with your money. Home ownership is very rewarding, but there are a lot of costs involved, and if you’re spending money without much organization, simply learning how to save and make better choices with your money is vital preparation for home ownership and that 20% down payment savings project is a great way to learn.

#3 – Location is incredibly important.

This is something you likely already understand, but I’m putting it here to re-emphasize it. Location. Is. Very. Important.

Wherever you decide to live, you’re going to be commuting from that place to wherever it is that you work. That commute is going to have a cost in the form of both money and time, a cost that is going to be repeated over and over and over again as long as you have that job (and, likely, jobs similar to that one which will probably be in the same area).

If you live close to that area, great! You can walk to work or take a bike to work, which means your commuting costs are practically zero.

If you’re a bit further away, you can probably take the bus to work or the subway. You’ll have to pay some mass transit fees, but it’s still pretty cheap in the big scheme of things.

If you’re far away from work, you’re probably buying a car. A car is expensive. The AAA estimates that the average annual cost of owning a car, including all of the expenses (fuel, maintenance, registration, insurance, parking, depreciation, etc.), is $8,698 a year. Ouch.

If you pick a poor location, your commute cost goes up from $0 per year to $8,698 per year. That’s effectively tacking $700 a month onto your monthly housing expenses – and we’re not even talking about the time eaten each and every day.

This isn’t to say that this should be a deal breaker, but that it should be part of your math when figuring out whether to move.

#4 – Shop around for your mortgage and get pre-approved.

Sarah and I did shop around on a very limited basis for a mortgage, but our “shopping around” mostly consisted of looking at a few advertised mortgage rates and then quickly selecting a single financial institution to work with.

What we should have done is actually meet with several different banks to discuss mortgage options and see what kind of mortgage offers they were willing to preapprove for us.

Preapproval is important. It gives you a dollar amount with which you can safely house hunt without having to go back and get approved. It’s effectively your budget for the house hunt.

It takes some time, but spend that time now. It will pay off enormously for you if you are able to find a bank that will shave 0.25% off of your interest rate while preapproving you. Just getting that little amount is worth many, many hours of bank meetings.

#5 – Go minimal when you’re choosing a home.

When you’re in the process of house hunting, it’s very easy to get blown away by the bigger homes with nicer decor and furnishings. They look good. They’re roomy. They shine in comparison to smaller homes with lower quality decor.

The thing is, you’re paying for that extra space. You’re paying for those nicer elements. You’re paying a lot, in fact.

My advice? It’s similar to my advice when shopping for anything. Start at the bottom and inch your way up. Don’t start by looking at homes at the high end of your preapproval. Start by looking at a bunch of homes at the low end and see if any stand out to you for your needs.

Then, very slowly start lifting the ceiling on your price and looking at more expensive homes if you don’t find anything that really stands out to you.

If you start, as we did, by looking at homes that are on the very upper end of your price range (or even out of your price range), you’ll find yourself naturally predisposed against lower-priced homes. Your basis for comparison becomes that expensive, gorgeous home that’s going to be like a financial weight around your ankle, a home that doesn’t represent the best bang for the buck for you (which is what you’re really looking for).

Start cheap. Look at cheap homes, then inch upward. You’ll know a good home for you when you see it.

#6 – A fifteen year mortgage is virtually always a better idea than a thirty year mortgage.

Over the course of a fifteen year mortgage, you’re going to end up paying about a third of the interest to the bank that you would pay over the course of a thirty year mortgage. That’s because not only is a fifteen year mortgage much shorter in length (meaning you’re paying more principal each month), it also comes with a lower interest rate.

If that tip is true, why do people get a thirty year mortgage, ever? The reason’s simple: thirty year mortgages virtually always have a lower monthly payment. Even though it’s a poor long term choice, people often look at the bigger fifteen year payment and back away, believing that they’re not going to be able to afford it.

Here’s the truth: if you’re scared of the monthly payment of a fifteen year mortgage, then a thirty year mortgage for the same amount is probably also a poor idea. It means that you’re buying more house than you can really afford.

Unless you have some sort of incredibly compelling and unusual reason for preferring a 30 year mortgage, you should be getting a 15 year mortgage. If it looks like you can’t afford the payments on the 15 year mortgage, then you need to be looking at a lower-priced property to buy.

We got a thirty year mortgage. We managed to pay it off in four and a half years (because we were making triple and quadruple and quintuple payments to try to become debt free). If we had a fifteen year mortgage, we would have paid the whole thing off even faster, with even less mortgage given to the bank.

#7 – Never go above using 40% of your take-home pay as debt payments.

This is a good rule of thumb for financial sanity. Take your monthly debt payments for your already existing debts. Add to that your monthly mortgage payment for a fifteen year mortgage. If that adds up to more than 40% of your monthly take home pay, then you’re putting yourself on a very dangerous financial tightrope and you should strongly reconsider buying that home.

This is an example of a foolish move that we almost made, except that we were directly saved from this by a loan officer at the credit union we were working with. The number one figure she worked with in terms of determining our preapproval was our monthly budget and she would not allow us to go above a 40% total debt payment. She preapproved us only for an amount that translated into a loan that was below that 40% threshold.

Without that careful loan officer, we could have found ourselves in a serious mess, as we had been willing to borrow more for a bigger house. We had our eye on a home that was almost $50,000 more than what we were preapproved for; buying that home would have been a giant mistake.

Keep your debt payments below 40% of your take home pay. If you can’t do that and also get the house you want, keep saving or turn your sights lower.

#8 – Flipping requires a lot of sweat equity; it’s definitely not just pure profit and reality show fun.

One potential avenue of home ownership that Sarah and I discussed was the idea of “flipping” a house. This was during a period where the concept of “flipping” a house – buying it, putting some work into it, then selling it for a profit – was very much in vogue.

It can be a moneymaker, for sure, but it’s also a very big time sink. You are going to be putting a lot of hours into such a project if you take it on, and if the house you’re flipping is also your primary residence during the process, you’re adding even more challenge to the equation.

My later experience with house renovation and flipping taught me a simple lesson: it can go well and be profitable if you know what you’re doing and have some good carpentry and handyman skills. If you’re lacking those, it’s not going to go well – you’re going to vastly increase your invested hours and vastly cut back on your profits.

#9 – You are going to want a healthy amount of cash in hand when you move.

In the months prior to your move, don’t just throw everything into a down payment or into closing costs. Keep some aside for the inevitable bundle of expenses that you’re going to discover when you move in.

You’re going to find that you need lots of things, particularly items that were previously provided by your landlord. You’ll need a mower (or a mowing service). You’ll need lots of various tools. You’ll probably need some furniture – even if you buy super low-end stuff, you’ll still need some. You may need appliances. You may need little things for minor home repairs. You may need food and beverages for the people who help you move and settle in.

Those costs are going to add up, no matter how you slice it. It’s a bad move to start off your new period of home ownership with a lot of credit card debt.

So, during those last few months in the apartment, direct some of your savings to be used for those expenses when you first move in. You’ll be incredibly glad you did, because if you don’t, your credit card will melt.

#10 – “Fill” rooms with very basic furnishings and upgrade slowly from there.

Your first home will probably be substantially larger than your apartment and you’ll find that, when you move in, some of the rooms are awfully… sparse. It will be very tempting to go fill them up with furnishings, particularly places to sit.

There’s nothing wrong with that temptation. Just do it smartly.

I highly recommend starting with very low-end furnishings, even secondhand stuff, to fill spaces in your rooms. This will enable you to eliminate that “empty” feeling as inexpensively as humanly possible.

Then, after that, slowly upgrade the furnishings as you see fit and as necessary. If you do it slowly, you can do it out of pocket, without the added expense of credit card interest and without putting your emergency fund or other savings at risk.

#11 – Adopt a “one in, one out” policy from day one, not later on.

Once you’ve settled in just a little and have purchased a few true essentials for your home – basic furnishings and such – adopt a “one in, one out” policy for everything in your home. If you bring in an object of some type, you need to get rid of an object of the same type by selling it.

If you bring in some clothing, you have to get rid of some clothing. If you bring in a book, you have to sell a book. If you bring in a gadget, you have to get rid of a gadget.

Seem strict? Well, the problem is that if you don’t do this, you’ll rather quickly fill up all of the additional space in this home and you’ll be just as cluttered as you were before you moved. You’ll also find yourself in a position where it is much more difficult to move, to rearrange things, and to nave a non-cluttered home, and you’ll be spending lots of time on maintaining your stuff and finding individual things you need.

Another big benefit of such a policy is that it keeps money in your pocket. You’ll become very selective with the things that you buy. You’ll spend less overall, and when you do spend money, it will be for quality upgrades, not just mass quantities of stuff.

Keep things simple. Stick with a one in, one out policy. I certainly wish we had done so.

#12 – Put in the effort to know all of your neighbors.

This is a final, but powerful tip for any new homeowner. Get to know all of the people in your neighborhood – at least within several houses of your own. Stop by if you see them outside and introduce yourself. Once you’re settled in, invite some of them over for a cookout in the back yard. Built at least a minor positive relationship with them.

How is this beneficial? A neighbor is a person who can lend a helping hand in a pinch. You can borrow things from them when needed. They can keep an eye on your house when you’re traveling. They can be a friendly face and a conversation partner at home and can even become a close friend. Of course, you’ll reciprocate these things, but the cost for you is much lower than the value of the benefit you receive.

Your neighbors are a lending library, a source for advice, an intruder alarm, a package retrieval aid, an emergency babysitter, a potential lifelong friend, and so much more. Don’t let that slip by just because of your own busy schedule.

Final Thoughts

In various ways, we bungled almost all of these strategies while purchasing, moving into, and settling into our current home. They weren’t conscious mistakes, just errors made because we didn’t yet know what we were doing.

After years as a homeowner, I’ve managed to overcome and fix some of these things. We eventually built good relationships with our neighbors. Our house is cluttered, but we have a “one in, one out” system that’s largely in place now. Our house is wholly paid for (though we could have paid for it much sooner).

If I had it to do all over again, though, I wouldn’t try to fix these things afterwards. I’d try to do them right from the start. I hope you’ll do the same.

The post Twelve Things I Should Have Considered More Carefully Before Buying My First Home appeared first on The Simple Dollar.

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Five Reasons You’re Not Getting Calls From Hiring Managers

Do you feel like you’re sending your resume into a black hole? It’s not necessarily because your experience is lacking. You could be the most qualified candidate in the world, but unless you hone your job search strategy during the pre-interview phase, you’re never going to get a chance to talk to a hiring manager.

If you’ve been job searching for a while, and your inbox is full of dust bunnies, here are five things you might be doing wrong:

1. You’re concentrating on applying online.

Up to 80% of job openings aren’t advertised, according to Steven Rothberg, founder of job-search website CollegeRecruiter.com. Instead, they’re filled internally or through employee recommendations. If you’re focusing your search on job boards and corporate job listings, you may only be seeing as little as 20% of the potential market.

The better bet is to concentrate on building your network. The more people you have in your corner, the more likely it is that you’ll hear about one of these unadvertised opportunities. Better yet, you’ll have someone to vouch for you to the hiring manager.

2. You’re not creating targeted resumes for each position.

Hopefully you’re customizing your cover letters instead of sending everyone the same generic letter, but your resume should get some tweaking, too. Of course, it’s easier to write your resume once and send it out for multiple job openings, but that sort of blanket-application process isn’t very effective.

Put yourself in the shoes of the decision-maker in this scenario: Do you want to hire the person who’ll take any job, or the one who appears genuinely excited about the particular job you’re hoping to fill? The enthusiastic candidate is more likely to appear like a good fit — and thus more loyal. It’s expensive to hire and train employees. Companies hope to make a good choice from the start and keep their workers on board and productive for as long as they need them.

3. You’re not using resume keywords.

When you apply online, your resume most likely enters an applicant tracking system, a software program that stores and sorts resumes, and allows recruiters and hiring managers to search them by keyword. Fail to include the right resume keywords, and you’ll never come up in their search.

How can you find the best resume keywords? Start with the job description.

“The buzzwords they’re looking for will usually be apparent in the job posting, so be sure to review them to make sure you have touched on most, if not all, of the keywords that are most relevant to each position,” writes Alison Doyle at About.com.

You should also include any keywords related to your skills, education, and job history. Don’t leave out terms just because you think they’re obvious. You might assume that everyone knows that a landscape architect probably knows AutoCAD, for example — but if you leave out that information, your resume might not make the cut when a recruiter searches her database.

4. Your social media profiles are working against you.

According to a CareerBuilder survey, 60% of employers used social media to screen candidates, and 21% said they were specifically looking for reasons not to hire a candidate. Don’t give them that reason.

If your online presence looks more like a Bud Light commercial, you might want to think about updating your privacy settings. (Although even that won’t necessarily save you: 36% of employers said they’d asked to be friends with candidates on social media. Cleaning up your profiles entirely might be best.)

On the other hand, not using social media at all can also work against you: 41% of employers said they’d be less likely to interview someone if they couldn’t find information about them online.

5. You’ve let the hiring manager know how old you are.

It’s illegal to discriminate against a worker based on their age – at least, after the age of 40 – but that doesn’t stop some companies from doing it anyway. At the hiring stage, it’s often easy enough for people to figure out how old you are, based on graduation years or outdated terminology in your resume (e.g., “webmaster”).

Remember that your resume is the highlight reel of your career, not a blow-by-blow account of everything you’ve done since graduation. If you’ve been in the workforce for a while, it’s perfectly all right to drop a few barely related early jobs from your CV. And definitely take off that graduation year if you think it might be holding you back.

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VIDEO: Where Should I Start Saving?

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How Can I Buy Stocks Online?

That you can buy stocks online is no surprise — what can’t you buy online anymore? However, knowing you can buy stocks online is different from actually knowing how to do it.

Buying stocks the traditional way can be hard enough. That’s why so many people use brokers to buy their stocks for them, and why even more people simply invest in mutual funds. If you’re looking to buy individual stocks online, however, you have plenty of options.

Brokerage Accounts

We recently explained in detail how to set up a brokerage account, but to recap: A brokerage account is a bit like a savings account — you can move money in and out freely — except you use the money to buy stocks or other investments, and those investments aren’t FDIC insured. Some of the most popular online stock brokers — which allow you to trade stocks at a discount compared to traditional brokerage houses — include Scottrade, E*Trade, and Charles Schwab.

• Related: E*Trade vs. Scottrade

With an online broker, you can buy and sell nearly any kind of investment, including stocks of individual companies, bonds, mutual funds, and exchange-traded funds (ETFs). Since you’ll typically pay a commission on each transaction — both when you buy and when you sell an investment — trading too often can eat into your returns.

Also note that you should only start trading stocks in a brokerage account if you have your tax-advantaged retirement savings plans maxed out, your credit levels under control, and six months to a year of living expenses stashed in your savings account as an emergency fund. Once all those ducks are in a row, then it’s time to think about investing — not before.

• Related: 10 Things You Need to Do Before You Start Investing

Index Investing in Your IRA or 401(k)

One of the problems with investing in individual stocks, however, is that it’s incredibly difficult to know which stocks will perform better than others. Unless you’re Warren Buffet or a similar Wall Street wizard (and, in fact, even they get it wrong much of the time), chances are good that you might as well just throw a dart at the financial section of the newspaper and buy whatever the dart lands on.

That might sound discouraging — and in a certain sense, it’s meant to be: Stock picking is best left to the experts, who have the resources to buy in bulk and the time to thoroughly research each company’s financial health.

Investing in mutual funds — collections of stocks chosen by a professional money manager and owned by a large group of investors — whether through your online broker or your retirement account, is one way to leave it to the pros. But even mutual funds present problems. Some funds charge high fees that eat into your returns, and, truthfully, most fund managers are no better equipped to beat the market than anyone else.

This is part of what led to the rise of index funds and exchange-traded funds. With these investments, as with mutual funds, you’re able to invest in the entire stock market or large segments of it (for example, all U.S. technology stocks), rather than just investing in individual companies piecemeal (and paying a commission each time you trade one).

However, because the holdings in these funds are determined by a set index and not hand-picked by an expensive fund manager, they tend to have far lower costs – and that can have a huge impact on your returns over time.

That’s a great bet, because over the long run, the stock market tends to go up — even if you’re not sure which stocks in particular will rise. Investing in index funds will almost certainly allow your money to grow over time through the miracle of compound interest, provided that you leave the money alone.

• Related: What Is Index Investing and Why Does It Work?

‘Robo-Investing’

However, even if you’re able to dodge the damage high fees can wreak on your investments, there’s yet another layer of difficulty here, because buying and selling stocks or funds can result in significant taxes if not done properly.

• Related: Five Quick Questions About Stocks and Taxes

The pot of gold at the end of this bad-news rainbow is that there’s now a modern alternative to financial planners. Robo-advisors, or online financial advisors, basically let a sophisticated computer algorithm manage your money efficiently and effortlessly.

When you use a robo-advisor such as Betterment or Wealthfront, you tell them what you want to invest in, what your risk tolerance is, and what your long-term goals are, and they do most of the rest of the work for you — automatically investing in low-cost index funds, rebalancing your account, and taking advantage of tax-loss harvesting.

This approach can save you a ton of money in fees — and low fees are the single best predictor of future investing returns. But it can also yield better overall results than even the best (and most expensive) financial advisors, thanks to the automation of buying and selling for tax purposes.

A robo-advisor can likewise help you choose and maintain a smart asset allocation. Most financial advisors say it’s best to come up with an investment plan based on your long-term goals and risk tolerance, and then stick with it. That might mean investing 50% of your money in U.S. stocks, 25% in international stocks, and 25% in bonds.

But as one group of investments rises and another falls, your asset allocation — how much of your money is devoted to each area of the market — can get out of whack. Robo-advisors automatically rebalance your portfolio periodically to cash in on gains, reap tax benefits from any losses, and get your investment plan back on track.

• Related: Betterment vs. Wealthfront

Put simply: Buying stocks online is easy, and yet it’s incredibly complicated to do it well. It’s almost always the best idea to let a professional handle it. With the current level of technology, you don’t need to even pick a professional — you can pick a program that a professional designed. That’s going to help you to grow a significant retirement nest egg, provided that you can leave the money sitting in your account long enough.

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Human Capital vs. Financial Capital: What They Mean and How You Can Take Advantage of the Difference

Human capital. Financial capital. They’re terms that sound like “business speak,” but when you boil them down, they’re just describing things that most people intuitively understand.

For starters, human capital is simply the skill, knowledge, and experience possessed by an individual (or population) viewed in terms of their value or cost to an organization or community. You have certain skills, character attributes, knowledge, and experience, and those are worth a certain amount to your employers and, for that matter, to your friends.

You can think of human capital in personal terms as the amount of money you’ve yet to earn over the course of the rest of your life. The younger you are, the higher your human capital is as you have more years in the workforce. The more skills you have, the higher your human capital. The more useful knowledge you have, the higher your human capital. You get the idea.

Note here that I’m not talking about human value, but human capital. Those are two very separate concepts. Human capital refers more to what others will pay you for the aspects of your life – your working years, your skills – that you can sell to them. Human value is completely different, as people have intrinsic worth regardless of what they’re able to sell.

On the other hand, financial capital is the sum of all of your assets minus your debts – your net worth, in other words. Add up the value of everything you own and all of your account balances and subtract all of your debts from that – that’s your total financial capital.

You’ll notice a few things about financial capital, too. In general, it’s lower when you’re younger. It tends to grow at a faster rate if you’re responsible with your money. Things that benefit your human capital tend to also benefit your financial capital over the very long run.

However, these two things also work against each other. They have an inverse relationship of sorts. Human capital slowly declines as you age and you become less reliable, as companies are less likely to invest in you and pay you well if you’re not going to be serving them and using your skills for them for very long. On the other hand, financial capital generally increases with age to a peak (usually right around retirement), then it begins to decline (as your human capital is very low and you’re not earning any additional income).

If you look at things from that perspective, you can see that the financial journey of a person’s life centers around the need to build up financial capital while human capital is strong so that the financial capital is there for you while human capital is weak. To put it in very simple terms, you work when you’re young and put aside money so that you don’t have to work when you’re old.

Every day that you work, in other words, you’re exchanging a little bit of your human capital – your time, your skills, and so on – for a little bit of financial capital – your paycheck. Naturally, you need to use that financial capital for life’s necessities, but at the same time, you also need to retain some of it for periods later in life when your human capital is tapped out.

The obvious, easy solution here is to just say, “SAVE FOR RETIREMENT!” That’s absolutely true – the whole purpose of saving for retirement is so that you can live off of your financial capital when your human capital is largely tapped out. Every single working adult should either be contributing to a 401(k) (or similar) plan or a Roth IRA or have a great reason for doing so – and “I need that money to pay my credit card bills” is not a great reason.

Still, that’s just the start of the implications of the balance between human capital and financial capital. Here are a few things you should be thinking about regarding that balance in your own life.

Don’t rely on your “future self” to bail you out of spending mistakes. As your life moves forward, your human capital is going to decline strictly due to age. Unless you have a huge increase in other dimensions of human capital – experience, skills, or other things – your human capital will be lower in a few years than it is now.

Thus, if you’re making financial mistakes now, like overspending and putting balances on credit cards, you’re actually relying on your future self – at a point in time where your human capital is lower than it is right now – to bail you out of this mess.

That’s a huge mistake. Your goal, right now, should be the opposite. You should be trying to make things easier for that future version of yourself by reducing the demands on human capital, not increasing them.

• Related: The Truth About Your Future Self

Invest when you’re young, even if you can’t invest much. This is something of a continuing thought from the above principle. The truth of the matter is that the earlier in life that you invest, the more time you have for your financial capital to grow up to a peak.

Why is that good? Well, let’s say it grows by 7% each year. The more years you give it to grow before you start drawing money away from it, the bigger it’s going to be. In fact, you can get away with contributing less each year to it if you start contributing earlier.

If you’re saving for retirement at age 65, for example, and you save the same amount each year, the money you save from age 25 to 35 will end up building into more value than all of the savings from age 36 to 65. That’s the power of the long term.

If you’re not saving for retirement, start right now unless you have an incredibly good reason not to do so.

• Related: Seven Reasons You Need to Start Investing Right Now

Ramp up your lifestyle very slowly, if at all. One thing many people do when they start enjoying the fruits of their human capital is that they ramp up their standard of living. They buy a fancy car and a beautiful house and all kinds of wonderful things to fill it with. They eat at nice restaurants, wear nice clothes, and have nice gadgets.

There’s a big problem with doing that, though. The money you’re spending on that stuff is being taken away from the vital task of building financial capital. Remember, your human capital is limited and every single day you drain away a little bit more of it. If you’re not putting aside financial capital, you’re going to be in a very bad place when it runs out.

So, instead of inflating your lifestyle every time your wages go up, hold back. Don’t immediately buy a new home and a new car to “fit” your new salary. Stick with what you have, raise your contributions to your financial capital, and make more subtle choices with what’s left over. Having a 20% smaller house, for example, can make all of the difference in the world here, since you’re not paying for the mortgage interest, the higher insurance, the higher property taxes, and so on.

• Related: Keeping Lifestyle Inflation at Bay

Building skills, getting certifications, and so on is all about building your human capital, so the earlier you do it, the bigger the long term impact. Today is the day to start working toward building the skills and earning the degrees and certifications you might need to take the next step in your career path, whatever it might be. The sooner you do it, the bigger the boost you give to your lifelong human capital. The longer you wait, the smaller the boost.

When you’re in your twenties, don’t spend every evening partying and clubbing. Spend some of it training and preparing for what’s next. You won’t miss a few of the forgettable events, but you will enjoy the benefits of a huge increase in your human capital. It will help you throughout the rest of your life.

Your human capital is limited. What can you do to build it up? And, what can you do to build your financial capital for when that human capital runs out? If you don’t have answers to those questions, you’re setting yourself up for enormous financial disasters down the road.

Good luck.

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Bottled Water, Filters, Chlorine, and Why I Drink From the Shower

When the water crisis in Flint, Mich., started to gain national attention, I took notice, as did all concerned citizens. I was horrified at the images of the murky, discolored water coming out of their taps. No one should be subjected to drinking water that can make them ill.

While I was confident my own tap water was pristine, I decided to do some investigating anyway. And I didn’t like what I found.

Chlorine

I was living in Madison, Wis., at the time, where there probably won’t be a Flint-level crisis anytime soon. Still, when I looked up their freely available water quality report, some things stood out to me.

I was disturbed by the fact that all the water is treated with chlorine. You know, just that chemical we use to clean pools. The one that’s known to interact with other chemicals in the water and create toxic, cancer-causing compounds.

Please don’t instantly assume I’m some kind of conspiracy theorist nut. I understand that we’ve been using chlorine to disinfect our water supply for over a hundred years. I know that it’s greatly reduced the amount of illnesses contracted from public drinking water.

I’m not an H2O Luddite — I have no desire to return to the days when people thought a witch’s curse was real and you could contract typhoid from a drinking fountain. I just want to explain what I found when analyzing the additives in our water supplies. And chlorine was just the start.

Chloramine

I have high health standards for myself, so I try to avoid drinking chemicals ordinarily reserved for cleaning swimming pools. Furthermore, Madison’s latest water quality report admits that people undergoing chemotherapy or who have otherwise compromised immune systems might want to take special precautions before drinking the tap water. That is because, even in minuscule doses, certain chemicals in our water supplies can have negative effects.

Reading about the potential dangers associated with chlorine naturally led me to articles about chloramine, an ammonia derivative that, like chlorine, is used to treat municipal water supplies.

Fans of chloramine like it because it’s more stable than chlorine and lasts longer in the water supply. Unsurprisingly, not everyone thinks that’s a good thing. Chloramine has known harmful properties, and it can leach lead from pipes as well.

There’s been very little research into the overall safety of chloramine, and the EPA itself admits that it is a “probable human carcinogen.”

I know, I know: There are many things we consume that may increase our risk of cancer, from booze to bacon. I’m not advocating we all live in a bubble. I just want to drink the purest water possible without paying a lot of money for it.

My Water Filter Solution

Taking into consideration my newfound fears of these chemicals, I decided to explore ways I could get healthier water at an inexpensive price.

The cost factor instantly removed bottled water from the equation. Besides the fact that much of it is functionally the same as tap water, bottled water is quite expensive as well. Some estimates put the cost of bottled water at 2,000 times that of drinking water out of the tap. 

I didn’t want to join the segment of the American population that spends almost $12 billion per year on bottled water, much of which is essentially coming out of a garden hose at some Coca-Cola factory. I decided I ought to look into a water filter. 

Since I don’t own my home, I had to limit myself to solutions that could be applied at the tap. After much research, I decided on a setup that tag teams the chlorine and chloramines in my water supply with Vitamin C filters and a state- of-the-art shower head/filter combo. I found this setup strikes a good balance for me, eliminating a high percentage of the cleaning chemicals in the water at an affordable price point.  

I decided to go with a shower filter because, according to the group Citizens Concerned About Chloramine, your greatest exposure to chloramine and chlorine actually comes not from drinking water, but from showering in it.

That means I just fill up my drinking water containers from the shower. Does this lead to quizzical looks when I have guests over? It sure does.

Do I care? Not one bit.

When you’re hanging out at Drew’s place, you’re drinking shower water. Once I give my impassioned case as to why I do this, I’ve never had a guest turn it down.

Cost Breakdown

My filters cost me a total of $99.58. With the replacement filters that came with my purchase, this will last me at least a year.

With the average person spending $1.22 per gallon for bottled water, the savings add up fast once you switch to filters. If my girlfriend and I drink bottled water and consume 16 cups per day between us, it would cost us $445 per year to drink bottled water — and that’s assuming we’re buying it by the gallon, not in 16-oz. bottles.

That’s $345 per year we can save with our filters — not to mention the peace of mind that we’re not drinking and bathing in pool water.

While that may not sound like a ton of money, little changes add up over time. If we took that $345 yearly savings and invested it each year, after 30 years we’d have an additional $46,000 in retirement savings, assuming an 8% growth rate.

And as for the flavor? I can confirm that this filter system makes the water taste great. Not ice-cold-Perrier-straight-from-the-bottle great, but it’s more than good enough for me and my girlfriend.

If you want to tailor a water filter setup to your personal needs, the National Science Foundation offers a nifty tool for you to do just that. It allows you to select all the parameters that concern you about water safety and then spits out a variety of filtration options that will do the trick for you. 

Summing Up

Maybe one day I’ll have a kitchen sink big enough to handle my water-filter setup, so I can install filters there as well. Or, more likely, the technology will advance and the filters will get smaller. It would be nice if I wasn’t known among my friends as the Shower Water Guy.

But, I’m willing to embrace that label as long as it means we’ve got clean, affordable water. I recommend trying out a water filtration system. You can hedge your bets against the potential dangers of additives in the water supply, and save significant money by never paying for bottled water again.

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