MONEY online shopping

Believe it or Not, Amazon Is Not the King of Cheap Online Prices

Amazon logo
Lionel Bonaventure—AFP/Getty Images

A new report suggests that Amazon’s edge is not as strong as people think.

As far as conventional wisdom goes, Amazon.com AMAZON.COM INC. AMZN 0.8464% is the king of low-cost goods bought online; the Wal-Mart WAL-MART STORES INC. WMT 1.4035% of the Internet, so to speak.

And that’s largely true.

In its rise from a humble online peddler of books into the most feared, and dominant, name in online commerce, Amazon has used its willingness to undercut the competition to send more companies than I can fit in this space the way of the dodo (RIP Borders, et al). However, a recently released report suggests that Amazon’s supposed edge when it comes to low prices might not be as strong as some believe.

Inside the battle for e-commerce

Earlier this month, Wells Fargo and online sales tracking firm 360pi unveiled their findings from a full-year analysis of the various online pricing habits of the world’s largest e-commerce companies across over 100 commonly offered stock-keeping units. And as you’ve hopefully gleaned by now, the findings came with their fair share of surprises.

Perhaps the biggest single bombshell was that Amazon.com has lost a sales edge in four important categories to the likes of Wal-Mart and Target TARGET CORP. TGT 2.0653% . According to the report, both big-box retailers generally offered lower prices online than Amazon in the clothing and shoes, electronics, housewares, and health and cosmetics categories. However, the report also notes that Amazon typically offered the lowest prices when it came to “like-to-like” specifics goods.

This comes as a surprise for longtime followers of Amazon and implies that online pricing software used by Wal-Mart and Target, which scans competitors’ prices and adjusts accordingly, has grown sophisticated enough to compete against Amazon’s own pricing bots. Specifically, the reports says Wal-Mart’s pricing in the four categories sat an astounding 10% lower than Amazon’s as of August and that Target enjoyed a 5% pricing advantage as well. The report acknowledges that the pricing survey didn’t account for the cost of shipping and taxes, areas where Amazon enjoys advantages with its Prime shipping service and its notorious state tax policies.

Either way, this new report certainly calls into question the conventional wisdom that it’s simply Amazon and then everyone else in the online retail space these days.

The bigger e-commerce picture

Still, I think this report misses the point to a large extent by painting Amazon in a negative light on pricing without discussing the overall profit opportunity online.

As Amazon.com and its online peers have been around for a generation now, it’s easy to fall into the trap of categorizing e-commerce as a whole as a somewhat mature business. In fact, the opposite is true. When viewed in the broader context of the entire U.S. economy, online retail sales represent a veritable drop in the bucket. See for yourself.

Source: U.S. Census Bureau.

With online sales in the U.S. consistently setting fresh all-time highs, it’s also important to understand just how paltry a percentage of total retail transactions they really represent: just 6.2% in the first quarter of the year. And this only reflects the new record figure in a technologically advanced market. Viewed globally, this figure is almost assuredly smaller and it represents a large opportunity for all e-commerce retailers.

There’s no question that the stakes are extremely high in online retail. As I’ve mentioned before, the only free lunch you get in broad-based retail sales are economies of scale. As the global e-commerce boom progresses over the next generation, the companies that control the greatest share of the proverbial pie will have the strongest hand. And both Amazon and Wal-Mart excel in online retail.

Foolish thoughts

Historically, Amazon has always outflanked other online retail outlets. However, owing to the stakes and its well-documented tenacity, it was probably never realistic for the media or investing community to expect a company like Wal-Mart to go quietly into that good night. So while this storyline gives Amazon’s dominance in the growing battle for online sales supremacy, it’s by no means the end of the story, and that is certainly worth noting.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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MONEY early retirement

The Most Important Move to Make If You Want to Retire Early

Small birdhouse
Michael Blann—Getty Images

Housing is the most dangerous expense for those seeking financial freedom. Here's what you can do to control those costs.

Looking to achieve financial independence and retire sooner? A top priority should be to control expenses—especially your major living expenses like housing, food, transportation, health care, and recreation. We’ll focus on the rest of these spending categories in future columns, but for now let’s take a look at housing—the single largest expense for many, and one that can all too easily sabotage your journey to financial freedom.

Housing-related decisions will impact your financial independence by years, if not decades. Homes are a downright dangerous expense variable, because price tags are high, leverage (borrowing) is usually required, and various financial “experts” with their own agendas are usually involved. And houses expose our vanities, tempting us to spend for the approval of others, instead of in our own best interests. Losses of tens of thousands of dollars are routine in real estate, and can completely derail your savings plan.

Even when you don’t suffer an outright loss, changing homes is expensive. I moved around in my 20’s, had few possessions, and rented, so the cost of relocating was minimal. Then I married, we bought our first house, and had a child. Our next move was punishing: We were forced to sell our house at a steep loss, and, because of all our new stuff, we had to hire professional movers for the first time. When we finally bought a house again, we stayed put for nearly 17 years. In retrospect, that long time in one place was an enormous help in growing our assets and retiring early.

How much does it cost to change homes? By the time you add up the costs of selling, relocating, buying again, and settling in, you can easily spend $20,000, or more. According to Zillow, closing costs to a home buyer run from 2% to 5% of the purchase price. The seller doesn’t have mortgage-related costs but is likely paying a realtor commission as high as 6% or 7%. Then there are moving costs, and the inevitable shakedown costs with any new home: painting, carpets and curtains, repairs, supplies and furnishings, and basic improvements to suit your lifestyle.

In short, changing homes is frightfully expensive, and will probably eat up most of the average family’s potential savings for several years running.

Of course there are scenarios like career moves, where you don’t have the luxury of staying in place. But anytime the choice to move is yours, stop and consider the expenses. The worst possible choice would be an optional move into a larger house that you don’t really need. You are taking on a big one-time expense, plus a bigger ongoing mortgage and maintenance obligation. If more space is truly necessary, consider instead modifying your current home: When our son reached the later teen years, we renovated a larger downstairs room so he could have more space.

Once you’re in your home, be smart about home improvement projects, especially those you can’t do cheaply yourself. Trying to create the “perfect” home is an uphill battle, at best. Borrowing to improve your home is an especially bad idea, in my opinion. You can spend vast sums of money without measurably improving your quality of life. And old assumptions about getting that money back when you sell are outdated. For 2014, Remodeling Magazine reports that the average cost-value ratio for 35 representative home improvement projects stood at just about 66%. In other words, you don’t make money when you sell: rather, you only get about two-thirds of your money back! Financially speaking, that’s a lousy investment.

Lastly, while there are situations where it makes sense, on paper, to hold a mortgage, for those truly dedicated to financial independence, the disadvantages of debt often outweigh the benefits. In general, pay off your mortgage as soon as possible. Using extra income to pay down a mortgage loan can be a solid investment in today’s low-return environment. We paid off our mortgage years before retiring, and the peace of mind was invaluable. Now, in retirement, we rent instead of own. It’s a flexible, economical, and low-hassle lifestyle.

In short, maintaining a home will be one of your largest life expenses. Pay careful attention to your housing decisions if you’re serious about financial freedom!

Darrow Kirkpatrick is a software engineer and author who lived frugally, invested successfully, and retired in 2011 at age 50. He writes regularly about saving, investing and retiring on his blog CanIRetireYet.com. This column appears monthly.

More from Darrow Kirkpatrick:

The Single Most Important Thing You Can Do to Achieve Financial Success

The One Retirement Question You Must Get Right

How to Figure Out Your Real Cost of Living in Retirement

Read next: 3 Little Mistakes That Can Sink Your Retirement

MONEY Budgeting

Guess Which U.S. City Is the Most Expensive

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Nikreates—Alamy

Hint: It's not NYC.

On average, American households spend the largest share of their annual expenditures on housing. The average family spends $16,887 on housing per year, equating to 33% of the average household’s annual expenditures. But how much do those expenses vary from city to city, and which places are the most expensive?

Well, the Bureau of Labor Statistics recently released a report (link opens PDF) detailing Americans’ average annual expenditures on housing and related items. And contrary to popular belief, New York City is not the most expensive city to live in. Two U.S. cities have overtaken it.

A breakdown of housing costs

The BLS took a deep dive into all the costs of housing, rather than simply comparing the cost of rent or average mortgage payments. Their analysis also took into account utilities (electric, water, and natural gas), household furnishings and equipment (textiles, furniture, floor coverings, appliances, and the like), housekeeping supplies, and other household expenses. What they found was that average annual expenditures on housing were far higher in both Washington, D.C., and San Francisco than in New York.

most-expensive-city-no-longer-nyc_large
Source: Bureau of Labor Statistics.

The data is current as of 2012, and housing costs in the District of Columbia and San Francisco have risen since then. In D.C., the rise in housing costs is being led by the redevelopment and gentrification of the downtown area, which in turn is being triggered by the high relative number of government and government-related jobs, particularly in the defense contracting sector. Baby boomers are also moving from the suburbs into the city.

In San Francisco, housing costs have always been high, but they’re spiking because of a confluence of factors. The continued boom in technology companies in Silicon Valley — most notably Apple, Google, and Facebook — means that a growing cadre of high-paid employees want to live in the area. Add in a longtime lack of housing development in the city, and you have a rise in housing prices that has become a contentious issue in the San Francisco Bay area as longtime renters are priced out of the city. TechCrunch’s Kim-Mai Cutler provides a great, in-depth piece on San Francisco’s housing problem.

The difference in annual housing costs between the two most expensive cities and the national average is a staggering $10,000. Excluding New York City, the difference between the two most expensive cities and other major U.S. metropolitan areas is over $5,000 annually. If you’re thinking of moving, it’s smart to compare costs carefully before moving to one of the most expensive cities in the U.S.

National differences in housing cost

While the above data is just from major U.S. cities, we have other data from the Bureau of Economic Analysis showing the real value of housing dollars in each state compared with the national average.

real-value-of-housing_large

You can see that generally, coastal states are more expensive than non-coastal states, as many people enjoy living near the ocean. You can also see that the Northeast on average is more expensive than the rest of the country except for California. These high costs, coupled with better weather and low to no income taxes, are why many retirees move south to Florida, Texas, etc.

If considering moving to a more expensive city, you should be sure the benefits will be worth the extra expense. For instance, while I pay a high cost of living to live in New York City, the quality of life that I get in the city makes it well worth it, in my opinion. While New York state is ranked poorly in terms of the happiest states in the U.S., New York City is ranked in the top quartile by happiness among U.S. cities, according to the Gallup-Healthways Well-Being Index.

The most important thing is to live in a place where you are happy. While the main determinants of happiness are the same for everyone, the specifics vary. Be sure that an increased cost of living comes with an increased quality of life.

MONEY Travel

3 Top Retirement Trips That Won’t Break Your Budget

Bartolome Island, The Galapagos.
Bartolome Island, The Galapagos. Ray Hems—Getty Images

That retirement dream trip may carry a harsh real-world price tag. Here's how save on costs and still travel comfortably.

Where is retirement going to take you? If you’re like most people, you’re dreaming of grand European tours, African safaris, maybe even Antarctica.

But even if you think you’ve budgeted generously for trips, you might get a harsh dose of reality when you see the actual price tag. A couple that puts aside $10,000 a year for travel may only be able to pull off one major trip per year, with maybe some left over for smaller jaunts.

What Patrick O’Brien, 71, and his wife Bobbie, 68, found out is that you can’t get too far on that. So what the O’Briens have done is a combination of lowering their expectations and raising their budget. They nixed Australia from their list, but over the years have done about 10 group tours, including two weeks in Alaska this year.

Here’s what three of the most popular trips for retirees will cost you:

GRAND EUROPEAN TOUR

How popular is the big European trip for retirees? Consider this: Viking River Cruises, one of the largest riverboat cruise operators, will carry more than 250,000 passengers in 2014 with a median age of 55, and 75% of them will do one of their European riverboat tours. The majority of those will sail from Amsterdam to Budapest, or some portion thereof.

Cost: A mid-tier balcony stateroom for an eight-day Rhine cruise in the spring will run about $8,000 for a couple, not including airfare, which can cost $600 a ticket from New York. Excursions and food are included, but not tips.

Budget tip: Off-season cruises are always cheaper, but on this route, Viking marketing executive Richard Marnell says the late-fall Christmas market specials are a big draw. “It has a feel and a vibe – they are an artisans’ heaven,” Marnell says.

GREAT WALL IN CHINA

Thelma Tiambeng-Bright’s dream retirement trip was to go to China, a feat she accomplished last year on a tour with YMT Vacations. The 70-year-old retired teacher, who lives in Duncanville, Texas, flew to California to join the group, which then flew to Beijing. From there, she saw the Terracotta Army, cruised the Yangtze River, saw the Great Wall and then Shanghai.

Cost: Tiambent-Bright’s 12-day trip cost about $4,000, including airfare. The current discount rate for a couple is $2,400, with $1,500 for airfare from a destination like Dallas.

Budget Tip: Travel with a buddy or significant other, if you can. Tiambent-Bright says she pays $600 to $800 extra on any trip she goes solo.

GALAPAGOS ISLANDS

For Patrick and Bobbie O’Brien, their dream retirement trip was to see the extraordinary wildlife of the Galapagos Islands, off Ecuador. They took an 11-day journey with Road Scholar, which was previously known as Elderhostel, a popular nonprofit group that plans educational trips for seniors.

One important feature for their budget was that the trip was all-inclusive. “We want to know how much money we will spend, and the nicest part is that there are no extra costs—you don’t have to worry about tipping or side trips,” says Bobbie O’Brien.

Cost: $8,000 for a couple, not including airfare to Quito, which will add $1,700.

Budget tip: When you want to go on the big trip, set it and forget it, suggests Peg Walter, a 70-year-old retiree from New York. “I cringe when I see the amount, because you pay for the whole thing in one lump sum,” Walter says. But then by the time she goes on the trip, she’s able to just enjoy herself because there are no extras involved on most of her tours.

“I call them ‘SKI’ trips —Spend the Kids’ Inheritance,” Walter jokes. “We’re not rich by any means, but we say, let’s try to use wisely what we have so we have memories.”

MONEY Budgeting

Financial Habits of Happy Stay-at-Home Parents

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Getty

When you're a stay-at-home parent, spending money on yourself can lead to feelings of guilt and resentment. It doesn't have to be that way.

Next time you complain about your 40-hour workweek, consider this: The average stay-at-home mom works more than double that rate —94 hours per week, to be exact. Her duties include (but are not limited to) cleaning house, cooking, teaching, behavior management, and laundry. For this, in theory, she should earn close to $113,000 per year, according to researchers at Salary.com. The same can be said for the growing number of stay-at-home dads.

In reality, though, full-time stay-at-home parents don’t receive a paycheck. And as a result, many struggle with feeling financially powerless or emotionally torn when it comes to spending money on themselves. A personal purchase like a new item of clothing or lunch out with a friend feels like it’s “taking away” from the family budget.

“I feel like I have to justify what I need,” one stay-at-home mom of two tells me.

“I feel extremely guilty buying things for myself,” shares another.

So how can couples set aside money for the stay-at-home parent in a way that avoids tension and emotional battles? Consider these steps.

Acknowledge Both Partners’ Feelings

If, as a stay-at-home parent, you feel guilty for spending on yourself, it may be that you’re not feeling valued for the work that you do. If that’s the case, you should be communicating that sense to your partner, says Edward Coambs, a financial planner based in Charlotte, N.C. “The issue may have more to do with your relationship dynamic.”

Coambs advises speaking up if you don’t feel empowered to spend more freely on personal things, or feel the need to ask for “permission” to shop. In exchange, he says, income-earning spouses should talk about what it feels like when their stay-at-home partner spends money on personal things. “From a place of empathy, spouses can usually find common ground in the way the family money is to be spent.”

Budget by the Same Rules

Creating a budget just for the stay-at-home-parent can lead to resentment and feeling like a second-class citizen. The solution: allow both partners equal access to the household money by creating equal spend/save funds for each person in the relationship. That sends a message that while only one person is bringing home a salary, both partners work hard and have equally important responsibilities. “When both feel they have the daily freedom to treat themselves…household well-being prospers,” says Manisha Thakor, author of Get Financially Naked: How to Talk Money With Your Honey.

How much to allocate? There’s no one-size-fits-all amount. The important thing is that you play fair. Each of you should factor in your anticipated personal needs such as haircuts, clothes, incidentals, etc. (maybe even over-estimate a tad to avoid shortfalls) and, together, decide on an equal percentage of the working partner’s income (say, 5% or 10%) that will go into your personal funds. Some months you might spend every penny; other months you might want to save up for a big purchase. The beauty is it’s yours to control. No questions asked.

Never Say ‘Allowance’

Call it a ‘personal expense account’ or ‘my personal budget’—but whatever you do, don’t call the money set aside for a stay-at-home parent an allowance. Coambs, who is also a former stay-at-home dad, says the term “allowance” is childlike and shouldn’t be used in an adult relationship. “It evokes a sense of ‘I have authority over you’ and takes me back to the days of living with my parents,” he says.

Thakor agrees. She likes to call personal accounts “joy funds.”

Earn by Saving

If the stay-at-home parent finds ways to save the household money (say via coupons or smart negotiating tactics), shouldn’t he or she be entitled to at least some of that savings? I think so. Growing up I watched my mom—an on-again, off-again stay-at-home parent—negotiate the cost of everything from bedroom furniture to deli meat. One time, after losing her job and becoming a stay-at-home parent again, the first thing she did was call up every monthly biller we had and insist on lower rates. In the end, she managed to talk our expenses down by $400 a month, which she and my father agreed should be allocated to her existing savings account each month. After all, she’d earned it!

Farnoosh Torabi is a contributing editor at MONEY and author of When She Makes More: 10 Rules for Breadwinning Women. She blogs at Farnoosh.TV.

MONEY Budgeting

How to Keep Fantasy Football from Fouling Up Your Finances

Fantasy Football
How much does your weekend pastime cost you? iStock

Make sure your weekend hobby doesn't wreak havoc on your budget—or your marriage.

Allison Lodish used to be a huge football fan.

Her affection for the game evaporated when her husband got fixated on fantasy football, a leisure pursuit where participants draft their own dream teams and compete against each other, based on how those players fare.

Before she knew it, he was in three leagues of fantasy football. Then, it became 10. “It was crazy,” says the 41-year-old personal stylist from California’s Marin County.

Crazy not just in terms of time expended, but money. Since many fantasy leagues charge fees for entering, trading players, or picking up free agents, the sums involved can be substantial.

At the height of her husband’s involvement, the hobby was costing north of $1,000 a year, Lodish estimates.

Indeed, the fantasy game has plenty of fans, with more than 41 million players in North America, according to the Fantasy Sports Trade Association. That’s up from 27 million in 2009, with the typical player dropping $111 a year on the hobby, and others, far more.

In an era of stagnant incomes and rising prices, it’s no wonder some spouses are alarmed by the amounts involved. The average player spends more than eight hours a week perfecting his or her team, the trade group says.

So, is there a fix for the obsession?

Experts say the first steps toward resolving familial conflicts around a fantasy sport involve turning off the TV for a few minutes and not obsessively checking statistics. Then, start working through marital differences that can easily spiral out of control.

“You have to figure out the crux of the problem,” says Sharon Epperson, CNBC’s personal finance correspondent and author of a financial advice book for couples, The Big Payoff. “It may be about the money, or it may have nothing to do with that. It may be the amount of time being spent away from the spouse or the children that is really annoying the other person.”

If a partner feels neglected, or the cash involved is being drawn from other family pots, that is a problem, says Matthew Berry, ESPN’s senior fantasy analyst and author of Fantasy Life, which chronicles the exploding interest in the field.

“Everything in moderation,” he says. “I don’t think fantasy football is different from any other couples issue. It’s about communication, and understanding what’s important to the other person.”

Here are some tips that may safeguard the family budget, or your marriage, from an unchecked fantasy-football fetish:

Family needs come first

“I don’t think spending money on fantasy sports is a bad thing—as long as you can afford it,” says Epperson, herself a devoted Pittsburgh Steelers fan who grew up watching greats like Franco Harris and Lynn Swann.

But if that cash is being siphoned from other critical needs, it’s a guaranteed recipe for marital discord. So before you sign up for multiple fantasy leagues, get your other bases covered.

Epperson’s advice: Stay current on all monthly bills, save 20% of your income in long-term vehicles like 401(k)s, and another 10% in short-terms savings like a household emergency fund. Then you can set aside 10% of income for “fun money”—and that’s where your fantasy-sports budget needs to come from.

Avoid secrets

Everyone likes to spend a little time and money on personal passions, whether it’s fantasy sports or designer shoes. And that’s okay – unless that information is being hidden from your significant other.

“It’s only a big deal if you are not telling your spouse,” says Epperson. “That’s like loading up a credit-card that your spouse doesn’t know about. That’s financial infidelity, and that’s a big problem in marriages.”

Involve your partner

If your spouse pushes back against your fantasy-football interest, take it as a compliment: They want to spend more time with you. So here’s an elegant solution: Get them involved, if you can.

“My advice is always, ‘Try it, you’ll love it,'” says ESPN’s Berry. “My wife now plays in my fantasy league. That way, Sunday becomes a day you can spend together, instead of apart.”

Hand over the winnings

If your spouse has zero interest in fantasy sports, here’s a novel approach: Pledge that any cash you win will go directly into their bank account.

“That’s what I did with my wife originally,” says Berry. “Whatever I won, she got to spend. So when I won my league, she got a brand new purse. It worked out great. Nowadays, if I’m falling behind in third place or something, she tells me to get it together and start studying up.”

Still, the outcome may not always be so collegial.

Allison Lodish eventually set up a website for fellow fantasy-sports “widows” and ended up splitting with her husband.

“It should be a fun game that brings people together,” she says. “But if it’s driving people apart, that is where you need to take a hard look at it.”

MONEY Budgeting

This Hangover Cure Will Make You Richer

People paying for drinks at bar
Do you know much money you waste by getting wasted? Roy Hsu—Getty Images

Okay, you may not want to give up drinking just to save a buck. But if you're having trouble trimming your budget, add up what you're spending on wine, beer, and liquor. You may find the numbers sobering.

Would you give up alcohol to help balance the family budget?

I posed that very question on social media recently. These were some of the answers I got:

“Yeah, right.”

“Gosh no – it’s what gets us through the week.”

“As if that would ever happen.”

And so on, in the same vein. Most responses ranged from sarcastic to outright incredulous.

But one other answer stood out, which got to the heart of the matter:

“I quit drinking – and it was like we won the lottery!”

And there’s the rub. We all tend to complain, in an era of stagnant incomes and rising prices, about how we just can’t make ends meet. There is just no place we could possibly find more savings.

But is that really true? Consider this: The average U.S. household spent $445 on wine, beer, and spirits in 2013, according to data from the Bureau of Labor Statistics. That amounts to roughly 1% of our household expenditures, and it compares with an average household figure of $268 in 1993.

That is more than we spend on all nonalcoholic beverages combined, by the way. Keep in mind those averages include nondrinkers, too. That means some households are spending much, much more than that already-hefty average on alcohol.

So let’s be honest with ourselves. It is not always the case that we can’t squeeze any more savings out of our budgets. It is that we choose not to, because we just don’t want to give up the booze.

When New York City’s Jenna Hollenstein sat down one day and calculated what her drinking was costing her, she was shocked.

The 39-year-old dietician used to enjoy a nice bottle of wine or some gin after work, and it was starting to add up. “Even if it was only a $15 bottle of wine, three times a week, that was $45,” she remembers. “That’s $180 a month, or over $2,000 a year.

“That’s a significant amount of money—and that’s not even including going out for cocktails with friends.”

Hollenstein finally decided to give up her pricey habit, and even wrote a book on her experiences, Drinking to Distraction. But she is hardly alone in having a taste for a nip after work.

After all, 64% of American adults report drinking occasionally, according to Gallup’s most recent poll on consumption habits. Through boom times and bust, one of our most consistent national traits is that we enjoy our booze, and are not willing to give it up.

“We’ve been asking this question since the 1930s, and the numbers are remarkably constant,” says Frank Newport, Gallup’s editor in chief. “Even in an era of huge demographic changes, the percentage of drinkers just doesn’t seem to budge.”

Our Beverage of Choice

Beer is America’s beverage of choice, by the way, followed by wine and then spirits. The average drinker enjoys a shade over four alcoholic beverages a week, according to the Gallup poll.

But 9% of people have more than eight drinks over the same period, and 5% of folks are guzzling more than 20. And that can get very expensive indeed—especially if you do your drinking in restaurants or bars with high markups.

We might not even realize how much we are spending on this habit, since it drips out in relatively small increments—a beer or two here, a carafe of wine there. Personal-finance expert Tiffany Aliche, author of The One Week Budget, suggests forcing yourself to do the math—just as Hollenstein did—before tossing back yet another nightcap.

“Let’s say you drink three nights a week and spend $30 each time,” she says. “That’s over $4,000 a year, or as much as a trip to Paris or Rome.”

It is not an all-or-nothing proposition, notes Aliche, who is not a drinker herself. You don’t have to become a teetotaler in order to realize massive savings. “Instead of drinking three times a week, just drink twice—and then go on your vacation, too,” she advises.

As for Hollenstein, who had a long and complex relationship with alcohol, she thought it was best to give up drinking altogether. She did not necessarily do it for the money—but when she did, she noticed that her finances changed overnight.

“As soon as I gave it up, the money thing became so clear,” she says. “Drinking was just a mindless, habitual thing I did on a daily basis. And I didn’t really notice it—until I got my credit card bill or looked at my bank account.”

TIME Saving & Spending

Young Adults Have Basically No Clue How Credit Cards Work

Close up of teenage girl texting on mobile in bedroom
Cultura/C. Ditty—Getty Images

Cause for concern?

Almost two-thirds of young adults today don’t have a credit card, but maybe that’s for the best, given their sweeping lack of know-how about this common financial tool.

Although Americans of all ages are less reliant on debt since the recession, millennials are far and away the most credit-averse age group. Bankrate finds that, among adults 30 years old and older, only about a third don’t have any credit cards at all. New research from Bankrate.com finds that 63% of millennials, defined as adults under the age of 30, don’t have any credit cards. Among those who do, 60% revolve balances from month to month, and 3% say they don’t bother to pay at all — more than any other age group.

There’s a good possibility that these young adults aren’t irresponsible, though, just misinformed. BMO Harris Bank recently conducted a survey that found almost four in 10 adults under the age of 35 think carrying a balance improves your credit score (it doesn’t). And roughly one out of four say they don’t check their credit score more than once every few years. Perhaps that’s because a third of them think checking your credit score hurts your credit (again, it doesn’t). BMO found that 25% of young adults don’t know even know what their credit score is.

And young adults also think it takes much less to get a good credit score. BMO finds that, overall, most Americans think a score of 660 or higher is a “good” score. In reality, that may have been true pre-recession, but it isn’t anymore. BMO says a good score is one that falls in the 680 to 720 range. Millennials, though, believe than anything above a 625 means you have good credit — a misconception that could cost them in the form of higher interest rates on credit cards and loans.

Millennials are also more likely than any other age group to think that store credit cards don’t count towards your score and that the credit card companies control their scores.

In reality, it’s up to the individual to maintain their credit score, and if millennials continue along not bothering to learn the essentials of credit and how to use it responsibly, they could end up paying for it in the form of lost borrowing opportunities or higher interest rates, Jeanine Skowronski, Bankrate’s credit card analyst, warns in a statement.

“The responsible use of credit cards is one of the easiest ways to build a strong credit score, which is essential for qualifying for insurance policies, auto and mortgage loans, and sometimes even a job,” she says.

TIME

Time to Kiss Your Free Checking Account Goodbye

Your checking account could be bleeding you dry

Just when you thought banks couldn’t get any stingier, the number of banks offering free checking has fallen below 50%, a drop of around 10 percentage points in only a year. Now, want to hear the bad news?

Depending on your usage habits and how much money you have, the price you pay for that account could be an eyebrow-raising $700-plus.

As of June, roughly 48% of banks offered free checking, according to financial research company Moebs $ervices, compared to just over 58% a year earlier. “The Banks are exiting Free Checking because it is too costly,” says Mike Moebs, CEO and economist of Moebs $ervices. The number of credit unions offering free checking fell by a fraction of a percentage point, but nearly 80% still offer free checking.

Not only is free checking harder to find, but a new survey from personal finance site WalletHub.com finds that the privilege of having an account can run into the hundreds of dollars — and banks make the most off customers who are financially struggling or who travel to or send money to other countries most often.

According to a new analysis of 65 different checking accounts offered by the 25 biggest banks, the average annual cost for a checking account runs for just under 18 bucks — that’s for “old school” customers who don’t bank online, use paper checks, never use another bank’s ATM or overdraw their accounts — to $499 and change for the customer segment WalletHub characterizes as “cash-strapped;” that is, those who overdraw and don’t have direct deposit. The bite is the most serious for these customers who have the M&T Free Checking account; WalletHub says this would cost a person with these usage patterns a whopping $735.

Within those averages, though, there’s a lot of variability, and WalletHub points out that just because a bank may offer a good deal for one customer segment doesn’t mean that they’ll be equally affordable for customers with different banking habits.

For instance, it finds that the First Republic Classic Checking account is the best deal at a (still pricey) $185 or so a year for internationally-oriented customers, but it’s the most expensive of the bunch for the consumer groups WalletHub classifies as “young and high-tech” and “everyday Joe,” with annual costs of roughly $300 and $397, respectively. Customers whose living or job situations change drastically could find that the bank account they always counted on suddenly becomes a money pit.

Overall, WalletHub dubs USAA the most affordable in its checking account offerings, with, Capital One and Union Bank, respectively, behind it. The priciest overall choice is M&T Bank, and the second-most-expensive Fifth Third.

TIME Mental Health/Psychology

6 Things You Must Know About Money and Happiness

Money stack
Getty Images

If you were offered a well-deserved raise at work or a no-strings-attached wad of money, would you take it? You’ve surely heard that money can’t buy happiness, but it can certainly get you closer to an enjoyable life, right?

Yes and no, says Elizabeth Dunn, Ph.D., associate professor of psychology at the University of British Columbia and author of Happy Money: The Science of Smarter Spending. “It turns out, what you do with your money seems to matter just as much to your happiness as how much you make,” she says—good news for those of us without a sudden windfall or promotion in our near futures.

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Don’t sweat the six-figure job

“There is definitely a correlation between income and happiness,” says Dunn. “But actually, money buys less happiness than people assume.” And in some ways, it buys happiness only up to a certain point: A 2010 Princeton University study found that emotional well-being—defined by the frequency of emotions like joy, anger, affection, and sadness—tended to rise with salary, but only up to about $75,000. Beyond that, people continued to rate their lives as more satisfying, but they didn’t seem to experience any more happiness on a day-to-day basis.

Spend on experiences, not things

Material goods may last longer, but a 2014 San Francisco State University study shows that life experiences—like trips, fancy dinners, and spa treatments—provide more satisfaction in the long run. Researchers interviewed volunteers before and after they made purchases of both types, and found that afterward, most people viewed the intangibles as a better use of money. However, they add, an experience has to fit a person’s personality in order to have benefit; someone who doesn’t like show tunes, for example, probably won’t see the value in a Broadway play.

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Donate to charity

Giving to people or organizations in need “has a direct correlational effect on happiness that is basically equivalent to a doubling of household income,” says Dunn, citing research from a Gallup World Poll. How you give matters, too, she says: You’ll get more of an emotional reward by supporting groups you feel closely connected to, or when a close friend asks for your help. (In other words, accept that Ice Bucket Challenge already—the giving money part, at least!)

Pay it off early

“The pleasure of consumption can be dragged down by the pain of having to pay for it,” says Dunn. One way to get around that? Put money down for things as early as you can, even if you won’t actually experience them for a while—book trips months in advance, pre-order books and albums you’re excited about, or purchase credit for a service you can redeem at a later date. “Research shows that what lies in the future is much more emotionally evocative than what lies in the past,” she adds. “If we paid for something last year, it’s almost like our brain forgets we ever spent money on it.”

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Give thoughtful gifts

When money gets tight, it may seem wasteful to splurge on presents and tokens of affection—but Dunn’s research shows that spending money on others, especially a loved one, is one of the happiest things you can do with your money. (In one study, people who had been asked to spend $5 on someone else felt better at the end of the day than those who’d been asked to spend it on themselves.) It’s the thought that counts, too: Both givers and receivers are happier when a gift is a good fit for the recipient’s personality.

Use a debit, not credit card

Being in debt is negatively associated with happiness, and is linked to health problems such as depression and anxiety. It may be hard to avoid all forms of debt, but one way to keep from falling deeper into it is to make everyday purchases with debit accounts, rather than charging them. “Debit cards are way happier plastic,” says Dunn. “They provide a lot of the same conveniences as credit cards, but don’t have the same long-term problems associated with them.”

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This article originally appeared on Health.com.

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