Carmen Wong Ulrich: What is the "Real" Cost of Living?

What's the actual cost of education, credit card debt and other financial decisions? iVillage personal finance expert Carmen Wong Ulrich explains the concept behind her new book, The Real Cost of Living

What exactly do I mean by “real”? 

When talking with folks about my new book, The Real Cost of Living, this question obviously comes up.  The answer, which I explain fully in the book, is one that can help you for the rest of your life. 

The real cost of things involves not only the direct price you pay—say, your interest rate on a credit card—but the indirect costs as well, both financial and personal.   And knowing the real, full cost of a decision, as opposed to only an initial cost, helps you make better decisions and reap more rewards.  Now who doesn’t want that?

The Cost of Financing Your Kids' Education
How can you lower the costs involved in a very, very expensive gamble on your kids' future?  Research shows that there are several ways to increase your odds of not only making the costs of college worthwhile, but to make sure that the return on that education is best. One important cost-controller: Make sure your kids graduate in four years or less. Seems simple, no? Not really. The majority of college students do not graduate on time. Taking longer not only costs more in tuition, fees, and room and board but also costs a lot in lost earning time. Students who graduate on time or early have more time to pursue and land jobs that quickly help them recoup the costs of school. 

The Direct Costs of Credit Card Debt

Is the cost of having credit card debt all about the interest rate and maybe a fee or two along the way?  No, that’s only part of the picture.  What you’re missing is the indirect cost of not being able to put that money you owe (along with the interest and fees you pay) to work for you either in savings or investing, long or short term. For example, if you owe $3,000 on a card at 18.9 percent and you only pay the minimum every month, it will cost you more than $800 in interest, and almost three years. That’s a hefty direct cost of owing that money. 

What if You Invested That Money in Your Future?
Let's say you hadn’t borrowed that money at all and instead you were able to put the full amount of your loan plus interest (say, $3,800) into your 401k, earning an average of 8 percent over 20 years.  That debt and interest would turn into more than $18,800. That’s around $15,000 in your pocket instead of $800 in interest in someone else’s pocket.

And what if instead of paying $120 a month toward credit card debt, you instead put that amount into your retirement? After 20 years, earning around 8 percent, you’d have nearly $30,000. THIRTY thousand dollars.

Don't Forget The Personal Costs
There are also personal costs involved with all the decisions we make, even if we think they're only money-related. What about your home?  Are you angling to pre-pay your mortgage because you just can’t stand the idea of not owning your home outright, especially in retirement?  Think twice.  That decision will cost you in retirement—long term. 

What about the costs of staying home to take care of a child, even for only a year? What about the costs of having kids, period?  These may not seem like they should be financial decisions but they can be. My goal was to consider every price that you may pay with your decisions and give you a guide to not only knowing what decisions cost, but how you can make sure to come out on top, happily!

Got a question for Carmen? Join iVillage at on January 13th, from 2-3 p.m. EST, for a LIVE Twitterview with Carmen Wong Ulrich! Ask Carmen your questions about money management and enter for chance to win an autographed copy of her new book and a $25 Amazon gift card!  Use hashtag #carmenwongu

Can't join us on Twitter? Post your questions here or send them to Carmen at

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