diff --git a/hledger-lib/Hledger/Read/JournalReader.hs b/hledger-lib/Hledger/Read/JournalReader.hs
index 1818df982..346ccf6c2 100644
--- a/hledger-lib/Hledger/Read/JournalReader.hs
+++ b/hledger-lib/Hledger/Read/JournalReader.hs
@@ -179,7 +179,8 @@ includedirective = do
   filename <- restofline
   outerState <- getState
   outerPos <- getPosition
-  return $ do filepath <- expandPath outerPos filename
+  let curdir = takeDirectory (sourceName outerPos)
+  return $ do filepath <- expandPath curdir filename
               txt <- readFileOrError outerPos filepath
               let inIncluded = show outerPos ++ " in included file " ++ show filename ++ ":\n"
               case runParser journal outerState filepath txt of
diff --git a/hledger-lib/Hledger/Utils.hs b/hledger-lib/Hledger/Utils.hs
index 0cc4a883c..25970f973 100644
--- a/hledger-lib/Hledger/Utils.hs
+++ b/hledger-lib/Hledger/Utils.hs
@@ -26,7 +26,9 @@ module Hledger.Utils (---- provide these frequently used modules - or not, for c
                           -- the rest need to be done in each module I think
                           )
 where
-import Control.Monad.Error
+import Control.Monad (liftM)
+import Control.Monad.Error (MonadIO)
+import Control.Monad.IO.Class (liftIO)
 import Data.Char
 import Data.List
 import Data.Maybe
@@ -35,7 +37,7 @@ import Data.Time.LocalTime
 import Data.Tree
 import Debug.Trace
 import System.Directory (getHomeDirectory)
-import System.FilePath(takeDirectory,combine)
+import System.FilePath((</>), isRelative)
 import Test.HUnit
 import Text.ParserCombinators.Parsec
 import Text.Printf
@@ -401,15 +403,16 @@ isRight = not . isLeft
 applyN :: Int -> (a -> a) -> a -> a
 applyN n f = (!! n) . iterate f
 
--- | Convert a possibly relative, possibly tilde-containing file path to an absolute one.
--- using the current directory from a parsec source position. ~username is not supported.
-expandPath :: (MonadIO m) => SourcePos -> FilePath -> m FilePath
-expandPath pos fp = liftM mkAbsolute (expandHome fp)
+-- | Convert a possibly relative, possibly tilde-containing file path to an absolute one,
+-- given the current directory. ~username is not supported. Leave "-" unchanged. 
+expandPath :: MonadIO m => FilePath -> FilePath -> m FilePath -- general type sig for use in reader parsers
+expandPath _ "-" = return "-"
+expandPath curdir p = (if isRelative p then (curdir </>) else id) `liftM` expandPath' p
   where
-    mkAbsolute = combine (takeDirectory (sourceName pos))
-    expandHome inname | "~/" `isPrefixOf` inname = do homedir <- liftIO getHomeDirectory
-                                                      return $ homedir ++ drop 1 inname
-                      | otherwise                = return inname
+    expandPath' ('~':'/':p)  = liftIO $ (</> p) `fmap` getHomeDirectory
+    expandPath' ('~':'\\':p) = liftIO $ (</> p) `fmap` getHomeDirectory
+    expandPath' ('~':_)      = error' "~USERNAME in paths is not supported"
+    expandPath' p            = return p
 
 firstJust ms = case dropWhile (==Nothing) ms of
     [] -> Nothing
diff --git a/hledger/Hledger/Cli/Options.hs b/hledger/Hledger/Cli/Options.hs
index 2de7fe11c..947d3fd58 100644
--- a/hledger/Hledger/Cli/Options.hs
+++ b/hledger/Hledger/Cli/Options.hs
@@ -456,25 +456,18 @@ defaultBalanceFormatString = [
     , FormatField True Nothing Nothing AccountField
     ]
 
--- | Get the journal file path from options, an environment variable, or a default.
--- If the path contains a literal tilde raise an error to avoid confusion. XXX
+-- | Get the (tilde-expanded, absolute) journal file path from options, an environment variable, or a default.
 journalFilePathFromOpts :: CliOpts -> IO String
 journalFilePathFromOpts opts = do
   f <- defaultJournalPath
-  let f' = fromMaybe f $ file_ opts
-  if '~' `elem` f'
-   then error' $ printf "~ in the journal file path is not supported, please adjust (%s)" f'
-   else return f'
+  d <- getCurrentDirectory
+  expandPath d $ fromMaybe f $ file_ opts
 
--- | Get the rules file path from options, if any.
--- If the path contains a literal tilde raise an error to avoid confusion. XXX
-rulesFilePathFromOpts :: CliOpts -> Maybe FilePath
-rulesFilePathFromOpts opts =
-  case rules_file_ opts of
-    Nothing -> Nothing
-    Just f -> if '~' `elem` f
-               then error' $ printf "~ in file paths is not supported, please adjust (%s)" f
-               else Just f
+-- | Get the (tilde-expanded) rules file path from options, if any.
+rulesFilePathFromOpts :: CliOpts -> IO (Maybe FilePath)
+rulesFilePathFromOpts opts = do
+  d <- getCurrentDirectory
+  maybe (return Nothing) (fmap Just . expandPath d) $ rules_file_ opts
 
 aliasesFromOpts :: CliOpts -> [(AccountName,AccountName)]
 aliasesFromOpts = map parseAlias . alias_
diff --git a/hledger/Hledger/Cli/Utils.hs b/hledger/Hledger/Cli/Utils.hs
index f5c9321ed..cdfd0a38f 100644
--- a/hledger/Hledger/Cli/Utils.hs
+++ b/hledger/Hledger/Cli/Utils.hs
@@ -48,8 +48,10 @@ withJournalDo opts cmd = do
   -- We kludgily read the file before parsing to grab the full text, unless
   -- it's stdin, or it doesn't exist and we are adding. We read it strictly
   -- to let the add command work.
-  journalFilePathFromOpts opts >>= readJournalFile Nothing (rulesFilePathFromOpts opts) >>=
-    either error' (cmd opts . journalApplyAliases (aliasesFromOpts opts))
+  rulespath <- rulesFilePathFromOpts opts
+  journalpath <- journalFilePathFromOpts opts
+  ej <- readJournalFile Nothing rulespath journalpath
+  either error' (cmd opts . journalApplyAliases (aliasesFromOpts opts)) ej
 
 -- -- | Get a journal from the given string and options, or throw an error.
 -- readJournalWithOpts :: CliOpts -> String -> IO Journal
diff --git a/tests/read-csv.test b/tests/read-csv.test
index 81ae3c77b..2daef30a4 100644
--- a/tests/read-csv.test
+++ b/tests/read-csv.test
@@ -5,7 +5,7 @@
     income:unknown          $-50
     assets:myacct            $50
 
->>>2 /using conversion rules file t.rules/
+>>>2 /using conversion rules file.*t.rules/
 >>>=0
 
 # 2. reading CSV with in-field and out-field
@@ -22,7 +22,7 @@
     expenses:unknown           $50
     Assets:MyAccount          $-50
 
->>>2 /using conversion rules file [0-9]+\.rules/
+>>>2 /using conversion rules file.*[0-9]+\.rules/
 >>>=0
 
 # 3. report rules parse error
@@ -32,6 +32,6 @@
 #     income:unknown          $-50
 #     assets:myacct            $50
 
-# >>>2 /using conversion rules file t.rules/
+# >>>2 /using conversion rules file.*t.rules/
 # >>>=0