On Mondays, I try to post about topics related to budgeting and money. Today’s installment talks about a topic that Dave Ramsey loves to harp on: the stupid tax. He often talks about this in the context of the lottery (i.e. your odds of winning anything are so low that it’s stupid to think you’ll ever see a return on your investment. Therefore, buying lottery tickets is not a smart financial plan).
I think that stupid is a little harsh, but there are definitely times when we have paid financially for less than ideal decisions. Here are the most common reasons B. and I end up paying the “stupid tax” and how we try to guard against these in our budget.
Lack of pre-planning
This is, without a doubt, the largest reason we spend money we don’t need to. Going on a trip? Pack some snacks and extra water. Running errands with a two year old? Make sure there is food in the car (and a change of clothing!) Birthdays/Holidays? Keep an eye out for gifts year round, when prices are cheaper and used items are more plentiful. These days, we don’t go anywhere without an arsenal of snacks and food in the car. Having a toddler has actually made this easier, because we tend to stop at rest ares more on road trips (since some have playgrounds)! Also, I keep a box of individually-sized goldfish packs in the car, for emergency snacks on-the-go (this has the added benefit of cutting down a little on grocery store whining).
This also applies to meal-planning. When I put less effor tinto preping an dplanning meals, we almost always end up eating out at least once. This is the “stupid tax” at work- avoiding work I didn’t want to do (meal-planning) led to more spending down the road. Finance managment requries some a bit of a time invesetment, but putting in that time can save real dollars down the eroad.
I am a horrible procrastinator. I was born to be a journalist (even though I’m not), because I can only work effectively under hard, close deadlines. Huge project due in two days? I am ALL OVER IT. Huge project due in two months? I have 58 days to start that!
However, procrastination can often end up costing you a lot more money than if you’d just done something originally. Case in point- we’ve know for a while that our dog’s teeth could use a cleaning, but we’ve been putting it off. Now, they need a cleaning and it’s at a much higher cost than if we’d just gotten them cleaned earlier and invested in a toothbrush and muzzle (or bite proof gloves).
Another example, from as recently as this morning. When we got our minivan, approximately two years ago, it came with one key. Since we bought it, I have been meaning to make key copies, but I keep putting it off. Well, this morning, I locked my keys in my car. If I had made copies and put one in my desk, as intended, I could have avoided a $50 charge to have a locksmith unlock my car.
Finally, for us, stressful situations often lead to paying the stupid task. These aren’t necessarily situations we didn’t plan for, but situations where we feel stressed and don’t make the optimal choice.
For example, when F. was sick a few weeks back, we had to pick up a prescription and I was NOT looking forward to taking a sick toddler to the pharmacy. We had already sat in urgent care for 2.5 hours, F. had been puking in the office, and I was definitely feeling stressed. I didn’t check which pharmacy Tricare uses and we ended up going to one that doesn’t accept Tricare. Since I wasn’t about to drag my toddler to yet another pharmacy for amoxicillin, I ended up paying full price for it.
For me, this is the budget area that is hardest for me. When I get stressed, I’m willing to spend almost any amount of money to make the stress go away. Unfortunately, that rarely works, so then I’ve spent a lot of money and I”m still incredibly stressed.
Fortunately, as we continue to encounter new spending situations, we’re able to modify our behavior (and budget!) going forward, but even after so many years on Dave Ramsey, we still end up paying the “stupid tax.” How about all of you? When have you paid a “stupid” tax?