Paying the Stupid Tax
I was born before the dawn of the interwebs and the cell-o-phones. Life was more dangerous, then. Cars didn’t have airbags, infant car seats were rare, and seat belts were optional. I rode a bike for almost 13 years before I ever wore a helmet. Making a mistake had some serious consequences and taught us memorable lessons.
Back when you could count my age in months instead of years, I crawled under the card table my parents were sitting at and chewed through the lamp cord I found there. There was a flicker, a pop, and a baby forcefully ejected back into the open, followed by some expected crying. I was lucky to have lived through that, but it taught me to never do it again. Even today, you won’t find me gnawing on any electrical cords, no matter how colorful or tasty they look.
We can argue whether our more child-safe society is an all-around improvement or not. One thing is true, though. It’s hard to learn valuable life lessons when we’re shielded from the consequences of our stupidity. Fortunately, there is still one area of our lives where we are generally free to do stupid things and potentially suffer for it.
There are just about as many ways to do stupid things with money as there are people to do them. If you’re over the age of fifteen, you’ve probably done three of them or more. Maybe you bought your first home mortgage on a trailer, and while it’s fine for shelter, it isn’t worth half of what you originally paid for it. Maybe you invested your emergency savings in a hyped up IPO, thinking it was a sure thing. Maybe you got sold on a timeshare pitch because you thought it would make a nice vacation option for your young and growing family, and now the maintenance fee just sets your teeth on edge.
We can talk ourselves into doing some irrational things. Our desire to have something now overrides our willingness to take the time to make sure we’re buying the right something. We let comfort or excitement guide us instead of wisdom and experience. We pay for it, and we all regret it.
Now, while it’s inevitable that we will occasionally pay some stupid tax, we don’t want to be doing it all the time. What can we do to avoid making money mistakes? How do we make sure the next big purchase is a good one?
First, never buy anything on impulse. It’s alright to take some time and think it through. Wait overnight, at least. You want to give your mind a chance to feel the regret of that purchase before you make it. And if the seller says they can’t wait, then your answer should be no.
Second, explain it to somebody and tell them exactly why you want to buy it. By doing this you make sure that you understand the product or service, and that’s huge. If you don’t understand it, you shouldn’t be buying it. You’ll also be clarifying your reasoning for yourself, and you can keep from being swept up in the hype of the purchase.
Finally, figure out three to five other things you could do with the money you would be spending on it. Things that you would want to do. If you spend that money now, it means you will have to put those things off, or not do them at all. The cost of your purchase needs to include the cost of what you’re having to say “no” to.
We’re human, and we’re going to make mistakes. Don’t beat yourself up too much for paying some stupid tax. We’ve all done it. Remember, though, that a lot of it can be avoided, and give yourself the opportunity to learn from other’s mistakes.
I’m still prying myself out from the decision to buy a timeshare. That’s my big stupid tax. What a waste of money. What stupid tax have you paid?
June 25, 2012 - Posted by Jonathan Bodey | Work and Money | accountability, bad money decisions, budget, buy, buyer beware, buyer's remorse, buying motivation, delay pleasure, end immaturity, finances, money, opportunity cost, stupid tax, work
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