The Stupid Tax: Are You Paying It?

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Let’s face it, sometimes blowing money is fun. Some of us like to go out to dinner.  Others enjoy spending money on toys.  Yet, some things that we are spending our money on can be more detrimental to our finances than others. The worst part is, you may not even realize what an impact they are having on your monthly budget. I like to call these things “stupid taxes.” For your reading pleasure, I have taken the liberty of listing several of these stupid taxes here.  Enjoy!

Stupid Tax #1: Smoking

So, you’ve decided to be a smoker.  How’s that working out for you?

Smoking really is one of the worst and most self-destructive things that you can do in your life. Obviously, smoking is awful for your health. We know that it causes cancer. Oh, by the way, that can kill you.  Yet, it is not always the cancer that gets you.  Besides cancer, smoking is also one of the main causes of COPD, heart disease, and several other health problems – many of which can also kill you.  To top it off, smoking is just plain gross. It affects the way you look and the way you smell.  Trust me, Romeo.  No matter how much you douse yourself in Drakkar Noir, you still reek like smoke. Ewww.

Now that we’ve covered some of the more obvious detrimental effects smoking has on your health, let’s talk about the less obvious detrimental effects it has on your finances. Imagine that you smoke just 1 pack of cigarettes a day. There are 10 packs in a carton which costs around $50.  At 1 pack a day, you smoke about 3 cartons – or $150 worth of cigarettes – in a month.  That equals $1,800 a year on cigarettes alone. This total doesn’t even include the increase in life and health insurance premiums that you have to pay.  Neither does it cover medical costs nor the insurance deductibles you will owe as you inevitably become more and more sick.

Add all of this to the fact that many companies are implementing “smoke-free” workplaces.  Not only will employers not hire you for a job if you are a smoker, but the company that you already work for may fire you if you don’t quit smoking within a certain timeframe of them adopting the policy. While that might not seem fair, choosing to smoke can cause you to lose more than just a few dollars a month.  It can actually cause you to lose your entire income.

So, if you want to slowly kill yourself and go broke doing it, keep on smoking. If you are really looking for ways to become financially independent, it may be time to kick the habit.

Fortunately, new-fangled contraptions called e-cigarettes offer smokers a genuine, feasible alternative to smoking, which simulates the process of lighting up, without the harmful side effects. E-cigarettes are considerably cheaper than smoking, and those who choose to adopt them on their path to being smoke-free can expect to pay up to 50% less than what they would for traditional tobacco products. Not only this, but they come in different flavors and styles, from watermelon to the more conservative menthol flavor.

Stupid Tax #2: Late Fees

Racking up late fees is one of the silliest financial mistakes you can make – and it is one of the biggest stupid tax culprits. Really, late fees are a completely avoidable stupid tax. All you have to do is pay your bills on time, and you are not charged any extra.  If you don’t, you get whacked with a late fee.  Compile too many of these late fees and you will be burning through some serious money in a hurry.

I hate bills. I hate to pay them. I hate getting them in the mail.  However, unless we live with our parents, we all get them…and it is our responsiblity to pay them.  It is tough enough to use your hard-earned money to pay that greedy electric company. Why owe them even more money because you didn’t pay them on time?

In order to help you avoid these fees, you might try using online banking programs. Most banks now provide some form of online banking.  This type of banking provides you with an opportunity to see all of your bills in one spot. It also helps you to keep a closer eye on your money. If you have recurring bills, you may even be able to set up an automatic payment in which the same amount of money is paid to certain companies (like your mortgage company) on the same day each month.  Using this technique can help you eliminate late fees. Score! As a bonus, you are sure to get fewer paper bills in the mail as well. Double score!

Stupid Tax #3: Credit Card Interest

Credit card interest is your punishment for buying something that you could not afford on credit.  As if buying something you could not afford wasn’t dumb enough, you are now paying a monthly fee for your stupidity.  Honestly, if you are paying credit card interest I really need to be thanking you.  Without the revenue stream you provide, credit card companies would not be able to provide the giant and generous rewards that people like me get.  Somebody has to pay for those rewards.  It might as well be you because it sure as hell won’t be me!

Stupid Tax #4: Overdrafts

When I was younger, I wasn’t particularly good at keeping an eye on my checking account. I would forget to account for money I withdrew from ATM’s. If I did account for it, I would often forget to account for any transaction fees that may have been charged.  At the time, I was living on a shoestring budget, so these mistakes inevitably led to me overdrawing my account; in turn, I was being charged additional fees by my bank time and time again. Because I was living on such a tight budget, these overdraft fees set me even more behind on my savings goals.

Regardless of the amount of wiggle room you have in your budget, incurring overdraft fees is like throwing money out the window. You wouldn’t you tear up a $20 bill because you didn’t feel like walking into your kitchen and grabbing a calculator, would you? Paper money or virtual,  in essence, this is what you are doing when you overdraw your accounts. Stop being so lazy and balance your bloody checkbook already!

Stupid Tax #5: Gambling

Who hasn’t dreamed about what they would do if they won the lottery?  Almost all of us have entered a casino at some point, hoping that we would hit a giant jackpot. When it comes to either the lottery or your local casino, believe me when I say that the odds are not in your favor. While it may be fun to dream about the huge and effortless payday that gambling offers, remember that casinos aren’t in business because they give all of their money away. Lotteries are not running because everybody is a winner. Everybody loves to tell the stories about how they hit it big. Nobody likes to tell the story of how much they spent in order to get there .

If you do decide to gamble, make sure that you budget for that expense as entertainment. Only play with the amount of money that you are comfortable losing.  That way, you are more likely to stay out of trouble and have more fun.

Saving money can be a difficult task even when you are doing everything right. Why work against your own goals? If you are currently paying any of these stupid taxes, be sure to stop immediately. If you do, you may suddenly find that your budget isn’t so tight after all.

Additional reading:

• How to Live Cheap: Tools of a Tightwad