Saturday, March 4, 2017

Stupid Tax

One of my favorite radio personalities is Dave Ramsey, a now very wealthy but still regular guy who created an outstanding program for dealing with personal finance. You can read about what he teaches or watch/listen to him here. I highly recommend his Baby Steps Program.  Because of his simple, easy-to-follow system, my husband and I are completely debt free, including our house. And now we are able to build wealth, travel, be generous, and do crazy things like flip houses for fun. (Fun for the hubby, mildly entertaining for me ;)

Anyway...Dave Ramsey is a favorite of mine for several reasons but one of them is because he approaches life, including finances, in such a simple, easy-to-understand way. And one of the concepts he teaches that makes sense in a lot of areas is the concept of paying Stupid Tax. Simply put, stupid tax can be defined as: (1) anything that cost money, (2) created some form of pain, and (3) later was discovered to be a stupid decision. I explain to my kids that Stupid Tax is just what it says....taxes you pay for being stupid.  And we ALL pay it, at some time or another, multiple times in fact and in varying amounts. The concept of Stupid Tax is both ingenious and intriguing to me because of its universality. In other words, it really applies to everything in life. We are all stupid occasionally--we all make mistakes and do things that later we regret....and sometimes it costs us in Stupid Tax.

Today we are going to talk about how paying Stupid Tax relates to the STUFF in our homes and our quest to deal with and get a handle on it.

Let's begin with an example from my life.

I give you...the Tale of the Finger Spork
Once upon a time a certain mom and her daughter were on vacation together. It was a girls trip...and they were having way too much fun doing all sorts of things. One day they were walking around a large fancy outdoor shopping mall and found a one-of-a-kind candy and novelties store they just had to check out. The store was filled with all sorts of never-before seen candies and toys and was amazingly entertaining. After searching around and really enjoying their time there, a few items were chosen for purchase and up to the checkout counter they went. And that's when the mom saw the Finger Spork sitting in a small container by the cash register. She'd never seen anything like it really and started giggling. It was so tiny and yet so functional (or so she thought). She imagined how fun it would be to have such a thing in her purse and then be able to whip it out at a perfect time when there was, let's say, a yogurt or pudding or Wendy's Frosty to be eaten but no utensil around. Not only would she be prepared but it might be entertaining to eat with your finger as part of your utensil. AND it was only $3.99. What a bargain! Purchase made.

Fast forward to today...8 months later.

And the Finger Spork, which has been in the small make up bag in my purse 
waiting for it's first chance to be used, is still brand new. 
Can you believe there has not even been ONE time I have come across a container of applesauce, a bowl of ice cream, or a cup of noodles and didn't have a way to get the food into my mouth? Yeah, me neither. But it's true. And just the other day, my husband (you know...the one I give a constant hard time to about keeping things he doesn't need to keep) got into my small makeup bag to use my tube of lip balm and proceeded to torture and tease me about carrying around the Finger Spork in my purse for the last several months. His reminder, mixed with the reality of the situation (namely the Finger Spork was still unused), brought me to a grand realization. The purchase of the Finger Spork was a stupid decision.


Admitting that is hard.

One of the reasons it's hard is because no one likes to admit they were stupid. Another is because this particular act of stupidity involved the spending of hard earned money...that was now completely wasted. As in thrown down the garbage disposal wasted. Ouch. I hate it.

But sometimes you just pay tax for being stupid. It's a fact of life...a reality of the situation. Sometimes you make bad decisions in the "spending money" department. It's going to happen.  So it's time we start admitting it, owning it, and moving on.

Why is that so important?

Because admitting to, owning, and moving on from paying Stupid Tax allows us to get rid of things we never should have bought in the first place.

I am sure as you have been reading thus far, there have been certain items in your possession that have come to mind as dumb purchases. You might have already said "Yeah, I've paid Stupid Tax more times than I care to admit." We buy things thinking at the time that they are amazing (like my Finger Spork) and some of them just aren't. But because it is human nature to fight against admitting we made a mistake, getting rid of that stupid thing is really hard. When we get rid of it, we're admitting to our stupidity AND it feels like we are throwing money away, or dare I say, being stupid again?

What we have to realize is that getting rid of the item isn't stupid. The purchasing of the item was stupid. There's a big difference. (I wrote a little about this in a blog post called "I paid good money for this."  You can read it here.)  We paid good money for something that didn't end up being something we like, use or need. The trick is to acknowledge it and let it go.

One of the things that amazes me as I work with others to dejunk and get control of their stuff and spaces is how much they fight me on letting go of things they have had for a while but are still brand new (or really close to it). Almost always, as we talk about it, it comes out that the only reason they are not wanting to get rid of the item is because it's brand new and they paid good money for it. In essence, they feel like getting rid of it would force them to pay the stupid tax.  I hope you can see the problem with that way of thinking?  When they made the purchase they paid the stupid tax. Holding on to the item, for however long, is not going to change that fact. In reality, the ONLY way to recover ANY of the stupid tax that was paid is to get rid of the item--i.e. to sell it at a consignment store, on Ebay, or at a yard sale OR to give it to a worthwhile charity and take a tax write off for the donation.

Keeping the item for longer does not recover your Stupid Tax. It's been paid. And then, one could argue, you keep paying stupid tax on that item by keeping it, worrying about it, apologizing for it and storing it! Sometimes people even PAY someone else to store it! It might sound harsh but I'm actually going to go as far as saying that anyone who bought something stupid then realizes it but chooses to keep it and PAY TO STORE IT is on the extreme end of stupid. In essence they are paying continuous stupid tax. (I'll get off my soap box for now but another blog post about storage units is coming! I can't STAND them!)

Even though I try, it needs to be said that I am FAR from perfect at eliminating the payment of stupid tax. Actually, I pay plenty of stupid tax quite regularly. It happens with items that come in all sorts of shapes and sizes.

For example, not too long ago I bought a new salad dressing "flavor" which sounded really delicious. However, when I came home and pulled it out to dress the next green salad, it didn't even come close to making the "delicious" cut. It was actually pretty disgusting. But it was opened now and I wasn't going to return it to the grocery store. And there was no way I was just going to throw it away! I paid almost $4 for that bottle of fancy salad dressing! So it sat in our fridge for months and months and months. Every time we had a green salad and got the other salad dressings out we of course thought about the lame one and wondered whether we should try eating it again. But who wanted to do that? We knew it was gross. And if we had company over I would have been embarrassed to put it on the table just in case our guests wanted to try it and then thought "Wow the Nelsons eat really gross salad dressings." But throwing it away? Are you kidding? It was practically NEW! I paid $4 for it and it had 1 tablespoon gone.

Do you see the problem? Keeping the salad dressing was not ever going to get me my $4 back. It's flawed logic to think that because you paid good money for something, even if it's gross, underwhelming, and useless, that you need to keep it. Admit that stupid tax was paid at the time of purchase and move on!

Another example from my life is this recipe book I bought at Costco.

Without bashing, after trying numerous recipes from it and despite the amazing step-by-step photos and instructions contained therein, the recipes in this book themselves were, in my opinion, completely below average. As in every recipe I have made from the book so far has been an "I'll never make that again" kind of recipe.  After making at least 10 of them, the frustration started setting in that I had paid close to $20 for this heavy, beautiful book that was actually a dumb purchase. I wish I would have just checked it out from the library. Or asked a friend to borrow it. Or tried a few of the author's online recipes first. Gah! An almost brand new but worthless $20 book! It's hard to admit but it just wasn't the wisest choice of expenditures. The $20 was gone though and keeping it is not going to change that.

New more stupid tax examples? I could keep going...

Recently my cream colored sweater appeared to be getting worn and kind of frumpy looking so I went on a quest for a new cream colored sweater. After all, it goes with a lot of things and it's nice to have a warm, comfortable, classic sweater in your wardrobe. The problem was that I started looking just a few weeks ago toward the end of winter season and so the selection isn't really good anymore. I maybe should have just waited until next fall but I got excited and started looking online. I've been a fan for years of the Ann Taylor and Ann Taylor Loft brands and went to their website to shop. They had a sweater that looked nice and had good reviews

and, because it was toward the end of the sweater reason was listed at a really good price. The problem was it was such a good price that it was a "final sale" item meaning it could not be returned. Talk about STUPID TAX! I thought and thought about it but hadn't had any luck finding a cream sweater locally that met my criteria and so I just went for it. Gah again!! Want my advice? Don't do that! Don't buy things that are not returnable when you can't even try the items on before you buy them! Yeah, STUPID! I got the sweater in the mail and what do you know? It doesn't look anything like this on me. It was too short for my long torso and more boxy on me too which made me look large and without a waist.

Oh dear old Stupid Tax....I know you so well.

Do you recognize any of these kinds of items in your life? Does any of this sound familiar?

If so, I hope you can start realizing that

1- We all pay stupid tax
2- Once the item is purchased the stupid tax is paid.
3- The only way to get any of the stupid tax back is to get rid of the item, NOT keep it.

So, instead of keeping the brand new Ann Taylor sweater and hope that someday it will start looking good on me, I am going to sell it on Ebay and see if I can get some of my money back. And the recipe book? I'm going to put in my yard sale this summer and hopefully going to get at least $5 of my $20 back?

You're assignment this week? Start looking at the items in your home and spaces that aren't adding anything positive to your life and be aware of any kind of resistance to getting rid of them that sounds like Stupid Tax Defensive Mechanism (STDM--just made that up. I love acronyms). It needs to be nipped in the bud immediately. As in stop doing it.

And if, on any given day, admitting to paying stupid tax is painful and you are ever struggling and want some reassurance that you are not alone in your stupidity, I hve a suggestion for you. Besides reading this blog post again and considering my dumb choices, take a 30 minute break from beating yourself up and read from a few other payers of stupid tax here. This is where Dave Ramsey offers a place for his listeners to write in and share their Stupid Tax stories. Most people find them to be not only extremely entertaining but also highly educational and profoundly motivating as well. After all, good behavior is a choice and it takes conscious thought to make the right decisions.

The payment of stupid tax is inevitable.  Acknowledging it was paid and moving on from our poor choices in the purchasing department is one of the best ways I know to start ridding your homes and spaces of unwanted and unused junk. Life is a constant lesson. Learn from it, change what you do and move on is what I say...without keeping all of your junk! The trick is to acknowledge when you pay Stupid Tax and let your stupid purchases go.

1 comment:

  1. AJ introduced this concept to us through his business classes at BYU. In the business world stupid taxes are called sunk-costs -- costs that cannot be recovered and should not have any bearing on future investments. I'm sure he thought to share it with us because I have had a hard time through my life getting over wasting my money, time, etc. But, this is a great principle to remember in life! Stupid Tax Happens! Move forward and be happy :)