Posted on 02/19/2010 5:49:57 AM PST by Stoutcat
Yesterday, I read a spot-on article by Dave Ramsey, a best-selling writer, financial expert, radio personality, and author of the weekly column, “Dave Says“. The article so struck me that I requested (and received) permission to reprint it in full here on Grand Rants. It’s really a micro view of what’s happening all over our country today, and in its larger incarnation, it’s a huge reason Tea Party people are active...
I love Dave’s concept of the “Stupid” tax. And of course it applies to far more than the example cited above. Renter’s insurance, health insurance, getting an education, not having babies at 16 years old, every sensible person can recite the litany of self-indulgent, self-centered, and, frankly, stupid behavior that we all end up paying for.
(Excerpt) Read more at grandrants.wordpress.com ...
Interest is the gentle, but deceptive, name for the insidious extra cost of purchasing beyond one’s means. We are very familiar with the sundry and inescapable taxes on income, sales, property, etc. Interest fees, however, are almost always voluntary but are seldom viewed in their true light as an avoidable tax on stupid people.
Income tax and sales tax are paid but once on the item being taxed. Interest fees on debt, similar to the tax on property, are paid as long as one possesses the debt.
Debt is analogous to body fat. Both are the logical consequence, and inevitable result, of unhealthy lifestyles. Most adults are painfully aware of the sacrifices necessary to lose body fat, but seem unmindful of the future pain and cost of debt. The mental and physical suffering necessary to decrease monetary debt is every bit as real as those incurred by efforts to lose excess body fat.
Taxes are a means of government to extract money from the public. Interest is a means of bankers and businesses to extract money from the public. Interest on debt, unlike taxes, is usually avoidable by those individuals with an adequate measure of wisdom and discipline. Self control and delayed gratification generally provide rewards far disproportionate to the temporary discomfort they might entail.
If you have been preparing a mental list of potentially justifiable interest incurring situations, simultaneous while reading this essay, you have approximately the same odds of improving your lifestyle as an alcoholic reading about the benefits of sobriety.
Yes, there are situations that justify borrowing funds and paying interest. If you can re-invest the money at a higher rate than at which you borrowed it, of course you should incur the debt. A residential home is a classic example of such an investment.
Incurring debt and interest on non-essential, non-investment, consumable or pleasurable items, is almost always unwise. Paying interest on those types of items absolutely insures that one will live, long term, beneath the level that his income should provide.
Credit cards are a convenient and marvelous means to borrow money short term, without interest, if one has the means and discipline to retire the dept each month before interest is charged. To pay 15% to 20% interest on perpetual credit card debt, however, is just short of insane. Why would anyone voluntarily reduce his affluence?
Planning, prudence and discipline, enable the avoidance of paying interest in most situations. The stupid, however, usually offer a myriad of excuses for their lack of sense.
Interest is a tax on those folks not proficient in mathematics. Interest is a tax on impatience and stupidity.
Just a couple nights ago, Junior and I were talking about how tight the budget was. He needed lunch money so I was trying to scrap up enough change to get him to payday. He looked up and said very softly that nearly everyone at school was on free or reduced lunches. He named off several who’s parents make good livings and are far and away above us. Unlike Junior, they have their own cars and the latest clothes and parties on the weekends, etc. I replied that there are too many people who lie and sponge off honest people. We are paying for those other students’ cars and designer jeans with the change I shook out of the bottom of my purse. He nodded and after a pause smiled and thanked me for not lying.
I just paid my auto insurance bill this month for the next 6 months. 40% of the cost of my insurance is for uninsured motorist coverage. And driving without liability insurance is illegal in Texas.
Wow, that is a fantastic post! Is it online anywhere else? I’d love to link to it.
No, it is just an essay that I wrote to myself (inspired by the lifestype and debt of a friend). Use it any any way that might help people.
Thanks! Just added a link to it as an update to my original post.
But far worse, our moronic government officials amplify and inculcate each and every “stupid tax” and then spread the cost to those who would otherwise prudently avoid same.
Just recently heard that the fed’s home energy use improvement boondoggle managed to weatherize some 6000 homes at the enormous cost of $57,000 per home. Lucky stupids, sap taxpayer, eh?
Piddling compared with the banksters’ bailout though.
I gotta fly for the evening, but thought you all might enjoy a DR read to end the workday.
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