41 Taxes Only Ignorant, Lazy, or Unhappy people Pay, Part 1

You're Getting Ravaged By Stupidity Everywhere You Go. Defend Yourself!

One of the most fulfilling things for me personally in the financial journey of my life has been experiencing what it's like to buck a system which I know is designed to take advantage of me... in essence, "sticking it to the man" who's waiting around every corner to "stick me up" and steal my wealth and livelihood.

The truth is, we're living in a world of shysters who are constantly groping for a chunk of our wallet at every turn. And it's always been my opinion that if you get taken advantage of, frankly, it's your own fault for not doing your "homework."

Turn on your TV, swipe open your tablet, walk out your front door, or drive down your street. Individuals, businesses, and organizations are bent on getting as much of your hard-earned greenbacks as possible using advertising, psychology, convenience, bright signs, and even fear to coax you into having or buying things that won't lend you freedom, security, or give you lasting satisfaction.

The bamboozling cacophony of voices have no shame at all in making sure you stay poor, stupid, and chained down to a lifestyle you probably never really wanted. It's sickening to think about.

There are hundreds of them out there, barely perceptible... it's like a living conspiracy theory. And the more stupid, ignorant, and lazy you are, the easier it is for you to get hoodwinked into forking over your wealth to some conniving shyster who doesn't deserve it.

These are the "taxes" I'm referring to--"tolls" you pay for making poor choices, or falling for wealth traps.

Not long ago, I read that many wealthy people making over $1 million a year pay absolutely zero in income taxes. Why is that?

They've figured out how to legally play the system in their favor, in order to avoid getting raked over the coals by the same machine that keeps the average Joe in the poorhouse.

Basically, they've learned how to avoid taxes on stupidity, ignorance, and laziness.

I want the same for you. You may not be wealthy yet, but someday you will be, if you play your cards right by making smart money decisions.

And after today, your eyes will be opened to ways the world takes advantage of you, the middle class, and keeps you poor in a micro-spending level. Consider this a wake-up call for ditching that lifestyle like a bat out of hell, and starting down the road to wealthiness by saving better, spending less, and investing your money like smart people do.

Here's a preview of what's in store in this and the next two articles on this topic:

• Taxes on the Weak-Minded

• Taxes on Lack of Self-Control

• Taxes on Impatience and Lack of Discipline

• Taxes on the Unstructured

• Taxes on the Unproductive

• Taxes on the Unknowledgeable

• Taxes on Big Ticket Spenders

• Taxes on the Easily Entertained

• Taxes on the Impulsive

• Taxes on the Technologically Impaired

• Taxes on Personal Finance Illiterates

• Taxes on the Perpetually Poverty-Minded

Time Value of Money

As we go into all of this, you'll be learning about a concept called the "time value of money," and how it factors into how much in "taxes" you're paying by making money mistakes in life. If you've never heard of this concept, don't worry... it's a lot easier than it sounds. Here's how this works.

If you have a $5 bill in your wallet right now, it's worth just $5. But what's it worth next year if you put it in a savings account or investment?

A savings account would make that $5 become $5.05 by this time next year. That's a horrible return.

Alternatively, in an investment account, if we estimate an average yearly return of 12% (the return of the standard stock market index over approximately the last 70 years), your $5 is actually worth $5.60 one year from now. If you take $5 every year then, and invest it in the market, $5 per year over 40 years is worth $4295.71.

This is the concept we'll use to determine how much you're getting taxed over your lifetime by the shysters of society.

Addictions - Taxes on the Weak-Minded

Alcohol

You can deny this if you want, but excessive alcohol consumption is an addiction, plain and simple. The reason alcohol producers are so successful is because they play upon the weakness of our population, and their desire to drown out the suckiness of their lives with a conveniently inebriating substance.

We could talk all day about the woes alcohol brings on society, particularly the death and suffering brought about by its abuse. But let's just talk today about the woes on your own wallet.

The Washington Post (if you trust it) conducted a study recently which basically tells you how much more alcohol you douse yourself with compared to other upstanding members of society.

According to the study, if you drink less than 80% of America, you still down about 6.25 drinks a week. What's the average cost of a drink?

That depends on where you get it. If you're doing all your drinking socially in a bar with friends, or to find "dates," you're probably paying around $5 a pop. Crazy! 6.25 of those bad boys every week costs you $31.25 a week, or $125 a month! That's $1500 per year, or $1,288,713 over your lifetime.

Even if you just pop for a 12-pack at the gas station, the average cost is around $1 each. That's $325 per year, or $279,221 in foregone wealth over your lifetime.

We're talking about just the cost of cheap stuff here--not even the expensive liquors.

Tobacco

What I said above about alcohol being an addiction and a trap for losers, the same goes for tobacco users. Are you dumb enough to actually smoke cigarettes? I can't even fathom what goes through someone's mind when they consider picking up this ridiculous money- and health-sucking habit.

According to the Bureau of Labor Statistics, the average smoker (with a median income of around ($59,000 a year) spends about $390 a year on the wide range of tobacco products out there--cigarettes, e-cigarettes, cigars, chew, snuff, whatever.... that's about .7% of their annual gross income.

If you're an average smoker, and smoke all of your life, you're giving up $335,065 in wealth and freedom over forty years.

Do I have to mention the health and social costs of tobacco use? Smoking-related illnesses take a toll of about $300 billion a year in the US economy. That's an average of $3533 per smoker. Smokers pay more for health insurance, they pay for the diseases of body rot internally and externally, they pay in social costs (nonsmokers don't tend to hang out with smokers), and they ultimately pay with their lives. Enough said?

Gambling

I've never pulled a slot machine in my life, but I'm sure many of you have. For some, gambling is a huge problem--especially online gambling.

The gambling industry revenues in the US total about $80.45 billion annually. That's saying a lot, considering that the only state where gambling is legal is in Nevada. With just under 80 million people reportedly visiting casinos last year, it's estimated that each person walking in donates about $1000 to the casino. Donald Trump thanks you for your campaign donation!

But let's assume you aren't that big into gambling, and you spend just $200 a year. That's still $171,828 in foregone wealth over 40 years. What could you do with a pile of money like that?

Automobile Moneypits - Taxes on Low Self-Control

The Mistake of Buying New

There's enough to be said elsewhere on this blog about getting sucked into buying a brand-new car, that I won't go into it here. But I encourage you to check it all out.

Suffice it to say that I almost cried recently when a relative of mine told me she had just bought the first "new" car of her life--a 2015 Toyota Something-Or-Other.

Automobile depreciation is one of the biggest money pits the middle class throws themselves into. A new car loses roughly 25% of its value the first year, another 20% the second year, 15% every year thereafter. This means a car purchased for $25,000 has lost over 60% of its value in five years, or $3150 per year over that period. 

$2,706,298 over a lifetime.

NEVER BUY CARS BRAND NEW. 

Drive Responsibly

But even if you are smart enough to buy used cares, don't be stupid in how you use them. Follow speed limits, parking rules, etc, and save yourself some cash. One in six Americans gets a speeding ticket every year, at an average cost of $150. If this is you, every year, you're forfeiting $128,871 in wealth during your lifetime.

And if you get a lot of moving violations (speeding tickets), expect higher insurance costs. A single ticket can cause premiums to rise by as much as 22%. With the average insurance cost sitting at $1080 per year for full coverage, you're wasting $237 per year, or $203,616 in wealth.

Downsize Your Gas-Guzzler

The last low-hanging fruit on the automobile tree is your monthly automobile gas bill. Do you drive a gas guzzler? How much could you save every year by downsizing if you always don't need to drive a tank around?

I sold the truck I owned about six months ago. I'm saving 50% a month, or $40, by driving around my sweet Toyota Camry instead of the Dodge Ram--and that's not including insurance costs on the larger vehicle, which was higher. That's $480 a year, or $412,388 invested over forty years.

Loan Interest - Taxes on the Impatient or Undisciplined

I work in the finance industry, so I think about loan interest all the time. I also see plenty of loan stupidity happening around every corner.

The Ignorance of Auto Loans

Financing automobiles when interest rates are as low as they are right now is very tempting.... but it won't be as tempting when rates begin to rise. If you're a subprime (bad credit) auto financee, you're already paying outrageously high rates, for something you probably can't afford. In the worst case scenarios I've seen, people take out loans on $45,000 vehicles, with interest over 5%--that's $180 a month in interest alone!

Even buyers with good credit can get loans for just 2.24%... interest on a $25,000 vehicle is still $47 a month, $564 a year, or $484,556 over a person's lifetime if that person always has a car loan under their belt.

The Stupidity of Payday Loans

What's a Payday / Title Loan? It's what irresponsible people get because they need to pay rent on Wednesday, but their paycheck doesn't come in until Friday, so they pay a $25 fee for an extra $50 now to cover their rent until the end of the week, then they should pay back that principal. But most don't, because they aren't disciplined. The interest just stacks up, week after week, until things get completely unmanageable. How unmanageable?

Payday Loan shops charge interest upwards of 500% per year, or six times the value of the borrowed money! Would you give a friend $100 if they promised to pay you back with just $20 by the end of the week? Heck no! That's what's happening when you get Payday Loans. They're the mark of irresponsible, undisciplined individuals.

Even one $25 fee per year for a Payday Loan will cost you $21,478 in foregone financial freedom. Frankly, if you have no debt at all, including a mortgage, that amount is enough to get you by for a full year of living.

The Truth About Home Equity Loans

The allure of home equity loans is strong, I can assure you. Unscrupulous bankers convince you to "upgrade" your home (which isn't going up in value) by "tapping into" the cash in your home, with "interest-only loans." 

Home equity loans allow you to take out loans on the equity, or ownership, you have in your house, and you pay just interest on any outstanding amounts you use for usually the first ten years of the loan. After that, you MUST pay down the principle. 

This can seem convenient, but there are several problems. First, they loan is adjustable-rate. Getting a loan at a low interest rate now will begin to cost you more in the future as rates rise.

The second problem with a home equity loan is the allure of taking much more than you need. The HELOC, as it's called, seems like free money, so you aren't as judicious in dispersing the funds for home improvements. You take out much more than you need, and it ends up costing you more down the road than you think it will. 

Lastly, if you decide to move before the loan is paid off, because of the HELOC, you have much less equity in your home to put toward your next one.

The best idea is to just save up the cash and pay for the upgrades outright.

Not taking out these loans can save you a few hundred bucks a year, or $257,742 over the long term.

Disorganization - A Tax on the Unstructured

How many times have you looked around your home for something you needed, but you couldn't find it, so you went to buy a new one, and found the old one a week later? This used to happen frequently in my home, especially for my own things (tools, electronics, etc), until I began to discipline myself and organize my life.

If you don't know what you have in your home, you won't use it, and you'll waste money buying duplicate things.

What if you scrapped this bad habit of disorganization, and saved yourself $100 a year in tools, office supplies, or even groceries? You'll be $85,914 richer in retirement.

On a much more exciting note, I also read an article claiming that being organized is a great indicator for a healthier intimate relationship with your significant other. As it turns out, clutter can wear you down physically, psychologically, emotionally, and intimately!

Bad Health - Taxes on the Unproductive

No, the government isn't taxing you for being overweight.... yet. But I'm sure it's only a matter of time. After all, they're taxing basically everything else.

A startling little statistic from the Center for Disease Control told me that 68.8% of adults in the US are considered obese. Holy crap batman! This isn't a condition which I've had to battle myself, but I do have loved ones who have, so I have compassion for those struggling. But do people realize the financial toll which being obese (or even just unhealthy, really) takes on a person's wealth? Let us count the ways.

Career Prospects

Did you realize that your level of health and you appearance has a great deal of effect on your job performance and earnings in the long term?

If you're unhealthy and feel crappy all the time, how do you think this affects your long-term job performance? You miss work more, you naturally like your job less, and this affects how co-workers view you.

The old moniker of "Dress for the job you want" really is an extension of the fact that if you are healthy, look healthy, and exhude the persona of a competent and confident individual, people trust you more in the workplace. They are more likely to rely on you.

The more trust and confidence people have in you, the more likely you are to advance in your career.

How much can good health affect salary and wages? Let's say it's only marginal--2%. That small percentage is life-changing for you. Earning just 2% more per year on a starting salary of $52,000 nets you $1040 more per year, or $893,508 over a lifetime into the old retirement account.

Insurance

Just because Obama outlawed insurance companies from denying coverage to people with pre-existing conditions doesn't mean it's not illegal for insurance providers to discriminate in coverage for people who are unhealthy.

Numerous previous employers I've had required medical screenings in order to determine insurance coverage costs. Things like smoking, excessive alcohol or drug use can cause you to be placed in the "base" categories--the most expensive coverage levels.

I remember that the "base" category of my plans in the past were nearly DOUBLE the premiums each month. By staying out of the base categories, I saved $70 per month, or $840 per year, or $721,679 over my lifetime.

Depression, Anxiety

I also sympathize with loved ones over the toll which anxiety and depression can take in life.

Many of these conditions, while not completely curable, can be lessened by eating right, getting exercise, and living an active lifestyle.

If you can abate the effects of these conditions, you abate the costs, such as medications and medical consultations.

A $14 prescription every month to deal with symptoms comes to $168 a year, or $144,335 over a lifetime. That's a lot of money you're tossing out the window, which could be saved if there are "free" treatments to your conditions--like living an active lifestyle.

Doctor Bills

If you're healthy, you generally don't require medical visits to your doctor. By eating right, getting enough sleep, and exercising, your body has a better ability to ward off sickness and disease.

Given the skyrocketing cost of even basic health checkups and medicine these days, consider saving yourself $500 or more per year just on medical consultations for your family. That's $429,571 for a lifetime of health.

Treatment for Injuries

When you live a more active lifestyle, you are a lot stronger and more agile. Your muscles and joints are much more likely to take abuse from falls, trips, other accidents, and lifting things. 

Consider how much it would cost you in physical therapy if you were injured from a fall and had to undergo that treatment at your own expense. Thousands? I don't know. What I do know is that the healthier you are, the less assistance you need to live independently.

Money Savings Summary So Far

Let's recap. Here's what wealth we've decided to NOT forego in this article by avoiding taxes on stupidity, laziness, ignorance, and unhappiness in our lives:

• Skip the extra alcohol/drinks:  $279,221
• Quit smoking and using drugs:  $335,065
• Stop gambling, period:  $171,828
• Stop buying new cars:  $2,706,298
• Don't get speeding or parking tickets:  $128,871
• Insurance: $203,616
• Trade out your gas guzzler:  $412,388
• Shun auto loan interest:  $484,556
• Avoid Payday loans:  $21,478
• Forget Home Equity loans exist:  $257,742
• Quit being disorganized:  $85,914, Plus a better SEX LIFE - Priceless!! :)
• Better career prospects of looking healthier:  $893,508
• Lower insurance costs by living a healthy life:  $721,679
• Lesson or cure you depression / anxiety:  $144,335
• Cut down on:  $429,571
• Avoid needing treatment for Injuries: ???

If you implement all my suggestions today, and take every drop of the savings to invest on great investment strategies, you'll be accumulating $7,276,070 more during your lifetime than the lazy, alcoholic, gambler, smoker, drug-using, interest-paying, speeding, disorganized, absentee, depressed redneck living next door to you.

Continue on to Part 2!!!

Live long and invest,

Jeremiah