Check out these four tricks used to get you to spend more (without you knowing it).
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Income tax, sales tax, property tax … does the list ever end?
Most of us agree that we have too many taxes, but we’ve come to accept that they’re just a fact of life. The good news is there’s one tax you can keep from paying—the stupid tax.
The tough thing about stupid tax is it’s like the anti-gift that keeps on taking. Some people make a poor decision that will follow them around for years, even decades. But just because you paid a stupid tax in the past doesn’t mean you have to pay one in the future. With that in mind, here are the most common stupid taxes and how to avoid them.
If you routinely play the lottery, you should do this instead: Hop in your car, open your windows, and drive down the interstate. As you drive, flick one-dollar bills out into the roaring wind. That will have the same effect as playing the lottery. Even better, you’ll provide a lonesome drifter with a few dollars cash.
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How to Avoid: Drop those singles into a jar instead of playing the lottery. Once a year, transfer that money to your 401(k) or your kids’ college fund. Lotteries are for losers.
Nothing says, “Please, sir, take my money. A bunch of it!” quite like a car lease. Statistically, leasing is the most expensive way to drive a car. But, according to CNW Marketing Research, nearly one in five people lease their cars. The National Auto Dealers Association says car companies make more money off leasing you a car than if you bought a car with cash. Don’t fall victim to the “fleece.”
How to Avoid: Save cash and buy a used car.
If you get a timeshare, we hope you really like it—because you’re never going to be able to sell it for anywhere near what you paid for it. You can hardly give the things away. You have no equity and ridiculous maintenance fees—all for the opportunity to visit a place, with minimal square footage, maybe once or twice a year. Why would you ever want to put your hard-earned money into something like that?
How to Avoid: Stay away from the sales pitches and rent instead.
Do you smell that? It’s the scent of liberally applied hair gel. That can only mean one thing: a greasy payday lender has set up shop nearby. Run! That is, unless you’re into paying hundreds of percent interest. These guys are bottom feeders who prey on poor people. Stay away.
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How to Avoid: Take Dave’s advice and just keep driving right past their buildings.
Living comfortably after 65 is just so overrated. Wouldn’t you much rather take loans out of your 401(k) today and pay ridiculous tax rates, rather than having a nice nest egg saved up for later? Just think: When you’re 70 and broke, you can move in with your adult children! How much fun does that sound?
How to Avoid: Short of avoiding bankruptcy, never, ever, ever dip into your 401(k). Just pretend like that money doesn’t even exist until you are 65.
One word: interest. Take a look at these numbers. Interest rates are currently hovering around 4%. With that rate, you would pay about $161,000 in interest on a 30-year mortgage of $225,000. For a 15-year mortgage at 4%, you would pay $74,000 in interest. That’s an $87,000 difference. Think of what you could do with $87,000! Pay for your kid’s college? Help fund your retirement? Maybe even buy another house? A 15-year fixed-rate mortgage is always the way to go.
How to Avoid: Get a 15-year fixed-rate mortgage with a monthly payment no more than 25% of your take-home pay.
If you think you’re on the verge of paying a stupid tax, take a deep breath, sit down, pick up the phone, and call The Dave Ramsey Show or talk to one of our Endorsed Local Providers. They will set you straight. And, better yet, you’ll save a lot of money and a lot of stress in the long run.
What are some stupid taxes that you have paid?