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Are you paying idiot tax?

Are you paying idiot tax? (Thinkstock)
"Idiot tax" was a term introduced to our household by a member of my whanau. It's the money people pay for doing stupid things. Since my 24-year-old relative, who has no consumer debt, introduced the concept to our house, we've debated it endlessly.

Here are some types of idiot taxes we've discussed over the dinner table.

Speeding or other fines

My kids were gloating their heads off a few weeks back after their father was snapped by a speed camera and pinged $80. Even at their tender ages they could see that fines are dead money. They're not necessary. I've survived the past 20 years without getting any and so can anyone.

Interest payments on consumer goods

Paying establishment fees and interest on hire-purchase and other personal loans sucks. Whether you're buying an iPod, sofa, TV, mag wheels, or anything else on tick, the idiot tax soon adds up. A standard $3000 GE Money personal loan with 12 months interest free over three years with an establishment fee of $275 will cost you $3667.50 (or $4226.96 if you didn't get the interest-free deal). That means on a $3000 item, you're paying $667.50 of idiot tax on an "interest free" deal.

Credit card interest

If you pay credit card interest on a monthly basis you're an idiot. Credit cards should be there for emergencies, not a means to day-to-day spending, or buying goods and services that you can't afford. Not everyone has credit card debt. It's not a normal part of life unless you choose to make it so. If you do, repeat after me: "I'm an idiot." Now go and reform yourself.

Buying lottery tickets

Like most people I buy the occasional lottery ticket and accept that it's idiot tax. Some people spend $11 a week on it. Your chances of winning are infinitesimal. I've even heard cynics say the lottery is a ploy by government to keep poorer people poor, as they tend to spend the most on the lottery. You may win $10 here and there, but how much have you spent on the lottery over the years? Put that money in your Kiwisaver instead and it'll soon add up to something significant.

Buying extended warranties

Since when did anyone need an extended warranty? The Consumer Guarantees Act is your extended warranty. Shops such as Harvey Norman and Noel Leeming make a small fortune out of these extended warranties, sucking idiot tax out of unsuspecting customers. Extended warranties are a legal con.

Paying full price for anything

Anyone paying full price for consumer goods deserves to be stung with idiot tax. Everything comes on sale eventually and smart people bide their time, shop around, or bargain. Even if it's just 10 percent off a $100 item, you're avoiding $10 of idiot tax. But don't use sales as an excuse to buy something you wouldn't otherwise. If you buy a $100 item at $90 but don't really need it, you've paid $90 idiot tax, not saved $10.

Buying luxury goods to impress others

If you've got a luxury car, luxury clothes or other luxury items simply to impress those around you, then you're definitely paying idiot tax. Keeping up with the Joneses is a classic trait of the insecure. Get your head sorted and start saving your cents.

Mobile phone bills

If you're paying for your calls, can you wait until you get home? Some people spend a small fortune on calls that could be made on a landline from work or home.

Are you one lottery ticket or consumer good purchase away from self-discovery? Those people who pay idiot tax on a regular basis always have excuses. It's much easier than taking personal responsibility for their actions.

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User comments
I used to work at Noel Leemings and Bond and Bond and the consumer guarantees act wont really do anything for people who have a fault 5 years down the track. However the salesperson who sells the warranty will make a little extra money, on what generally isn't so much money anyway. The reason I don't think you should buy an extended warranty on most things is that you will probably look to replace them in less then two years as technology advances and your appliance is no longer able to do what you need. However whitewear should last at least 5 years so an extended warranty isn't as silly on that.
This is the funniest article I have read in a long time. It absolutely makes sense in an uncanny way. I had to laugh at the 'paying fines' this tax should be number 1 on the list of all idiot taxes. I must admit, in the past I've had fines, but not anymore and not ever again after reading this....thanks
I rarely put money in the charity buckets people hold outside supermarkets because I pay to charity through the lottery as lottery money goes back to the community, so instead of thinking of it as an idiot tax one can think of donating that $6 to NZ communities, and there is still the chance of getting some back. Where would the major winners be today if they had decided not to buy their tickets? Everyone likes to buy a dream now and then. Other points in the article are only too true.
A tad harsh, but to be brutally honest it is 100% correct. I did buy a lottery ticket for many years, as i too hope and dream, but the penny finally dropped, that all i was doing is giving it to the winner. I still do a lottery it's called bonus bonds, and although i dont earn interest i can get the money back and still be in for a chance for a win. Credit cards and loans are just bad news! No body cares what car you have or whether you have the latest tv, most people are just trying to keep their head above water and enjoy the best life they can get for them and their family.
I think one of the biggest idiot taxes are cups of coffee. I too am guilty of it now and again. $4 -$5. They are everywhere. Maybe on a cold morn if running late but hoardes of people buying them on a 28 degree afternoon still?
Yes, I managed to pay idiot tax recently because I underpaid my GST by mistake and got hit with an IRD fine. Good article. Thanks.

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