The grand master of debt elimination is Dave Ramsey and one of the terms he has introduced to the world of personal finance through his book, The Total Money Makeover, is 'stupid tax'. While the exact definition is somewhat of a moving target, stupid tax can generally be defined as: (1) anything that cost money, (2) created some form of pain, and (3) later was discovered to be a stupid decision. Note that it's the third part that makes stupid tax difficult to avoid because going into a purchase or other financial transaction, most of us will believe we're making a good decision. Only later do we realize our error in judgment.
It doesn't matter who you are, you either have paid or will pay stupid tax sometime in your life, but it's worthwhile to educate yourself and try to avoid it altogether. To be an expert in any subject, it has been said that you need only know the pitfalls and avoid them. When it comes to stupid tax, the greater your expertise, the less you'll have to pay.
In an upcoming post, we'll walk you through how to calculate stupid tax as well as the most common ways to avoid paying a heaping ton of it. Until then, if you're looking for a little schadenfreude fix or just want to read more about it, click here to go to DaveRamsey.com where readers have posted their stupid tax stories.