The online Personal Finance community talks a great deal about the cost of payday loan operations—especially now that they’re popping up on every corner and seem more pervasive than McDonald’s. We also talk about our out-of-control consumerism that leads us towards spiralling levels of debt, especially credit card debt and HELOCs. But there’s one thing we don’t talk about enough when it comes to what can put a dent into our finances: fines & traffic violations.
Mr. F2P and I were painfully reminded of this fact last week. He and I had a lot on our plate and a scarcity mindset [in this case a lack of time] created by our respective preoccupations left us a distracted mess.
On October 3rd, I drove from the pet store to our bookkeeper to the grocery store and back. I did all of these things, but I decided to take a more efficient route to do all of this. That meant driving on streets and avenues I don’t normally drive on. At one point, as I was driving, I thought to myself that I should be more mindful of my speed instead of just following the flow of traffic because I wasn’t familiar with the speed limits of each of these main thoroughfares. My "spider sense" did in fact tingle for good reason, but it was a bit late to the party because I’d already been nabbed by a traffic camera. I was doing 63 km/h in a 50 zone, though I didn't know it at the time.
My notification came via snail mail three days later. That's when I found out that the penalty for trying to be efficient while not being mindful of driving within the speed limit would be a harsh $221. OUCH!
Wait. It gets better.
The same day I received this notice, Mr. F2P, also preoccupied with too many jobs on the go, also did something uncharacteristic to save time: instead of turning right at the usual intersection, he proceeded left and, realizing his mistake, took the next right…on a street where right turns are not permitted. YIKES! As luck would have it, a police officer was there at the ready to promptly write him up, leaving him $208 and two demerit points poorer. OUCH! And OUCH!
In one single swoop, Mr. F2P and I had accumulated $429 in stupid tax. It’s definitely a record and one we won't be chattering about. We hope it’s no more than a stupid tax unicorn and that we’ll never see it again!
The Ultimate No-Redeemable-Value Expense
Fines and traffic violations are no-redeemable-value expenses. They offer no enhancement to our quality of life. They are a pure and utter waste. And demerits follow us for years, costing us more in licensing fees and in car insurance (thought thankfully, there will be no increase to our insurance because thankfully our car is insured under my name). That’s not just wasteful, it’s reprehensible.
When I think of that $429, I think of the opportunity lost. For a Canadian making the median income of $27,600, a $200 fine represents two days of work in pre-tax dollars. What a waste!
And as Road To A Tesla reminded me in one of his recent posts, forty-six percent of Americans cannot handle a $400 emergency expense. Unfortunately, I expect Canadians are not too far off this dangerous mark.
Had we not had to fork over that cash and invested it instead, the value of those fines could have doubled every 10 years. Worse yet, if we fail to smarten up and experience this expense on a yearly basis, at a very conservative 5% growth, it would leave us $15,000 less well off in 20 years. Now that’s A LOT of stupid tax to pay in opportunity cost.
I intend to smarten up pretty darned quickly, because there are a lot of things we can do with $15,000!
Have you experienced any stupid tax lately? Have you considered the opportunity cost of having had to dish out that dough?