Convenience Tax: You’re Only Charging Yourself



Often people lump debt into one of two categories – “good” debt and “bad” debt.

Typically good debts refer to student loans, business loans, and anything resulting in your general betterment. Bad debt includes all of life’s temporary luxuries.

There’s another side of debt many people don’t often consider. Not a separate group, it’s more a subcategory to both good and bad debt .

What I’ll call the “Convenience Tax” refers to our preference towards making things easier. Not completely unwarranted, with the technologies available this day in age, why would you go out of your way to make yourself uncomfortable?

Because these conveniences are adding

unnecessary debt to your balance sheets.

Before we go further, recall the ongoing debates between the colloquial phrases: “Sweating the Big Stuff” vs. “Sweating the Small Stuff”.

There are those who believe you should only focus on reducing the larger expenses, and then those who believe you should carefully monitor ALL expenses, no matter how small. Personally, I believe focusing on the big ticket items will make the largest dent in your debts, but I don’t want to trivialize the everyday charges either.

The point here is not to discuss denying yourself pleasures or living like previous generations did, but to realize that we’re paying a premium for convenience. And the unfortunate part is that only we are to blame for self-imposing this “Convenience Tax”. We’re stealing from ourselves because the tax enforcer (us) is not the same as the tax collector (service provider).

Why take public transportation when you can take a cab, why pickup your food when there’s delivery, why go out for a rental when you can order OnDemand, or why send regular mail when you can send it next day?

No one wants to struggle, but how much convenience do we really “need”? It seems that people justify these expenses by calling it a need. The most common qualification you hear is:

I need this because I don’t have the time”.

Really, it’s a sense that if something is available to us, we should capitalize on it. In a culture were creature comforts are king and any discomfort should be quickly dispelled, we lose focus on how much we cost ourselves per year.

Washington, DC recently implemented a $0.05 charge per plastic bag at grocery stores. I won’t go into the details or advocate/dispute the legislation, but instead use it as an analogy for how accustomed we’ve become to “convenience”. There are two components here – the convenience to the bagger and the convenience to the shopper.

Next grocery trip, look at how many bags you receive. Sometimes we can end up with 2x as many bags as groceries! That’s because the “convenience” of throwing random items together in a bunch of different bags far outweighs the time it would take the bagger to carefully sort and load the items into a limited number of bags.

If I only have a few items, I’ll forgo the plastic bag. “Don’t worry about bagging these”.

While this absurd request is being processed, I usually get a blank stare, followed by a concerned “Are you sure”? It’s almost as if I just told the clerk I planned to walk across some hot coals barefoot.

Yeah, I think I can manage the gallon of milk and carton of eggs”.

I decided on this example because of the irony. It could not be a more perfect illustration of my “Convenience Tax”. One could easily avoid the $0.05 charge simply by bringing in their own bag. It doesn’t even have to be a “green” reusable bag, it could be your own plastic bags! But how many people will end up paying this unnecessary charge?

The challenge I’ll proposition you with is this. Next time you convince yourself something is easier, quicker, better – go through these simple questions:

  1. What will be made easier? Cab Example: Are you taking a cab because you’re late for a business meeting or meeting friends at a bar?
  2. How much easier will it be? Cab Example: Is the train/rail/bus running 20 mins late or are you taking a cab to arrive 10 mins earlier?
  3. How much more will it cost? Cab Example: Will the cab cost you $20+ to go somewhere the train/rail/bus can take you for $3?

In a world where many people still don’t have stable electricity grids, clean running water, or reliable health services – don’t be afraid to challenge your notion of “convenience”. The only benefactor will be yourself, and your goal of debt elimination will be your reward.

Photo by Ben Golub

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13 Responses
  1. Fin Engr

    @ LeanLifeCoach:

    Thanks for promoting this week’s Carnival of Debt Reduction.

    You’re right that many debts can originate from this mindset. Good example with the making dinner vs. going out.

  2. Great post. When I went through the exercise of getting my finances under control, I was amazed at how much I spent on little things just like the ones you mention. For instance, using the first ATM I could find, rather than going an extra block to a credit union and saving myself $3. On bigger expenses, because I was in bad shape financially, I paid outrageous sums in late fees, for the “convenience” of paying at the last minute. And don’t even get me started on shipping fees for things ordered on line. Technology has made us so impatient, we are often willing to pay $10-$15 more for shipping just to get something delivered in 2 days instead of 5.
    .-= Tracy´s last blog ..Surviving Debt Recovery: Watch out for that Tree! =-.

    1. Fin Engr

      @ Tracy.

      If you enjoyed this article, you should check out “Your Brain is Your Own Worst Enemy”…. I bet it’ll resonate with your experience as well.

      Glad you’re on the bandwagon now! It’d would be an incredible undertaking, but I bet tallying up all the “convenience” fees we pay would total to a staggering sum.

    1. Fin Engr

      @ MD.

      Never say never! A buddy of mine had a late night in NY and ended up walking some ridiculous distance. He got part of his walk subsidized my coercing a few ladies to let him ride with them. The catch? If the cab took credit cards, he would pay for the whole thing – but could offer no cash.

  3. David @ MBA briefs

    Convenience tax is a great term. Video on Demand instead of going to the video store or finding a RedBox would be another example.

    I think the cost of the “tax” would depend on how valuable your time is to you. If you can easily find the time to catch the bus and still make your meeting or appointment then your unnecessarily taxing yourself. If you’re running from one appointment to another and the bus won’t get you there on time then the cab would be an expense.

    The trick is not convincing yourself all those costs are expenses and not taxes :)

    1. Fin Engr

      @ David.

      Agreed. I actually hint at the video rental options in the post.

      Also agree about the time factor. This is where optimization comes into play. You need to weigh the risk/return of each expenses.

      I’ve always thought motorcycles have been the perfect congestion solution. What better way to avoid traffic delays than weaving in and out of lanes and cruising on the shoulder. Two problems – the law & death.

      Recall that I am not advocating wasting one’s time simply to save money – merely to point out that everyone’s time is valuable, but not always as valuable as believed. In a culture of instant gratification and one-up’s-man-ship, people convince themselves that always having the best/fastest/newest in every aspect of life is necessary.

      I VERY much enjoyed your point about expenses. This is yet another aspect of personal finance that I feel many people miss.

      I can’t count the number of times I’ve heard friends say, “I’m buying a house because I’m tired of throwing away money on rent”.

      Glibly, I look at them and reply “You’re right! I’ve decided to stop eating because I just sh*t it out anyway”. There are certain “sunk” costs surrounding life. Avoiding expenses altogether is near, if not, impossible. The goal is to minimize the erroneous portions and maximize the value of each dollar spent.

  4. FE – “Convenience tax” is spot on! The thing is, the more you make, the more you WANT to pay the convenience tax b/c your time becomes more precious.

    I was going to take a cab back downtown after I got home at 7:30pm b/c I FORGOT that I drove and took the bus home. Sweet!

    Instead, i biked downtown b/c i refused to pay the $12 bucks for my stupidity. I guess if I was super rich, I would just take a cab!
    .-= Financial Samurai´s last blog ..Treat Your Job As If You Won The Lottery =-.

    1. Fin Engr

      @ FS:

      Like the self-punishment. Very “honorable” of you. Maybe that could be a technique for budgeting?

      You know, I was listening to something the other day that was jokingly referring to how we’ve almost completely outsourced our relevance. We bring in people for our PhD programs and advanced, technical trades and we bring in people who want to work hard jobs and long hours for a slice of the America Dream. So what’s left for us to do?

    2. Fin Engr

      @ FS.

      Really enjoyed your article on the Moose snafu. Hope people swing by to check it out.

      If you were super rich, you’d hire a police escort and private SWAT team to barrel you down the freeway and clear the pinons out of your way ;) Top Finance Blogs


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