How Money Gets Wasted

Last week the Baltimore Sun ran a list in picture gallery form of "Money Wasters to Avoid." It got picked up by the often amusing Consumerist, which Family Feudwas then noticed by the WSJ’s The Wallet, which is where my jaded mouse  found it. And now I am going to write about it too.

To be fair, this particular bit of sound in the blogosphere echo chamber hasn’t much substance and likely wasn’t intended to be taken very seriously. I imagine a few summer interns brainstorming a list of things people waste money on, rounding up some stock photos, and then poof, it’s internet content.

But if I limited myself to commenting on things that truly deserve comment this blog wouldn’t be much fun to write.

The thirteen wasters of money are: the lottery, books, eating out, pets, DVD rentals, ATM fees, cigarettes, coffee breaks, bottled water, designer clothing, car washes, speeding, and bars.

If you are scratching your head over books, you are not alone. It’s what The Consumerist picked up on and linked to a blog that discussed the very small controversy that ensued from the Sun’s betrayal of fellow tree-killing media.

Sure, there are public libraries, and you can usually wait to buy popular titles in paperback, but in the grand scheme of things a hardcover book habit is hardly a lifestyle destroyer. I know there are people who buy books and don’t actually read them, but for those of us who do, it’s one of the more cost-effective forms of entertainment.

The same is true of DVD rentals. Renting them is a lot cheaper than buying them or seeing the movie in the theatre. It’s even pretty competitive with cable TV, assuming it was used as a substitute not a supplement. And what would be a non-money wasting form of entertainment? Talking to your family? Sitting on the front porch watching the cars go by?

The rest of the list is what you would expect to find on a Family Feud survey. ("We asked a hundred people to name something people waste money on….") My problem with this is not that people don’t waste money on the things on the list. It’s just that they are all so trivial. They are exactly what would first occur to a person asked to name something people waste money on, not where the real money that gets wasted in America goes.

Take the lottery, for example. In 2007 Americans spent an astonishingly wasteful $21 billion on lottery tickets. (Never mind that some of that was won back in prizes or that what wasn’t lowered the tax burden.) $21 billion is a lot of money. But on a per capita basis that works out to a little less than $6 a month. That may be a pointless waste, but it’s not likely to endanger a person’s retirement plan.

Cigarettes and bars are probably the closest things to a common cause of real money problems on the list, and then only for serious users. If you are doing more than a pack a day or more than a few drinks a night then not only are you spending thousands of dollars a year on this vice, but you’re buying yourself health problems that will cost you serious money later on in life.

Where does money really get wasted? I think it is on things that we need but pay too much for. Houses. Cars. Insurance. And on things that ought to be minor luxuries but that we allow ourselves to inflate into major ones. Vacations. Weddings. None of these things are on the Sun’s list.

I think, and this is not a particularly scientific judgment, that most money in America is wasted not by buying things we should do without, but by buying too much of things that are not inherently wasteful. We need shelter, but we don’t need to buy quite so large a house in quite such a nice area. And we need wheels, but that old car now in the driveway is perfectly adequate.

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