How Money Gets Wasted

[This Thursday rerun first appeared August 5, 2009]

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 [now, sadly, defunct] 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.

No Comments

  • By Young CPA, August 17, 2010 @ 10:31 pm

    I think that’s a very good observation. I’m sure there are a lot of people who bought twice as much house as they needed, or purchased a house when some analysis should have told them to rent, or bought a car every five years without a thought about repair cost vs the cash outlay for a new car. The bad part of overbuying on a house is that It also increases so many related bills such as taxes, insurance, utilities, some maintence costs, furniture costs, possibly hoa dues for expensive neighborhoods, and the hidden peer pressure that comes with living around people who might have more money to spend on crap than you do.

    It’s not really the little thing that sink people – pretty much everyone on any kind
    of budget will have their own little things they spend money on. It’s all of the major recurring expenses and one time major purchases made when people forget about budgets and paycheck levels that do most people in.

  • By getagrip, August 17, 2010 @ 11:00 pm

    If they’re going to include pets, why stop there? Let’s include the real culprits like:

    Kids, can you name a bigger money suck. It’s not like you can put them to work like in the good ol’ days. They’re pretty much lead weights strapped to your legs until they’re on their own and making some real money. Then do they pay you back? Hell no! They want more money for weddings, grandkids educations, cripes, it never ends.

    Parents, like hurry up and die. You’re bleeding my inheritance away by clinging to life once you hit 70.

    Work, it’s what makes me spend money! I have to get nice clothes, travel back and forth in a car or public transit five or more stinking days a week (just think of how much that costs), then once I’m there I’ve got to buy lunch every day, coffee to keep awake, donuts to keep the admin staff happy, bri..er..gifts for the bosses. What a waste!

    Sigh, silly article.

    You know, it’s only waste if you see no value to it and it hurts you financially. Even if you’re hurt physically, you may not consider it a waste (e.g. contact sports, extreme activities, etc.). If I’m meeting all my other obligations, and I want to spend $500 on new clothes, or $250 on a new golf club, or ten bucks on a scratch off, what’s the problem? I really don’t see any. Just like beauty, waste is in the eye of the beholder.

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