Do you know this person?
Shortly after the clock struck midnight on New Year’s Day of 2018, you closed your eyes and vowed a resolution: sign up for a gym. go every day and lose the 15 pounds and reclaim your shape.
A few days, and a few inspirational Instagram posts, later, you found yourself at a local big-name gym, inking an annual contract. Sans the hidden fees, that worked out to a little under $35 per month — a steal, for 365 days of value.
But by early February, the commitment began to wane. “Every day” became every other day; every other day slipped to twice per week… once per week… zero times per week.
You are paying the “FAT TAX”
How much do you spend each month/year in making your “FAT TAX” payments?
You read that right – FAT TAX, not flat tax.
You don’t know what the FAT TAX is? According to the Michael Tannery dictionary of terms not normally used in everyday business lexicon, the FAT TAX is spending $$$ for goods and services that you pay for BUT NEVER USE.
The FAT TAX definition came from a conversation in December I had with a friend hanging out at the local watering hole about their gym membership. They had signed up as many do in January as part of their recurring never changing New Year’s resolutions (The never achieve them, they just recycle last years). Here it was December and she told me that yes, she was still paying for it at $35 per month.
My question was, “When is the last time that you went?” June 14th was the reply. So, you have now paid for the last 7 months without going? I continued my quest for several minutes until I asked her how much she was willing to pay for her FAT TAX before she would take the 15 minutes to cancel the membership. Her reply was that it was only $35.
Being the kind and generous soul that I am, I asked, “Would you mind just writing me a check for $420”.
Her reply, “Why would I do that?”
My answer, well in a year you will have spent $420 in FAT TAX.
I am not sure if she ever connected with how her wasteful spending was taking resources that could be used towards, retirement, paying on her house mortgage or just savings.
I pose the question to several people that had then joined the conversation. I asked what you would do with $420. There were several creative answers besides save it; use it to buy a new bike to replace the gym membership, buy a new outfit, and other simple pleasures.
What FAT TAXES are you paying each month?
Cable Bill – Do you really watch all those channels? Get a web TV or Apple TV and read Consumer Reports How to Decide if Cord Cutting is Right for You.
Subscription Services like Netflix, Hula, Blue Apron. Do you use them? Keep a tally of how often you use the service and check out Ask Trim. Using artificial intelligence, Trim is a free tool that communicates with users via SMS. Trim scans users’ bills and texts them to get permission to cancel any subscriptions it finds. I use it and have seen the results.
Cell Phone – When is the last time you looked at the details on your bill? Check out 10 Ways to Lower Your Cell Bill
Credit Cards They should be paying you reward points if not then switch. Check out The Points Guy for ideas.
Bank Checking Fees – Your checking account should hold your active spending money—use it to pay the bills that you can’t pay with a credit card, and to get cash from the A.T.M. It should never have a ton of extra cash in it. NO FEES is the only checking account to have.
What do you do next? Pick out one of these and begin reviewing one each month. I know that in a years’ time you might just find several opportunities to eliminate the FAT TAX you are paying. Need Help? Give us a call and we can work together on this.
Also, let me hear from you; bring me up to speed on how things are going, what’s changed, what you need or if there is something, I can do for you. Let’s connect.
Michael Tannery CPA, CDFA® AIF®
Tannery & Company
Tax – Accounting – Wealth Management
Be A Financial Olympian™