We have all made mistakes which cost us money.  If you’re a Dave Ramsey fan then you know when someone calls his show and has made a mistake which costs them money he calls it being charged “stupid tax”.  It makes sense. You’re being “taxed” for your stupidity in that situation. The idea is that we’ve got to learn from the experience so we don’t get taxed again.


I want to share a time I bought a crazy expensive bed which cost me some stupid tax… in a big way.


The Situation

In 2013 I moved to Raleigh.  I had just signed an employment contract which came with a nice raise and after a signing bonus and moving package, I was flush with cash and ready to buy a couple things for my new apartment.


It should be noted here that at this time I still had about $40,000 in student loan debt but did I pay down the debt with all the cash I came into? No way.  I remember thinking that even if I put all the money I had toward the debt I’d still have a mountain of debt and nothing to show for it.  It was truly silly logic, I know, but I needed to still learn a few lessons before I was ready to sacrifice lifestyle and pay down my debt with vengeance.


 One thing I wanted to get was a new mattress.  I set my budget at $300 cash and headed to the store.  While there were $300 options the salesmen asked me to just try the Tempurpedic to see the difference.  There was a huge difference in comfort and the salesman explained that we spend 1/3 of our lives in our bed and his job was to get people into the mattress they deserved.


The Hook

I did deserve a nice mattress, right? …
With the raise I just received at work I could “afford” it …
I mean, I had a good job. I didn’t have credit card debt, I was responsible …
If I got a nicer bed, I’d be able to perform better at work, right? …
I deserved a good nights sleep, right? …


… All of these thoughts started flowing through my head and before I knew it the salesman was telling me I could have a bed delivered, installed, and it would cost less than $170 a month at 0% interest for 24 months.  Cheap, I thought.  That was much less than my raise so it could have the bed without impacting my current standard of living.  Talk about moving up in the world.


Then the hook.  If I didn’t like the bed I could return with no restocking fee if they picked it up.


Still, I wanted to get a “good deal”…   He called his manager twice to see if he could do the deal.  Eventually, he was given the go ahead.


The “Deal”

I would have to buy the mattress and the adjustable and vibrating foundation and it would only cost me $120 for 24 months. I’d have to pay a portion of the delivery fee which was sometimes free… but since I was getting such a deal they would charge me $100 for delivery.


The total package was more than $4,000 on the showroom floor and I was getting a STEAL at only $2,800.


I signed the paperwork and the mattress was to be delivered in the next few days.


Instant Buyer’s Remorse

Instead of spending $300 I spent $2,800.  Even while I tried to justify that I got a good deal, I didn’t feel good about it. I called to try and cancel the delivery but I was coerced into keeping the bed and just “giving it a shot for awhile, after all, it could be returned within 60 days with no restocking fee.”

Even after taking delivery I wanted to return it.  That’s when I was told that while there was no restocking fee by the store there was a restocking fee from the manufacturer AND I’d have to pay for pick up.

I felt stuck. So I just kept the bed.  It was nice. But it was just much more than I wanted to pay, even if I could afford the monthly payments.

The Stupid Tax

Even after paying the bed off in full in less than a year,  I only had it a few years. It was only a queen. It slept hot. I never used the adjustable or massage functions which doubled the price of the purchase. After getting married, it had to go.  I sold it before moving in with my wife.  What did I get for it?  A whopping $700 dollars.  In a few years, I turned $2,800 into $700.

A loss of $2,100 or more than $500 bucks a year to own the bed… Ouch! Never again!

Post Mortem of the Deal. 

Let’s review this deal so we can see how in the world I ended up in that situation and how you could avoid paying stupid tax in a similar situation.


1) Use of Credit

Since I used credit I minimized the instant pain of making such a massive purchase.   I suggest not entertaining the use of credit for any consumer purchase even if it is 0% interest or “same-as-cash”.  It’s all too common to overspend with credit which is obvious because the average American household has over $16,000 in credit card debt.


 2) Got Emotional

When I was in my right mind, prior to entering the sales floor, I knew there were much nicer beds than $300. Still while completely unemotional, I reasoned that a proper budget was $300. But I quickly got caught up in the deal and end up spending almost 10 times what I planned.  It didn’t help they sweetened the deal with “one-time” offers….  I just got caught up in the whole thing.  Now I take a timeout for a week or more before any big purchase. When we buy big ticket items we undoubtedly get emotional. I found it helps to clear the mind and make the final buy decision with a clear unemotional mind.


3) Hubris and Entitlement

I remember reasoning that I worked hard and that I deserved a nice bed.  What does that even mean?  I can only tie that logic to hubris (pride) and entitlement.  Somehow, although I had outstanding debts, meaning I hadn’t paid for other things which I had already purchased, I deserved something better and nicer than a reasonable $300 bed.  It was silly of me. I find the pre-purchase timeout helps curb hubris and entitlement thinking as well.


So was this just me? or do you have a similar story?  I’d love to hear it!  Comment below or email me at Michael@MurphyOnMoney.com