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Terry Pratchett said it very well: “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for examp

Terry Pratchett said it very well: “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet. This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”

jimktrains2 11y ago
I was just about to post this because it said there was no comments and when I opened it you had just beaten me to it! I would like to note that it was from the book "Men at Arms". The older I get the more I see this. Paying upfront to get a lower rate on your mortgage. Having money to begin with to manage well to get a good rate on a mortgage to start with. Having the flexibility in general to try something that may lead to less money overall if it pans out, but is a waste if it doesn't.
- Naritai 11y ago
  To continue your point: Having the credit score to get a good mortgage. Living in a good zip code, and so your car/home insurance is cheaper. Living in a good zip code, so you can send your kids to public school. Living in a good zip code, so you don't need an expensive security system. Working for a company that provides high-quality health care plans with low deductibles. Owning a newish car, that is much less likely to break down.
  - tostitos1979 11y ago
    I generally agree with what has been said. Except for the car part. I thought it was best to drive a car to the ground. I buy reasonably priced sedans for around 20K (but brand new). Full coverage car warranties seem to end after 3 years. I sold my last car at that point (it had started to give me headaches). I got about half the money back .. so 10K loss or 3333 per year. Our current car is also at 3 years and starting to act up. I'm deciding whether to buy a new one (and take a 10K loss) or keep going for 2 years. Or is my mistake not buying the 50K BMW or 100K Tesla? :-p
    - ghaff 11y ago
      A lot of warranties have gotten longer. I just had something fixed that sneaked in under a 5-year powertrain warranty and probably wouldn't have been cheap. However, in general, leaving aside the question of buying new vs. used, it's usually pretty economical to hold today's cars for a pretty long time. To be sure, there's a certain cost in time and inconvenience in decreasing reliability. And it's always a bit of a crapshoot (which I've typically let go on a beat or two too long) at the point where it's time to get rid of the thing. But I've been mostly happy with buying new and driving it until I start to run into ongoing issues. (Currently I have a '97 Honda with about 170K on it but I admittedly don't drive it on salted roads any longer or take it on long road trips.)
    - dnautics 11y ago
      Buy a hnda next time. I had a bad honda (civic hybrid 1st gen 1st model year) lasted 6 years and 170k... Currently driving an 2 gen insight, did a year and a half of tough Lyft driving in it, it's going really strong with >200k with no sign of giving up the ghost.
    - zo1 11y ago
      Go second-hand for one of the luxury brands that provide warranty/motor-plan for 5 years. Most of that "loss" is in buying new, instead of second-hand. If you don't mind it, and sell it while it's still in the plan, your 'cost-of-ownership" per year is actually quite good. Might even be better than if you were to get a "low-end" sedan new.
- pnathan 11y ago
  This also plays out with many mutual funds: below a certain volume of money, fees are everywhere, the more you have, the fewer the fees are.
  - khuey 11y ago
    True historically, but Vanguard et al have fixed this.
Eric_WVGG 11y ago
I heard a quote somewhere regarding buying quality items: “I’m so poor I can only afford to buy the very best.” It’s life-changing when you can get to that minimum income threshold.
- NaOH 11y ago
  I learned a similar line: "I'm too poor to be cheap."
SilasX 11y ago
Sorry, the quote irritates me to no end (doubly so how people trip over each other to copypaste it). In practice, most opportunities are not a pure savings like this where you will end up ahead in every way if only you could borrow the money; usually, you'll end up with more painful feet but more money to spend, as the cheaper shoes aren't completely useless and in need of replacement. If the quote were as true as claimed, then someone could make a program where helpers pair up with a poor person, loan them 50 dollars, and then let the savings spiral up virtuously -- that loan enabled $100 of savings, which can be reinvested in more savings, when frees up more savings, etc. But obviously no one's figured out how to make that happen, and the poor can often already get loans of such size and not trigger the upward spiral. So something's missing. With that said, being poor does tend to be a double whammy where e.g. you live in a places that makes bulk purchases harder ... but it looks nothing like the dynamic in the Vimes copypasta.
- euyyn 11y ago
  I'm buying a house, because downpayment + misc. costs are going to result in less monthly cost (mortgage + HOA + taxes) than the rent I pay now. The difference is bigger than what I'd obtain by just investing that money somewhere safe. A year ago, with about the same salary but less savings, I wouldn't have been able to meet the 20% downpayment mark, so loan insurance would have make it not profitable. Before that, with even less savings to put as downpayment, just the monthly mortgage payment would have been higher than my rent. I disagree with your premise that the poor can often get loans big enough to make an impact in their lives. And when they do, they tend to be predatory loans.
  - SilasX 11y ago
    The story is trying to illustrate a specific dynamic: because of being unable to spend a little more in one month [1], you end up having to pay a lot more in later months. You're supporting that by illustrating a situation where being able to come up with a lot of money over a year enables a savings later, which gives a different impression than "look how poor you become from not having $50 one time". I think your example supports my point: being poor has costs, but it doesn't look at all like the dynamic given. >I disagree with your premise that the poor can often get loans big enough to make an impact in their lives. And when they do, they tend to be predatory loans. But if the savings is so sharp, then even a predatory loan could reverse the cycle. In practice, it doesn't. So the theory is incomplete. [1] though inflation since the writing makes the amount larger than it sounds now
zelcon5 11y ago
As the landlord of a small building in a poor neighborhood, I cannot tell you how true this copypasta is. It really has calloused my sympathy for the poor. Poor people are poor because they live beyond their means. Save for extreme talent, intelligence (+2 σ above mean), or lottery-winner luck, there isn't really a general way to make more income without investment (i.e., having money). So for a non-intelligent average person born from a poor family to become middle+ class, the only way is to grow savings (in order to invest) by living within or below one's means. But these people have different priorities. Or maybe they do wish to improve their lot but lack the executive functions to skip costly partying/restaurants/weed/gambling/whatever. A little part of me dies inside when a tenant tells me they can't pay the rest of the rent until X date and pulls out a iPhone 6S to show me on the calendar.
jpindar 11y ago
Go back to reddit.

jimktrains2 11y ago

I was just about to post this because it said there was no comments and when I opened it you had just beaten me to it! I would like to note that it was from the book "Men at Arms". The older I get the more I see this. Paying upfront to get a lower rate on your mortgage. Having money to begin with to manage well to get a good rate on a mortgage to start with. Having the flexibility in general to try something that may lead to less money overall if it pans out, but is a waste if it doesn't.

Naritai 11y ago
To continue your point: Having the credit score to get a good mortgage. Living in a good zip code, and so your car/home insurance is cheaper. Living in a good zip code, so you can send your kids to public school. Living in a good zip code, so you don't need an expensive security system. Working for a company that provides high-quality health care plans with low deductibles. Owning a newish car, that is much less likely to break down.
- tostitos1979 11y ago
  I generally agree with what has been said. Except for the car part. I thought it was best to drive a car to the ground. I buy reasonably priced sedans for around 20K (but brand new). Full coverage car warranties seem to end after 3 years. I sold my last car at that point (it had started to give me headaches). I got about half the money back .. so 10K loss or 3333 per year. Our current car is also at 3 years and starting to act up. I'm deciding whether to buy a new one (and take a 10K loss) or keep going for 2 years. Or is my mistake not buying the 50K BMW or 100K Tesla? :-p
  - ghaff 11y ago
    A lot of warranties have gotten longer. I just had something fixed that sneaked in under a 5-year powertrain warranty and probably wouldn't have been cheap. However, in general, leaving aside the question of buying new vs. used, it's usually pretty economical to hold today's cars for a pretty long time. To be sure, there's a certain cost in time and inconvenience in decreasing reliability. And it's always a bit of a crapshoot (which I've typically let go on a beat or two too long) at the point where it's time to get rid of the thing. But I've been mostly happy with buying new and driving it until I start to run into ongoing issues. (Currently I have a '97 Honda with about 170K on it but I admittedly don't drive it on salted roads any longer or take it on long road trips.)
  - dnautics 11y ago
    Buy a hnda next time. I had a bad honda (civic hybrid 1st gen 1st model year) lasted 6 years and 170k... Currently driving an 2 gen insight, did a year and a half of tough Lyft driving in it, it's going really strong with >200k with no sign of giving up the ghost.
  - zo1 11y ago
    Go second-hand for one of the luxury brands that provide warranty/motor-plan for 5 years. Most of that "loss" is in buying new, instead of second-hand. If you don't mind it, and sell it while it's still in the plan, your 'cost-of-ownership" per year is actually quite good. Might even be better than if you were to get a "low-end" sedan new.
pnathan 11y ago
This also plays out with many mutual funds: below a certain volume of money, fees are everywhere, the more you have, the fewer the fees are.
- khuey 11y ago
  True historically, but Vanguard et al have fixed this.

Eric_WVGG 11y ago

I heard a quote somewhere regarding buying quality items: “I’m so poor I can only afford to buy the very best.” It’s life-changing when you can get to that minimum income threshold.

NaOH 11y ago
I learned a similar line: "I'm too poor to be cheap."

SilasX 11y ago

Sorry, the quote irritates me to no end (doubly so how people trip over each other to copypaste it). In practice, most opportunities are not a pure savings like this where you will end up ahead in every way if only you could borrow the money; usually, you'll end up with more painful feet but more money to spend, as the cheaper shoes aren't completely useless and in need of replacement. If the quote were as true as claimed, then someone could make a program where helpers pair up with a poor person, loan them 50 dollars, and then let the savings spiral up virtuously -- that loan enabled $100 of savings, which can be reinvested in more savings, when frees up more savings, etc. But obviously no one's figured out how to make that happen, and the poor can often already get loans of such size and not trigger the upward spiral. So something's missing. With that said, being poor does tend to be a double whammy where e.g. you live in a places that makes bulk purchases harder ... but it looks nothing like the dynamic in the Vimes copypasta.

euyyn 11y ago
I'm buying a house, because downpayment + misc. costs are going to result in less monthly cost (mortgage + HOA + taxes) than the rent I pay now. The difference is bigger than what I'd obtain by just investing that money somewhere safe. A year ago, with about the same salary but less savings, I wouldn't have been able to meet the 20% downpayment mark, so loan insurance would have make it not profitable. Before that, with even less savings to put as downpayment, just the monthly mortgage payment would have been higher than my rent. I disagree with your premise that the poor can often get loans big enough to make an impact in their lives. And when they do, they tend to be predatory loans.
- SilasX 11y ago
  The story is trying to illustrate a specific dynamic: because of being unable to spend a little more in one month [1], you end up having to pay a lot more in later months. You're supporting that by illustrating a situation where being able to come up with a lot of money over a year enables a savings later, which gives a different impression than "look how poor you become from not having $50 one time". I think your example supports my point: being poor has costs, but it doesn't look at all like the dynamic given. >I disagree with your premise that the poor can often get loans big enough to make an impact in their lives. And when they do, they tend to be predatory loans. But if the savings is so sharp, then even a predatory loan could reverse the cycle. In practice, it doesn't. So the theory is incomplete. [1] though inflation since the writing makes the amount larger than it sounds now

zelcon5 11y ago

As the landlord of a small building in a poor neighborhood, I cannot tell you how true this copypasta is. It really has calloused my sympathy for the poor. Poor people are poor because they live beyond their means. Save for extreme talent, intelligence (+2 σ above mean), or lottery-winner luck, there isn't really a general way to make more income without investment (i.e., having money). So for a non-intelligent average person born from a poor family to become middle+ class, the only way is to grow savings (in order to invest) by living within or below one's means. But these people have different priorities. Or maybe they do wish to improve their lot but lack the executive functions to skip costly partying/restaurants/weed/gambling/whatever. A little part of me dies inside when a tenant tells me they can't pay the rest of the rent until X date and pulls out a iPhone 6S to show me on the calendar.

jpindar 11y ago

Go back to reddit.