Clothing and the rich

Discussion in 'Classic Menswear' started by esquire., Feb 2, 2005.

  1. brescd01

    brescd01 Senior member

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    Hey, compared to many of the anal sphincters on AAAC, I will take T4Phage AND Mark37 any day. Didn't I get absolutely DESTROYED on AAAC for writing PRECISELY the contents of this post, that their is little relationship between spending for luxury goods and people's actual means, and that spending according to one's means is more of an ideology than an economic exigency? Oh well. If Internet justice were the alpha and omega of reality we would be trying people on-line. I am sure many of you have seen or heard of this, but for sage investment advice related to the ideas expressed in this thread, try "Rich Dad Poor Dad."
     


  2. Giona Granata

    Giona Granata Senior member

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    So to be a Millionaire you have to save on suits ... that's ridicolous.

    They who buy a 10.000.000$ Yacht are not millionaires?

    We can draw a point, you have not to be a millionaire to have a taste.

    PS
    Jan, Marc37 cannot travel because he suffers travelling. Maybe his aunt can buy a 737 to make him comfortable?

    Oh, well I think he can pay Tony a holiday in Australia.
     


  3. rlevine

    rlevine Well-Known Member

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    I'm young and maybe don't understand this.  I don't even know what a forex account is.  But wouldn't you be better off taking the loan on the car and house? You can get 14% a year from your investments versus the car loan of maybe 0% and the mortgage of 6%? Or do you get a substantial cash discount?
     


  4. johnw86

    johnw86 Senior member

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    Let's face it, a million dollars isn't that unusual anymore. Particularly if, as they did for this study, you include the house and retirement funds.

    Another finding of the book was that the "average" millionaire shops at Wal-Mart and buys used cars.

    Also, as was pointed out earlier, the method used to solicit respondents may have been biased toward those who meet the lower end of the eligibility pool.

    That doesn't detract from the financial lessons--just that I don't want to take my lifestyle advice from these people.
     


  5. joseanes

    joseanes Senior member

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    Different people spend money in different things.
    Some people find cars a luxury. Some people find traveling a luxury, or eating out, or going to the theathre, or golfing. Others find clothing a luxury. You can not infer the propensity for becoming a millionare from how much someone spends on a single kind of luxury.

    Anyone can become a millionaire with a salary between 50K and 200K... with enough time. (yes, before retirement).
    A million is not too much money. My salary has been between 38K and A LOT LESS THAN 200K for the first 8 years of my career and I am slightly above halfway there (although I must confess my most expensive suit is a $200 dept store one, and I will soon fix that).
     


  6. Giona Granata

    Giona Granata Senior member

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    I'm not offended by the book. I find it ridicolous.
     


  7. johnnynorman3

    johnnynorman3 Senior member

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    I think that the one of the book's (err, excerpt's) underyling themes is that humans have a finite amount of time, that time is money, and that spending time shopping means that time that could be spent earning money is not. This, to me, has more powerful ramifications. The money difference between buying luxury clothes and cheap clothes is probably, in the end, not that much. In most cases, it will be about a $6 - 7000 difference per year (unless you are just obsessed with continually overloading your closet -- but that is a different issue from being obsessed with having only luxury clothes). On the other hand, if you are making $200 an hour, you can reach that $6000 in only 50 hours of work (taxes).

    I don't, however, think that the logic is correct if this is the point the book is trying to make. There is no evidence that people who buy luxury clothes are spending any more time shopping than people who buy ordinary clothes. I would estimate that I spend LESS time per item now that I know what to look for and where to look for it. I no longer have to try on 15 pairs of jeans before I find one I like, because I know what fits my body now. I no longer have to go to four stores to find a high quality pair of pants, because I know I can look up "Incotex" on Ebay and buy a pair in my size in five minutes. Moreover, luxury goods are actually easier to shop for, because you get superior customer service (though this isn't saying much), and there are more goods concentrated in one store (for example, I can get jeans, a casual shirt, a tie, a suit, dress pants, etc. at Louis Boston, whereas I can only get the former two at The Gap).

    If the book's point is that time spent THINKING about luxury goods is a waste of time economically speaking, well then yes the point is well taken. But there is probably only a marginal correlation between thinking of style and fashion and actually buying. I can talk about the different cuts of Italian and English suits, sure, but I simply can't afford to go out and buy a Kiton, Attolini, or Savile Row suit at this point.
     


  8. AlanC

    AlanC Minister of Trad

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    The whole book is quite laughable.
    I really fail to see how it is. I read both the "Millionaire Next Door" and the "Millionaire Mind" when I was teenager and found the points that it advocated to be sound and realistic. It dispells the popular notion of the typical millionaire lounging in a pool somewhere while "Bunny" fetches the kids in the Benz from prep school. Â If you want to build your wealth you have to make sacrifices in the short-term for long-term gain, something Western society is really bad at promoting.
    I agree with Aaron. It is probably a case study in itself how the findings of the book are received here. I will say this, however, the findings certainly are based on the habits of an older generation. You will find, for example, a bias against foreign automobiles. I tend to believe that's more of a generational issue than anything else (my father won't drive foreign cars, for example, while I own a Nissan and a Mazda). I think the type of lifestyle and overall approach the book shows from millionaires reveals principles of wealth building (as opposed to cash flow) that really can't be disputed. I would suggest reading a few pages, which you can do for free at Amazon.
     


  9. AlanC

    AlanC Minister of Trad

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    Just to make their point, if you start with $6,000 and invest an additional $6,000 at 10% interest for 30 years you'll end up with $1,091,661; at 12%: $1,627,756.

    If you do the same with $7,000: $1,273,604 (@10%) and $1,899,048 (@12%).

    And there's a millionaire.
     


  10. johnnynorman3

    johnnynorman3 Senior member

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    Yes, I know, fine. But I'm sure as hell not making 10% interest on my 401K, and that $1 million is still taxed either at real income or capital gains rates, and inflation causes that money to be worth less.

    I also doubt that most people who like luxury goods buy a consistent amount per year for 20 years. I'm building a nice wardrobe now, but at some point I'll need less and less staple pieces, driving my spending significantly down. Indeed, I think I mostly agree with one of the themes on this board -- buy expensive things now and watch them depreciate less slowly.
     


  11. AlanC

    AlanC Minister of Trad

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    The 70 year average rate of return in the stock market is 10.7%. You can invest in a Roth IRA and avoid both capital gains and income tax. You only pay tax on the money you initially invest. As Warren Buffet points out, when you're a buyer of stock (investor) you don't want the stock market to increase because you want to buy your stocks cheaply.

    Certainly, I'm using static figures, but your $6-7,000/year won't remain static, either.

    The point the book makes simply is the mentality of people who are millionaires. They would see that $6000 and maximize its investment potential rather than spending it on depreciating goods (new cars, consumer products, etc.).

    I'm just pointing out the point of the book. I'm not a millionaire (yet) either.
     


  12. AJL

    AJL Senior member

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    I think the bottom line is to live within your means, i.e. do not spend more than you earn. There is no doubt in my mind that your "garden variety millionaire" aka the millionaire next door, has become so due to frugality and conservation. Many of the millionaires I know (primarily clients) are not garden variety millionaires, i.e. they've more than a million or two in net worth, and subsequently spend money on nice things for themselves, their homes, etc. And yes, it's not just about the cars, the clothes and what have you. I know a fellow who wouldn't dream of spending much more than $1,000. on a suit or $300. for a pair of shoes, drives a 7 year old Nissan, wears a black plastic casio watch on occasion, yet he takes his family (adult children & grandchildren) on lavish tropical holidays every December, travels frequently, dines out regularly and just bought a nice house outside of Harvard Square for $2m+. Cars and clothing are not priorities for him; family, good food and travel are. I cannot argue with his choices: he lives well, pays cash for everything, takes good care of his family and puts away enough annually for a very comfortable retirement. And in fact, he does not dress shabbily, just not up to the rarified standards of most SF-ers (mostly BB).

    Conversely, I know another fellow who lives in an extremely large house in Brookline, who has a walk-in closet that resembles a small boutique in a fine men's shop, replete with built-in mahogany floor to ceiling cabinetry, wainscoting & crown molding. Suffice to say he likes clothes and is not afraid to spend money, which he has lots of.

    Another fellow (these latter 2 are clients) lives in a large house in Dedham, with a walk-in cedar closet that is approx. 8' x 15' in dimension. In it he has over 140 suits, many of them bespoke with an endless assortment of pressed and folded shirts and ties arrayed on a running shelf above them; it is most impressive. Interestingly he has only about 6 pairs of shoes, although several are Lattanzi custom. He is a senior partner at one of the top Boston law firms , so looking good is of paramount importance. His rides consist of an older red dented Jeep cherokee and a gray Taurus wagon of indiscriminate age (does it really matter?), yet last year he spent over $100k on a hand made Italian concert grand piano (Fazioli). Personally I'd probably have chosen the Maserati coupe over the Fazioli piano, but it is the music he is passionate about, not the car he drives; he plays reasonably well, to my ear.

    I work for wealthy people, alas I am not one of them. I am still trying to learn to live within my means, which at this point does not include $800 E. Green shoes even at the $450 I just paid for them, or the BMW 330CI in my driveway, lovely though they both are. At the rate I am going I will never be a millionare, but will end up very well shod standing next to my broken down vintage bimmer that I cannot afford to fix, holding a sign reading "will work for shoes, er, food."
     


  13. johnw86

    johnw86 Senior member

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    Of course, past performance is no guarantee of future returns... [​IMG] (And there are many economists I respect who believe that the mid-term outlook for the market is less positive than the recent past.)
     


  14. VMan

    VMan Senior member

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    Great point - nobody becomes wealthy from spending a lot of money (investing activities aside, of course).
     


  15. LA Guy

    LA Guy Opposite Santa Staff Member Admin Moderator

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    Whatever. If I invested 35% of my gross income right now, I would literally starve. If I bought nothing but necessities (i.e. food, toiletries) and kept travel to zero (which I cannot do right now), I would be able to save 10 % of my gross, about 15% of my net. Granted, I am at the beginning of my career, and can expect to earn about twice or a little more than that when it actually takes off (assuming I stay in the States), but what you can afford to put aside depends a lot on the basic costs of living in your particular geographical location. I live in a rather small studio right now; and the rent is equivalent to a mortgage payment (20 year plan) on a reasonably sized house in most parts of this country. Go figure.
     


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