‘Boots’ theory

‘Boots’ theory of socioeconomic unfairness

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Vimes  ‘Boots’ theory of socioeconomic unfairness

 

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 a 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.

From ‘Men at Arms’ by Terry Pratchett.

Vimes is the Commander of the City Watch, the police force of the Discworld’s largest city, Ankh-Morpork. Night Watch another novel in the Discworld series is one of my all time favorite books.

My take away from this is to purchase items that will last. I recently bought a new gym bag for 40$, The store had one for 25$ but was not water proof and was made from cheaper materials. I would rather buy one 40$ bag then two 25$ ones any day. There is a difference between being cheap and frugal. Don’t equate the lowest price with the best price. The long term savings for many products is not always clear but there is some truth to the saying “you get what you pay for.”

 

 

How to set up a DBA

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How to set up a DBA

Based on previous posts you may think by DBA I am referring to a Database Administrator, but in this case DBA is an abbreviation for “doing business as.” I recently open up Tevunah Consulting and want to share the experience of creating a DBA. If you’re a sole proprietorship, you need a DBA to register your business name. Once you have registered a DBA, you can open bank accounts and conduct other business activities using the business name rather than your own name.

What is needed

  1. A name
  2. Find relevant forms
  3. Mail in the forms and money order
    • Usually the clerk requests you to send a stamped return envelope
  4. Publish notice, if required

Cost

  • $35 Money Order
  • $2 Notary fee
  • $1.18 for envelopes and stamps
In total $38.18, just under $40 to register a DBA in Nassau County. I suggest a DIY approach instead of Legal Zoom as they charges $99 + state filing fees for the standard package. In NY outside the 5 boros the total would be $159. Filing yourself would save $121.

Disclaimer

I am not a lawyer, talk with an attorney and/or CPA to learn more about what are your best options to start a business.

Life Insurance

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I spent a summer working as a Financial Representative Intern, which boiled down to me calling people and trying to sell them life insurance and annuities. From the internship I learned about the different types of Life Insurance and what the differences are.

Life insurance can be divided into two basic classes: temporary and permanent. and within these classes are sub-classes that exist for a better fit of one’s needs.

Term insurance

Term gives life insurance for a… you guessed it a specified “term”. The policy does not accumulate cash value. Term is cheaper for the same amount of coverage compared to whole life.

There is also renewable term in which you can keep renewing your policy without getting another physical every renewable period. If you are over 80 the chances of being able to buy term is low.

Permanent life insurance

Permanent life insurance is permanent as long as you pay the premiums.  A permanent insurance policy accumulates a cash value. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, but it’s a loan, to get your policy back to normal, you would have to pay back what you borrowed plus interest. Similar to a 401(k) borrowing from your insurance policy is not recommended.

Who needs Insurance?

You don’t need life insurance if you are single with no dependents. But if you have a family that depends on you, then you may want a life insurance plan that can take take care of them when you are gone. Also note that the older you are the more expensive insurance is for the same amount of coverage. Another class of people that insurance makes sense for is the ultra wealthy, who would want to minimize estate taxes. The main purpose of life insurance is to provide for your dependents when you die, not as an investment vehicle while you are alive.

One piece of advice you see online is “buy term and invest the difference.” I agree this is a smart idea, on the condition you have the discipline to invest the difference. Now this changes if you work in the industry, by having the internship and 10-55 certified I was able to keep half of the first years premiums. I personally have a small 65-life plan with Northwestern Mutual. I make one annual payment, and got categorized in the highest health bucket, both of which reduces how much you need to pay for the coverage received. Not only being a great sales tactic, the lower fees will explain why when you speak with a financial representative he or she will usually have a multi-million dollar policy.

[One summer does not make me an expert, and I recommend further research before making insurance decisions.]