How the rich stay rich; a lesson in lateral thinking

By Paul Michael on 14 October 2007 (Updated 10 May 2009) 38 comments

A friend recently told me the story of how a millionaire thinks. Not every millionaire of course, just one in particular. It's ingenius, as you will discover. But it really made me ponder about the decisions I make every day, and if I could make better ones just be exercising that underused part of my anatomy - my brain.

The story goes something like this, and forgive me if I paraphrase but my memory is far from photographic.

The millionaire's loan...

Our millionaire, let's call him Anton, walks into a popular bank in the middle of New York City and requests to speak to a loan officer. He doesn't alert the staff to his immense riches, he simply says he's going away on business for a few weeks, to another country, and needs to borrow a small sum of money - $5000. Banks being banks they immediately asked for security on the loan, after all they're not just going to let anyone walk away with a big wad of cash.

Ferrari

Anton then points out of the window to the shiny new Ferrari parked right in front of the bank. He took the title, paperwork and keys out of his pocket and slapped them down on the counter like a man on a mission. The staff went to work checking out the validity of his ownership and sure enough, everything checked out. And of course, which bank is going to turn down a quarter of a million dollars in collateral for a measly $5000 loan? This was a no-brainer (an ironic turn of phrase as you'll soon discover).

Anton left the bank with his $5000 and the bank employee took Anton's keys and drove the brand new Ferrari down into the bank's underground garage. He assured Anton that it would be perfectly safe down there. Anton then left the bank and caught his flight to his faraway land, I think it was China.

Anyway, two weeks go by and sure enough the bank opens Monday morning to see Anton stroll in and slap the $5000 he had borrowed back on the counter, plus the interest which was around $15. The loan officer asked that the car be brought round to the front of the bank and then asked Anton a question. "Our bank prides itself in details and customer service" he said "and while you were away we did a background check, it's routine, and discovered you are actually one of the wealthiest men in America. Why on earth would you need to borrow $5000, it just doesn't make sense."

Anton smiled, picked up the keys from the counter and said "Can you tell me another way I could have parked my new Ferrari in the middle of New York for two weeks, for just $15, and still expect it to be in mint condition when I get back?" With that, Anton walked out of the door and the loan officer smiled a bigger smile.

My first reaction to this was "cheapskate." But then I realized this man probably made his fortune by thinking in this way; by seeing a saving opportunity around every corner. Sure, he could have stashed his Ferrari in a high-quality garage for hundreds of dollars but his mind refused to accept that scenario. There was a cheaper way, just as safe, and he probably got a buzz out of finding a new way to buck the system.

So, with this in mind, I ask all of you to think about ingenius ways that you can get exactly the same service or product for less in the coming weeks. I would love to know your stories, and I know they will help us all look at our world in a different way. The bottom line...the rich stay rich by thinking laterally. You can do it, too. We all can.

Additional photo credit: http2007
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Guest's picture
Guest

I read this one before so I knew the outcome and I agree, it's a real hoot.

Guest's picture
Guest

Wouldn't a guy that rich own his own garage? Cute story, though.

Guest's picture
Anton

This is an old fairy tale of course, I like how its presented here as if its a "real" story. Anyways, here is a variation of it (different car!):

http://www.anvari.org/fun/Misc/How_to_Park_Car_in_Manhattan.html

Clearly the logistics of getting a loan of $5,000 at a bank vs paying a parking fee are simply not worth the millionaire's time...

But a cute story nonetheless.

Guest's picture

I would sit down to get a $5000 loan if I thought my Red Ferrarri held enough sentimental value.

Paul Michael's picture

boy, I was really hoping that was a true story. My friend certainly thought it was, and he said he's heard about it via a well-known finance website. Still, true or not there's a lesson to be learned here.

Guest's picture
Hannah

Anton, while I highly doubt the story is true, remember that just because there are multiple versions of a story out there, does not mean that there isn't a real version. Good stories get told over and over again, and details can get tweaked along the way.

And I had a rich great uncle who would have tried this, had he not been too cheap to buy a car worthy of being used as collateral.

Guest's picture
Guest

Well, that's kind of the point, isn't it? If you're NOT too cheap to buy a Ferrari, you've probably got a place to store it in Manhattan.

Guest's picture

Real story or not, I think we are all missing the point here. Most of us in the middle class will never count ourselves as rich (at least monetarily) because of the way we think about money. As long as we continue to buy depreciating assets (new furniture from the bigbox store, cars, run of the mill wall art and such) and don't bother to use OPM (other people's money), ie leverage, we will continue to wallow in mediocrity! Start thinking outside the box, and you'll go far!

Guest's picture
sylrayj

Maybe he's renting his secure parking spot to someone else while he's out of the country, and has made back that $15 five-fold or even twenty-fold. He didn't need a convenient secure parking spot while he was gone, and someone else might have appreciated subletting his spot for a time.

Guest's picture
Paul

But wouldn't the easiest way to save money be to avoid buying $250,000 cars? Interestingly enough I have just finished reading "The Millionaire Next Door" reviewed on this site. That book did a detailed study on the cars the wealthy drive - what they found...very few millionaires would be driving this car. Just a thought.

Guest's picture
Crys

That was hilariously genius.

Though I'd never buy an expensive car like that, the thought behind the story is what matters :)

Guest's picture
deborah

This is a pretty old joke actually, I've heard it styled originally as a blonde joke (punchline, not all blondes are dumb); old man and rolls royce; ferrari; woman who's outsmarting the men in the bank who looked down on her, etc etc.

Here's a snopes link to the blonde joke version. http://www.snopes.com/humor/question/requests2.asp

Guest's picture
Sarah

What this story actually shows is how easy it is to overlook transaction costs. Setting aside the time he would have spent waiting for the bank to check his bona fides (not inconsiderable, and must be counted), before the bank would take physical delivery of a $250K piece of collateral, they would surely insist on his signing some sort of custody agreement--which he would need his lawyer to read and perhaps negotiate over (who would be responsible if anything happened to the Ferrari while he was away?). Right there, he's out several hundred dollars.

Paul Michael's picture

I think it's the thought that counts. It's had me thinking a little differently ever since I read it.

Guest's picture
Kacie

I hove the concept! Millionaires don't get rich by squandering their money. It's ideas like these that keep money in their pockets.

Guest's picture
Guest

I think this is a nice little parable. The Ant and the Grasshopper is not a true story and neither is The Hare and the Tortoise but it doesn't stop them from teaching great lessons. Thanks for sharing.

Guest's picture
Guest

I would like to know how much time he spent to find a bank with garage and 24/7 guards to store cars (or anything) as as collaterals. There is no such bank anywhere.

Guest's picture
Guest

I do not think self made rich entertain stories like this. They would see nonsense of it in a blink, poor folks however see the wisdom... what makes difference in getting rich is quality of thinking.

Guest's picture
Guest

If I were to comment on this millionaire, I would say this guy is penny wise but pound foolish. Why should he go to a bank to save on parking his Ferrari? He shouldn't have bought it in the first place! Tens of thousands of dollars in depreciation a year not including exorbitant maintenance costs with exotic cars.

If he was so good with his money he should have bought a cheaper car and invested that in his various money making assets and businesses. This website teaches money discipline does it not? =)

The funny thing is that when I used to work in a laundromat I had customer come in with his Ferrari. Supposedly his insurance costs were enough to buy a new car every year!

I wouldn't mind racing in someone else's Ferrari though.. =) Interesting article nonetheless.

Guest's picture
Guest alexander rahim

Wonderful thinking pattern of how the rich stays rich, brilliant story, brilliant

from Alexander

Guest's picture
Diane

It's definitely worth reading and passing on. Perhaps the truly wealthy stay rich by not spending their money rashly!

A moral to us all. When something is available for less, why pay the full price?

Guest's picture
Rick

Bless you!

Guest's picture
Keith

This guy was probably schooled at Harvard Business School!

Guest's picture
Guest

lol this is hilarious. Look at the cheapskates who wont reward themselves of any luxury are the ones who are the bottom of the barrel millionaires. These millionaires maybe paper rich or they make lowly salaries from their business. The milionaires who no longer feel poor are the ones who will actually take a woman to a movie on a saturday night.

Guest's picture
Ryan

2 things came to my mind when he laid the cash down. 2 scenarios.
1 - one of the employees dented or scraped the car whilst taking it down to the parking space and that is why it's in the shop getting fixed. BTW, who ever heard of a bank having an underground parking lot to keep cars for collateral?
2 - The bank manager couldn't resist taking it home over the weekend for a spin and wound up in an accident. We all probably did it in our younger days if we worked at a gas station and took in cars to be fixed over the weekend. I remember a white Corvette quite clearly...hmmm.

Guest's picture
Guest

In reality, the bank would hold the title, and not store the actual car.
If the loan was in default, only then would the bank arrange reposession.
No bank I've ever been to has an attached garage.

Guest's picture
Guest

This story is older than the net...

Guest's picture
Guest

That's all: BS

Guest's picture
Guest

what are you trying to be like Robert Kawasaki!!!LOL

Guest's picture
Guest

A similar story involving oil changes. A man owned a service station across the street from a major office building and offered oil changes for $20 each. As it turns out the parking garage for the office building charged $25 for all day parking. So, if one were to get an oil change leaving the car in the morning and picking it up in the afternoon they could park for all day $5 less and get an oil change in to the bargan.........

Guest's picture
Guest

I liked it at first but then I gave it some more thought. How far away was the bank from airport? Did he take a cab to and from? What did that cost?

Also, if I took my car to the bank for a loan. They wouldn't want me to leave it on their property. They'd just want the title. Right? Otherwise, bank parking lots would be cluttered with Boats, RV's, and all kinds of big clunky valuable items.

Sorry. Not quite out of the box enough for me. Perhaps he should try a paw shop beside the airport in the next version of this tale.

Guest's picture
Batman

I think this is quite right. I grew up in a poor environment, and as a young adult I could barely afford rent. I'm still young, but now I'm what you'd say pretty much loaded.

Despite of this fact, I always find myself paying less than others for the same thing. Because I recognize the world as a big business place, and its now hardwired into my genes to make good deals. And it does not turn off even if the gain I achieve is minimal, like less than a dollar. It's about achieving something, not about the amount.

The story seems pretty much made up though, but serves well to prove a point.

Guest's picture

Although the validity of this story is somewhat questionable, there is no doubting that those who are active in seeking out new ways to protect the money they have will get some enjoyment out of it, be able to tell others, and also get some of the rare deals that we hear about occasionally. You can only get results by doing.

Guest's picture

I stumbled upon this with the stumble upon tool bar today and laughed so hard I gave it a thumbs up. I have met a lot of very rich people and they are all like that. They will ask you out for a beer and leave you with the bill.

Guest's picture
Guest

Thank you Paul for your story.  This reminded me of one of my own.  I was having a moving company move my household contents across town and when it came to my Vintage Piano to be moved the mover informed me that it would cost a additional thousand dollars to move the piano, I declined his offer and got on the phone with a furniture refinishing company and asked them if they refinished piano's and if they could pick the piano up at one house and deliver it to another when it was done.  The refinishing company said that they could and it would cost me three hundred dollars to do so.  Guess which route I took?!

Nita

Guest's picture
joel

the millionaire was a white brother thats why he could think like that,.. honestly a black brother woudn`t do that what so ever,. we all about the floss.. different mindsets i guess. however, this million dollar man was disciplined, and thats a virtue that most of us dont have with our dollar.

Guest's picture

"Lateral thinking". Great post and I believe I am going to put this type of thinking to work in my future ventures. Getting something that we use each day for less than we are right now is another way to be reach success.

Guest's picture
Guest

This makes no SENSE! He would obviously have his own garage t keep it in! Who the hell parks an exotic car on the street??