Wednesday, July 12, 2006

Nora Ephron on the word "Amortize"

This is my new favorite quote about money:

I should point out that I don't normally use the word "amortize" unless I'm trying to prove that something I can't really afford is not just a bargain but practically free. This usually involves dividing the cost of the item I can't afford by the number of years I'm planning to use it, or, if that doesn't work, by the number of days or hours or minutes, until I get to a number that is less than the cost of a cappuccino.
It's from a New Yorker article (June 5th issue) that caused a bit of a buzz here in the city: Nora Ephron tells the story of her love affair with an apartment that she lived in for many years, in the Apthorp, a grand old building on the Upper West Side. The "amortization" she's referring to above was in relation to her paying $24,000 in "key money," i.e., bribery for the right to move in to her rent-controlled apartment in 1980. At the time, the rent was $1,500 (about $3,500 in today's dollars), which wasn't bad for 8 rooms. Sometime in the 1990's, Ephron falls victim to NY state's luxury decontrol law stating that anyone whose rent is over $2000 and whose earnings are more than $250,000 a year then becomes subject to market rate rents. I say "victim" rather lightly here, because I think this kind of decontrol is a very good thing and anyone who whines about it should be slapped, and worse.
Ephron writes "It was totally unfair! It was completely unjust!" Some readers of the article seemed to find that a bit annoying, but I think she's being ironic. Sure it sucks to find out your home of many years is suddenly going to cost triple what you're currently paying, even when you know you make plenty of money, and as Ephron points out, sometimes it's not about money, it's about love. She renews her lease at the exhorbitant new market rate rent but the next time it comes due and the rent hits the five figures, she falls out of love, and moves out.
Funny, isn't it, that "amortize" sounds as if it could be derived from the same Latin root as amor/amore/amour: love, as if paying for something for years and years were somehow associated with deep and timeless love. But it's not-- it's from admortire: ad: to, and mort-: death. The paying goes on and on until something dies. Money, love, and death... powerful stuff.


Sarah Barah said...

When I was growing up, my father used to think of things as being a good buy if the # of uses equaled the # of $ paid. So, a t-shirt that costs $10 will certainly be worn more than 10 times and would balance out a party dress (for me, not him) worn only a few times.

Anonymous said...

The word mortgage comes from the same root as well. I would love to have been in Ephron's position with her problems, but then I'd have to also take flak for You've Got Mail. How many Tom Hanks/Meg Ryan movies can the same person write?

Anonymous said...

I fully subscribe to the concept of applying amortization to consumer purchases. My wife and I sometimes justify so called "luxury" purchases based on the longevity of the article. For example, we might spend $500 on a sweater, but the couple of expensive sweaters I own, I have owned for an average of 7-8 years and they get constant use. I don't run out and buy a new one each season, and they were carefully considered quality purchases. I also got them at a discount sample sale (one of the benefits of living in NYC, the fashion capital of the U.S.). And yes, $500 is the discounted price for brands like Malo.

Likewise, an expensive timepiece, or quality home furnishings can last more than a lifetime. I've owned my watch for about 12 years. Though I admit to admiring new watches, and may upgrade someday, my old anniversary watch is still great and I'd simply rather do other things with my money than buy a new one.

Of course, this concept can get carried too far sometimes, to justify buying things you really can't afford. And sometimes paying up does not necessarily result in superior quality (a disturbing trend as of late). The danger is in not knowing where to draw the line or not understanding what you are getting. We establish budget line-items for clothing, furnishings, etc and adhere to our budget. And we're only allowed to exceed one category if we come in under-budget on another. And we are not impulse shoppers - which is key to not getting carried away. I've been thinking about buying a new car for the past 10 yrs. Still thinking about it. Perhaps I'll get one in about 10 years.

Anonymous said...

A very interesting take on the origin of "amortize". But you probably already know that it's root is "mort", which means death. In this case, you're paying until the death of the loan (hopefully not til yours).

Here's a dictionary link:

Anonymous said...

OOops. Stupid me. My sincere apologies. I read your post from the Bloglines RSS feed aggregator and somehow I missed that you already wrote about the real root.

So very sorry :P

James L said...

i would reallly love to beat my mortgage to death instead of paying it off