In an Over-Communicated, Intrusive World, Simple is Better
Ed

Clason’s “The Richest Man in Babylon” Part 2 – The 7 Cures for a Lean Wallet and The 5 Laws of Money

Copyright © 2007 Ed Bagley

Part 1 of this 2 Part series ends the synopsis of George Clason’s book “The Richest Man in Babylon,” but Clason raises an important question: Why should
so few men be able to acquire so much gold?

The answer is because they know how.

One may not condemn a man for succeeding because he knows how. Neither may one with justice take away from a man what he has fairly earned, to give to men of less ability.

And so it was that the good king of Babylon sought out the richest man in Babylon to teach to others in his kingdom the secrets of his success.

This is a synopsis of what the richest man taught to the people
of Babylon:

The Seven Cures for a Lean Wallet

1) Start your wallet to fattening. Save one-tenth of all you earn. Remember that a part
of all I earn is mine to keep. Do this faithfully. Do not let the simplicity of this escape you.

When I ceased to pay out more than nine-tenths of my earnings,
I got along just as well.
I was not shorter than before, and, money came to me more easily than before.

2) Control your expenses. How is it that all do not earn the same yet all have lean wallets? Here is the truth: That which each of us calls our “necessary expenses” will always grow to equal our incomes unless we protest to
the contrary.

Confuse not necessary expenses with desires. We all have more desires than our earnings can gratify. Examine which of the accepted expenses of living can be reduced or eliminated. Let your motto be 100% of appreciated value demanded for every dollar spent.

Budget your expenses so that your actual necessities are met without spending more than nine-tenths of your earnings.

3) Make your money multiply. Protect your growing treasure by putting it to labor and increasing. Money in your wallet earns nothing. Money that we earn from our money is but a start; it is the earnings generating earnings that builds fortunes.

When the richest man in Babylon loaned money to the shield maker to buy bronze, he said this: “Each time I loaned money to the shield maker, I loaned back also the rental he had paid me. Therefore not only did my capital increase, but its earnings likewise increased.”

4) Guard your money from loss. Everyone has an idea of how to make quick money; few, however, have the evidence of making money to justify their idea, scheme or offer of quick riches. The first sound principle of investment is security for your principal.

Before you loan your money to any man assure yourself of his ability to repay your loan, and of his reputation to do so. Make no one a present of your hard-earned treasure.

Consult the wisdom of those experienced in handling money for profit. Such advice is often freely given for
the asking, and may possess more value than the amount you
are about to invest.

5) Make your home a profitable investment. When you can set aside only nine-tenths of what you earn to live, and can use a part of that nine-tenths to improve the investment in your housing, do it; owning your own home is also an investment that grows with your wealth.

Your family deserves a home they can enjoy and call their own. It builds a sense of stability and well-being.

6) Ensure a future income. Build income-producing assets that do not require you to work forever. We will all grow old and die.

You should prepare a suitable income for the days to come when you are no longer younger and cannot work as hard, and to make preparations for your family should you no longer be with them to comfort and support them. Provide in advance for the needs of your growing age, and the protection of your family.

7) Increase your
ability to earn.
Desire precedes accomplishment, and the desire must be strong and definite. When you have backed your desire for saving $1,000 with the strength and purpose to secure it, you can then save $2,000.

Desires must be simple and definite. Desires defeat their own purpose when they are too many, too confusing, or too difficult to accomplish. Cultivate your own powers to study and become wiser, more skillful, and more productive.

Here is more sage advice from Clason’s masterpiece on financial matters:

The 5 Laws of Money

If you had to choose, would you choose tons of money or wisdom? Most men would take the money, ignore the wisdom, and waste the money. Here is the wisdom:

1) Money comes gladly and in increasing quantities to any man who will put aside not less than one-tenth of his earnings to create an estate for his future and the future of his family.

2) Money labors diligently and contently for the wise owner who finds for it profitable employment, multiplying unto itself in infinity if kept working diligently. Money multiplies itself in surprising fashion.

3) Money clings to
the protection of the cautious owner who invests it with the advice of men wise
in its handling.

4) Money slips away from the man who invests it in businesses or purposes that he is not familiar with, or which are not approved by those skilled in its keep. The inexperienced handler of money who trusts his own judgment, and puts his money in investments which he is not familiar, always pays with his money for his experience.

5) Money flees the man who would force it to impossible earnings, or who follows the alluring advice of tricksters and schemers, or who
trusts it to his own inexperience and romantic desires in investment.

Here is the hard lesson of the 5 Laws of Money: You cannot measure the value of wisdom in bags of money. Without wisdom, those who have it quickly lose money, but with wisdom, money can be secured by those who have it not.

This ends the condensation.

Copyright © 2008 Ed Bagley

It does not seem that long ago that federal spending in the United States of America was $627 billion in 1965, according to The Heritage Foundation, which keeps track of these and other numbers of interest. Federal revenue in 1965 was $620 billion, so our government was $7+ billion in the hole for 1965.

Even then, knowing that $1 billion is really $1 million 1,000 times and that $628 billion is really $1 million 628,000 times, it seemed like a lot of moolah.

Federal spending in 2008 is estimated to top $2.7 trillion. Knowing that $1 trillion is really $1 billion 1,000 times, and that $2.7 trillion is really $1 billion 2,700 times, and really $1 million 2,700,000 times, it is mind-boggling to wrap your mind around. No wonder we are called the richest nation in the world.

We may also be the most foolhardy nation in the world as our national debt has now topped $9.4 trillion against an estimated annual federal revenue of $2.5 trillion for 2008. It may be difficult, but think about servicing $9.4 trillion in debt with $2.5 trillion in revenue.

Perhaps the relationship between the two figures it is easier to think of this way: Your annual income is $100,000 and you have to service $376,000 in debt, or your annual income is $50,000 and you have to service $188,000 in debt. What if the $188,000 in debt was credit card debt? Would you ever get out from under?

There are a lot of families in America with annual income well in excess of $100,000 that are servicing more than $1 million in debt, but does all of the wonderful lifestyle make your feel any more secure?
Is our federal spending out of control in the United States? It is a fact that federal spending has grown 334% since 1965, that is 9 times FASTER than our median income, which rose just over 35% during the same period.

If you think that statistic is scary, try this one: Discretionary spending, the portion of the federal budget subject to annual review and debate, has risen 152% since 1965 while mandatory spending, consisting mostly of Social Security, Medicare and Medicaid which continue on automatic pilot, has risen 759% since 1965.

In other words, mandatory spending is rising 5 times FASTER than discretionary spending. Mandatory spending has grown from $169 billion in 1965 to $1.45 trillion in 2007, taking up more than 58% of the federal budget.

Our government has a real stupid plan when it cannot meet our taxpayer obligations—the government prints more money. When doing so, our government simultaneously increases inflation and reduces the value of our American dollar. This is the same plan that South American dictators use when pressed for cash to pay bills. Do it enough, and pretty soon it takes a wheelbarrow full of dollars for a citizen to buy a loaf of bread.

If you lost your job and your income was cut in half or two-thirds, you would use some good old-fashioned Yankee ingenuity (common sense) to cut back your expenses until you found another source of revenue. If we as citizens printed money to cover our expenses, our government would prosecute us and send us to jail.

The people who run our government are citizens like you and me, with one big difference: they can authorize the printing of money to cover their mistakes and we cannot. It also helps that none of them are forced to live in a dumpster behind a trash store. Trust me when I say that they are hardly living near poverty level.
In other words, there are so many millionaires running into each other in the nation’s capital they can hardly get anything done that will actually help the people they are representing, which would be us. The plain truth is that politicians have done more to help themselves get on in life than help us, and they have done this because we put them in a position to do so.

Our elected officials in Washington have such a good self-image they refuse to be part of our Social Security System, which is plenty good enough for the taxpayers who elect and support their spending habits, but certainly not good enough for them. Their retirement system is not nearly as shabby and cheap as ours; their retirement system continues their salary for the rest of their life when they retire.

But enough carping about our elected politicians who basically could really care whether we drop dead or get on in the world. Do not believe all of the drivel coming out of their mouths this presidential election year.
Put simply, Barack Obama wants to be the first African American president, Hillary Clinton wants to be the first woman president, and John McCain wants to be the oldest president ever elected. All are U. S. Senators, and all are multi-millionaires or married to multi-millionaires. Their chief interest in being a politician is to line their pockets at our expense.

If nothing about our country being $9.4 trillion in debt bothers you, perhaps you should know that the $9.4 trillion is the actual debt at this very moment—the federal debt INCREASES $1.2 billion per day into the future.
And, just for the record, our actual federal obligations into the future are a whopping $55 trillion and counting. This figure includes “off balance sheet” items like Social Security, Medicare, etc. that we the taxpayers are obligated to pay by being taxed even more in the future.

Most of us who are less prosperous than the millionaire politicians who represent us would do well to work at becoming debt free so we can ultimately survive even if our government cannot.

Sid Miller Wants to Know: What are you voting for?

 

That moment when someone says, “I can’t believe you would vote for Trump”

I simply reply “I’m not voting for Trump.”

I’m voting for the First Amendment and Freedom of Speech.

I’m voting for the Second Amendment and my right to defend my life and my family.

I’m voting for the next Supreme Court Justice(s) to protect the Constitution and the Bill of Rights.

I’m voting for the continued growth of my retirement investments and the stock market.

I’m voting for an end to America’s involvement in foreign conflicts.

I’m voting for the Electoral College & the Republic we live in.

I’m voting for the Police to be respected once again and to ensure Law & Order.

I’m voting for the continued appointment of Federal Judges who respect the Constitution and the Bill of Rights.

I’m voting for our jobs to remain in America and not be outsourced all over again to China, Mexico and other foreign countries.

I’m voting for secure borders and legal immigration.

I’m voting for the Military & the Veterans who fought for this Country to give the American people their freedoms.

I’m voting for the unborn babies that have a right to live.

I’m voting for continued peace progress in the Middle East.

I’m voting to fight against human/child trafficking.

I’m voting for Freedom of Religion.

I’m voting for the American Flag that is disrespected by the “mob.”

I’m voting for the right to speak my opinion & not be censored.

I’m not just voting for one person, I’m voting for the future of my Country.

I’m voting for my children and my grandchildren to ensure their freedoms and their future.

What are you voting for?

About the Source: Sid Miller is the Commissioner of Agriculture in the Great State of Texas.

(Ed’s Note: The current 2020 Presidential Election has been reduced to a choice between our “constitutional republic” form of government and creeping into a “socialist” form of government in America. We should not allow any political party in America to bring advancing socialism—example: The Green New Deal—under the guise of improving our constitutional republic. Every form of socialism as a government in history has failed to advance the welfare of the citizens therein. Smart people know that socialism does not secure our rights as citizens but rather reduces our personal rights to the point where we have none and ultimately end up as a dictatorship.)

Financial Thoughts
on Investing
by Warren Buffett

(Ed’s Note: The following condensation is from The Tao of Warren Buffett, written by Mary Buffett and David Clark and available for sale at Amazon and bookstores nationwide. I am always impressed by what Warren Buffett has to say and am doing this condensation to help promote their book.)

On Investing: Never be afraid to ask too much when selling offer too little when buying.
(Ed’s Note: How much you get from a sale or how much you have to pay when making a purchase determines whether you make or lose money and how rich you ultimately become.)

(Ed’s Note: For more of Warren Buffett’s advice go to the menu bar above and click on Financial Thoughts.)