The Richest Man in Babylon by George S. Clason is a financial advice classic written in the 1920s. It presents timeless principles for managing your money in the form of “Seven Cures for a Lean Purse” (how to acquire wealth) and “Five Laws of Gold” (how to preserve and grow wealth). The principles are illustrated by parables set thousands of years ago in the wealthy city of Babylon, where the basic ideas of finance were born.
Clason’s message is that if you work hard, save, live within your means, and invest wisely, you can become wealthy. He’s credited by some with being the first person to articulate the principle, “Pay yourself first.”
The financial principles in the book are delivered by the fictional character of Arkad, the richest man in Babylon, who imparts the secrets of wealth to a group of local citizens who want to learn how to stop struggling financially and become rich.
Arkad, who started his working life as a lowly scribe in Babylon’s hall of records, noticed that the scribes who produced more work received more pay. He worked to increase his speed and received more money himself.
Upon the advice of a money lender, Arkad began saving 10% of everything he earned. To his surprise, he didn’t miss having it available for spending. He created a budget and lived within his means. At first, he spent the interest earned on his savings—however, he later learned to put his money to work by earning more interest on his interest. He also looked for ways to invest. Except for the mistake of investing in the jewels that turned out to be fake, he increased his wealth gradually through wise investments.
Arkad became wealthy because he learned to:
The money lender put Arkad in charge of managing his land and other wealth. Arkad increased their value and eventually inherited a share of the estate. Thus, he became “the richest man in Babylon.”
Arkad explains to the group of Babylon citizens who questioned him that he became wealthy by implementing “Seven Cures for a Lean Purse.” The cures or principles for acquiring wealth are:
1) Pay yourself first. Save 10 percent of everything you earn, even if you’re in debt, to start building wealth. You’ll find that you get along just fine on 90% of what you earn and in 10 years, you’ll have saved a year’s earnings. Arkad teaches that you may think all of your earnings belong to you, but most of them actually end up going to your grocer, your landlord, and your shoemaker. Only your savings are truly yours. Although you’ll be tempted to spend your savings at times, remember that spending brings only temporary gratification, while saving builds long-term wealth and security. And the person who saves part of his earnings will find it easier to acquire more money.
2) Control your spending. After you save a tenth of your earnings, determine your necessities and create a budget to cover them, plus a few worthwhile things you enjoy, not exceeding the remaining 90% of your income. When distinguishing necessities from desires, remember that if a pack animal got to choose his burden for a long trip, he’d choose to carry grain, hay and water—necessities—rather than gold and jewels. Additionally, lLive within your means or, better yet, live below your means. Should your earnings increase, beware of lifestyle inflation, which is the tendency to increase your spending as your income increases. What you define as necessary will always expand to keep pace with your income unless you resist.
3) Put your money to work. The money you accumulate from your earnings is just a starting point. You need to put it to work by investing it or multiplying it by taking advantage of compounding interest over time. For example, Arkad loaned money to Aggar, a shield maker, whom he knew to be good at his business. When Aggar successfully sold all the shields, Arkad got back the loaned money plus interest. By investing your money, you create a continuing income stream—your money keeps working for you whether you are working, traveling, or retired.
4) Protect your principal from loss. The first thing to do with money you’ve saved is to protect it. Invest it only where your principal is safe and you can get it back if you want to and where you’ll get a fair interest rate. For example, Arkad made a poor investment by loaning money to a brickmaker who intended to sell jewels for a profit. The jewels turned out to be fakes. The lesson is to invest only with experts. Beware of these other ways of losing money you’ve saved:
5) Own your home. Make your home a profitable investment. By investing your money in buying a home and paying it off over time, you’re turning an expense into an asset. Once you own it, you’ll reduce your cost of living and you can sell it at a profit if you choose. (Shortform note: This principle is debatable today. Depending on factors such as home prices, interest rates, appreciation, and your income/job stability, owning your home may not make sense for you.)
6) Plan for retirement. Invest for the future for two reasons: 1) if you die prematurely, your family will be provided for and 2) when you’re no longer able to work, you’ll have an income.
Ways to do this include buying real estate and land that will increase in value and can be sold later, or making other investments. (Shortform note: Further options today include investment in stocks and bonds, pension/social security, and various forms of insurance.)
7) Increase your earning ability. Increasing your income doesn’t mean asking for a raise. That makes you dependent on a boss. Instead, take control by investing in yourself. Improve your skills or learn new skills through classes and training. The more you learn, the more valuable you are and the more you might earn. Also, set goals and work to improve your performance. Arkad learned this by noticing that scribes who produced more work received more pay.—pPeople who do more and better quality work get paid more.
Arkad presented “Five Laws of Gold” to his son Nomasir, along with a bag of gold and instructions to return in ten years to report on his accomplishments. (Shortform note: The Laws of Gold, which focus on building wealth, overlap or repeat the seven principles for acquiring wealth.)
The Laws of Gold or of growing your wealth are:
1) You acquire gold by saving regularly (at least a tenth of your earnings) to build wealth for a secure future.
2) Gold grows when you invest it wisely, along with the interest you receive on it.
3) Your gold will stick around and grow if you follow competent advice from financial experts.
4) You’ll lose your gold if you follow bad advice or rely solely on your own judgment when you lack experience.
5) You’ll also lose your gold if you succumb to the allure of get-rich-quick schemes or risky investments that promise huge payoffs.
Nomasir lost the gold his father had given him by betting on horses and investing in a foolish business venture. When he hit rock bottom, he read the laws of gold and determined to do better. He went to work managing a slave crew, saved 10% of his earnings, and eventually invested in several successful business opportunities, based on competent advice. After ten years, Nomasir was able not only to recoup his father’s money, but also to triple it.
Three parables in the book further illustrate how to manage your money:
Invest wisely: A spear maker’s sister urged him to loan her husband money to start a store. But despite wanting to help his sister, the spear maker concluded it would be a poor investment because his brother-in-law had no experience in running a store or any other business.
Protect yourself against the unexpected: The city of Babylon protected itself with massive walls and a moat that, in one instance, withstood a siege of more than three weeks. You can ensure your personal security by saving, investing, and buying insurance.
Find a way: When you have problems, you need need to fix them rather than letting them define your life. When a man named Dabasir was a young man, he fell into debt, became a robber, and ended up a slave. However, through determination he overcame his problems.
The Richest Man in Babylon by George S. Clason is based on a series of financial advice pamphlets Clason wrote in the 1920s, which were distributed by banks and insurance companies. He compiled them into a book in 1926, which is considered a classic. It presents timeless principles for managing your money in the form of “Seven Cures for a Lean Purse” (how to generate wealth) and “Five Laws of Gold” (how to preserve and grow wealth). The simple principles are illustrated with a series of parables set thousands of years ago in the wealthy city of Babylon, where the basic ideas of finance got their start.
Clason’s message is that if you work hard, save, live within your means, and invest wisely, you can become wealthy. He’s credited by some with being the first person to articulate the principle, “Pay yourself first.” With a few modern-day caveats, the principles remain valuable today.
The financial principles are delivered by Arkad, the richest man in Babylon, who teaches the secrets of wealth to local citizens who want to learn how to stop struggling financially and become rich. (Shortform note: The parables are told in language patterned after that of the King James version of the Bible, with lots of “thys,” “thous,” “saiths,” and “thinkeths.”)
According to Clason, the reason you should manage your money wisely is two-fold: Prospering financially helps not only you, but also society. The prosperity of the nation depends on the wealth of its individuals. So personal prosperity is in essence patriotic. Babylon was the wealthiest city of its era because its citizens were the most prosperous.
A word about success: Success is what you accomplish through your own efforts and abilities. It requires effective preparation, based on wisdom and understanding. If you desire financial success—to obtain money, keep money, and grow your money—following the principles will get you there, even if you’re struggling with debt.
(Shortform note: To make the message of the book clearer, we have reorganized the material to present Clason’s principles of money management first, followed by parables showing how people apply the principles at different points in history to illustrate their timelessness.)
Babylon was one of ancient history’s greatest and wealthiest cities. It was built not on natural assets but by work and ingenuity.
It was founded in 2300 BC in Mesopotamia, beside the Euphrates River in a dry valley about 60 miles south of Baghdad in present-day Iraq. The area had little rainfall and lacked building materials such as stone and forests for wood.
The city exemplified humans’ ability to make the most of what was at hand—the only available resources were good soil and water from the river, and Babylonians took advantage of them. Engineers channeled water from the river to grow crops by creating irrigation canals and huge dams. Besides creating the irrigation system, they drained swampland at the mouths of the Euphrates and Tigris rivers for additional cultivation.
The city was built of brick made locally and was surrounded by walls and a moat, with a royal palace and a magnificent gate. It may have contained the fabled hanging gardens of Hammurabi and an immense tower to the gods. Besides having some of the earliest engineers, Babylon had mathematicians, astronomers, artists, and financiers—the latter reportedly invented money by using gold as a means of exchange. The city is described in admiring terms by Greek historian Herodotus and others.
Babylon was captured multiple times and ruled by a succession of kings, including the biblical king Nebuchadnezzar. The city fell to Persian ruler Cyrus the Great in 539 BCE.
(Shortform note: Babylon was captured multiple times and ruled by a succession of kings, including the biblical king Nebuchadnezzar. The city fell to Persian ruler Cyrus the Great in 539 BCE. Babylon’s ruins were discovered and excavated by a German archeological team in 1899-1917. Clay tablets with cuneiform inscriptions were found describing life at the time, including property titles, sales records, and promissory notes.
In the 1980s, Iraqi dictator Saddam Hussein built a $5 million replica of Babylon’s royal palace on top of the historic ruins, to the dismay of archeologists. On some of the bricks, he inscribed: “Built by Saddam, son of Nebuchadnezzar, to glorify Iraq.” The ruins suffered further damage in the U.S.-Iraq war.)
Although the ancient city is gone, the financial wisdom that took root there remains useful:
Arkad, a fictional character in the Babylonian parables, is described as “the richest man in Babylon.” Two friends, Bansir and Kobbi, a chariot builder and a musician, get tired of working hard to get by without ever improving their status. So, they gather some additional friends and approach Arkad for advice on how to become wealthy. Arkad, who began his working life as a poor scribe, obliges by recommending “Seven Cures for a Lean Purse.”
Save 10 percent of everything you earn, even if you’re in debt, to start building wealth. You’ll find that you get along just fine on 90% of what you earn and in ten years, you’ll have saved a year’s earnings. To visualize this, think of collecting ten eggs every day. Each evening, take nine from the basket to sell and keep one for yourself. Eventually, your basket will overflow because you’re putting in more eggs than you’re taking out.
Only the money you consciously set aside is truly yours. You may think all of your earnings belong to you, but when you don’t save a portion, you give them to everyone but yourself. For instance, they go to your grocer, your landlord, your shoemaker, and so onetc.
Although you’ll be tempted to spend your savings at times, remember that spending brings only temporary gratification, while saving builds long-term wealth and security. And the person who saves part of his earnings will find it easier to acquire more money.
After you save a tenth of your earnings, determine your necessities and create a budget to cover them, plus a few worthwhile things you enjoy, not exceeding the remaining nine-tenths of your income. Don’t confuse wants with needs. If a pack animal got to choose his burden for a long trip, he’d choose to carry grain, hay and water—necessities—rather than gold and jewels.
Live within your means or, better yet, live below your means. Should your earnings increase, beware of lifestyle inflation, which is the tendency to increase your spending as your income increases. What you define as necessary will always expand to keep pace with your income unless you resist.
Remember that the purpose of a budget is to grow your wealth while ensuring that you have the necessities and a few things you enjoy—without exceeding nine-tenths of your income. A budget shows you the potential “leaks” in your wallet, so you can stop them by maintaining control of your spending.
The money you accumulate from your earnings is just a starting point. You need to put it to work in ways that earn more money by investing it or multiplying it by taking advantage of compounding interest over time. (Shortform note: Here’s how compounding works: when you invest or loan out your money, you receive interest on your deposit. The next year, you earn interest on both the original deposit and on the interest you earned on it in the first year. Each year, your money multiplies as you earn interest on your interest.)
Just be sure you invest wisely, with people of honor and experience. When he was starting out, Arkad made a good investment. He loaned money to Aggar, a shield maker, whom he knew to be a man who knew his business and paid his debts. The loan enabled Aggar to order a large supply of bronze at a good price. When Aggar successfully sold all the shields he had made with the bronze, Arkad got back the loaned money plus interest. As Arkad’s capital increased, he made more loans and investments, thereby continually increasing his wealth.
By investing your money, you create a continuing income stream—your money is working for you whether you are working, traveling, or retired.
The first thing to do with money you’ve saved is to protect it. Invest it only where your principal is safe and you can get it back if you want to and where you’ll get a fair interest rate.
There are many ways to lose money you’ve saved:
For example, Arkad made a poor investment by loaning money to a brickmaker named Azur, who was traveling and planned to buy jewels while he was away and resell them at a profit when he got home. He would split the proceeds with Arkad. However, the jewels he bought turned out to be fakes, and Arkad lost the money he’d invested to buy them.
The lesson he learned is to invest only if the person you’re partnering with is experienced in that type of investment. Don’t trust a brickmaker to buy jewels. Or, invest only with people who are experts in investing money for profit.
(Shortform note: Many people in finance today believe that investments with risk (like stocks) make sense as part of a balanced investment portfolio that includes both safer and higher-risk investments. Assuming a certain level of risk is necessary to make money, but it should be a calculated risk.)
Make your home a profitable investment. By investing your money into buying a home and paying it off over time, you’re turning an expense into an asset. Once you own it, you’ll reduce your cost of living and you can sell it at a profit if you choose.
(Shortform note: In 1926 when this book was published, home ownership was seen as fostering strong families, promoting “moral rectitude” and civic virtue, and contributing to the well-being of the nation. “Own your own home,” a magazine article urged, “and protect it with your life and you will be a good citizen and patriot.” Another writer said he couldn’t imagine a nation being great “if all its people are renters.”
Today, the value of home ownership is debatable. Clason contends that it’s smarter to make payments that will eventually become equity than to pay a landlord. But depending on factors such as home prices, interest rates, appreciation, and your income/job stability, it may not make sense for you. In an economic downtown like that of 2008, you could end up under water—owing more on your home than it is worth.)
Invest for the future for two reasons: 1) if you die prematurely, your family will be provided for and 2) when you’re no longer able to work, you’ll have an income.
Ways to do this include:
(Shortform note: Further ways to provide for your future today include investment in stocks and bonds, and pensions/social security.)
Increasing your income doesn’t mean asking for a raise. That makes you dependent on a boss. Instead, take control by investing in yourself. Improve your skills or learn new skills through classes and training. The more you know, the more valuable you are and the more you might make.
Also, set goals and work to improve your performance—people who do more and better quality work get paid more. Arkad learned this by noticing that scribes who produced more work received more pay. With practice and effort, he increased his speed and received more money himself.
When you manage your finances well, you demonstrate self-respect. Demonstrating self-respect alsoThis includes:
Arkad was the son of a humble merchant. He didn’t inherit wealth or have a sudden streak of luck. Determined to discover the secrets of financial success, he started out working as a scribe in the hall of records, recording information on clay tablets. He made barely enough to cover food, clothing, and shelter.
Arkad was constantly looking for ways to get ahead, so when a money lender, Algamish, promised him extra money to complete a big transcription assignment in two days, he agreed to do it. But the job was too big and Arkad didn’t meet the deadline. Instead, he made a deal with the money lender: in exchange for instruction from Algamish in how to get rich, Arkad said he’d work all night to complete the unfinished job.
Arkad finished the work overnight and asked the money lender for the secret to accumulating wealth. Algamish’s secret was simple: he decided to keep part of everything he earned for himself. He realized that if all of his money kept going to pay bills, he’d never have any for himself and therefore would never get ahead. However, if he set aside a tenth of his earnings, it could earn him more money through interest, which would compound.
Wealth is like a tree—the more regularly you water and nourish it, the more it will grow and provide shade (security) for you.
Arkad began saving and, to his surprise, didn’t miss not having a tenth less available for spending. He resisted temptations to spend his savings on luxuries. At first, he spent the interest he earned on his savings—however, Algamish further advised him to put his money to work by earning more interest on his interest. He also looked for ways to invest. Except for the mistake of investing in the jewels that turned out to be fake, he increased his wealth gradually through wise investments.
He had learned to:
When Algamish saw that Arkad had learned to handle money wisely, he put Arkad in charge of managing his land and other wealth. Arkad increased their value and inherited a share of the estate when Algamish died. Thus, he became “the richest man in Babylon.”
Nearly everyone dreams of getting lucky—receiving a large amount of money without working for it. Some people hope for luck in gambling. The ancient Babylonians believed luck was bestowed by the gods as they chose.
However, Arkad pointed out to his students that no successful person ever credits a windfall from gambling as the start of his success—he credits effort, persistence, and smart decisions. Instead of hoping for luck, look for opportunity. The key is to recognize and seize a good opportunity for increasing your wealth when it presents itself. You make your own luck when you seize good opportunities.
The human tendency to procrastinate is your enemy. People are more likely to waffle or delay an investment when they’re right than when they’re wrong. One way to counter your tendency to waffle is to make a deposit right away. When you’re convinced an investment is smart, don’t hesitate to make it. Action, not luck, will lead you to success.
Arkad addressed several other excuses from his audience for not making the effort to acquire and growth wealth:
The fictional character Arkad in The Richest Man in Babylon recommends saving a tenth of everything you earn. This is a time-honored principle, yet one U.S. survey has shown year after year that a majority of Americans (about 58%) have less than $1,000 in savings.
Do you save or “pay yourself” part of everything you earn? Why or why not?
How could you start saving or save more? What keeps you from doing so?
Is your saved money working for you? In other words, is it invested? Is the interest invested? Is there a way it could be “working harder”?
The “Five Laws of Gold” are revealed in a campfire tale by a wealthy camel trader, Kalabab. He starts by asking his audience which they would choose: a bag of gold or a clay tablet inscribed with wisdom. Everyone opts for the gold. However, he points out that without wisdom, they’d just waste the gold and end up back where they started.
Gold (or money), he says, accrues only to those who understand the laws governing it. Kalabab then explains five laws, which he says originated with Arkad, the richest man in Babylon. Arkad passed them on to his son, Nomasir, for whom Kalabab once worked.
(Shortform note: The laws of gold, which focus on building wealth, overlap with the seven principles for acquiring money.)
1) You acquire gold by saving regularly (at least a tenth of your earnings) to build wealth for a secure future.
2) Gold grows when you invest it, along with the interest you receive on it, wisely.
3) Your gold will stick around and grow if you follow competent advice from financial experts.
4) You’ll lose your gold if you follow bad advice or rely solely on your own judgment when you lack experience.
5) You’ll also lose your gold if you succumb to the allure of get-rich-quick schemes or risky investment strategies that promise huge payoffs.
When Nomasir became an adult, his father Arkad considered naming him as his successor and putting Nomasir in charge of his estate. However, to first make sure Nomasir wouldn’t squander his wealth, Arkad gave him a test: a bag of gold, a tablet containing the five laws of gold, and instructions to return in ten years to report on what he accomplished. This was Nomasir’s eventual report:
Nomasir first traveled with a caravan to Nineveh, where he bet and lost some of his money on a horse race that turned out to have been rigged. Then he invested more of his gold in a partnership with a fellow traveler to purchase a store, but the partner was foolish and the business failed. Out of money, Nomasir sold many of his belongings for food and shelter, and he decided to read the tablet containing the laws of gold. After reading the advice, he was determined to make up for his mistakes.
He got a job managing a crew of slaves who were building a city wall and, in accordance with the laws of gold, he saved part of his earnings. His boss noticed his frugality and offered him a solid investment opportunity. Following the third law about heeding competent advice, Nomasir agreed to participate. Realizing that when the city wall was finished, a gate would be needed, the men pooled their resources to purchase metal from distant mines, which they sold to the king for the gate at a profit. Over time, the group joined in other successful ventures after careful analysis, and Nomasir was able not only to recoup his father’s money, but also to triple it.
Arkad was pleased with the return on his investment in Nomasir and entrusted his son with management of his estate.
The character Nomasir initially failed to follow the “laws of gold” and ended up losing money his father had given him. But he learned from his mistakes, started over, and eventually succeeded.
Have you ever made a financial mistake and lost money? What was your mistake? Did it violate one of the principles or laws of this book? How?
What did you do about your mistake? What impact has it had on how you have managed your money since then?
What would your advice be to someone facing a similar situation?
This chapter recounts three Babylon parables about managing your finances.
When a friend or family member asks for money, most people will help if they can—even if they have reservations about the wisdom of doing so. But this altruism can often cause new problems, dragging the helper into the friend’s predicament.
Rodan, a spear maker, found himself with this dilemma. The king had given him fifty gold pieces because he liked Rodan’s design for a new spear point for his guards. The payment was far more than Rodan expected to receive. Now his sister wanted him to loan money to her husband so he could open a store. Rodan had doubts about the husband’s business acumen.
Unsure of how to respond, he asked Mathon, a money lender, for advice. Mathon replied with a parable about an ox and a donkey. The ox complained to the donkey about having to work hard all day plowing the fields, while the donkey had little to do unless the farmer needed a ride somewhere. The ox was tired and wanted to rest, so the donkey advised him to pretend to be sick the next day, so he wouldn’t have to work. The ox did this, so the farmer gave him a day off. But meanwhile, the farmer hitched the donkey to the plow and the donkey ended up doing the ox’s work.
The lesson is, if you decide to help someone, make sure you don’t end up taking their problem upon yourself. If you loan money to someone who can’t handle it, you might have to step in and do their work to save your investment.
Based on his experience as a money lender, Mathon offered Rodan this additional advice about lending money:
Mathon’s final piece of advice on lending was that it’s better to be cautious than to suffer regret later. Not willing to risk losing his money, Rodan ended up declining his sister’s request.
Always take steps to protect yourself against possible setbacks and tragedies in life. In ancient times, the city of Babylon protected its more than 100,000 citizens from enemy attack by maintaining strong walls. This paid off when the Assyrians attacked the city while the king and most of his forces were far away on a campaign against the Elamites.
The small force that remained behind to protect the city took heavy casualties and the enemy’s efforts to breach the walls were relentless. For over three weeks, the defenders held off the attackers and Assyrian bodies piled up outside the walls. Finally, when dawn broke during the fourth week, city residents saw clouds of dust in the distance as the attackers retreated. The attack was over and the walls had held.
People need wall-like protection from the unexpected in many aspects of life. Guard against disaster with wise financial decisions, savings, investments, and insurance. No one can afford to be without protection.
Everyone is irresponsible at one time or another. But instead of letting mistakes like becoming mired in debt define your life, you need to find a way to overcome them.
Tarkad was a young man who had fallen into debt. One of his creditors was Dabasir, a camel trader, whom Tarkad bumped into outside an eating establishment where he was hoping someone would offer him something to eat.
Dabasir demanded repayment and Tarkad mumbled something about having a run of bad luck. At that, Dabasir scoffed and hauled him inside, where Dabasir proceeded to eat a large meal without sharing it and launched into a story about how he overcame struggles early in his life and succeeded.
Dabasir had been a saddlemaker, but spent extravagantly and fell into debt. Fleeing creditors, he went to work in the desert for caravan traders. When he and several others banded together to rob caravans, he was captured and sold as a slave. He became a camel tender for one of his master’s wives. Dabasir told the woman he hadn’t been born a slave and still had the soul of a free man. She urged him to prove it by finding a way to pay off his debts.
While accompanied by Dabasir on a camel trip to visit her mother, the woman gave Dabasir a chance to escape with several camels. He wandered in the desert for days and, at the point of exhaustion, he lay down and considered giving up. But tThen he had an epiphany that being free meant taking responsibility for your past and future. Eventually, he found his way to Babylon. Resolving to change his life, he went to work for a camel merchant, saved money, and paid back his creditors.
The lesson, Dabasir told Tarkad, was that a man with the soul of slave whines about his problems, while a man with the soul of free man solves them. With determination, you can solve financial problems. Tarkad vowed to change his life and Dabasir ordered food and drink for him.
Fast-forward to 1934. (Shortform note: 1934 is the date on the letter referred to below and quoted in the book. Since the copyright on the book is 1926, this story may be a fictional projection meant to show that the principles of the Babylonians are timeless.)
Professor Alfred H. Shrewsbury of the Department of Archeology at Nottingham University in England received five clay tablets from the ruins of Babylon, excavated by his colleague, Professor Franklin Caldwell. Shrewsbury translated their inscriptions and was surprised to find that they spoke to his own financial circumstances.
The tablets contained the story of Dabasir’s efforts to pay off his debts. The professor and his wife were deeply in debt, and Shrewsbury seized on the story as a lifeline. It was as follows:
Having escaped slavery, Dabasir returned to Babylon determined to pay his debts and become a person of means. He recorded this plan, which was based on the advice of the money lender Mathon:
Dabasir listed his creditors and how much he owed to each. He visited each one and explained that once a month he would split 20% of his earnings among his creditors, until his debts were paid in full. Although some berated him, all of his creditors accepted the payment plan. When the camel business was good, he was able to repay more; when it lagged, he repaid less, but he kept up the schedule. Meanwhile, he saved for himself and stuck to his expense budget.
In twelve months, he paid off his debts and gained new stature and respect in his community. Dabasir decided to continue saving and budgeting to build wealth for the future.
In a letter to his archeologist colleague, Professor Shrewsbury reported successfully applying the same principles. Shrewsbury and his wife had become mired in debt and felt hopeless. He worried that his creditors might go public and he’d be forced out of his position at the college. So, following Dabasir’s process, he made a list of his creditors and what he owned each of them. He visited them and presented his repayment plan, to which they agreed. By paying himself 10%, he began accumulating money for the first time in years. He invested it wisely so it would grow, while living frugally and paying down his debt. He and his wife vowed to never again spend more than 70% of their income. Thus, financial advice thousands of years old proved to be timeless.
It’s easy to pile up debt. We live in a consumption-oriented culture urging us to buy things in order to be happy and have status. Also, necessities such as housing, transportation, and education are increasingly expensive. Average personal debt was $38,000 in 2018, excluding mortgages.
How much money do you owe, including a mortgage, car loan, college, and consumer debt? What is your current repayment plan? What percentage of your income does this reflect?
How does the amount of debt you are carrying affect your lifestyle and goals? How do you feel about it?
What changes could you make to pay off your debt more quickly?
Sharru Nada, a wealthy and respected merchant of Babylon, was returning from a trip to Damascus to bring back his late partner’s grandson, whom he’d agreed to mentor.
The youth, Hadan Gula, was greedy, lazy, and arrogant and Nada worried that with his spendthrift ways, the youth was destined for a troubled future. So he decided to tell him the story of his partnership with the young man’s grandfather, Arad Gula, as a lesson in humility and how to succeed.
The youth was shocked when Nada revealed that he’d started his working life as a slave—his brother had killed a friend and his father bonded Nada to the friend’s widow, who decided to sell him.
On the way to being sold at a slave market, Nada’s fellow slave, Meggido, advised him to work hard because slaves who did good work were valued by their masters. If you convince potential buyers that you’re a good worker, you have a better chance of getting a good master, Megiddo said. Also, good work will bring good things and make you a better person.
So, at the slave market, Nada stressed to buyers his willingness to work and this convinced a baker to buy him. Nada felt he was the luckiest man in Babylon, having escaped the worse fate of working in a wall-building slave gang.
Nada became a skilled baker and came up with a way of selling more honey cakes by hawking them in the city’s streets in the afternoon. His master let him keep some of the profits, which he saved to one day buy his freedom. One of his regular afternoon customers was Arad Gula, who was also a slave and sold rugs for his owner in the streets. Gula was impressed with Nada’s enterprise because he, too, believed in hard work and was laboring to earn his freedom.
The baking business was going well until the baker fell into debt from gambling and creditors confiscated his property, including Nada, who was put to miserable work building a canal. Nada began to question why he should work hard when things were only getting worse, but he persisted.
One day the foreman came and told Nada he’d been ordered to take Nada back to Babylon. When they got there, Arad Gula was waiting for him and purchased his freedom. Gula had purchased his own freedom earlier and then searched for Nada so the two could become business partners. For both of them, work and saving money were the keys to freedom and financial success.
The youth, Haden Gula, was impressed with the story of his grandfather’s and Nada’s perseverance, which he vowed to emulate so he, too, could be a successful and honored man. As he and Nada approached the city of Babylon, he dropped back in the caravan and rode behind Nada as a sign of respect.