August, 2009:

This article is Part Eight in our series of the lessons from George S. Clason’s bestseller The Richest Man in Babylon. If you’d like to go back to the beginning and catch up on the earlier lessons, you can start with the first article in the series by clicking this link.

The Clay Tablets From Babylon

This chapter is fancifully comprised of several letters back and forth between an archeologist, digging up the ruins of old Babylon, and his colleague at St. Swithin’s College of Nottingham University.  (Imagine a scene from one of the Indiana Jones movies…)  The subject of the letters is a collection of clay tablets that the archeologist has had delivered to the college – supposedly the record of our friend old Dabasir’s financial affairs.  If you don’t recall, Dabasir was introduced to us in the previous chapter, The Camel Trader of Babylon.  In that lesson, we learned that having the right attitude can take you where you want to go in life.  In these clay tablets, we find the details of how Dabasir worked his way out of debt.

In the letters, the professor at St. Swithin’s is telling his colleague the archeologist that the details written on the clay tablets has opened his eyes to a new way to deal with his own financial affairs… and then in a subsequent letter he explains that the formula used by old Dabasir has, in fact changed his life.

Here is the lesson:  If you find yourself dealing with a debt situation that is out of control, the only way to “fix” it is to organize your information and begin attacking the problem.  Old Dabasir details on the clay tablets how he used the first rule, saving one-tenth of all his earnings, to begin building up his savings.  Then, he made a list of all of his creditors, including the amounts owed.  He took this opportunity to visit each individual, explaining that he could not currently pay off the debt.  He took his list of debts to show them, and explained to each that this debt would be serviced by two-tenths of his earnings, each debt in proportion.

Some of his creditors rebuked him – saying they needed all of the money returned immediately.  Others were happy to hear that he was working his way out of debt.  In the end, all had no choice but to accept his offer – which he attended to religiously.  Each time he earned some money, one-tenth went into his savings, two-tenths was split among his creditors evenly, and the remaining seven-tenths he and his wife used for food, clothing, and other needs.

The surprising thing, to both Dabasir and later the professor at St. Swithin’s, was that getting along on 70% of his earnings was not as difficult as he thought it would be.  Soon enough, in both cases, the debts were disappearing, and the savings was accumulating.  In due time, both men retired all of their debts, had increased savings, and had learned to live on much less than they earned.  These are keys to financial success.

There’s no magic to it – but for some reason those particular proportions work well and provide success to anyone who undertakes the plan.  Very important to the success of this plan is to write down your debts, and to talk to your creditors to explain your plan.  Don’t skip this step, as you’ll either cause problems for yourself when the creditors don’t understand, or you’ll underestimate the size of your debt.  Writing it down will put you in a position to track your progress as you begin retiring the debt, as well – which can be very helpful to keep you motivated through the process.  Sticking to the plan – having discipline to carry it out – is all that remains for you to succeed.

One more chapter awaits, this one called “The Luckiest Man in Babylon” – and it brings many of the lessons together in one concise place.

Photo by Uriel 1998

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This article is Part Seven in our series of the lessons from George S. Clason’s bestseller The Richest Man in Babylon. If you’d like to go back to the beginning and catch up on the earlier lessons, you can start with the first article in the series by clicking this link.

The Camel Trader of Babylon

In this chapter, we are introduced to Tarkad, a young fellow who has fallen upon hard times.  He owes money to literally everyone he knows, and can not even come up with enough money to buy a simple meal to keep from starving.  He considers stealing some food, but his forays into theft in the past have taught him the lesson that that is not the way to go.  So he finds himself hanging around outside an inn, hoping that he’ll see a friendly face among the folks coming in to dine at the inn.  Instead, he finds Dabasir, the wealthy camel trader, to whom Tarkad owes a small amount of money.

Dabasir asks Tarkad for the repayment, to which Tarkad explains he has suffered much misfortune, and as such does not have the money to repay him.  Dabasir rebukes his excuse, but then invites Tarkad to join him in the eating-house so that he might tell him a tale.

The tale, boiled down, is of how Dabasir had at one time been subject to slavery in his youth.  Through wanton spending and living for the day, he became so heavily in debt that he could not only not pay the debts, he could no longer support his wife.  She left him and went back to live with her father.

After a time, Dabasir could find no gainful employment and took to a life of robbery.  As you might expect, his success was short-lived, and he was caught and enslaved.  It might not seem so, but this is where good fortune shone on young Dabasir:  he happened to be sold to a man who required him to attend to his wife’s camels.  This wife, Sira, notices that Dabasir is not like the other slaves, much the same as she was not like the master’s other wives.  Sira then approaches Dabasir with a life-changing question:  “Do you have the soul of a slave, or the soul of a free man?  If a man has within him the soul of a free man, will he not become respected and honored in his own city in spite of his misfortune?”

Pondering these words, Dabasir becomes determined to face up to his debts, become respected and honored, and truly live the life of a free man.  Fortune worked in his favor again, as Sira helped him to escape from his slavery – but his journey back to his homeland was very difficult… many times he wanted to give up and die.  Over and over he told himself that the soul of a slave would give up and allow the winds of circumstance to direct him – but a free man would stand up for himself, and through sheer determination make his way through the difficulties, to get back to Babylon and face his debtors.  Of course he did, and over time paid off all of his debts, and became a respected and honored man in his own country.  The details of just how Dabasir paid off his debts are covered in the next section of the book.

Lesson:  Self-pity and allowing the circumstances to direct your life are the actions of a man or woman with the soul of a slave.  Taking charge of those circumstances in your life, taking action when action is needed, are the ways of a man or woman with a free soul.  The only way to make yourself successful is to take on the mantle of the free man’s soul, having the courage and determination to be accountable and, eventually honored and respected.

The next chapter “The Clay Tablets From Babylon” outlines Dabasir’s specific methods for retiring his debt obligations.  It is presented as if the old camel trader had written it all out on clay tablets, which have been found in the modern day.

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The sixth part in our series of the lessons from George S. Clason’s bestseller The Richest Man in Babylon. If you’d like to go back to the beginning and catch up on the earlier lessons, you can start with the first article in the series by clicking this link.

The Walls of Babylon

In this, the shortest chapter of the book, we are introduced to Old Banzar – who is an old warrior of times past.  At this particular time, the city of Babylon is under siege, and king, along the main garrison of troops, is off on a conquest.  But the city of Babylon is well-protected by enormous walls with huge bronze doors, which keep invaders out and provide a vantage point for the defenders to counterattack with burning oil, arrows, and if necessary, spears.

The citizens of Babylon are frightened out of their minds.  All day and all night, they can hear the sounds of the invaders trying to breach the walls – and they see evidence of the fierce battle in the multitude of wounded soldiers being carried down from the walls.

Time and again, the citizens approach Old Banzar, who was in the best position to deliver news as a guard upon the passageway leading up to the walls, to ask if the walls will hold.  Some are concerned for their own safety.  Others are concerned about the safety of their families.  Little children ask if they will be safe.  Banzar, knowing the strength of the walls and the defenders, reassures all that the walls will hold, and the invaders will be turned back.  He knows this because the walls were built at a great expense of money and human effort, specifically for this task. Due to his confidence in the defenses, the citizens are able to rest more comfortably.

Finally, after a siege of three weeks and five days, the attackers withdrew, just as Old Banzar predicted.  The good citizens of Babylon can finally sigh their relief.

The lesson:  In this case there are two lessons – the first is that security is something that must be planned in advance, to fit the needs of the situation.  In our financial lives we plan security in many ways:  through insurance for life, health, and property; with diversification of our investments; and by choosing investments with risks appropriate to our ability to absorb losses, among other things.

The second lesson comes from Old Banzar himself.  Having experienced many battles upon those walls, and therefore being in the position to know that the defense was up to the task, he was able to reassure the citizens that all would be well.  Much the same as the citizens of Babylon, we often hear day in and day out of the terrible things going on with the markets, the economy, and so forth.  It is helpful to have an advisor or mentor, someone who knows how the “defenses” work in our times of need.  This experienced person is in a position to really know what is going on, and to help reassure us that all will be well.

The next section of the book is called “The Camel Trader of Babylon“, and it will help to explain how you can get yourself out of the financial ruts you may be in, to achieve financial independence.

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The fifth part in our series of the lessons from George S. Clason’s bestseller The Richest Man in Babylon.  If you’d like to go back to the beginning and catch up on the earlier lessons, you can start with the first article in the series by clicking this link.

The Gold Lender of Babylon

In this chapter we learn a few valuable lessons about lending money.  The story is about a young man named Rodan who came into some sudden, unexpected money.  As you might expect, his friends multiplied and his family became bold in their requests for loans.  And, not wishing to be foolish with his money (which amounted to more than he could save otherwise in a year!), Rodan wisely seeks the counsel of the gold lender, Mathon, due to his long experience in loaning money successfully.

“Neither a borrower nor a lender be.  Do not forget, stay out of debt.” Well, that’s not exactly the lesson…

One of the first things that Mathon explains is how providing assistance to another should never result in your taking on the burden yourself.  In other words, were Rodan to loan his money to someone who was incapable of repaying it, he would be taking on the burden of the lack of that money.  The way to alleviate this is to require a borrower to provide some sort of collateral, something of value to the borrower, to secure the loan.

In some cases the collateral is of greater value than the loan – in those cases the money lender is virtually guaranteed of the return of the principal plus interest.  In other cases there is the promise of wages to be earned – these are also very easily assured.  In yet other cases there is nothing of value that the borrower can deliver other than the assurance of his friends and family that the loan will be repaid (the modern-day co-signer).

Mathon provides Rodan with many examples of good and bad loans he’d made throughout the years, each with similar lessons.  In the end, Rodan asks the real question that he came to ask: should he loan his “found” money to his sister’s husband in order to help him get started out as a jewel merchant.

Mathon asks some simple questions:  What knowledge does the man have of the ways of trade? Does he know where to buy at the lowest cost? Does he know where to sell at a fair price?

Rodan acknowledged that his brother-in-law did not possess the skills of a merchant.  And so Mathon explained again that, while it is noble to lend a hand, it is critical to make certain that you are not taking on the burden for yourself.  In the case of Rodan’s brother-in-law, the purpose of the loan would surely end up in failure, transferring the lack of funds to Rodan.

As the parting statement from the gold lender, Mathon shows Rodan his chest full of tokens used as collateral for loans… and inscribed on the lid, very succinctly, is our lesson:

Better a little caution than a great regret.

The next installment will cover “The Walls of Babylon” – with some insights regarding financial advisors and protection.

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Today we’ll continue on the journey of examining the lessons of George S. Clason’s exceptional book The Richest Man in Babylon.  If you’d like to start back at the first lesson, you can find it here.  Today’s lesson is from the chapter entitled “The Five Laws of Gold”.

The Five Laws of Gold

This chapter is your predictable prodigal son story – from the viewpoint of the son, a fellow by the name of Nomasir, who was Arkad’s son (Arkad was the richest man in Babylon).  The story is related by another man who knew Nomasir.

It seems that when Nomasir was ready to make his way in the world, his father Arkad gave him a bag of gold and a clay tablet, upon which were written the five laws of gold.  As you might expect, Nomasir was foolish with the bag of gold, and only after losing it all did he review the five laws closely.  They are as follows:

1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

After reviewing these laws carefully and putting them into action in his own world, sought out advice from skilled investors, and began to build his fortune.  Over the course of ten years (he was to return to his father after this time) Nomasir built quite a life for himself.  Upon his return to his father’s home, he paid back the original bag of gold, and then paid two more bags in exchange for the five laws.

Lesson:  The first three laws have been covered previously, but are always worth repeating.  The last two are important to remember – keep your investing activities in the well-understood and proven realms.  Much like Warren Buffett has preached, it’s important to invest in something you understand – and with the advice of those who’ve been there before.

The next section will cover the chapter “The Gold Lender of Babylon” – which provides interesting lessons for those who are asked by family members or close friends for a loan.

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