After a long hiatus, I figured it’s time to start posting to the blog again. Plus, there are some really interesting things happening in the financial industry that I can yap your ear off about. But, before I do, let’s rap about personal finance books. Been re-reading one of the best ever written: The Richest Man In Babylon.
The first time I ever read this book, I was blown away by its simplicity. A lot of “common sense” stuff in there but some perspectives which I don’t think are common knowledge — at least not today.
Like this: There’s a part in the story where this dood Tarkad is wandering the streets of Babylon, starving. Runs into an old friend of his… a friend who lent him some money a while ago and wants it back. Now, his friend, being his friend, is very happy to see him. But Tarkad isn’t happy to see his friend because… he can’t afford to repay him.
“Tis because ill fortune does pursue me that I cannot pay.”
His friend ain’t havin’ it and tells old Tarkad:
“Ill fortune! Wouldst blame the gods for thine own weakness. Ill fortune pursues every man who thinks more of borrowing than of repaying.”
Then, his friend tells him the story of how he got into debt, ran away from his creditors, ended up robbing some folks, ended up being sold as a slave and… how he overcame it all to become a successful merchant.
One of the best lines in this particular story is:
“My debts were my enemies, but the men I owed were my friends for they had trusted me and believed in me.”
Something almost no one talks about when they mention this book on personal finance blogs (if they even mention it on the Innernet). The advice contained in that book is from another era — an era of “can do” attitude and optimism and also… of some really successful people. The advice is also 180 degrees from the way most people think about debt and it’s largely because of the pervasive idea that “debt is dumb”, that “the debtor is slave to the lender” and other foolish nonsense.
Today’s financial goo-ruse bang their stick of wizdumb on the ground, telling you how debt is evil, credit card companies are evil, how banks rob you of your savings, and so on.
Rubbish, I say.
Banks are your friends because, when they lend you money, it’s a sign they trust you… at least enough for you to repay them. My unpopular opinion? People need to look in the mirror more often. They’ll see the true enemy. But — and more importantly — they’ll also see their true hero.
The Gríma Wormtongues of the world who tell you banks and other lenders are the enemy are not your friends. Lenders are great teachers, if you’re willing to learn from them. What do I mean by that? Well… model your savings plan after the banking business model. You cannot “be your own bank” but you can, in some sense, be your own personal lender. Build up your savings, and whenever you spend it on something, pay yourself back, with interest to grow your savings. In other words, always replenish your savings with more than what you took and it will be impossible for your savings to shrink.
Alright, that’s it. I’ve said too much. Peace out.