This is the fourth blog in our series. We hope that our ancient story has brought a fresh slant to learning the universal laws of money. When George Clason wrote his famous book, The Richest Man in Babylon, his purpose was to impress upon the reader just how timeless and practical these universal laws were in 1925. Here we are in 2020 and the impact of his book still rings true.
Continuing our story this week, we move on to the fifth “cure to a lean purse” – Make of your dwelling an investment. It’s not difficult to realize that this law moves us on to investment in real estate. Owning real estate is usually considered a wise aspect of one’s wealth. The principle behind it is that rather than pay a landlord rent each month, money so to speak “down the drain”, it’s better to pay on a mortgage and “invest” in owning the property. Many believe that the wise use of your money in this way actually helps your retirement, as you will have a valuable asset and a place to live when you can no longer work and make payments.
This law of money has been brought back to the forefront of today’s world by the work of Dave Ramsey. If you follow his real estate principle, when you buy a home, put at least 20% down on a 15-year fixed mortgage. And the monthly payment should be no more than 25% of take-home monthly income. But in 2008 for example, over-zealous buyers got into trouble. Many got burned when they decided to take on huge mortgages and were left with homes that lost their value, even going into foreclosure. Cure #2 comes into play here, “Control thy expenditures”, live within your means!
After going through five of Babylon’s cures to a lean purse, it seems that all these rules and principles go together like a jigsaw puzzle. We have just two more “cures” to study, #6 Insure a future income and #7 Increase thy ability to earn. We will examine these rules over the next two weeks and give examples of each to show how they also fit into the puzzle. The whole picture will, hopefully, provide a foundation upon which you can build your financial success and independence. As professionals, we are always dedicated to the success of your plans and dreams.
Have a great weekend!
Clason, G. S. (1926). The Richest Man in Babylon. New York, NY: New American Library.