My notes on The Richest Man in Babylon Part 4 : The Clay Tablets from Babylon

The Clay Tablets from Babylon

Supposedly the record of Dabasir’s financial affairs, the camel trader of Babylon whom decided to be a man with a soul of freeman rather than the soul of a slave by paying off his debt and be a man worthy of respect among men in Babylon. These clay tablets dictate the details of how Dabasir worked his way out of debt and build himself a worthwhile fortune.1

Here is the lesson on managing your earnings:

  1. 1/10 of all your earnings shall be yours to keep (savings)
  2. 2/10 of all your earnings shall be for your debt payment (suggested as pro-rata)
  3. 7/10 of all your earnings shall be for your living expenses (includes all except for your saving and debt repayment

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, rebuilding him reputation as trustworthy and integrity man of Babylon.  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 living expenses.

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.

However, i would advise on debt snowball.

 

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Categories: Books Review, Personal Development, Personal Finance

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