The Wisdom of Wealth

Lessons Learned from "The Richest Man in Babylon"







"Wealth is the slave of a wise man. The master of a fool."
Seneca




Sometimes the best advice is the oldest. How many times have we disregarded the tried and true wisdom of our Parents and Grandparents only to return moments later with a humbled grin confessing that hey were right all along.

The same thing holds true with your finances and pursuits for financial independence. Now the wisdom I speak of does not come from anyone in my family but from a very small book (160 pages), written in the 1920s by George Clason. To be consistent with its theme, the book is inexpensive:

Available from Amazon.com for as little as $2.99 for the book.



Or $10.97 for the Audiobook:




Now lets look closer at the book and some of the themes. The book is written in short parables. Each story has its own distinct moral. This makes the book easy to understand and the themes memorable:

Seven Cures for a Lean Purse
1. Start thy purse to fattening - One tenth of what I earn is mine to keep. (Pay yourself first)

2. Control thy expenditures - Live off of less of your income. Create a budget – and stick to it.

3. Make thy gold multiply - Once you start to build up some capital, invest that money so that it will make more money for you.

4. Guard thy treasure from loss - Invest in things that will safeguard your principle. Minimize your risk.

5. Make of thy dwelling a profitable investment - Owning your home is preferred to renting.

6. Insure a future income - Invest for your retirement and future expenses (College for the kids)

7. Increase thy ability to earn - Grow your business or look for opportunities to earn more as an employee.


The five laws of gold are pretty self explanatory, again it is the story that is told that makes these laws come to life.

The Five Laws of Gold
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 who are 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.

Some of this advice is timeless, tried and true. It is funny how something written over 85 years ago can still be so relevant and impactful. If you haven’t read this book yet – I highly recommend it. If you have read it, I’d be interested in your personal review.

Prescription for Debt

The price of pharmaceuticals today can significantly impact any family’s budget, but with a little shopping you can make the best of a bad situation. The first thing to do is review all of the prescriptions that your family has and divide them into two categories:

Long Term
These are prescriptions that you take continually and are often refilled several times throughout the year. (Over 30 Days)

Short Term
These are prescriptions that you have that are for a short duration – no refills. (30 Days or less).

For those that are long term you may want to look into purchasing the generic form in larger quantities (90 Days supply as oppose to 30 Days Supply) – Please talk with your physician. You should check all of your local pharmacies to see who offers the best value. (I’ll cover this exercise in more detail later in the article)

Some prescriptions do not have an available generic. Consumer Reports recommends using Pharmacy Checker to find the best price from several online pharmacies within the US or Canada. With comparable requirements to the FDA Canadian pharmacies will offer a significant savings on brand name prescriptions. (Note: Generics are usually more cost effective within the US).

Price Comparisons
For the long term generics, and the short term prescriptions, you may want to shop around. Several pharmacies offer special pricing on generics and specific types of prescriptions, what is best for you depends on what your family needs. I reviewed the offerings of 6 different local pharmacies. Chances are several of these are close to you. Be sure to review the list of Generics carefully. Dosage and types vary depending on which store you select.

Pharmacy	Generic Program Enrollment	Cost of Generics	Special Offers	List of Generics
	$10 annually per person	$9.99 for 90 Day Supply	N/A
	N/A	N/A	Free Antibiotics Free Prenatal Vitamins	N/A
	Free	$8.99 - 30-Day Supply and $15.99 - 90 Day Supply	Match all Competitors pricing and offers.*
	Free	$4.00 - 30-Days Supply and $10.00 - 90 Day Supply	N/A
	$20 annually or $35 for an entire family	$12.00 - 90 Day Supply	Includes Birth Control Pills and Prenatal Vitamins
	Free	$4.00 - 30-Days Supply and $10.00 - 90 Day Supply	N/A

Stop The Bleeding!

1. Telephone Service
Why pay more for the same telephone service. VOIP (Voice over IP) uses your internet service for phone service and provide significant discounts over your local and long distance provider combined. If you don't believe me, just contact your current long distance provider and ask them if they can beat VOIP's pricing. For just $25.00 / month you can get unlimited local and long distance service.

Sign up here:

2. Surveys
Believe it or not. You can make money by completing surveys online. Many companies pay you to complete the surveys. Anywhere from $2 to $100 for more focused group projects. I've done these for years and have found one of the best to be Survey Savvy. To sign up to start taking surveys and earning money, click on the following link:

Other websites that pay you to take surveys: www.mindfieldonline.com and www.globaltestmarket.com.


3. Eliminate your cable bill (Hulu and the Library)
Why pay for a night out at the movies. Why not stay at home and enjoy dinner and a movie at a fraction of the price. Most people don't utilize the public library, but they do have several popular films and television series. Just visit your library's website and see what is new in the video collection. Here is what I found:

Feature Films

1. Nights in Rodanthe
2. Madagascar, Escape 2 Africa
3. The Family That Preys
4. Righteous Kill
5. Babylon A.D.
6. Never Back Down

Television Series

1. The Wire
2. Monk
3. The Sopranos
4. Friday Night Lights
5. 24

Still don't want to leave the House? Want even more recent content? Try Hulu:

Exceptional content and some is even in HD. Enjoy as if you had a DVR Pause and stop at will. The best part about this site, is that you can get caught up on any of the series (crucial if you have missed a few in the season).


4. Thermostat/Hot Water Heater
To save on energy on heating or cooling, buy a programmable thermostat, especially if no one is home most of the day. Set it to turn on a half-hour before anyone arrives home.

Lower your hot water heater's thermostat 10 degrees, but no lower than 120 degrees. You'll still get all the hot water you need and save 25 kilowatt hours a month.


5. Insurance
Some home improvements can reduce the cost of homeowners insurance. Something as simple as installing a fire extinguisher or a deadbolt lock can take a significant bite out of your insurance bill. Contact your insurer and review your policy.


6. Recycled Clothing
Put cash back in your pocket by taking the clothing you no longer wear -- that's still in good condition -- to a consignment shop. While you're there, shop for used clothes. Some of these items may even be new, but they will definitely have reduced prices.


7. Cut the Debt (Credit Cards)
One of the most rewarding ways to cut your costs is to reduce or eliminate monthly finance charges that you incur on your credit cards, home equity line of credit and other debts. Pay down the balance on your highest interest-rate debt first and pay more than the minimum payment each month. You may also want to consider transferring your balances from high-interest credit cards to low-interest ones. Then make the same payment as before or double the minimum.


8. Don't pay for Cash
I understand the concept of interest. Someone provides you with cash up front and you agree to pay them back including an additional amount for using their financing. Somewhere along the line someone decided to charge consumers a convenience fee for utilizing their ATM. Now wait a minute --- you can electronically determine that the cash is in my account and electronically transfer the funds. In addition, I am using a machine (not a teller) so that your expenses are minimized, yet you still want to charge me a fix fee to utilize your machine. Hmmmm. Until we can get the banks to agree to not charge us for access to our own cash, we need to be very careful where we get it. Those convenience fees can quickly add up.

Make it a habit to use only your bank, thrift or credit union's ATMs. You'll avoid paying surcharge fees to your bank and the other bank. Or consider opening an account with an online bank or brokerage that covers out-of-network ATM fees (Please read the small print: some of these accounts include an annual fee or will limit the number of transactions).

Another way to avoid ATM fees is to get cash at grocery stores, where most point-of-sale terminals are free.