My thoughts on financial bondage

I’ve been reading “The Richest Man in Babylon”, a series of financial parables set in the Babylonian era. They’ve been around since the mid-1920’s and convey (very simply) some basic principles of finances and money management. They’re the kind of things we all know, but few of us seem to do. The highlights are the following:

1. A portion of all you earn is yours to keep. Save at least 10% of everything you make, no matter what
2. Do the above by controlling your expenses carefully with the use of a budget
3. Put those savings to work for you by investing
4. Don’t be risky in your investments
5. Buy a house
6. Plan for retirement and future generations
7. Increase your earning potential

Again, very basic stuff, but apparently the majority of people just don’t get it. For example, the average savings rate in America is now NEGATIVE. People who make $50k per year spend just over $50k per year and people who make $100k per year spend just over $100k per year. Average household debt goes up every year and the average American only has something like 15k set aside for retirement.

My company (CNET Networks) had a guy come in today from the Social Security Administration and speak to us about how Social Security works. Nothing really new. I was hoping he’d talk about some of the plans to fix SS, but he merely said that it will be bankrupt by 2040 unless we change something. Fantastic. The thing that struck me was, 1) how little money you get, even if you paid a fortune into Social Security, and 2) how jacked up it is to face a retirement of 20+ years knowing that there’s no way you can even come close to living on what you have. What person, at 66, wants to realize that they have to work until they die? How sad. The saddest part was that they actually increase your benefit if you work past 66, because they’re trying to keep people working as long as possible. Isn’t that great? We live in a country where senior citizens are encouraged by their government to work as long as possible, even well into their 70s, or until they die, whichever comes first.

It all kind of clicked for me this evening. I was reading the book again and this part jumped out. The speaker is a slave who fled his city because of debt and fell into the wrong circumstances, eventually ending up as a slave to a very wealthy lady.

“So I was turned over to Sira and that day I led her camel upon a long journey to her sick mother. I took the occasion to thank her for her intercession and also to tell her that I was not a slave by birth, but the son of a free man, an honorable saddle-maker of Babylon. I also told her much of my story. Her comments to me were disconcerting and I pondered much afterword on what she said.

‘How can you call yourself a free man when your weakness has brought you to this? If a man has in himself the soul of a slave, will he not become one no matter what his birth, even as water seeks its level? 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?'”

Think about it.