Need Real Audio? Get it here for free

• For Your Wealth: The surprising reason why college graduates make so much more money
• For Your Health: Why you should eat a big bowl of chili . . . with a cup of honey on the side
• To Make You Wiser: Why there are five rings on the Olympic flag
• Today's Essay: The Richest Man in Babylon, Part 2
• Today's Action Plan
• The worst time to run an errand
• Reader feedback . . . from INDIA!
• What the word "vicissitudes" means

*Advertisement*

The group that recommended Taser International (TASR:NASDAQ) at $4.00 and watched it rally to $64.00 now says...

"These companies could single-handedly secure America's homeland and make you 1,275% - no matter who's elected President." Access this Time-Sensitive Investment Alert now:

Wealth

Why College Graduates Make More Money

A college degree, per se, won't guarantee you a wealthier life. But in their book "Getting Rich in America", Dwight R. Lee and Richard B. McKenzie argue that most college graduates do better than their less-educated peers because college gives them the opportunity to develop basic habits that help them in the business world, such as:

• showing up on time
• paying close attention to assignments
• completing assignments on time
• doing more than the minimum required
• struggling with difficult tasks
• organizing time and tasks by priorities

Health

The Cause of -- and Cure for -- Heartburn

Heartburn has nothing to do with your heart. It gets its name from the location of the discomfort. You get heartburn when small amounts of stomach acid leak into your esophagus (the long, narrow tube that leads from your mouth to your stomach). Usually, this happens because you ate too much or ate food that was too spicy or greasy. Natural remedies for heartburn include mustard, licorice, papaya, honey, and mint.

Wisdom

It's Good to Know: About the Olympic Flag

The five rings on the Olympic flag stand for the five major regions of the world: Africa, the Americas, Asia, Europe, and Oceania. Though the colors of the rings -- blue, yellow, black, green, and red -- are not meant to represent specific continents, every national flag in the world includes at least one of them.

*Advertisement*

The Lazy Man's Personal Profit Center

In 6 hours and 35 minutes, you can be in business well on your way to making upwards of $100,000 per year! That's how long it takes to create what is without question the world's easiest, most profitable and infinitely rewarding business.

A business you can run out of your home from your kitchen table in as little as two to three hours a day.

Here's how:

Today's Message

Introduction: Yesterday, we started to talk about the important wealth-building secrets brought to life in the classic, best-selling parable "The Richest Man in Babylon," by George S. Clason. Today, let's examine one of those secrets in detail.

The Richest Man in Babylon, Part 2: Pay Thyself Today and Rest Easy Tomorrow

In the second chapter of "The Richest Man in Babylon," we meet Arkad, "far and wide famed for his great wealth. He was generous in his charities . . . with his family . . . in his own expenses . . . but nevertheless each year his wealth increased more rapidly than he spent it."

Bansir and Kobbi are not the only wealth seekers asking for his help. Some of them, "friends of younger days," question why fate has singled him out "to enjoy all the good things of life and ignore us who are equally deserving."

"Once we were equal," they point out. "We studied under the same master. We played in the same games. And in neither the studies nor the games did you outshine us. And in the years since, you have been no more honorable a citizen than we. Nor have you worked harder or more faithfully."

Arkad says, "If you have not acquired more than a bare existence in the years since we were youths, it is because you either have failed to learn the laws that govern the building of wealth or else you do not observe them.

"In my youth, I looked about me and saw all the good things there were to bring happiness and contentment. And I realized that wealth increased the potency of all of these. Wealth is a power. With wealth one may ornament the home . . . sail the distant seas . . . feast on the delicacies of far lands . . . buy the ornaments of the gold worker and the stone polisher . . . build mighty temples. One may do all these things and many others.

"And when I realized all this, I declared to myself that I would claim my share of the good things in life."

But the desire to have all of these good things was not enough. It was not until Arkad learned a lesson about wealth building from his mentor, Algamish, that his fortune changed.

Algamish told him, "I found the road to wealth when I decided that a part of all I earned was mine to keep. And so will you."

"But all I earn is mine to keep, is it not?" Arkad demanded.

"Far from it," Algamish replied. "Do you not pay the garment maker? Do you not pay the sandal maker? Do you not pay for the things you eat? Can you live in Babylon without spending? What have you to show for your earnings of the past month? What for the past year? Fool! You pay to everyone but yourself. Dullard, you labor for others. As well be a slave and work for what your master gives you to eat and wear. If you did keep for yourself one-tenth of all you earn, how much would you have in 10 years?"

"As much as I earn in one year," Arkad replied.

"You speak but half the truth," Algamish retorted. "Every gold piece you save is a slave to work for you. Every copper it earns is its child that also can earn for you. If you would become wealthy, then what you save must earn, and its children must earn, that all may help to give to you the abundance you crave.

"Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed, the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade."

And that was the beginning of Arkad's journey to wealth.

In "The Automatic Millionaire", David Bach builds his entire wealth-building scheme around this one principle. He calls it "paying yourself first. " It's an idea that is at the base of many of the best modern wealth-building programs, from Ben Franklin's writings to ETR's Wealth Club and Seeds of Wealth.

It's a very simple idea. The money you spend on the trappings of wealth -- cars, boats, jewelry, etc. -- may make you feel wealthy, but they don't add to your wealth; they subtract from it. If you want to increase your wealth, there is only one way to do that: You must save. And if you want to save regularly and well, you should put a portion of your income into savings first -- before you spend it on anything else.

Making the conversion from a spender to a saver isn't easy. It takes more than simply reading this issue of ETR and saying to yourself, "Yes, that's true. I know that." It takes commitment and the discipline to follow a carefully articulated savings-and-investment plan over time.

The first thing you need to do is decide how much of your income you will "pay yourself first." That number, as Clason suggests, should be at least one-tenth of your income and can be "as much as you are comfortable with."

And it has to be done consistently with each and every paycheck and every time you bring in any extra income.

"If I set for myself a task," Arkad says, "I shall see it through. Should I say to myself, 'For a hundred days as I walk across the bridge into the city, I will pick from the road a pebble and cast it into the stream,' I would do it. If on the seventh day I passed by without remembering, I would not say to myself, 'Tomorrow I will cast two pebbles which will do as well.' Instead I would retrace my steps and cast the pebble. Nor on the twentieth day would I say to myself, 'This is useless. What does it avail you to cast a pebble every day? Throw in a handful and be done with it.' No, I would not say that nor do it. When I set a task for myself, I complete it. Therefore, I am careful not to start difficult and impractical tasks, because I love leisure."

That is a profoundly important point. You want to make "paying yourself first" a regular habit -- because until it becomes a habit, it is a chore.

The purpose of wealth building is not the acquisition of wealth itself but the power and peace of mind it can bring you. Unless and until you make paying yourself first an automatic part of your day-to-day routine, you won't enjoy those benefits.

In my own life, this transformation took several years. For the first two or three years of my wealth-building adventure, I managed to increase my income dramatically and put a good portion of that money aside. But I did so only after I spent a ton of money on all sorts of material rewards -- a bigger house, a nicer car, some toys for me and my family.

It didn't take long to grow tired of the toys and discover that I felt little better in my Lexus than I had in my Honda. And so long as my retirement account was insufficient to do anything but keep my bills paid for six months or a year, I never felt any of the true benefits of wealth.

Pay yourself first. Invest 10% . . . 20% . . . 30% of your income, as you get it, and within a relatively short amount of time (two years, three years, or maybe five years, but certainly not longer), you'll experience a complete change in the way you think about money.

You'll no longer count your wealth by recounting your possessions. You'll see your material trappings as what they are -- toys that give you temporary pleasure. And you'll begin to see your savings/investment nest egg for what it is -- a true measure of your potential to live life to the fullest.

About twice a year, I spend a few hours taking the pulse of my financial health. I add up my assets, deduct my liabilities, and come up with a figure that represents my personal net worth. You should do the same.

When that's done, I deduct the combined value of my home, my car, and any other thing that I know I will want to keep and use even in a state of retirement or semi-retirement. After that figure is subtracted, I arrive at a number that represents my net savings -- that is, my savings minus any debt.

This figure is the basis for passive income -- money I can make without actually working. And this figure is the number I am always hoping to increase, because it determines how well I will be able to live if I'm forced to (or simply decide to) stop working.

I count only the investment pool that can generate income -- "the slaves and their children," to use Clason's terms -- and my objective is for that income to be sufficient to pay for my lifestyle even if my active income dries up completely.

In working with the three people I mentioned yesterday, it's easy to see why they all arrived at middle age without three shekels among them. They have worked long and hard in various professions and at times have enjoyed incomes well above average. But when I sat down with each of them to construct a personal balance sheet, it became painfully clear that, in careers that spanned 20 years, none of them had managed to achieve a positive net worth.

Yes, they had good reasons -- business setbacks, family demands, unexpected health expenditures, etc. Yes, they have had their share of bad luck. But so have I . . . and so, probably, have you.

We are all apportioned an equal number of hours in every day and, over our lifetimes, equal portions of good and bad luck. The trick to overcoming the vicissitudes (see "Word to the Wise," below) of fortune is, as Algamish taught Arkad, to begin by paying yourself first.

Today's Action Plan:

Starting right now, you're going to "pay yourself first." Here's how:

Start, immediately, by banking at least one-tenth of your gross (not net) income.

If this means you can't pay the other people in your life (the landlord, the grocer, etc.), find a second stream of income and/or reduce your spending.

Be sure to save at least 10% of that second stream of income too.

Don't give yourself any breaks. Don't make any excuses. Pay yourself first. Stick with the plan.

Consider that pool of money to be your wealth. Don't count any value you have in your car, house, and toys. Each month, take a measure of that pool. Make sure it is deeper than it was the month before.

*Advertisement*

Forget China! Asia's Next Superpower Could Help You Turn $10,000 Into as Much as $9.5 Million

Last year a small group of investors had a chance to make up to 147% in two months... thanks to a remarkable system that predicted China's rise. Now the system has uncovered the next Asian Powerhouse -- and this time, YOU have a chance for big profits. Discover the only two stocks you need to own for the next 15 years... and your opportunity to turn $10,000 into $9.5 million. Get the details here.

TIME MANAGEMENT

The Worst Time to Run an Errand

When's the worst time to make a "quick" run over to the post office or drugstore? Friday at lunchtime.

According to the U.S. Department of Transportation:

The most daily trips are made on Friday.
The fewest daily trips are made on Sunday.
More daily trips are taken between noon and 1 p.m. than between 8 a.m. and 9 a.m.

READER FEEDBACK

Lakshmi from Bangalore, India, wrote to say:

"I do not have the words to express my gratitude to you for sharing your wisdom, insights, and experiences with all your ETR readers. I am a regular reader of ETR . . . which I treasure reading.

"Reading ETR every day feels so wonderful! Like having a bit of sunshine inside one's head. It's so energizing! In fact, I read and re-read each issue.

I am very happy to report that I find a slow and gradual transformation happening within me . . . in small but very significant ways. I used to be a late riser. Now I wake up early. I never followed a daily action plan. Now I do.

"Each day, after reading ETR, I reflect on every word that you have written -- and then, where possible, I try to apply and follow what you say.

"I find myself becoming a more confident and optimistic person -- less plagued by fears, doubts, and negative self-criticism and more determined to succeed."

(Ed. Note: If, like Lakshmi, you would like to comment on something you've read in ETR -- or on ETR in general -- please send an e-mail to support@earlytorise.com.)

Word to the Wise

"Vicissitudes" (vih-SIS-ih-toods) are sudden or unexpected changes.

Example (as used in today's main message, above): "The trick to overcoming the vicissitudes of fortune is, as Algamish taught Arkad, to begin by paying yourself first."

Michael Masterson
Copyright ETR, LLC, 2004