Who's read The Richest Man in Bablyon?

DontDoDebtKids

Hi all,

This is more of a "what do I do when I am debt free" thread but read on for my question...

I read "The Richest Man in Babylon" over the weekend - quite short book but interesting to read.

In it, it talks about how to sort out your finances using parables set in ancient Babylon.

One chapter deals with how someone in debt sorts himself out:

He saves 1/10 of his income.
He pays off his debts with 2/10 of his income.
He lives with 7/10 of his income.

Sounds like an IVA to me!!!

However, the central theme to this book is to save at least 1/10 of your income.

My question is this: What do you do with this 1/10 of your income and the interest earned? In the book, one character congratulates another for saving/investing 1/10 of his income but then tells him off for using the interest/dividends generated by that saved money to spend. What are you meant to do with it?

1) Just keep saving and investing to grow the amount and pass it on when you die?
2) Just keep saving and investing until you need the income?
3) Something else?

Any thoughts DFWs?

all_hours

Thanks - that's another book for me to look out for.

In Turning Debt into Wealth it suggests saving until you can live off the interest - then I guess you pass on the principal when you erm.. pass on.

If you save and reinvest any interest then your savings will increase at a faster rate and put you in a position to retire sooner. So spending a few £s today can cost you more in the long run.

Though I've read conflicting opinions on the return on long term investments. One of the books said 10% another said 14% p.a. That 4% makes a big difference over a 10-15 yr period.

Broken_hearted

Buy a holiday home as an investment, seriously I don't know.

Tiff_2

In my situation, I'd need to carry it over 3 lifetimes just to be able to mortgage a cat!!! :0

MoneyMagnet

I've read it - v good book!

My investment plans are - eventually (after paying off loan & mortgage) build my investments to the point where I can live off the income as well as reinvesting some of the profits to grow the capital. Basically I want to be financially independent & not have to work unless I want to. Don't want kids, so am not concerned about passing it on! Whatever is left when I die (assuming OH dies before me) will go to charity.