Budgeting that works: Arkad’s Simple Rules

This budgeting frame is particularly appropriate when paying off ‘negative wealth’. When people have debt negative wealth, the customary advice is ‘don’t save; throw everything to pay it off’. I happen to disagree with this and from the very first days of my financial awakening I set myself two goals: one pay negative wealth and pay it fast; and two build up an emergency fund and savings. As it turned out I am in good company and Arkad, the richest man in Babylon, also agrees with me. Arkad’s advice to people who have negative wealth and wish to become wealthy was the following:

Ten percent of all you earn should be saved and invested.

Twenty percent of all you earn should be used to pay debts negative wealth– if the amount is insufficient one should negotiate with their creditors firmly and convince them that this all that they can afford but that they will pay diligently.

Seventy percent of all you earn should be used to cover all living expenses.

Currently we put 21% of our monthly net income to pay off negative wealth; 14% of our monthly income is saved and a proportion of this is invested; and we cover all our living expenses using the 65% of our monthly income that is left.

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The Money Principle Running: three running AHAs for life and wealth

In his book What I talk about when I talk about running, Haruki Murakami famously said that he doesn’t think about anything but running when running. Apparently, elite runners gave a very similar answer . This probably explains why I am not part of the elite and will never be; when I run I think about many things. I think about my latest writing project, I solve problems, I work out the points on which I am stuck, I make plans about my finances and yes, I think about success.

Today, I was thinking about the three main AHAs that I wouldn’t have had if I was not running. These are:

AHA 1: People succeed when they compare themselves with absolute goals not with other people. This is something I learned by reading the stories of top athletes – they never compete with other athletes, they compete with the clock. This holds for any achievement: to get there we ought to set absolute goals which are ours and ours alone. What do you want? Where to you want to be?

AHA 2: ‘Ambition’ and ‘delusion’ are separated by a very thin line. I am someone who doesn’t get going on ‘realistic’ goals – they are somehow never exciting enough, never brave enough and never challenging enough. Have audacious goals is my game because even achieving some of these gives such a high. But I have learned that this is also a tricky game because goals ought to be audacious but not delusional. Running a marathon in under 4 h 30 min for me is ambitious, winning a marathon is delusional. Becoming wealthy is my ambition, having net worth equal or even close to that of the likes of Bill Gates is delusional.

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