The Richest Man in Babylon

This short little book (143 pages), The Richest Man in Babylon, a collection of financial advice written 80 years ago by George S. Clason, is set in ancient Babylon, a city of great wealth, but also great poverty, where men can become slaves through debt, but can free themselves through hard work, thrift, and ambition. The basic rules of wealth then, and during the author's time, and even up to the present day are always and everywhere the same. This book illustrates these rules through simple parables about spear-makers, chariot-makers, money lenders, merchants and slaves.

I highly recommend it to anyone seeking to free themselves from financial slavery.

The inside cover details these 7 cures for having no money (they are fully explained in the book):

1. Start thy purse to fattening.
   
2. Control thy expenditures.
   
3. Make thy gold multiply.
   
4. Guard thy treasures from loss.
   
5. Make of thy dwelling a profitable investment.
   
6. Insure a future income.
   
7. Increase thy ability to earn.
   

Financial Horror Stories

The scariest stories are true, as you will soon see. In this dark corner of the world exorbitant interest rates lurk around every corner and refinancing a mortgage isn't always what it seems.

Though the names have been changed, these tales of true-life horror were sent in by Bankrate readers. Cringe in terror at the customer service department designed for disservice. Shriek in fright at the lies told by salesmen to sell their nefarious wares. The Bankrate chamber of financial horrors is waiting for you, if you dare.

Just in time for Halloween, Bankrate.com has some financial horror stories. Read about monstrous mortgages, fraud alerts being placed on an out-of-town shopper, universal default clauses, and other tales of woe.

Another scary story is about SAR, Suspicious Activity Reports. It's a program designed to attack the finances of terrorists, by requiring banks to report suspicious activity to the Treasury department. The problem is that the guidelines are so vague that a lot of innocuous activity is reported, making real terrorist transactions into the proverbial needle in the haystack. Over 900,000 SARs were filed in 2005, and about a million will be filed this year.

What can trigger a Suspicious Activity Report? Any out of the ordinary transaction or group of transactions totaling over $5,000 can trigger a SAR.

Irregular Income

'Intuitive finance' plan can stave off bankruptcy Bankrate.com's Bankruptcy Advisor, Justin Harelik, has some advice for a salesman considering bankruptcy.

He writes:

The best plan, Edward, is to figure out how to ride this out. Certainly there are lawyers who will try to convince you that bankruptcy is your best option, but I disagree. Access to credit is important for people in unpredictable lines of work.

You asked the question: How one can budget with an unpredictable income? This is a good question, and over the years I've come up with an answer that works for people whether their income is predictable or not. Simply, you must stop thinking about yourself as a business and start developing your personal financial intuition. I call this approach "intuitive finance."

I consider the word, "budget," to be a term exclusively for businesses, not individuals. As important as money is, your life is not only about the bottom line. It's also about experiences, memories and enjoyment. This is why having a good time is so essential to an individual, because it reminds us that it is good to be alive and protects our sanity.

Then he goes on to explain a system for initially tracking every expense, and then automating those that are "commitments" (mortgage, car payment, electric bill, etc). This leaves him more time to focus on his other expenditures and see if he can make it through the lean months just paying the minimums.

Prosper in the News

Here you can see all the articles about Prosper that have appeared in the media.

I've already linked to the Reader's Digest and Bankrate articles, but there were articles in Business Week, PC Magazine, Inc. Magazine, Entrepreneur, Newsweek, and the Wall Street Journal, that can be reached from this page.

What Cities Are Home to the Best Savers?

America's 50 biggest cities: best-to-worst savers

Boston, Rochester, Hartford, San Jose, and Washington, D.C. made the top 5 in a study that ranked the 50 largest cities, according to savings. At the bottom were Austin, Columbus, San Antonio, Oklahoma City, and Memphis.

In my neck of the woods, Birmingham was 35th, Nashville 44th, and Atlanta 45th.

Reader's Digest Digests Prosper, Home Equity Not Money in the Bank

Reader's Digest has an article on Prosper in the November issue, as well as some other money management tips.

Meanwhile, Bankrate.com has an article explaining that your home equity is not the same thing as a savings account

And finally, The Motley Fool has some credit myths to dispell.

Prosper's New Group Ratings System

Prosper now has a new group rating system in place, that gives stars to groups based on loan performance. Groups in which the borrowers are late or default less than would be expected, judging by their credit score, receive more stars than groups whose default rate is worse than would be expected. 15 payments must have come due before a group gets a ranking.

These are the results of my recent search for 5-star groups only. Hard Money Loans, Vets helping vets, Computer and IT Professionals, and Nu Beginnings are at the top. Tzedakah is another group highly-ranked, that is also respected. Only 34 groups out of over a thousand made this list, and together, there are over 200 open listings from members of these groups.

Read the official announcement here

Is Cash Trash?

Take My Money, Please!Do businesses have to accept cash? The short answer is no. Creditors are required to take cash in payment of a debt, but businesses can accept whatever they want, including silver "Liberty dollars".

Bankrate.com article on Prosper

Person to Person Lending: High return, but risky? This Bankrate.com article describes Prosper and goes through an example loan. The article is primarily directed towards lenders, but even prospective borrowers would benefit from reading it.