The Richest Man in Babylon, Retold for 2026 (Part 5)
This is Part 5 of a 7-part series where I'm retelling the money lessons from The Richest Man in Babylon as a story set in 2026. New here? Start with Part 1: The Freedom Account, then Part 2: Step Over the Dimes, Part 3: Savers Are Losers and Part 4: A Fool and His Money.
Quick catch-up: Marcus and Jess are paying themselves first, they've cut the big leaks, and their freedom account is earning while they learn. Jim, the neighbor at the end of the road, has given them four rules so far.
Rule one: pay yourself first.
Rule two: spend less than you earn. Step over the dimes and go pick up the dollars.
Rule three: make your money multiply by learning to spot value and add value.
Rule four: guard your money from loss. Only invest in what you know and understand, and if someone says "guaranteed," run.
Back in Part 2, Marcus and Jess got pre-approved for a $250,000 house. Then Jim ran the mortgage math, and they decided to wait.
A few weeks later, Jess finally asked the question.
"Are we ever going to buy a house?"
She asked it standing in Jim's garage, with the pre-approval letter folded in her jacket pocket. She'd been carrying it around for a month.
"Yes," Jim said. "Just not the way most people do it."
"I'm halfway through Rich Dad Poor Dad," Jess said. "I just got to the part where he says your house isn't an asset. Is he serious?"
Jim laughed. "I had the exact same reaction."
The waiting room
"I remember right where I was when I read that. A medical waiting room. We were there for an appointment, and I had Rich Dad Poor Dad open on my lap."
"I turn the page, and Robert Kiyosaki says your home is not an asset. It's a liability."
"I was honestly shocked. That was the opposite of everything I'd ever heard. Your home is your biggest investment, right? Everyone says so."
"But he made a great case. He said assets put money in your pocket. Liabilities take money out of your pocket. Period, end of story."
"Then he walked through what buying a home looks like for most people. You've got interest. Property taxes. Insurance. Furnishing the place. Fixing the place. The roof, the water heater, the fence. On and on and on."
"By the time he was done, it was clear. For most people, in most cases, the house they live in takes way more money out of their pocket than it ever puts back in."
"So by his definition," Jess said slowly, "it's a liability."
"By his definition, and by the math."
Who told you it was an investment?
"Here's the second thing he pointed out, and it stuck with me just as much."
"Think about who tells you your home is your biggest investment. The real estate agent. The mortgage lender. The title company. The guy selling you furniture to fill it."
"Every one of them puts money in their pocket when you buy. And the bigger the house, the more they make."
Jess pulled the letter out of her pocket and looked at it.
"They're not bad people," Jim said. "But they're the wrong people to take financial advice from on this one."
The death pledge
"You know where the word mortgage comes from?"
Marcus shook his head.
"Old French. Mort gage. It means death pledge. In other words, until death."
"Cheery," Marcus said.
"Remember the calculator?" Jim pulled it out of the drawer again. "Two-fifty, nothing down, 7.24%. About $1,704 a month. Over 30 years, about $363,000 in interest."
"Now here's the part that shocked me when I first learned how a mortgage is calculated. Let's just look at the first five years."
He punched in the numbers.
"Sixty payments. About $102,000 out of your pocket."
"How much of that actually goes toward the house? About $14,000."
"The other $88,000 or so goes to the bank."
Jess did the math in her head. "So after five years of payments, we'd own a tiny slice of it, and the bank would have most of what we paid."
"That's how it works. In the early years, the overwhelming majority of every payment is interest."
(Quick note: same as in Part 2, that's just the loan. Taxes, insurance and repairs come on top, and a down payment or extra payments change the numbers. The early years still lean heavily toward the bank.)
The trailer math
"When my wife and I first got married, we were living in a single-wide trailer. And we had the same question you do. Do we buy a house?"
"So we sat down in that trailer and ran two calculations over five years."
"Option one: get a loan, buy a house, and see how much equity we'd have built up at the end of five years."
"Option two: stay right there in the trailer, save the money we would have paid on a mortgage, and see how much we'd have at the end of five years."
"It wasn't even close. Staying in that trailer and saving the money put us way further ahead than buying a house and paying the bank."
"So renting is smarter?" Marcus asked.
"It depends. If you can rent cheap enough that you're saving and investing extra money every month, and that five-year number beats what you'd build by buying, then yes. Renting is the better choice. Absolutely."
"And buying makes sense when you run the numbers and the decision grows your net worth over time instead of shrinking it. Let the numbers be your guide."
Stop trying to make your house pay you
"The old book's fifth rule is make of thy dwelling a profitable investment. And I'm going to disagree with it a little."
"For most people, trying to make the house you live in pay you back is the wrong goal."
"You need a place to live. That's a fact of life. So just face it. Your house is going to cost you money. It's a necessary expense, like food. Stop calling it an investment."
"That sounds depressing," Jess said.
"It's the opposite. It gets you out of the delusion that you're investing when you buy a house. Once you see it as an expense, you shrink it like any other expense. Then you can turn your mind to real investing, and put your money where it actually earns a return."
"There's one exception. Some people buy a home, live in it for about two years, and then sell it. There's a tax rule that lets you keep the profit tax-free if you've lived there long enough out of the last five years. It's a real strategy. But it only works if you buy something that will be worth more when you sell than when you bought.
AND, that the profits will surpass what you've paid in interest and expenses up to that point."
The trailer that paid rent
"So what did you do with the money?" Marcus asked. "The money you saved living in the trailer?"
Jim grinned.
"We bought an income-producing asset. And guess what it was."
"Another single-wide trailer."
"So while we were living in a single-wide, we bought another single-wide. A friend of mine sold it to us for $10,000, and we rented it out for around $600 a month."
"That was my first taste of residual income. Money coming in every month from something I owned, whether I worked that day or not."
"And it was so good I had to have more."
"That's how you make a dwelling profitable," Jim said. "You buy one you don't live in, and someone else pays you to live there."
Money Mistakes Of The Masses
"Honestly, the first mistake most first-time buyers make is thinking they need to run out and buy a big house in the first place."
"We've been conditioned to believe it. Grow up, get married, buy the biggest house the bank will let you. Keep up with the Joneses."
"When my wife and I decided to live in a single-wide, it was different from everyone around us. I remember watching people's faces. Their minds struggled to grasp what we were doing."
One time a lady at church said to my wife, with a sympathetic look, "Are you guys staying warm in that little trailer?"
HA! She thought we were so deprived. Little did she know we were plenty warm, comfortable, safe, happy and growing RICH at the same time.
"We had to be okay with making the right choice for us, knowing we'd be judged for it."
"And that's the second big mistake. People make the biggest purchase of their lives so other people will look at them a certain way. Instead of making the best financial choice for themselves and their future."
"Dave Ramsey has a line that always takes me back to that trailer. Live like no one else now, so you can live like no one else later. BAM, there it is."
The wealthy kitchen table
That night, Marcus and Jess sat down with a calculator and two columns on a yellow legal pad. Buy. Rent and save.
They ran both out five years, the way Jim had in his trailer.
Then they ran the numbers on themselves the way things stood right now, with nothing changed.
Jess looked at the bottom of the page for a long time.
The pre-approval letter went in the kitchen drawer. Not the trash. The drawer.
"Not yet," she said.
Your move this week
Okay, back to you and me.
Part 4 was about not losing your money. This one is about the single biggest money losing decision most people make, and why the house you live in is an expense to manage, not an investment to brag about.
Here's your homework. Do a five-year equity calculation. Sit down with a calculator and answer two questions.
1. How much is adding to my net worth every month right now? Add up the cash you put in the bank, the growth in any investments, and the part of your mortgage payment that actually goes toward the house (not the interest).
2. Where will I be five years from now if nothing changes? Take that monthly number and run it out five years. That's your net worth, or your equity position, on the road you're on today.
If you're thinking about buying, run it twice, the way my wife and I did. Once if you buy. Once if you stay put and save the difference.
This gives you a very clear picture of where you stand, where you're headed, and what might need to change to get a different result five years from now.
Coming up in Part 6
A few days later, Marcus was on the night shift when he got a text from Jess.
"Random question. What happens to all of this if one of us can't work anymore?"
He didn't have an answer. He knew who would.
In Part 6, we get to the sixth lesson from the old book: insure a future income.
Until then, tell me in the comments: has the house you live in been an asset or a liability for you?
Thanks for reading and whatever you do, always go for your dreams!