OPIUM is destructively addictive, yet morphine that's derived from it is vital in the management of acute pain after surgery. So, what are your thoughts on the similar-sounding OPM or Other People's Money?
Whom would you like to make rich or perhaps richer, yourself or a lending organisation?
Consider that life-defining question as I share a line from Shakespeare's play Hamlet, which my late father, lawyer D.A. Devadason of Malacca, quoted to me more than 40 years ago: "Neither a borrower nor a lender be…"
Before we go further, I must confess that in the years following my father's well-meant guidance to his teenage son, I did not heed Shakespeare's words, uttered by his doomed character Polonius, whom Hamlet would kill by mistake. Well before his murder, though, Polonius was giving advice to his beloved son, Laertes.
In my defence, in case you haven't realised it, our planetary economy is fuelled by debt — specifically the expansion of credit from one year to the next. Remember this as we scrutinise Polonius's advice.
Since context determines meaning, while writing this column I took down my beautiful three-volume set of publisher Geddes and Grosset's The Works of Shakespeare from a rarely accessed high shelf in my home library and extricated Volume 2: Tragedies, which contains 11 depressing plays by the Bard, one of which is Hamlet.
Its full title, in case you were wondering, is The Tragedy of Hamlet, Prince of Denmark. In Act 1, scene 3, lines 75-77 are these three lines about money:
"Neither a borrower nor a lender be:
For loan oft loses both itself and friend;
And borrowing dulls the edge of husbandry."
BASIC THRIFT
Shakespeare wrote the play between 1599 and 1601. I have always taken "husbandry" to mean the diligent work we pour into our careers, but I looked it up to be certain and discovered I was only half right.
While husbandry can mean the care, cultivation and breeding of crops and animals, it also means the management and conservation of resources or basic thrift.
To complete my research, I checked my fat copy of Asimov's Guide to Shakespeare by the incomparable Isaac Asimov, who died in 1992 at the age of 72 after writing or editing about 500 books. Asimov began his commentary on those three lines with undisguised sarcasm, describing them as "literature's greatest gift to the small of heart…"
So, referencing those lines, Asimov went on to write: "How many skinflints who know not one other verse in Shakespeare are letter-perfect in this, to use at the first sign of another's need!"
While Asimov was a self-described atheist and I am not, he recognised what you and I both know today almost 30 years after his passing: Earth is a tough place so we should focus on being as kind and generous as possible to lighten the loads of other people.
We should err on the side of compassion and magnanimity through prudent lending, or better yet, outright giving, to those in need. However, even with the best filters in place, acting in this manner will sometimes see us ripped off by unscrupulous manipulators.
Therefore, we should always aim to refine our internal filters through common sense and enhanced discernment to increase our odds of helping deserving people.
You are, of course, welcome to disagree with me, but my view is that what Polonius told Laertes was merely half right.
FULL CIRCLE
There is a place in our lives for controlled, judicious lending. The flipside of that coin, though, is when we ourselves borrow money, which brings us full circle back to my opening query:
Whom would you like to make rich or richer, yourself or a lending organisation?
There are four possible answers:
1. The lender;
2. Both;
3. Neither; and
4. Yourself.
A basic loan sees the creditor or lender hand over money to the debtor or borrower. The borrower promises to make timely repayments comprising portions of the principal sum borrowed plus interest.
The profit made by the creditor stems from the aggregate interest charged IF the debtor is honourable and repays everything — all principal borrowed plus all interest accrued — in due time.
1. If your goal is to enrich the lender, then borrow a lot and often. Minimise your capacity to live well in the future so you may maximise the interest paid to the lender.
2. If you wish to enrich both the lender and yourself, only borrow money to make investments or start businesses that grow faster than the accruing interest over time.
3. To enrich neither the lender nor yourself, always spend exactly as much money as you earn. Then you'll never pay interest to lenders, but you'll also never have regular cash flow surpluses to save and invest for yourself.
4. And to enrich yourself but not a lender, never borrow any money; also curb your appetites and manage money well by always spending less than you earn; then always save and invest your surpluses to grow only your own wealth.
I think only options 2 (both) and 4 (yourself) make logical sense. What do you think?
Much more importantly, what will you do?
© 2021 Rajen Devadason
Rajen Devadason, CFP, is a Licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via [email protected]. You may also follow him on Twitter @Rajen Devadason and on Clubhouse (Rajen Devadason).
