Domain Name Com's The Automatic Millionaire : A Powerful One-Step Plan to Live and Finish Rich

The Automatic Millionaire : A Powerful One-Step Plan to Live and Finish Rich

Domain Name Com's - : The Automatic Millionaire : A Powerful One-Step Plan to Live and Finish Rich

- A life changing book!!
Never thought that personal finance could be this simple and easy. Applying what is written in this book, has changed my life and how I value my earnings and money. Well done!

Rating:

- A Must Read!!
Easy to read and easy to apply principles for managing your money. This book has become my standard gift for high school grads because as helpful as this book has been to me at 40 years old, it will be that much more beneficial to an 18 year old. Start reading and start saving!

Rating:

- Some of the things are a bit hard to believe...
Okay, I LOVE financial books. Love them. I like David Bach, he's okay, but this book is kinda hard to believe.
First, when he tells the "story" of the couple from when David Bach was back in his 20's, so that would be back in late 70's or early 80's(?) - he talks about how the people told him about his "coined phrase" the Latte Factor (insert trademark symbol here).

Uh, was a Latte even a common phrase drink back them? Not that I recall, so that little "PR" move for his "catch phrase" AUTOMATICALLY put me on guard as to what was real vs. not real.

His info is a bit far-fetched if you want to truly read into it, but on the whole the book gives great ideas on how to set aside money for your future. Without picking it apart, it's not bad advice.

Easy to read, but the stories are totally unbelievable to me. I kept thinking that he totally made them up, or how embellished they were.

Get it from your local library. Also recommend Jean Chatzky books.

Rating:

- This is wonderful!!
We have been giving the Automatic Millionaire to graduates instead of cash so that hopefully they will learn to save their cash as they go through life. We truly believe in the automatic way to save and invest our way to becoming millionaires!!!

Rating:

- Become Wealthy in One Easy Step
The basic premise of Bach's book is to automate as many financial aspects of your life as possible. With today's technology, this is much easier and more accessible than in the past.

A main focal point of the automation is having automatic deductions from one's paycheck go into a retirement account. The benefit being that one learns to live on the lower net income and does not even notice the automatic deduction. At the same time the investor is saving tax if investing in tax deferred accounts such as a 401(K), 403(b), SEP, or traditional IRA retirement account.

So for example if you take a $1,000 paycheck and deduct 15% to go directly into a retirement account, that would be $150. In contrast if you did not put anything into the retirement account first, you would bring home $800 assuming a 20% tax rate. By "paying yourself first" you avoid tax today on the $150 and rather than only bringing home $650 based on the $200 tax on a $1000 paycheck, you would actually bring home $680 due to not paying tax on the $150. This may not seem like much but can make an enormous difference over time.

The millionaire part comes into play by following this system of setting it up one time to automatically deposit the money and letting the power of compound interest work over the course of a number of years.

He also recommends automating things such as a house payment by having payments drafted from your account once every 2 weeks rather than once per month. This results in an additional full payment each year with the advantage of paying off a 30 year mortgage (if using one that long) in only 22 years. This cuts out a huge amount of interest paid and gets you out of debt that much quicker. Rather than relying on discipline and remembering to send in a payment every 2 weeks you've automated it and don't ever have to worry about it.

An additional idea Bach presents is that most people have a "Latte Factor." This essentially is little things through out the day which you may not think about spending money on such as picking up a $3.50 latte and $1.50 muffin at Starbucks in the morning. While this is ok from time to time, the point is that if done on a regular basis without thinking about the total cost, it can really add up to substantial amounts of money in time. Say for example you did this on the way to work each morning (5x50=250x5=1250) $1,250 per year in coffee and muffins. In my book that's a decent chunk of change.

An idea Bach does not mention but which is effective is to give oneself a monthly budget for random purchases. Dave Ramsey calls this the blow category in a budget. Money which can be spent as you please without having to fall in a specific category. If your blow category is $50 for the month, at the beginning of the month you put $50 in an envelope and can spend it any way you choose. But when the money runs out and the envelope is empty, you don't spend any more. It really helps in making you pause to consider a purchase before whipping out the plastic and swiping away that $1,250 in muffins and coffee.

Other elements which Bach promotes are paying off debt and giving money away. Debt will really hamper one's ability to become wealthy so by attacking it, you free yourself to run unfettered towards wealth. The giving aspect helps put things in perspective and give you a sense of wealth and generosity even before becoming "wealthy."

One aspect that I would give caution to the reader about is Bach's chapter on real estate. If not read in a proper context, the reader could get the impression that taking on large amounts of debt or "leverage" great ideas with limited risk. One should always incorporate a big risk factor whenever introducing large amounts of debt. Regardless of how leverage is couched, real estate prices do not always go up as seen recently, and renters do not always make payments. So if taking on a mortgage to purchase real estate, it would behoove the person to make a large down payment and pay off the mortgage as quickly as possible.

Overall, The Automatic Millionaire offers some good ideas on helping to reduce the discipline needed to attain financial independence and comfortable retirement. Automation of investments is a great way to consistently build wealth over a long period of time.

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