Automatic Millionaire By David Bach is a practical guide to one of the most obvious and intuitive ways to become a millionaire. Are you tired of all the get-rich-quick schemes peddled on the internet and would instead like a no nonsense approach to achieving financial independence? Then this book review is for you.
Who is this book for?
– Young working professionals looking to retire early
-Entrepreneurs with no clue as to what to do with their money. Especially useful if your income is not a steady stream.
Conventional wisdom says the only ways to become a millionaire is to
-work hard and long for approximately 25 years, 10 years if you have a high-paying job
-invent a revolutionary product or software that a lot of people cannot do without
-or just win the lottery. We all know what those odds are like.
But is there a more unconventional way to become a millionaire? David Bach thinks so. And what more, it’s one of the most simplest easiest to implement systems ever.
The Latte Factor:
An average cup of coffee costs $3.50, which over the year adds up to $1250!
He’s not asking you to stop buying coffee, but instead to “spend” an equal amount of money everyday into a savings account.
There are numerous examples in the book about normal people with very median income becoming millionaires by following this method. It’s not about how much money you make, it’s about what small percentage of it you can safely lock up in a well-paying savings account and forget about it.
What about in times of an emergency? All it takes is one life threatening disease to you or your spouse to see all your savings depleted. How do you account for this?
Well, keep your emergency aside from this “millionaire fund”! Seems obvious, but not everyone is comfortable saving such an amount of money from their income. In this consumerist age we are more likely to spend it on things we don’t need rather than save it for a rainy day. Carpe Diem and all that.
If experience tells us something, it is “It’s better to have it and not need it, than need it and not have it.” So be wise. Stop frivolous spending if you’re serious about becoming a millionaire.
But when will I enjoy life?
Easy. Have you those pictures of billionaires resting in their yatch? It looks like they hardly do any work at all. Well, after reaching a certain point in riches, making your money work for you earns more dividends than if you were to make it work for you at an earlier stage. Hope this makes sense.
Simply put, investing a million dollars will make you more richer than investing $10,000.
Investing in stocks is something you shouldn’t do unless you have built up a comfortable savings account to cushion your fall, which is only a matter of time for the novice.
The sooner you start the sooner you are poised to live a life of financial independence.
Stop renting and buy your own house.
Easier said than done, I know. But in the long run renting costs you more money. Ultimately, if you’re renting you end up paying your landlord the same amount of money as you would be paying a bank for the mortgage but without any of the freedom!
Seems like a no-brainer to me.
Choosing the right kind of mortgage and devising a strategy to pay it off as quickly as possible is key to becoming in the homeowner arena. For example, when interest rates are low it makes sense to use a fixed-rate mortgage and opt for a bi-weekly payment plan. Why? Well, read the book to find out. Nobody said becoming a millionaire was easy.
Pay off your debt as automatically as you are saving money.
First off, pay all your credit card debts in full every month. Paying the minimum is setting yourself up for much heartache down the line when you realise just how much interest you’ve ended up paying.
Credit card debt is one of the leading causes of stress in American Families.
First, pay off the cards with the highest interest rates and work your way down to other lower interest cards. Once you’re done, just break those cards. You don’t need to be spending money you don’t have on things you don’t need.
Of course, financial planners will beg you to get a credit card, if nothing to improve your credit score. But remember, it only helps to improve your credit score if you pay the whole amount every month. Even one missed payment can severely affect your credit score.
For more such insightful looks into how to become a millionaire, read the book now. It’s worth investing your time.