The Automatic Millionaire: Book Review

About 7 years ago I read David Bach’s Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich. Recently I picked it up again, and was glad I did. I’d have to say that this book has influenced me dramatically in the area of managing my personal finances. I know the book is a bit old (it was first published in 2004), but most of the material presented is timeless, as the techniques and strategies are time tested and proven to work.

It should be noted that David Bach is one of the foremost authorities on personal finance today. Having written 12 best sellers, with 2 of them reaching the top spot on the New York Times best seller list, he is called upon regularly by Oprah, CNN, and Fox Business Channel for his advice and financial opinions.

Recently, he has joined forces with the Fortune 500 Company, Equifax, to form Debt Wise, a debt elimination program that includes credit monitoring, identity theft protection, apps for your smart phone, and more.

With so much "street cred," I recommend this book, but I also recommend just about anything that David Bach has to offer in this vital area of personal finance.

Introduction

In the introduction, David gives his motivation for writing the book, as well as some motivation for you to read it. He shares that the "one-step" in his one-step plan is to "MAKE YOUR FINANCIAL PLAN AUTOMATIC!" That’s right, only one step! The rest of the book contains the "action steps" to make this happen. So, while there are actually more steps to his plan, his title and approach provide emphasis (and marketing savvy) for getting the main point across, which is really pretty simple.

Summary

The book is divided into eight chapters. Each chapter is 20 to 30 pages and the entire book is about 230 pages. Each chapter includes a story or two from Bach’s seminars or media appearances. The book is light reading and can probably be finished in a four hour plane ride, or a week of leisurely reading at home.

Chapter 1. Meeting the Automatic Millionaire

This chapter relates how an average American couple, the McIntyres, created an automatic plan to retire early with almost two million dollars. In their highest income years, the couple earned a combined income of $55,000 but they followed a few very simple steps so they could retire at 55 with lots of money. The rest of the book explains some of the things Bach learned when he met this couple, and how you and I can apply them.

Chapter 2. The Latte Factor: Becoming an Automatic Millionaire on Just a Few Dollars a Day

A few dollars a day (of lattes or other expenses) can add up to a lot of money. People often joke about how foolish the latte factor is, but Bach defends himself by explaining the problem most people have is spending. Bach suggests you record your expenses to stay on track. Just look at this quick example of how those little latte purchases can add up over time if you purchase one a day, five days a week:

• $3.50 a day

• $105.00 a month

• $1250.00 a year

• $12,600 in ten years

Chapter 3. Learn to Pay Yourself First

You work way to hard for you dollars to be giving them all to other people and end up with nothing to show for that work. Paying yourself first involves setting aside money every month or paycheck for yourself to invest.

Chapter 4. Now Make it Automatic

Lack of discipline and limited willpower don't have to get in the way of saving your money success because you can automate tasks like saving, investing. And this can be done regardless of your current level of income.

Chapter 5. Automate for a Rainy Day

Emergencies happen and one should be prepared with anywhere from 3 months to as much as 24 months depending on the specific situation. Since this is a vital piece of our over all personal financial strategy, why not put this on auto-pilot as well?

Chapter 6. Automatic Debt-Free Homeownership

Owning a home is better than renting, and there are ways to own a home even with a very low-down payment. This chapter may be a little dated, but the strategies of home ownership and paying it down faster are timeless.

Chapter 7. The Automatic Debt-Free Lifestyle

Credit card debt can be tackled with consolidation, planned repayment, and as part of a plan to save for the future. Imagine how much you could save if you could live without debt. Imagine what life would be like without the stress of outstanding debt!

Chapter 8. Make a Difference with Automatic Tithing

Giving is rewarding and one should consider making planned and automatic gifts.

The Automatic Millionaire is worth every word, and every minute of time you spend reading them. If you haven't done so, get a copy and take this time tested advice. You and your bank account will be glad you did! :-)

Blessings,

Jerry Spangler