David Bach – Automatic Millionaire

The Automatic Millionaire by David Bach is the current book that I am reading as per goal number 2 of my Goal Post for 2007. Lizzie’s son, David gave me it as well as its associated workbook for Christmas. We had seen David Bach on PBS one evening, and were very interested in his program. In particular, we like the ideas of becoming wealthy with what you currently make, without the use of a budget. The key to David’s program as the title suggests is to make all of your money transactions such as contributing to IRA or other retirement programs automatic. Pay your self first and do it automatically before you pay everyone else.

In the first chapter I learned how David’s system developed to include the beginnings of his “Latte Factor”, which basically is an idea that gets people to see how they can actually save money by watching the small things they spend money on in their daily lives.

Another key idea that David highlights is the use of Compound Interest to create your wealth. A chart on page 48 entitled the Time Value of Money illustrates the amount that a person would have at age 65 when they start saving at different times in their lives with a an average interest rate of 10% annually. If a 15year old saves $3000 for the first 5 years of his working life, at 65 he would have a nice little nest egg of $1,615,363.40. If this person starts saving at age 19, she and saves $3,000 for eight years, at 65 she will have $1,552,739.25. And in the last column, if a person at age 27 starts to save $3,000 per year, he or she will need to save $3000 for the next 27 years in order to have $1,324,777.67 at age 65. These figures really make me wish I had started saving so much sooner.

Click the above pic to buy the Automatic Millionaire.

I will continue to make posts about this book and others I am reading, and the progress I am making in my life due to the influence of this book and others.

Oh, one last note before I end this post, Lizzie bought tickets to the Learning Annex Real Estate and Wealth Expo in Philadelphia on April 21 and 22. She made the initial purchase the evening we saw David on PBS, by making a tax deductible contribution to PBS. She then received two tickets as a gift from PBS. Lizzie later bought two more tickets for her parents, who happen to be our business partners and also are interested in building wealth. Lizzie’s Pop has actually been wealthy at different periods in his life. As he says, its not making it that is hard, its keeping it that has always been a challenge to him. I will also be writing about the Expo before and after it occurs, so If you would like to follow along, subscribe to my Investing Feed.

Written by Pixelhead on January 27th, 2007 with 1 comment.
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