This book is not worth the hype at all. There's nothing new in it except for the "Latte Factor" thing. There is a ton of shit about real estate being great, but hey - it was written in 2005 ;) We know better now that we saw what happened in late 2008 and after that.

The other thing is that just like a lot of the other finance/investment books the majority of the stuff is only applicable in the US.

Basic introduction to finance, paying off debt and investing. It is now over 20 years old and the principles discussed in this book remain good advice for the novice investor.

Although this is a departure from my usual reading, we are approaching an age where we really need to get our ducks in a row with our retirement savings. 

I have heard great things about Bach's book and thought I would spend a day reading this to make sure we were on the right path with our savings. 

This book tells the story of a couple, that David was providing financial consulting to, and their journey to becoming millionaires. David is completely astounded that they have saved this much because the couple seemed like the typical middle-class family who didn't seem like they had a lot to save.

Their story, he reflects, is the template we all need to achieve the same financial freedoms.

The idea of automating things is an easy one to implement, especially in this era of technology. His template to remove the "latte factor," pay off your vehicles, pay off your house, possibly do another property ownership, pay down debts, and then save are pretty straightforward.

The idea of being aggressive with retiring and how to make your savings work for you is where the meat of these lessons worked for me.

One of my tasks this week is to do some of these ideas for automation and we upped our retirement contributions since we have worked hard to put a safety net in place.

If you are trying to pay things down and looking for a strategy to begin, I think this is a great one for learning beginner skills to grow your savings and retire comfortably.

Although I hate to plug my own book, I do think there are some additional lessons you could discover in my book. Bonus, it's priced at just $4.99 on Kindle.

I encountered two new ideas in this book:

1. Make your (good) financial decisions automatic
2. If you have a mortgage, pay it down twice a month rather than once a month.

I wholeheartedly agree with #1.
Idea #2 is a fantastic idea if you "own" a home, which the author endorses; but even at the time of the book's publication, this was not great financial advice (it's not bad advice either, but the problem is David Bach insists that owning a home will put you on the road to riches, and renting will not).

Bach details all the wonderful benefits of home ownership (ending the list with, "It feels great to own a house."), while ignoring the many financial drawbacks of owning a home.

Instead of listing the pros and cons of owning a home versus renting, he lists all the pros of owning a home and all the cons of renting.

He mentions that, with a mortgage, in the end you will pay nearly twice the price of your house (oddly he seems oblivious to this as a problem, and already sold on the idea of owning a home, tries to mitigate the issue by guiding us to pay the mortgage biweekly so that we nibble away at the debt faster).

If you are buying a $100,000 house, you'll pay nearly $200,000 for it.

But don't worry, it's financially wise to do that because David Bach makes that clear.

Fundamental ideas in Automatic Millionaire:

1. Pay Yourself First. I first encountered this concept in the old classic The Richest Man in Babylon.

Regardless of whether you make $20k/year or $200k/year, if you don't pay yourself first, then you'll never be wealthy.

Every week, every month, we work, and the first people we pay our hard-earned money to are landlord, car dealership, government, utility company, etc.

You should add to that list yourself, and put yourself (or your future self) at the top of the list, which means no matter what, YOU get paid first.

Paying yourself first is about keeping some of that money you've worked for.

A good percentage is 10%-12%, but if you're not already doing it, then you can start with a smaller number...even 1%. Then get used to that before adding another percent.

One way to think about this is that, if you work 8 hours in a day, then work the first hour of the day for YOU.

2. Do a 401k or IRA, because you aren't taxed on the gains (I think... Bach didn't make this clear). If you make $30k/yr, then after taxes you really have $25k for the year from which you can save/invest. But with a 401k or IRA, you have $30k from which you can invest.

And say you put 5%-15% of earnings into an index mutual fund, which earns you 10% annual interest (that's a conservative figure and it's been roughly 10% per year for 70+ decades now),
then that 10%/year earnings does not get taxed (I'm pretty sure). Only the principle gets taxed (but even that is tax deferred or tax sheltered).

3. Make the things above like pay yourself first and 401k/IRA automatic, because those ideas work, but they rarely work when the human has to manually do the thing every month. This is David Bach's main idea (well, I hadn't seen it before).

4. The Latte Factor: when you buy a latte every day, that's bad. Doesn't mean you're a bad person, but keep in mind that every time you buy a latte, an angel gets assaulted.

We don't think about the latte, or the energy drink, the little daily treats for ourselves. But these things together add up to thousands of dollars at the end of the year (or after a couple years).

Maybe daily lattes aren't really as rewarding as $1825 at the end of the year which is what you'd have if you kicked the latte habit.

The 401k or IRA not only has the tax benefits but also automates saving.

The other thing is pay yourself first, which the Roth and such does that as well.

Another thing is the rainy day fund, which is a good idea. These are in most personal finance books.

Also he says that if you have credit card debt, you should halve the pay yourself first % and use the other half to whittle down the credit card balance because the amount of % of cash you're hemhorraging from the CC debt is like 20% loss which would be a great deal if you were to put the PYF money into an investment with a guaranteed interest like that.

So numbers wise, it's probably a priority to shrink the CC to zero before PYF, but he still suggests doing half and half (I think because of the principle of it or something).

The last advice, based on several flimsy reasons, is to buy a house, and I strongly disagree with him about that for several good reasons, and almost every reason David Bach gave for it is no longer valid.

Buying a house was wise financial advice 20+ years ago.

If you were going to buy a house, there is a good idea in the book that turns a 30 year mortgage into a 20 year mortgage--without paying any extra.

You just pay the mortgage twice a month instead of once a month.
Since in the first years you're paying mostly interest and not principle (on a mortgage),
this means every year you paid 13 months instead of 12 months (if you're mortgage is $1000/mo, then you pay $500 every fortnight). Magically this can turn a 30 year mortgage into 20 years paid off.


Pissing Away Money

One argument for buying a house is that you're not pissing money away on rent. That's obvious.

But what he does not mention is that instead you're pissing money away on the loan interest
(for a $500,000 house, you typically end up paying nearly a million dollars over the course of 30 years).

So that sort of cancels out his other argument--that houses appreciate.
So your house appreciated double in value over 30 years.

You still paid nearly double for it, so it's not as if you got a great deal.

He also says it's "investing in real estate."
But you can invest in real estate by owning stock in an REIT (real estate investment something)...and that way, you're not LIVING in your investment for 30 years.

Opportunity Cost

Let's say your house appreciates 100% over 30 years (btw, as investments go, that's not a great ROI over the course of 30 years).

What have you LOST over the course of those 30 years because you signed that agreement with the bank?

What might you have were you not burdened by the mortgage?

Freedom.
Mobility.
More money to invest in vehicles that can be compounded (30 years worth of house insurance payments; 30 years of annual property taxes; 30 years of not spending your time mowing the lawn, not repairing the lawn mower, not buying a new lawn mower, replacing the fridge, home repairs)
Better, more liquid investments-- that extra money you saved by not paying interest on a mortgage loan could be put to good use investing in an investment vehicle that doubles in value every ten years (not 30 years)... that's very conservative, all you'd need is 10%/year return, which is average.

Real estate is a good investment IF you're not living in the place.
If you're living in the house and your house becomes more valuable,
how easy it to cash in? How easy is it to sell the house and move to another one?
Nigga what?

It's a lot easier for me to open my Robinhood app, see that my XYZ stock has doubled in value over the last 4 years, click Sell, then click Transfer to Bank.

THAT's liquidity.

Population Growth

And even then, this "real estate is the best investment" idea was more certain 20+ years ago when people were having more children.

That's no longer true, because people are having fewer children.

Fewer children means fewer people looking to buy a house.
Fewer people looking to buy a house means fewer occupants.
Fewer occupants means more vacancies.
More vacancies means more empty houses for sale.
More empty houses for sale means housing prices fall down and go boom (or at least they don't appreciate like before).

Bach had two valid arguments for buying a home.

The first is that it's a forced savings plan...hence, automatic.

The second was not a financial argument.
The feeling of "owning" a home is warm and fuzzy.

Can't argue with that; it's probably true.
But then, I could also counter that with an argument for renting.
The feeling of freedom and mobility. Warm and fuzzy.


Compounding

Here's something else that David Bach, the author, should've realized...

Compound interest. He went on and on about the beauty of compound interest in the first part of the book. Good on him.

But doesn't the "investing in a house and living in it" mean that this is one unique investment where you CANNOT benefit from compounding?

An example:

If I put $100 into an index mutual fund and get 10% return per year,
then in the second year, I have $110 to invest.

Assuming the same 10% return, at the start of the 3rd year, I have $121 to invest.
4th year, I have $133 to invest.
5th year, I have $146 to invest.

Because of compounding my growing money/assets,
by year 40 I have $4114.

Yes, you read that right.

That's a 191 percent increase.

Show me a house that appreciated that much.

That's NOT from adding a new $100 every year...that's just starting from a seed of $100 and reinvesting the dividends.

What would that look like if a house appreciated 191%?
That would mean a house you bought at $100,000 becomes a $291,000 house.

The statement on page 80 sums up the author's philosophy, "-you need to have a system that doesn't depend on your following a budget or being disciplined."

This personal finance book is less about shaming you and your irresponsible money habits, and more about how to take an hour or two and straighten out your finances. The book revolves an example of one main family who exemplifies the topics of each chapter. (It's refreshing after reading a Dave Ramsey book with hundred's of letters from families). Bach isn't interested in why you are in a certain state, he just wants to talk to you like a college professor who's just pointing out the way the money you have is going to be ok to work with. He's not going to yell at you to get three jobs and watch your budget intently. I'm pretty sure that Bach knows that if his clients needed to get a second job, that they would just do it.

The book is designed thoughtfully, and each chapter gives you the homework to do list at the end. The first couple of chapters might seem like a sales pitch (including the obligatory opening page about how if your reading this in a book store you should buy it.) I would encourage you to keep reading the rest of the book to get some clear advice and instructions on how to get wealthy with your current income.

Its good book for beginners in this field but for me, a guy with a little more experience on this topic , its all already familiar things, he didnt teach me anything new. Best things from this book are copied from Scott Carsons book: richest man in Babylon.

Pay yourself first!
Donate some of the money you earn.
Latte effect-money you waste
Close the credit card debt
Own a home
Emergency fund + 6 months of life expenses in case you get fired.
Invest rest.

Borrowed this from the library as a little personal finance refresher as I enter into a five year period in which I will be getting married, probably buy a house, and (if COVID allows) take a trip or two. This book very much did not deliver. There was no guidance on insurance, no suggestion of how to balance saving goals of various terms, no allowance for the possibility that some readers might be trying to pay off student loans, no reference made to competing life goals, nothing.

It was just the super, ultra basics, and when paired with Bach's vaguely condescending attitude and infomercial salesman rhetoric it really wore on me by the end of the book. There is a good idea in here - the necessity of automating savings plans - but it all could easily have been covered in a single page article. Instead the book is stuffed absolutely chalk full with filler examples, repetition, and self-promotion. But I mean c'mon: are they really people out there over the age of 16 who don't realize that cutting out a Starbucks latte every day (or the equivalent) would add up over time in terms of $ saved? Or that owning your own house is better than not owning your own house? Did I really need pages-long description of the times he showed somebody the math and they were surprised?

Worse, some of the advice around homeownership is outright cringe-worthy, written in 2003 as it is. For example: the strong hint that making a 0% downpayment is a legit option because housing prices always go up and you don't want to miss out on your chance to get rich do you?! Tell that to those poor people in Detroit (and elsewhere). So David Bach can save me all those trademarked phrases, "the bet ya didn't know this" (bet they did), and "rich people think like this, but people who aren't serious about getting rich think this".

Also, a bit of unintentional humour, from which I derived schadenfreudal pleasure: his earliest example of an Automatic Millionaire (insert trademark symbol here) features a couple who is telling him about how they became wealthy by doing simple stuff, and he just can't believe it. Sounds like typical personal finance book stuff right? Well here's the kicker: the stuff they did was AFTER ATTENDING HIS SEMINAR. So his disbelief - surely contrived, but still - is for the value of his own methods.

David Bach is just a salesman. Go do what I should have done and read/re-read The Wealthy Barber instead.

2/5

Easy to implement recommendations. Everything makes sense and is clearly illustrated with examples and charts. May need a bit of an update since it's was not written almost two decades ago.

I would recommend this book to the complete novice, if you want to learn some very simple things that you can do to help you secure your retirement then read this book. If however, you want to really understanding investing, and finance this probably isn't the best book.

The book has a few good tips that work for everyone:

1: Pay yourself first (A common recommendation)
2: Pay your mortgage bi-weekly (could reduce it by 5-10 years)
3: Put away 10% of your money
4: Tithe
5: Always save some, even if you have debt, while debt reduction should be a priority, having a little cash will help to avoid future debt.

The book also some tips that I don't agree with:

1: Buy a home (This book was pre-bust) not all people benefit from home ownership and it's not something to be undertaken lightly. While there are *many* benefits, sometimes renting works for certain types of people and areas.

2: Pay your credit cards with the lowest amount left first... While this is great psychologically, I would argue that you should probably pay the one's with the largest interest rate first. What if your lowest card has a 0% rate and the one with the highest balance has a 20% rate? You'd be much better off chipping away at that 20% card :)

3: His assessments on when you will be a millionaire on $5 a day is based on 10% annual return, which by the way is better than the stock market (based on the S&p 500 avg for 50 years) long term average which happens to be arguably the best long term investment in terms of returns. How does he suggest you do this? Mutual funds... small problem being that somewhere in the 85%+ range of mutual funds _fail_ to even meet, much less beat the market. Even the ones that do often charge an annual fee as well as front/rear loads that can chip away at that rate. More importantly, just because the fund earns 10%, doesn't mean you will :) That's the money the fund earns *before* all of the costs. According to Warren Buffet, and Charlie Munger, and John Bogle (He's biased as he did create it...) the best investment for someone who doesn't want to learn, would be an S&p 500 index fund that simply tracks the market. These tend to have the lowest fees possible and essentially guarantee roughly the same rate of return that the overall market returns.

In summary, this is a good book for someone who wants an easy way to guarantee some retirement and move in a more fiscally responsible direction. This is not, however, in my opinion the bible on this subject, nor is it the final word. While I do like his automatic payments structure, and do agree with that logic, I think the investment strategies need a little more depth and experience.

The author took a short, bulleted list and turned it into a book. I think this is the best lesson of the whole book- that you can make a lot of money writing a book about anything, even the simplest list. The concepts are ones you hear everywhere, or could just as easily learn with a simple internet search on how to build wealth.

To save you time, here is the list of his advice that somehow spun out into 240 pages:
1. Save 10% of your income (or the first hour of pay per day) into a retirement account, make it automatic with payroll deduction.
2. Save enough to cover 3 months of expenses into a money market account or savings bonds. Make it automatic with payroll deduction of bank transfers.
3. Stop renting, buy a home. Automate your payments and pay extra, either through biweekly payments or adding 10% to monthly payments.
4. Get out of credit card debt. Automatically pay 50% of what you would have saved in #1 towards debt with payroll deduction or bank transfers.
5. Donate or tithe 10%, do it automatically with payroll deduction or bank transfers.

I did find the information on bonds interesting, I've never considered buying bonds before and didn't know about them. That's a whole 2 pages in the book though and he tells you to go to treasury.gov to learn more.

MY COMMENTS: David Bach is a very active writer and you-tuber. As a great communicator, he managed to distil very important financial principles in an easy-to-read book full of success stories, personal anecdotes as well as hard-core financial tables. We must recognise he was the inventor of the “Latte Factor”, a concept that became extremely popular and is still very helpful whenever we want to control our consumption habits. For these reasons, the book is definitely on my top 10 list of books on personal finance and, more importantly, one of the first to be read.

THE BOOK
The book by David Bach is one of the most popular books on personal finance of our time. It promises to help create an easier financial future for the reader: “becoming an Automatic Millionaire is not simply about accumulating wealth. It is also about relieving stress and worries about the future – about putting yourself in a place that enables you to enjoy life now as well as in the future”. The author is indeed great in simplifying major personal financial principles and tools (he defines it commonsense financial advice); he proudly shares a no-nonsense/”no-brainer” system to learn about money and reach financial freedom (become a millionaire). While most of the references are US based, the lessons and technics can be universally understood and applied in any country.

David states that we deserve to live the American Dream. Despite the economic challenges we may face, there is a secret “to become a millionaire – steadily and surely – over the course of our working life”. The author states we might even know the secret and the related technics, but most likely, we are not using them yet.

The Philosophy behind the Automatic Millionaire can be summarized in 7 points:

We don’t have to make a lot of money to be rich.
We don’t need discipline.
We don’t need to be our own boss (we can also be employees)
We must apply the Latte Factor.
We must pay ourselves first.
We need to be homeowners.
Above all, we need an automatic system.

The tactic of making our financial plan automatic is non-negotiable here. For David, it allows us to:

Focus on our life, without spending a lot of time thinking or worrying about how to manage our money
Make sure the system is implemented consistently, removing ourselves from the equation.

THE STORY 

To inspire us, the book presents the success story of a hardworking “average Joe” family: the MKcIntyres. Both husband and wife had a modest income, but they could build a Net Worth of 2 million dollars and secure an early retirement in their 50s. The only inheritance they received from their parents was knowledge! Their parents told them: either work all their lives for money and live paycheck to paycheck or learn to make money work for them.

The core system was to:

“pay yourselves first” before paying for all the bills (needs and wants). In this way, there is no need for a budget; budgets often cause endless arguments among couples. It is better to set a simple automatic transfer of an agreed percentage of our income into a separate saving account.
Save for retirement
Save for your home: pay for it as soon as possible.
Avoid wasting big money on small things (the Latte Factor)
Never buy on credit. If we don’t have the money, we don’t buy. The only exception is the house.
In case we still need to use credit cards, we must pay them off in the same month.

The main force behind these methods is making sure things are done automatically, “taking the decision out of our hands”, so that it is not necessary to exert discipline. The author points out this is method is even more necessary in a society where “advertising and entertainment – even the government – are constantly bombarding us with temptations to do exactly the opposite” of what makes financial sense. We live in a society where it’s become almost patriotic to spend every coin we have. Such an approach is even sold as the way to pump and fix our economy. Unfortunately, this approach brings us to an endless treadmill, often known as the rat race. When we spend everything we make, or even more, we are subject to a life of stress, fear, debt and the threat of future poverty.

The author puts it in this way: the automatic system protects us from ourselves. These rules help us enjoy life and somehow be free from worrying about money every day.

THE LATTE FACTOR

The author wants to make sure we also understand this point: “the problem is not how much we earn…it is how much we spend!” Most people focus on the ultimate secret for increasing the income as quickly as possible: “if only I could make more money, I would be rich”. Unfortunately, the more we make, the more we spend.  For the author, how much we earn has almost no bearing on whether we can and will build wealth.

The Latte Factor shows we already make enough money to become rich. We have to monitor if we spend for unnecessary wants; the bottom line is that saving small amounts of money can make us rich. And the sooner we start, the better. The author refers to the “latte” (coffee and milk) many people buy once or twice a day, which costs several dollars.

The book promotes “the latte factor challenge”: monitor our expenditures for one week to identify our Latte Factor. This is not a Budget. The author is strongly against family budgets: they are like diets, they don’t work; what is more, they cause too many conflicts among couples. The Latte Challenge is different: It will be done only for one week, focusing on identifying our Latte Factor. We will then extrapolate how much we spend in a month in a year. We will then be able to adjust our expenditures and improve our system accordingly:  pay ourselves first and make the saving/investments process automatic.

INVESTING

The next step is to analyze what would happen if we invest them after saving such amounts.  If we save $5 a day, we can secure a monthly investment of $150 (30 * $5). If we invest in financial products with 10% average annual returns, these would be the compounded results:

YEARStAMOUNTS
1 yeart$ 1,885
2 yearst$ 3,967
5 yearst$ 11,616
10 yearst$ 30,727
15 yearst$ 62,171
30 yearst$ 339,073
40 yearst$ 948,611

If we decide to save $10 a day instead of $5, we can secure a monthly investment of $300. Using the same financial products with 10% average annual returns, these would be the compounded results:

YEARStAMOUNTS
1 yeart$ 3,770
2 yearst$ 7,934
5 yearst$ 23,231
10 yearst$ 61,453
15 yearst$ 124,341
30 yearst$ 678,146
40 yearst$ 1,897,224

The tables demonstrate the necessity of letting compound interest work its magic. If we feed our investments, time will work on our side.

So far, we are merely talking about saving 5$, or 10$ a day. It is probably less than one hour’s worth of pay to be saved and invested for ourselves. The question is the following: are we willing to work one hour a day for ourselves, save it, invest it and secure our financial future? Our freedom?

The author makes the point to overcome any “Yeah, but”:

Yeah, but…I will never be able to earn a 10% return on my money in the current market.
Yeah, but…1 million won’t be worth much in 30 years.
Yeah, but…there is no way I can save small amounts and invest it.
Yeah, but…I am now wasting any money, and there is no way I can find my Latte Factor.

As such, It is necessary to overcome any excuse and resistance. Any additional results will be better than no results at all and will bring us closer to our financial freedom.

To further motivate us, he moves the discussion from the money to the time spent to work. He quotes this slogan: “Who we work for is waiting for us at home”. The reason most of us go to work is ourselves and our loved ones. Are we truly helping ourselves while working?

We should try to work 1 Hour a day for ourselves and save (put aside and invest) more than 10% a month of our gross income.

David describes the following profiles:

Dead Broke: spend more than he makes. Borrow money that can’t pay off.
Poor: spend everything and save nothing.
Middle Class: pay myself first 5 to 10% of my gross income
Upper Middle Class: may myself first 10-15% of my gross income
Rich: Pay myself 15-20% of my gross income
Rich enough to retire early: pay myself first more than 20% of my gross income

For David, the only way to secure a financial future is to buy it: decide not to be financially dependent on the government, employer, or family…and look for a stress-free life after retirement. To do that, we need to invest the money we saved for our future.

HOW TO INVEST

The author believes there is no better way to get rich/financially free than paying ourselves before paying taxes. In America – like in several other countries – it is possible to access PRE-TAX retirement/investments accounts. If that is not our case, any other investment account will be good enough.

Whether we earn 1 per cent or 10 per cent on such investment accounts largely depends on how we invest. First and foremost, it is mandatory to avoid gambling and invest wisely. The first rule is to diversify: don’t put all the eggs in one basket. The author uses a pyramid diagram to graphically guide us on how to allocate our money based on our current age.

The base of the pyramid rests on the safest investments (cash and bonds). The rest is structured based on the risk level. The mixture of risk categories depends on our age (time horizon).

The second advice is on where to specifically put our money. He promotes mutual funds or ETFs using balanced funds, asset allocation funds, or robot advisors. In the book, he lists several US-based companies. It is up to us to select the most appropriate service based in our country or region.

David also shares a secret that he learned: to be an investor that does well in both good times and bad times, managing our money should be boring! There will be nothing to brag about a simple diversified investment portfolio during cocktail parties, and that’s ok.

THE SLEEP WELL AT NIGHT FACTOR

David discusses the importance of creating an emergency fund to cover our monthly expenses for “x” months in case we lose our job, because “stuff happens”. It is up to use to choose the right “x” amount of money to make us feel save and sleep well: it could be 3 months to 12 months’ worth of expenses. This cushion can give us the freedom to make decisions about our life. This cushion must be easily accessible (easy to get the cash if needed) but also provide some interests. As such, it is ideal to select money market accounts or high yields deposits accounts.

BUY A HOME AND PAY IT OFF

The author promotes home ownership as long as we pay for that automatically so we can be debt-free before we are too old to enjoy it. He is adamant about it: we cannot get rich renting. Landlords get rich, renters stay poor. “Many people don’t realize that the same amount of money they spend on rent today could buy them a home tomorrow”.

Over the long term, owning a home is a great investment and also provides a great sense of security. For David “we are not in the game of building wealth until we own some real estate”.

Home ownership is a kind of forced savings program for one of the best investments around: home equity
Buying a home, we can borrow money and leverage our down payment
OPM: other people’s money. In order to reach financial freedom, it is mandatory to make money work for us. Well, we can also make other people’s money work for us. We can borrow at competitive interest rates OPM while our own money compounds at higher interest rates in our investment/retirement account.

As usual, it is important to be smart about how we do things, how we pay for a mortgage or a bond without wasting a fortune. A good rule of thumb reported in the book is that “most people can afford to spend 29 percent of their gross income on housing expenses – as much as 41% if they have no previous debt”.

Buying the house is the easiest part. The challenge is getting the right kind of mortgage/bond. The interest rates historically change over the years, and also based on the currency and the country we purchase the real estate. As such, the best advice is to shop around, and negotiate the best deal possible. David clarifies that long-term mortgages (30 years or more) are more profitable for the bank than for us. It is important to secure a short mortgage and pay it as fast as possible. For those who get payed every two weeks (a popular option in US), he suggests paying the mortgage with 2 installments per month (every 2 weeks). This method largely reduces the due interest payments and reduce the numbers of years necessary to fully repay it.

DEBT-FREE LIFESTYLE

The only time when it makes sense to borrow money, is when we buy somethings than increase in value (like a home); borrowing is not something to be done for consumption, to support lavish lifestyle.

In this regard David quotes a great way people in Texas describes someone who tries to look like more than he really is: “big hat, no cattle” guy. In other ways, someone who wants to look like a wealthy rancher but in fact has no cattle at all. The author recalls that, due to the consumeristic culture we live in, the average household in US holds $8,400 in credit card debt. This figure does not include car loans, mortgages or other debt. With cards that easily charge 18% to 29% of interests, that is a risky habit.

To become an Automatic Millionaire, we cannot run up credit card balances and pay only the minimum due. It is necessary to get rid of the credit cards, negotiate our rate, consolidate our debt on only one card. David does not suggest directing all our savings to debt reduction, but to keep around 50% of our savings for debt reduction, while keeping an automatic transfer of the remaining towards our retirement/investment account. He says that this is an emotional and financial strategy to secure long-term success.

THERE IS MORE TO LIFE THAN MONEY

For David wealth is not simply a matter of money; it is about a way of life. He quotes this phrase: “we make a living by what we earn – we make a life by what we give” (Winston Churchill). In the last part of his book David warmly introduces the tithing system: a proactive practice of giving back. It defines it as a spiritual principle common to many traditions and promote the action of sharing 10% of what we have received. While promotes it as a way to feel good, feel joy, he acknowledges that such act of abundance tends to flow back to those who give. The more we give, the more we receive back, because givers attract abundance into their lives rather than scarcity.

TAKE ACTION

David knows most people want to do well financially, but they never find the time or the energy to set themselves up for success. If we haven’t yet begun, now is the time to start with a simple and automatic system!

A very easy read. The target is definitely the financially unsavvy, not for those looking for the extra push... Although, I did learn a few tidbits, like SEP IRA for business owners and got me thinking about government bonds.

It fits with the title, but I can't count how many times he said "Now make it automatic". I guess that's another point that I haven't really done, which is set it and forget it (though that hasn't stopped me from saving in the past, I just haven't been consistent)