The Automatic Millionaire by David Bach - Chapter 1

The Automatic Millionaire is subtitled, “A Powerful One-Step Plan to Live and Finish Rich”, is written by the David Bach who has recently been showcased on the Oprah Show’s “American Debt Diet“. He is the author of Give What You Didn\’t Get - Steps Toward a Karmic Psychology (1997), Smart Women Finish Rich (1999), Smart Couples Finish Rich (2001), 1001 Financial Words You Need to Know (2003), Start Late, Finish Rich (2005), and the latest The Automatic Millionaire Homeowner (2006). Start Young, Finish Rich is scheduled for release in 2008.

Chapter 1 of the book is titled, “Meeting the Automatic Millionaire”, and introduces the McIntyres, a couple who were attending one of the author’s classes. The author states that their story changed his life and can change the reader’s. I did not catch why these ‘millionaires’ were attending a class on ‘how to finish rich’ but that is besides the point.

This is the philosophy behind the author’s “Automatic Millionaire” approach:

• You don’t have to make a lot of money to be rich.
• You don’t need discipline.
• You don’t need to be “your own boss.” (Yes, you can still get rich being an employee.)
• By using what I call ‘The Latte Factor’ you can build a fortune on a few dollars a day.
• The rich get rich (and stay that way) because they pay themselves first.
• Homeowners get rich; renters get poor.
• Above all you need an “automatic system” so you can’t fail.

The chapter introduces a number of these ideas. First, the McIntyres are introduced as a couple of modest means who earn about $50,000 a year but who have a couple million invested for retirement. They had money automatically put into their individual and company sponsored retirement plans so that they never ‘missed’ the money.

They both gave up smoking and earmarked the money that had gone to buying cigarettes towards investment. Except for their home, they do not ‘do debt’. Their cars and boat are bought used and not financed. They turned their first home into a rental property when they purchased their new home. They also mention in passing having their bills automatically paid each month, be it the mortgage or their donations to their church.

The idea to pay yourself first is not new to Bach. Stanley and Danko talk about this in The Millionaire Next Door. Givens taught this in his More Wealth Without Risk and George Clason is perhaps the best known for teaching this in The Richest Man in Bablyon. Many people have written about the idea of paying yourself first, many more have read about it, but few have implemented it. The question will be, can Bach make this automatic. Can we become “Automatic Millionaires” without discipline? That is his claim. We will see.