An Interesting Read...
I went to the library to pick up an investment book and saw this one as well. IT sounded familiar (from discussions here probably) and so I picked it up. I am really not a big fan of PF advice books, frankly I find them a little boring. I Was raised with these principles, they are drilled into my head, so I have really balked at reading them. Even though I love the subject, just too boring, and a little too much, "yeah? & this isn't obvious to everyone???" LOL.
But this book was a little different because it was really short and sweet! I started skimming it last night, to see if I should even bother, and ended up reading most of it in an hour. I skimmed a lot that did not apply to me in the least (paying off debt). & stuff like that - skimmed through the super obvious stuff, but read a good chunk of the book word for word in an hour. I was pretty surprised. So I think I will put this on one of my top recommendation book for friends. IT is easy to read and I think that is important when trying to spread this knowledge to other people.
But I had quite a few thoughts on it - had to share.
The Automatic Millionaire is not about budgets, making more money, anything like that. IT is a simple, "get rich quick fix" I guess. The principles I can agree with but for me it is just 1 piece of the puzzle. But looking at most of the people I know deep in debt, not doing well financially, I think this book could change their life dramatically. So for that I could give it 5 stars.
It pretty much describes dh and I's philosophy when we made a lot of money. Pay yourself first. Or taking it another step - save your raises. I have said quite a few times here we both made about $10k in school and both made $30k right out. & we saved the difference. Sure we had more options, a hell of a lot more money in the bank, but 1 year out of school I did not see the need to triple our lifestyle. HEck maybe we both spent an extra $1k/year - that's a 10% raise - good as gold. & so we saved over 1/2 our paychecks until we got into a house and got married, then we saved closer to 1/2. As long as we saved dh's income, and we both got raises every year - our revenue and savings increased every year. I think this is on a big level what the Automatic millionaire is about. Don't spend all your money. Bank your raises. Sure we could have easily started living up to a six figure lifestyle, sure wouldn't get us far though!!!
Start early, pay yourself first, bank your raises, wala.
On a practical side. I don't know. I always found cutting the big expenses far more useful to our budget. Today it's like we have been saving our raises, we have lived so lean. My medical expenses are going up 40% per year. I am not sure how this helps me TODAY. I don't waste $5 here and there to save. BUT I have plenty of bigger expenses I can cut. Before we went down to 1 income the best way we saved money was not buying newer cars. But then we had tons more money for other fun things. So this book may be about small, little things, but it leaves out the point that cutting out bigger things can be a bigger impact.
The book also bugged me because there was not much talk of a rainy day. Save $3k/year for life and you'll be rich. Well, yeah great, but what if you get laid off for a couple of years???? On the flip side, I really feel more comfortable financially with a lot of cash - even "for when the aliens invade" or something - he says. HE said - if 5 years of cash in the bank makes you comfortable - so be it. The whole point of the book is that you are comfortable financially. Something to think about. I think there was not much talk of a rainy day because many people with no savings reading this book will be far more prepared following the advice. HE did talk of emergency funds too.
Debt-free home ownership. I have been defending my decision not to pay it down too fast or make that a priority - but his method of making 1 extra payment a year I can jive with. I don't see the point right now when we are in a worse financial situation and our retirement and cash needs care. But you bet the second dh gets a job and our retirement is fully funded, that I will be back to the extra payments a year. It's small beans. It just a matter of priority. IF he said make an extra payment every month I'd be more wary. But I totally jive with his philosophy.
Oh i so totally disagree you should buy a house on 100% financing. I think you need the discipline to save a down payment before you are ready for homeownership, personally. Maybe that advice flies when the market is good, but no so wise today...
Automatic Millionaires don't do consumer debt - for sure - check that one off.
I think the book drew me in because it was our financial philosophy overall. But all the same a little overly simplified. If you save 20-25% of your money you will be rich or super rich. I don't know, that's my goal, but I don't expect to be super rich. I just want money for a rainy day and to retire in my 60s is all. There are so many what-if factors in between. Frankly I Feel this is the minimum we should do to get there - to best prepared for all the un-knowns. But all the same anyone who knows me knows I am usually pretty over-prepared for anything. My motto is shoot high and hope for the best I guess.
I get surprised the more we go through life and people who appear to have much less make twice as much, I so totally agree with the philosophy that you don't have to deprive yourself of good and fun things in life to make these goals. We have a little bit more wealth to flash around perhaps, but that is where I find budgeting and buying used comes in, and trying to make more money, so we can have it all I guess. But by following the principles in this book we keep twice as much as so many people who make a lot more- that is the fascinating thing I realize more and more with age. & this book makes clear - I have seen the truth in it over and over. It's not what you make, but what you keep!!!
I am looking at our 20%-25% rate thinking, does this make us super rich??? I don't know, depends if it can be sustained I guess.
It impresses on me the fact to drop $2-$3k in the retirement fund - how beneficial it is - it doesn't have to be so all or nothing - still drilling that in my head. I want to make the full IRA contribution and feel like a failure if I Can't or something - I have to get over that - for sure.
The end of the book really annoyed me though - recommending 10% tithing to charity???? Seems a bit much. I agree with the underlying principle, the more you give, the happier you probably are and the more you receive in life (more important, non-material things, sure). But all the same, I am not sure you should commit to 10% of your income unless you have a lot to give. I have been watching too much Suze lately (take care of yourself before you give) and know too many people who give more than they have way to their own detriment. For us, we made a personal vow to give less money and give more of our time to charity when we went down to 1-income and had a lot less to give. I am a giving person and I know the importance, but giving 10% my cash to charity i don't really think is going to do me any good at this point. Plus frankly, I Think giving cash is the easy way out - I have always found it far more rewarding to give of my time, and maybe a little cash to boot. So yeah I kind of see what he is getting at, but overall not the best advice I feel. I am perfectly happy to give my time and maybe 1% of my income if I am feeling extra generous. Plus giving of my material goods cleanses us and helps others as well - but doesn't cost a dime all the same.
Anyway, overall I Think it is a great book. If you look at it as a "get rich quick" promise I think you may be disappointed in 30 years when you are not as rich as the book makes it out you will be. Especially if life happens along the way. But certainly some very good, simple, easy points to a strong financial foundation.
Oh yeah - and of course he is really into automatic transfers, savings, deposits. So you don't have to think about it!!!! Sure, it's good, but I think I like finances too much and am a little bit of a control freak. I worry what if my deposit didn't clear in time and I can't cancel an automatic transfer in time. But that's just me. I prefer to do it all myself. But I have the discipline - it isn't a biggie for me. IT's probably one of the biggest points of the book, but one that I just don't rally care to do I guess. But I can see how it can help others, indeed. When we have a little more cushion in the bank I think I Will set up some automatic stuff. I just don't want an overdraft if something is automatic and goes wrong!!!! But something I have been thinking of anyway. It would be nice to have direct deposit - would help - but I don't... I think I need an automatic retirement fund savings. Regular savings, not a prob, I diligently transfer the money every month no matter WHAT! But retirement - it is harder to let go - LOL. So I see the benefit. I need to set it up automatically just to do it... The best/easiest money ever saved was my 401k contributions - for sure!!!!
The Automatic Millionaire
An Interesting Read...