Finally part two of the book review! I will continue reviewing:
The Automatic Millionaire, Expanded and Updated: A Powerful One-Step Plan to Live and Finish Rich
Is this book worth your time? Is it actionable? Will it really work?
The principles in this book are:
- The Latte Factor
- Pay yourself first
- Make it automatic
- Automatic Emergency Fund
- Automatic mortgage payments
- Automatic debt-free lifestyle
- Automatic tithing
So lets pick up where we left off. We now all now what the Latte Factor is and we all pay ourselves first automatically. If you don’t please read The Automatic Millionaire book review part one.
Part two is going to be a bit shorter because it all comes down to the same automation technique just for a different purpose. Setup some automatic transfers for when your money has come in. Dedicate a percentage to a each cause.
Automatic Emergency and Retirement Fund
Just like in the Total Money Make-over and the Barefoot Investor (which I will do the next book review on) you will automatically syphon money to these funds.
Just put aside a percentage of your income towards your Emergency Fund each month.
As for your retirement fund this all depends on what your current situation is and what country you live in. For entrepreneurs it’s a different setup than for employees. For employees it seems like it’s really beneficial to max out the total you can do with you job and a lot of US companies match your percentage. That means that when you put $ 100 in the employer will put another $ 100 in for you as well. Basically free money! And it’s all before taxes! This makes a huge difference!
There’s an example in the book that when you save $ 5.000 a year in your 401k that will only be $ 3.500 of your spendable income. And if your employer matches it you will have $ 10.000 a year for just $ 3.500. Using this method just paid for this book.
If you’re an entrepreneur you can still deposit money into a 401k like account before taxes but you have to figure it out yourself on how that works.
Automatic Mortgage payments
Do this every two weeks instead of every month. This will save you sooo much interest in the long run. A month is approximately 4.2 weeks so you will have one extra payment each year and almost 3 in two years. This is an underrated technique that is definitely worth doing!
More tips about this can be found in episode 3 of the Freedom in Two podcast with Amy “How to save $ 200.000 on your mortgage”
Automatic Debt-free Lifestyle
Yet again the same as the Total Money Make-over. Only buy things that you can pay off directly. Live like you would as if you’re living in the great depression and buy stuff with the money you actually have.
There are also some great insights on why you shouldn’t get credit cards. Obviously they have benefits as well but they don’t outweigh the costs you are paying long-term. Go read the book if you want more on this. I don’t have a credit card anymore so I don’t need to get convinced. Do miss it sometimes…
A tithe is a tenth. So the rule of thumb is to give 10% of your income to a cause you believe in. Every charity here in The Netherlands has the ability to automatically transfer it out of your bank account so this should be one of the easier steps.
Why is every book hammering on this? Because for some reason the act of selflessly giving has one of the biggest ROI’s. Why? For now I’ll summarize it with one word: Karma. Would love to read an in-depth book on why this happens.
I totally recommend you read this book when you are on your financial freedom journey. This book is very similar to others in the genre but it has some golden nuggets I have not seen in the other books.
This book has plenty of actionable steps to automate your financial life so that you can indeed become an automatic millionaire.
The downside of each and every one of these books is that its only specific for the US market. Like I said in part one someone should jump in that huge market gap and go for world domination. If this idea hasn’t been stolen by the time I’m ready to write a book of this magnitude I’ll write it! By the way feel free to use this idea and just put my name in the acknowledgement section and let me write the foreword. 😀
The thing I liked most about this book is that you setup your automatic payments once and benefit from it forever. Besides that I really loved the story of Jim and Sue McIntyre. They are a great example of how it should work.
If you don’t have enough time to read a whole book make sure you read the chapter Meeting the Automatic Millionaire.
Lets a go to a the balance! It’s a me a Mario!
Day 50 balance:
Expected expenses today:
€ 14,20 (dinner and breakfast)
Expected income today:
€ 37,05 – € 14,20 = € 22,85
Current balance personal account:
Current balance business account:
– IRS: € 46.534,16
– Business: € 22.005,03
– Personal: € 9.374,58
Balance day 50:
– € 77.851,44
Started reading this financial book:
The Barefoot Investor: The Only Money Guide You’ll Ever Need
Page 204 of 884