Millionaire
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In the first four chapters of The Automatic Millionaire, David Bach recounts his experience with the McIntyres, the first couple to become automatic millionaires. While most people think that becoming a millionaire requires strenuous planning, a six figure income, or an inheritance, Bach shows how easily an average middleclass person can amass wealth. Bach goes onto explain how anyone can gain financial independence and accumulate millions of dollars by setting aside small amounts of money daily.
Chapter One begins with Jim and Sue McIntyre, a middle class hardworking American couple, setting up a meeting with the author to go over their financial situation. The couple was excited about the thought of retiring in their mid 50s while most people in the United States are struggling to retire at the age of 65. David Bach seemed intrigued by the McIntyres because he could not figure out how an average American couple, like the McIntyres, could afford to retire so early. During their meeting, David Bach reviewed the McIntyres tax returns to reveal that the Jim and Sue earned a combined $53,946 the previous year. “Not bad. Not rich, to be sure but a descent income” (Bach 14). Upon further review of the McIntyres financial records, Bach discovered that they have no debts. In addition to having no debts, the McIntyres had a net worth approaching $2 million including 2 homes, a boat, 3 cars, retirement funds, bonds, and cash savings. Bach was absolutely baffled at how an average working middleclass couple could have amounted such a lofty net worth with an middleclass income. Bach asked the McIntyres how they were able to amass their lofty net worth while most people their age are still living paycheck to paycheck. The McIntyres responded that they inherited their parents knowledge and took financial advice that their parents had give to them when they were in their twenties. Sue stated that she and Jim started out struggling financially. Until finally, they realized that “we could work all our lives for money and live month to month, paycheck to paycheck, like most people. Or we could make our money work for us and really enjoy our lives.” (Bach 19) The couple then decided to do the following:
* “We decided to pay ourselves first”(Bach 19) By this the couple decided to take a certain percentage out of their own paychecks that would go directly towards their investments.
* “We watched our Latte Factor” (Bach 21) The McIntyres found ways to eliminate unnecessary expenses. For example, Jim discovered how to reduce his mortgage by seven years by making half a monthly mortgage payment every 2 weeks. This increased his yearly payments from 12 to 13 and helped him save thousands of dollars on the interest on his mortgage.
* “We decided to become automatic millionaires” (Bach 26) In order to protect themselves from temptation, the McIntyres made all of their payment automatic. They did not have to write checks, pay bills, or set aside money for savings every month. They created an automatic system that they could not work out their selves out of it.
In doing so they where able to achieve what most people are still hoping for, becoming automatic millionaires. Bach believes that what the McIntyres achieved could be achieved by anyone if they are willing to take the steps to do so.
In Chapters 2, 3, and 4, David Bach goes into further detail about the 3 steps the McIntyres used to become automatic millionaires. Bach also gives several examples of how to manage money in order to become an automatic millionaire. Chapter Two discusses and focuses on a principle called “the Latte Factor”. The Latte Factor is based on the idea that