Notes & Quotes: The Automatic Millionaire by David Bach

The following are my favorites notes from David Bach's The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich.
  1. Every time you earn a dollar, you should make sure to pay yourself first.
  2. They decided to toss the budget and instead take 10 percent of their pay out of their paychecks and put it in a savings account before they ever saw it or had a chance to spend it on anything.
  3. You can't spend what you don't see.
  4. You pay for your purchases with cash or you don't buy.
  5. The problem is not how much we's how much we spend!
  6. How much you earn has almost no bearing on whether or not you can and will build wealth.
  7. If you are living paycheck to paycheck, spending everything you make, what you are really doing is running an unwinnable race. Here's what the race looks like: GO TO WORK...MAKE MONEY...SPEND MONEY...GO TO WORK...MAKE MONEY...SPEND MONEY...GO TO WORK...
  8. When you spend everything you make (or, worse, spend more than you make), you subject yourself to a life of stress, fear, uncertainty, debt, and even worse -- bankruptcy and the threat of future poverty.
  9. Is your income helping you become more or less free?
  10. The so-called small things on which we waste money every day can add up in a hurry to life-changing amounts that ultimately can cost us our freedom.
  11. I owe, I's off to work I go.
  12. Start doing what the rich do -- you can get your money to work for you, instead of your working for it. 
  13. The point is that whether you waste money on fancy coffee, bottled water, cigarettes, soft drinks, candy bars, fast food, or what it happens to be -- we all have a "Latte Factor." We all throw away too much of our hard-earned money on unnecessary "little" expenditures without realizing how much they can add up to. The sooner you figure out your Latte Factor -- that is, identify those unnecessary expenditures -- the sooner you start eliminating them. And the sooner you do that, the more extra money you'll be able to put aside. And the more money you can put aside, the larger the fortune you'll wind up amassing.
  14. Becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan.
  15. Inspiration unused is merely entertainment. To get new results, you need to take new actions.
  16. When it comes to money, you should control it. You should never let it control you.
  17. When you boil it down, there are basically six routes to wealth in this country. You can:
    1. Win it.
    2. Marry it.
    3. Inherit it.
    4. Sue for it.
    5. Budget for it. Or,
    6. Pay yourself first.
  18. You need to set up a system that guarantees you'll get paid -- a system in which you pay yourself first AUTOMATICALLY.
  19. Last week, I worked a total of [x] hours. I earn $[y] an hour (before taxes). Last week, I put aside $[z] for my retirement. So last week, I worked [a] hours for myself.
  20. According to the U.S. Department of Commerce, the average American saves well below 5 percent of what he or she earns. In other words, most of us work barely 22 minutes a day for ourselves.
  21. Instead of thinking just about percentages of income, think about hours of your life.
  22. The "Pay Yourself First" Formula:
    1. Dead Broke: Don't pay yourself first. Spend more than you make. Borrow money on credit cards and carry debt you can't pay off.
    2. Poor: Think about paying yourself first, but don't actually do it. Spend everything you make each month and save nothing. Keep telling yourself, "Someday..."
    3. Middle Class: Pay yourself first 5 to 10 percent of your gross income.
    4. Upper Middle Class: Pay yourself first 10 to 15 percent of your gross income.
    5. Rich: Pay yourself first 15 to 20 percent of your gross income.
    6. Rich Enough to Retire Early: Pay yourself first at least 20 percent of your gross income.
  23. The single most important investment decision you ever make may well be how much to automatically pay yourself first into your retirement account.
  24. Small business truly powers our economy; it's the engine that creates economic growth. Recognizing this, the government gives business owners the best tax breaks when it comes to retirement accounts.
  25. If I've learned one true secret to being an investor who does well in both good times and bad, it is this: MANAGING YOUR MONEY SHOULD BE BORING! And the fact is that boring works.
  26. Some people worry about change, while others prepare for it. 
  27. In order to be a real Automatic Millionaire, I believe you need a cash cushtion of at least three months' worth of expenses.
  28. You aren't really in the game of building wealth until you own some real estate.
  29. So you want to be a millionaire? Like I said before, there are only three things you really need to do:
    1. Decide to pay yourself first 10 percent of what you earn.
    2. Make it automatic.
    3. Buy a home and pay it off early.
  30. There are five concrete steps you should take to get out of credit card debt and stay out.
    1. Stop digging.
    2. Renegotiate the interest rate on your debt.
    3. Pay for the past; pay for the future.
    4. DOLP your bad debt out of existence. (Pay off the smallest balance first.)
    5. Make it automatic.
  31. "We make a living by what we earn -- we make a life by what we give." Winston Churchill
  32. Although you should give simply for the sake of giving, the reality is that abundance tends to flow back to those who give. The more you give, the more comes back to you. It is the flow of abundance that brings us more joy, more love, more wealth, and more meaning in our lives. Generally speaking, the more you give, the wealthier you feel. And it's not just a feeling. As strange as it may seem, the truth is that money often flows faster to those who give. Why? Because givers attract abundance into their lives rather than scarcity.
  33. If it's so easy to become an Automatic Millionaire, why don't more people do it? The answer is human nature: Most people simply don't do the things they know they should do.