So, I picked up this book and started reading it last night. Some interesting thoughts to ponder in this book. I had read his book the Canadian version "Start Late Finish Rich" and really enjoyed it. The Automatic Millionaire book is the American version, I forgot to check before I picked it up however, still a good read and I found that the only part I skipped past was regarding the retirement funding which was ok as I had already picked up on that in the other book of his.
I found interesting on page 75 The "Pay Yourself First" Formula . He mentions how over the years he has received a number of e-mails asking him for a Pay Yourself First formula. People would ask him if 10% was enough, some people would say that they had heard that they should save 12% and wanted to also know about saving even more then that.
Here is David Bachs formula which he uses now and he mentions how everyones life is different, but this should give a benchmark to shoot for or plan around;
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.
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...."
Middle Class: Pay Yourself First 5 to 10% of your gross income.
Upper Middle Class: Pay Yourself First 10 to 15% of your gross income.
Rich: Pay Yourself First 15 to 20% of your gross income.
Rich Enough to Retire Early: Pay Yourself First at least 20% of your gross income.
Another part which I found interesting was on page 65.
It wasn't Always Like This. He mentions how the government didn't always grab a chunk of your paycheck before you even saw it. He says that up until 1943, people got their money when they earned it and weren't asked to pay their income tax until the next Spring. The gov't found that there was a problem with this system and that People coudn't be counted on budgeting enough money to be able to pay their taxes when the bill came due.
Basically I am reading that the gov't changed this system and made sure that they (gov't) got paid first Automatically out of Peoples paychecks.
Bach says that we need to do the same , "You need to set up a system that guarantees you'll get paid---a system in which you Pay Yourself First Automatically."
When I read Bachs book "Start Late Finish Rich" he had mentioned about a "Pretax Retirement Account" , dh and I had never heard of that before so we did some checking around and sure enough, like in America, Canadians have that option too, even our Boss had no knowledge of that at the time, his accountant found out all of the information so that we could get it set up.The only problem which I do have is that because we do not have direct debit for our pays, dh gets a check once a month to take to the bank to deposit into our retirement fund and sometimes our boss is a bit tardy so he might not get it for a couple of months thus we are losing some of that compound interest but all in all Since doing this,and we have been doing this for about 1 1/2 years now, it certainly does add up quickly and we are having fun watching our money grow  .
I will post more on his book later as there are other topics which I find interesting as well.
Happy Tuesday Everyone | 