What I'm reading right now - Automatic Millionaire (part 2)

Today, I'm continuing with more excerpts from The Automatic Millionaire.

On page 33-35, I really liked what David says in the following excerpts:

Are You Earning More...And Saving Less?

Over the years, I've watched people I love increase their earnings but often not their freedom. I've got one friend who's worked extremely hard and seen his income go from $50,000 a year to more than $500,000. But while his lifestyle has increased along with his income, his savings haven't...He's succeeding at a level that most Americans can only dream about, but in reality he's caught up in the same rat race as a person who earns a fraction of his salary.

What about you? Chances are that you're earning more than you were ten years ago. But are you saving more? Are you getting ahead or running harder just to stay even. Is your income helping you become more free or less free?

Why Most Americans Have So Little Saved

Aside from the equity they may have in their homes, most Americans really don't have any savings to speak of. On average, most of us have less than three months' worth of expenses in the bank.

Why so little? The answer is simple...most of us waste a lot of what we earn on "small things." I put quotation marks around "small things" because the phrase is misleading. 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.

I Owe, I Owe...It's Off To Work I Go

It doesn't have to be this way. Most of us don't really think about how we spend our money - and if we do, we often focus solely on the big-ticket items while ignoring the small daily expenses that drain away our cash. We don't think about how many hours we had to work to earn the money that we so casually spend on this or that "small thing." Even worse, we don't realize how much wealth we might have if, instead of wasting our income, we invested just a little of it.

What I'm reading right now - Automatic Millionaire (part 1)

The first time I read this book was about 3-4 years ago, and I was blown away by the simplicity of the Automatic Millionaire system. I totally believe in almost everything David talks about, but before you implement these automatic strategies, you really need to (at the very least) be completely debt free.

Over the next several blog posts, I'll highlight some specific strategies from the book that are definite "must-dos" for a strong financial future.

On page 32-33, I really liked what David says in the following excerpts:

"...The trick to getting ahead financially, he said, is watching the small stuff - little spending habits you have that you'd probably be better without.

Most people have a hard time believing this. Why? Because they are taught the opposite. We live in a society where it's become almost patriotic to spend every penny of our paychecks. In fact, we often spend our pay increases even before we get them. Merchandisers know this; they run ads every November and December specifically designed to get people to spend their year-end bonuses. Even the government promotes this idea..."
{Larry's comment: hmmm, sounds familiar - ever heard of a stimulus package!}

"Unfortunately, there's a problem with this. If you are living paycheck to paycheck, spending everything you make, what you're 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...

Notice how it always comes back to GO TO WORK. This is the endless treadmill that most people are on. Some people call it the 'rat race.' It's a race in which hardworking people bust their butts, working forty to fifty hours a week or more - and wind up with almost nothing to show for it because at the end of the month their paycheck is already spent.

It's an unfair, vicious cycle, and you don't want to fall into it. If you are already there, you want to get out...fast. When you spend everything you make (or, even 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."