"The Automatic Millionaire" by David Bach

• The philosophy behind the automatic millionaire:
• You don’t have to make a lot of money to be rich
• You don’t need discipline
• You don’t need to be your own boss
• By using the latte factor, you can build a fortune on a few dollars a day
• The rich get rich (and stay rich) because they pay themselves first
• Homeowners get rich; renters get poor
• Above all, you need an “automatic system” so you can’t fail
• If your financial plan is not automatic, you will fail!
• Making your financial plan automatic is the one step that virtually guarantees that you won’t fail financially.
• Every time you earn a dollar, you should make sure to pay yourself first.
• Put aside a few dollars for yourself, THEN pay all your other bills.
• Pay off your mortgage as quickly as you can.
• Take your mortgage payment and instead of paying it in full once a month, you pay half every two weeks.
• No matter how big they are, you pay for your purchases with cash or you don’t buy. The only exception is buying a house, and you pay off the mortgage as quickly as you can.
• Ask anyone who got a raise last year if their savings increased. In almost every case, the answer will be no. Why? Because more often than not, the more we make, the more we spend.
• How much you earn has almost no bearing on whether or not you can and will build wealth.
• The trick to getting ahead financially is watching the small stuff -- little spending habits that you’d probably be better of without.
• We throw away too much of our hard-earned money on unnecessary “little” expenditures without realizing how much they can add up to.
• Becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan.
• Inspiration unused is merely entertainment.
• There’s a very simple reason why budgets don’t work in the real world. They aren’t fun.
• If you want to be rich, all you have to do is make a decision to do something that most people don’t do. And that’s to PAY YOURSELF FIRST.
• You need to set up a system that guarantees you’ll get paid -- a system in which you pay yourself first automatically.
• You should work at least one hour a day for yourself. This means you should pay yourself first for your future by putting a minimum of 10 percent of your gross income into what we call a pretax retirement account.
• Formula to decide how much to save:
• 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 percent of your gross income.
• Upper middle class: Pay yourself first 10 to 15 percent of your gross income.
• Rich: Pay yourself first 15 to 20 percent of your gross income.
• Rich enough to retire early: Pay yourself first at least 20 percent of your gross income.
• Nothing will help you achieve wealth until you decide to pay yourself first.
• The foundation of wealth building is pay yourself first.
• The secret to creating lasting financial change is to decide to pay yourself first and then make it automatic.
• You need to have a system that doesn’t depend on your following a budget or being disciplined.
• Pretax retirement plans are where all wealth starts.
• In a perfect world, the fastest way to become rich is to max out the (retirement) plan.
• The single most important investment decision you ever make may well be how much to automatically pay yourself first into your retirement account.
• An asset allocation or balanced fund does all the work for you, offering the right mix of cash, bonds, and stocks in one fund.
• Managing your money (i.e. investments) should be boring!
• Not earning interest on your emergency money is almost as bad as burying it in your backyard.
• What you want to do with your emergency money is put it in a money market account that pays reasonable interest.
• The rich get rich because they make their money work for them.
• You can’t get rich renting.
• The fact is, you aren’t really in the game of building wealth until you own some real estate.
• Take the normal 30-year mortgage you have, and instead of making the monthly payment the way you normally do, you split it down the middle and pay half every two weeks.
• One of the most important lessons in this book is that automatic millionaires don’t do debt.
• The only time borrowing makes sense is when you do it to buy something that can go up in value (like a home).