David Bach The Automatic Millionaire

I'll never forget when I met my first Automatic Millionaire. I was in my mid-20s and was teaching an investment class at a local adult-education program. Jim McIntyre, a middle-aged manager for a utility company, was one of my students. He and I hadn't spoken much until one day he came up after class to ask if he could make an appointment with me to review his financial situation. He was planning to retire in the next month.

I was surprised. I looked him up and down and doubted he could be in a position to retire. From the few comments he had made in class, I knew he was in his 50s and had never earned much more than $40,000 a year and didn't believe in budgets. He considered himself "ultraconservative," so I figured he couldn't have made a fortune in the stock market.

Jim and his wife came into my office a few days later. They looked exactly like what they were: Hardworking, average Americans. They were excited, even bubbly, as they talked about their retirement plans. Usually people came to me to find out if they could retire. This couple seemed sure they could afford it.

I looked over their tax returns and financial statements. Their combined earnings for the previous year were $53,946. They had no outstanding debts. They owned two homes. The one they lived in was valued at $450,000. A rental property, which was providing them with $26,000 in rent annually, was worth $350,000. Jim's 401(k) balance was $610,000. Sue had two retirement accounts with $72,000. They had $62,500 in the bank, $160,000 in municipal bonds, plus personal property -- three cars and a boat, all paid for. And, Jim's job would provide him with a small pension. Their net worth was approaching $2 million!

I'm not one for getting wide-eyed about people's wealth, but the McIntyres impressed me. How could they have possibly amassed such wealth at such a relatively young age? I was confused and embarrassed. Here I was a financial advisor and I was often struggling myself. Yet here were the McIntyres, who probably in their best year made half what I was making, and they were millionaires while I was falling further and further into debt.

Eager to know their secret I asked them if they inherited some of their money. Jim broke into a deep belly laugh. The only things they inherited from their parents were a few common-sense rules about handling money. I'll share their secrets with you.

Looks Can Be Deceiving

You don't have to look rich to be rich. There was nothing fancy about the McIntyres. Jim wore an 18-year-old Timex and they were happy to drive their Ford Taurus.

The same day they came to my office, I had a man come in who was driving a new Porsche, wearing a gold Rolex, living in a million dollar home with an $800,000 mortgage. He had less than $100,000 in savings and $75,000 in credit card debt. On the outside he looked rich and successful, but he was far from it.

The McIntyres weren't trying to impress anybody. They focused on putting their money to work for them, rather than having it on display.

Set Priorities

Early in their marriage their parents told them they had a choice: Work all their lives and live paycheck to paycheck like most people or learn to make their money work for them and really enjoy their lives.

How would they do that? Simple. Every time they earned a dollar, they would pay themselves first. Before any bill was paid, they socked away money for retirement, their home, investing, and more.

Sweat the Small Stuff

The McIntyres saw their friends splurge on decorating their apartments and eating out every day, but they didn't follow the crowd. They watched spending, even on the "small stuff."

They both stopped smoking a pack of cigarettes a day and the money saved helped fund their house down payment. They called it the "Cigarette Factor." Today, I call it the "Latte Factor."

Cash Only

Their parents taught them never to buy on credit -- no matter how big the purchase. The one exception: A home. Even then the McIntyres paid their mortgage every two weeks instead of monthly. In addition, they would regularly throw in extra money and wound up paying off their home in their 30s. With the freed up money they bought another house, following the same pay early system. If they did use a credit card, they paid the balance off the same month.

The McIntyres claim no special willpower or super discipline. But what they did have was the smarts to take temptation out of the picture. They arranged to have a portion of their pay automatically taken out of their paychecks. They created a literally foolproof, automatic system to achieve wealth.

Money was taken out of Jim's paycheck and invested in his retirement account. They handled their accelerated mortgage payments in a similar fashion. They used a systematic deduction to automatically invest a portion of both their incomes in mutual funds. They even automated their tithing. What they didn't see, they didn't miss.

If you think you need big bucks to do this, think again! The McIntyres started with amounts as low as $50 a pay period.

The McIntyres lived all the stuff I teach about in my classes and in my books. There are many success stories. Take another example, the West family. In two years they've automated themselves big time. They have $120 monthly going into a deferred compensation account. The husband contributes 7 percent to his 401(k). He and his wife both opened Roth IRAs. They are automatically putting money into a money market account to build up a three-month emergency fund. They have money going into a savings account automatically so there is a vacation fund and they won't have to touch a credit card since they now have no credit card debt.

The Wests, the McIntryres, and countless others have discovered the power of making it automatic -- doing what needs to get done without temptation, without having to spend time on it! Make even small changes and you'll get big results. Dropping cigarettes helped buy a house!

Take your first step today. Find out about direct deposit options at your company or with your bank. Then decide how much money you can set aside. Remember you can start small, even $50-$100. Choose a high interest savings or money market account and, if you can, an IRA or mutual fund. Have money automatically directed there monthly. Amassing wealth slowly and steadily can become your story, too.