David Bach The Automatic Millionaire

B W - Saturday, October 6, 2007, 5:03PM ET  Report Abuse

• Overall: 4/5

I like the concept of pay myself first. I also like the one about letting time and placement of my investments make it double over and over and over. I go with two of the largest Mutual fund companies, and so far get over 28% on all of them right now year to date. I did not know you could set up a 401K on your own. Thank you David, that was a great Pearl of Wisdom. I will max my Roth IRA with about 115K in it every year. 401K I had at 30% as long as I could stand it, dropped down to 10% for awhile during child support and alimony and loss of military retirement that I held her at 36.98% for the rest of my life. Had I known I did not need a company with 401K offered, I probably would have had it set up the day after my divorce became final. My Priorities are: Pay credit card in full every time. Pay Principal reductions and minimize interest payments, which I can and do use for quality of life and home improvements, and non retirement investments. If the non retirement investments are doing well, I can always take from them to feed the Roth in full. Roth has been my vehicle of choice because what I take out of it is tax payed already when I retire from my second career. The 401K is new for me but allows me to shield a lot of my income from taxes. My company matching is pretty good, but not that central to my plan. The main thing is having my 401K in the right accounts and diversified fairly well, and also max it out as much as I can each year. Roth I have had for about 15 years, and stopped feeding it when I realized I was divorcing. I check my fund placement from time to time, and may or may not end up moving it from one account to a better performer every 2 to 6 years. The retirement accounts do not cause any problems, but even shifting a non retirement account to another without taking the money, gets the IRS's panties in a bunch. Penalties fall under wasted income, like unavoidable interest payments. The max you can owe the IRS you is paying in 1K above what was automatically deducted from all of your incomes. You can owe more than that for one year, but that is to give you time to shift to quarterly payments of projected tax debt you may owe to the IRS at the end of the year. I try to owe them a check for $990 each year, through exemptions I claim and also the amount of taxes I pay when I claim my money from an investment in a non retirement account. ie... 20K per year for High School for my son living in Japan taken from a court liquidated fund during the divorce. Keep easily findable financial records for your accounts and investments. If the IRS should come after Penalties and Interest for something you invested 20 years ago, be ready.... I saved over 4K in penalties and interest for just such an event this year. Proof taken and applied. I strongly favor the Everything you Buy USAGE Tax over the IRS system. It will be interesting if they ever implement it, and Life should be much better for all Americans as a result. Thank you for reading my comments. I wish you well on your investments. Brad

allenEv - Monday, October 1, 2007, 3:32PM ET  Report Abuse

• Overall: 1/5

It is a bad idea to lock so much of your cash flow into a retirement account. You will end up with bloated credit cards debt and not be able to access the IRA money.

Loo - Sunday, September 30, 2007, 9:55PM ET  Report Abuse

• Overall: 5/5

A simple idea, but not applicable to place I live. However, we hav ecompulsory saving per month, of around 30% of pay. Should be good enough, I think.

Stephen M - Thursday, September 27, 2007, 8:18AM ET  Report Abuse

• Overall: 5/5

David Bach delivers a message that every worker should heed.

vilgelm - Tuesday, September 25, 2007, 3:34PM ET  Report Abuse

• Overall: 5/5

Very good advice