6 Questions to Test Your Wealth-Building Strategies: Review by Automatic Millionaire David Bach

If you want to test your own financial habits against the backdrop of recommended wealth creation strategies, the answers can help you start building wealth in your life. How is it possible that an ordinary couple with a regular income created extraordinary wealth by becoming multimillionaires and retiring at fifty?
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This is the premise of David Bach’s “Automatic Millionaire,” one of the 12 best-selling books in personal finance. The strategy he presents is not as far-fetched as the story looks.
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Instead of focusing on increasing income, increasing expenses and looking rich, if you switch to saving money, making smart investments, you can become very rich – and sooner than you might think. It’s easy to read, but people find it difficult to implement in an increasingly materialistic and credit-oriented culture.

As a regular at the Oprah Winfrey Show, David Bach is no stranger to the personal finance industry, at least in the US. But what sets it apart from many experts is the direct strategies it can make so that anyone can get rid of debt and create wealth in your life.

Here are six questions you can ask yourself to start your own wealth building strategies and end your life rich.

1. Do you want to be rich?

This is not a tricky question. But the real question is to ask yourself WHY you want to get rich.

When you clearly define your goals, you wake up hungry to accomplish it, and most likely you will do the work and make sacrifices to achieve them.

2. Do you pay yourself first?

This is the number one financial decision, but few of us do it, and of course we don’t automatically. If you make a dollar, the first person to pay is YOU. First of all, pay yourself, so save money for taxes, retirement accounts, savings, many of which are not taxed!

The rule is to pay yourself one hour of invested income – about 10-15% automatically for life. (On average, domestic workers actually earn only 10 minutes a day – about 2% – which is shocking and frightening.)

3. Do you know your Latte factor?

The average American and probably European spends about $ 10 a day on occasional purchases, such as buying lattes and pastries before, during and / or after work, perhaps a pack of sandwiches, salad and a drink at lunchtime. If that’s not the case, it’s a magazine or extra CD that takes the chocolate to the gas station.

That’s $ 10 a day is $ 3,600 a year (assuming you’ll have a latte ratio not only on weekdays but also on weekends). If you put it off instead, it will really get stronger – and it will impress you.

Expect it at about 8% annual growth over 35 years, it’s actually a staggering $ 1385,505 – over a million dollars – on coffee! Wait another five years and that would be an incredible $ 2,108,569.

The strategy here is to realize what your occasional latte purchases are, reduce them or knock them out and pay yourself instead.

4. Do you rent or own?

If you pay yourself first – this is the number one financial decision, then the number one investment decision – is to buy your own home. This is the main wealth creation strategy you can use. Homeowners are 40-50 times more expensive than renters.

The secondary strategy is to pay off the mortgage as early as possible by overpaying and thus saving huge amounts on interest payments. But the third part of this is that once you pay about half, use your equity to buy another property of the same value and rent.

For a 15-year fixed-rate mortgage, interest rates are as low as they can always be, and easier than ever, to benefit and create wealth in your life. In fact, using a biennial payment plan can save more than six figures in 15 years!

5. Do you have debts?

If you are going to truly work to make money, you should make sure you have a plan to keep them! The only economy you can control is your personal economy, so reduce your debt by repaying it from the beginning and little by little. It’s easier and less stressful than trying to repay large lump sums.

6. Are you coming back

When your personal finances are stretched, it seems very difficult to consider any level of tithing. But it is a healthy habit and pays you a lot. This is another kind of wealth. When you experience happiness and satisfaction on a deeper level, you are much more open to opportunities that you would otherwise never notice.