How to retire a millionaire without doing much of anything

I just finished reading The Automatic Millionaire by David Bach. It’s a good book. It promises to turn just about anyone into a millionaire in one easy step–if you do it right, you can make one phone call, do nothing else, and retire a millionaire.

I recommend the book.He’s saying essentially the same thing a lot of popular financial advisors right now are saying, but the spin is a bit different. You have to market something.

Essentially, what he says to do is to open up some kind of an IRA, be it a 401(K), 403(B), or Roth, and set up automatic deductions every month that happen before you get a chance to spend any of your paycheck.

If you were to start doing such a thing at age 16, it’s entirely possible to pile up more than $13 million by retirement age. Of course the later you start, the less you’ll pile up, but $1 million is within reach for most Americans.

It’s a boring way to make money but it works.

Of course he also advocates paying off all debts early, which makes it possible to save even more.

I believe that over the next decade, the rich are going to get richer and the poor are going to get poorer, maybe much poorer. People will blame the politicians, but I don’t know that politicans have much control over this situation. Here’s what I expect will happen.

A lot of people are getting non-traditional mortgages without necessarily understanding all of the terms. In many instances, at the end of five years, they will owe the entire cost of the house. Large numbers of people aren’t going to be able to afford to do this, and they aren’t going to be able to afford to refinance because they won’t be able to afford the higher monthly payments.

The homeowners will be forced to sell. And since so many of these mortgages are being handed out now, at some point there will be more sellers than buyers. That will be the end of today’s real estate boom. Thosee who have cash will buy these houses at depressed prices and rent them out to former homeowners who can no longer afford to buy a home.

When the real estate market recovers, which it will, the people who bought lots of real estate at bargain basement prices will be extraordinarily wealthy–both from the rising value of the property they bought, and the money they made by renting it out.

I know what I need to be doing. I’m ahead of the game on paying off my mortgage. I need to get better about dumping money into a Roth IRA. And right about the time I make the last payment on the house, I expect I’ll get my yearly bill from the county, and for the first time ever, the number on it will be lower than it was the year before. That’ll be when I know it’s time to go for a walk and look for For Sale signs.

This is a good time to be buying financial books, using their advice to get your finances in order, and wait for up-and-coming troubled times. Because for the people who get out of debt now, the next depression (let’s not mince words here–when the economy is in the toilet, it’s called a depression) will be an opportunity.

2 thoughts on “How to retire a millionaire without doing much of anything

  • October 14, 2005 at 7:48 pm
    Permalink

    The CEO over at Delphi has a great deal to say on the future of this country. Listen because it’s the future for all workers that aren’t indispensable.
    When one reads, you should include histories.
    Millions of people lost farms and homes in the ’30’s because money was so scarce they couldn’t pay their taxes.
    In Germany a wheelbarrow full of marks couldn’t buy a loaf of bread.
    Put your faith in G_d and when it all comes unraveled, you will have a place to stay.

    "There are three kinds of men. The one that
    learns by reading. The few who learn by
    observation. The rest of them have to pee
    on the electric fence for themselves."
    WILL ROGERS

    The Camel and the Needle’s Eye
    http://www.debunker.com/texts/needleye.html

    • October 16, 2005 at 7:44 pm
      Permalink

      Well, there’s no question that the government isn’t going to take care of you–most GenXers, when asked if there’s a greater probability of the existance of UFOs or of them getting Social Security benefits pick UFOs–and the first thing any company cuts is retirement benefits, not the CEO’s six- or seven-figure salary. Workers are treated as mercenaries anymore, whether we like it or not.

      It’s possible to play the rules to your benefit too. And increasingly, it’s necessary. I need to go over the specifics again, but I believe that if you incorporate, your corporation can dump up to $40,000 (yeah, 40 grand) a year into a profit-sharing IRA. That’s a nice way to build a nest egg. The hard part is figuring out how to make enough for that rule to be of advantage to yourself.

      But that’s a moot point for most Americans, since most Americans have let the TV program them to spend every cent they make and then some.

      In 30 years, I may very well be the only guy on my street who gets to retire.

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