Happy New Year Everyone,
These are amazing times here at FinishRich Media as we officially launched The Great American Homeowner Challenge on New Year's Eve in Times Square! I was awed and inspired to usher in a new year by seeing our message on the ABC Super Sign. This, accompanied with the March 7 launch of my new book, The Automatic Millionaire Homeowner, will continue to make this an incredible year of helping people to live and finish rich! For more information about The Challenge click here for details.
  Above: The Challenge billboard and me in Times Square!
Three little words that can change your life.
"Pay yourself first." No exaggeration, no hype. I mention this in every single one of my books because it is that important. Many of you have read this before but have you implemented this principle into your life? What about the people you care about? Have they? If you or your loved ones want to be rich, all you have to do is make a decision to do something that most people don't do, PAY YOURSELF FIRST!
What most people do when they earn a dollar is pay everyone else first. They pay taxes, the landlord, the credit card company, the car loan, the telephone bill and on and on. They try and budget every week, month and year hoping that if they are careful, at some point they will reach the end of the month or year and have some money left over.
My friends, this is absolutely, positively financially backwards. And because of it over seventy percent of American's continue to live to paycheck to paycheck regardless of increasing incomes.
We make more and we spend more. At the end of the year we're still broke. Are you tired of this game?
What "Pay Yourself First" means.
Pay Yourself First means just what it says. When you earn a dollar, the first person you pay is you. When most people they earn a dollar, the first person they pay is Uncle Sam. They earn a dollar and before they even see it, they pay an average of 20 to 30 cents to federal income withholding taxes (often more). Depending on the state and city they live in, they may pay average of 5 cents more in state income tax. On top of that you have Social Security taxes, Medicaid, and unemployment. In the end, they wind up paying the government as much as 35 to 40 cents of their hard-earned dollars first. Now add in the bills and it seems everyone is getting paid but the person who earned the paycheck.
Don't Pay The Government First.
The government didn't always get paid first on your paycheck. Back in the early 1940's the government changed the tax laws to make it easier for you and I to pay our taxes. Up until then we actually got our hard earned pay checks and then we paid our taxes. There was a problem however with this system. People weren't budgeting and saving their money to pay taxes. They spent what they earned-and when it came time to pay taxes, they didn't have the money. The government got smart and created a system where they got paid "automatically" every time we got paid. And that system has now worked for the government for over sixty years. But how is it working for you?
My point here is not to have you break the law-but rather learn from the government. The government created a "fool proof" system to collect its money. They came up with a system to be "paid first" on every dollar you and I earn. It's a system that doesn't require a budget. It' doesn't require discipline. All it requires is automation. The government figured out how to get paid first automatically! That is what you need to do starting now.
The secret to paying yourself first-legally.
You have a right to legally avoid federal and state taxes on the money you earn. The key word is "legally". You can legally Pay Yourself First, instead of the government, simply by using what is called a pretax retirement account. There are many different types of these accounts, with names like 401(k) or 403(b) plans, IRA's and SEP IRA's. The one thing that makes all of these accounts, "pay yourself first accounts" is that the money you put in them is tax deductible.
Pay yourself first-one hour a day of your income.
The most common question I get asked, is David, how much should I save? How much should I Pay Myself First? The answer is simple. Your goal should be to save one hour a day of your income.
If starting this week you go into your benefits department at work and set up your 401(k) plan to withdraw a dollar amount equal to one hour a day of your income you will be in fantastic shape savings wise.
If you don't have a retirement account at work you can use, then go to a bank, brokerage firm or online bank or brokerage company this week and set up an automatic savings plan directly into a retirement account.
Did you pay yourself first in 2005?
So now let's be honest. Did you pay yourself first in 2005? For those of you who did, how much? Did you save an hour a day of your income? An hour a day of your income pretax comes out to be about 12.5 percent of your gross income. If you did this, congratulations, because you're in the top 10 percent of savers in America. If not then let's get started in 2006, and let's start now.
Also when calculating this, I'm not including in here "your company match" on your retirement account. If your company matches what you save in your retirement account that's fantastic, but I look at that as "icing on the cake" or "free money". You should still be making it a goal to save an hour of your income a day.
The first person who should get paid at work is you.
Bottom line, you deserve to be paid first - and you deserve to keep at least one hour a day of your income. Whatever you earn an hour, whether it's minimum wage or a hundred dollars an hour, the first person who should get paid is you. Rather then thinking I need to save more in 2006, think "I'm paying myself first." Doing it will change your life.
I wanted to share with you some very inspirational success stories that I've received lately.
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Last December, I purchased your book Smart Women Finish Rich. I realized how much money I wasted on little things: the vending machine trips during the day, needless shopping, and emotional splurges. Your book helped me recognize my Latte Factor and watch how I spend my money. It also helped me pull myself up out of credit card debt. I found your book so helpful, I told all my friends, even my supervisor now has a copy!
A couple weeks ago, I decided to check out your Web site. I read reviews on The Automatic Millionaire (the title had really caught my eye). You helped me so much, I didn’t think I could benefit from another book – surely they must all be the same ideas, right?
Well, I decided to order the book. I received it last night and read the whole thing. The Automatic Millionaire showed me how to make it easy – by doing it automatically!
Thank you so much for your financial advice. You are changing lives!
- Michelle W., New York, NY
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Dear Mr. Bach,
Thank you for showing the light at the end of a dark tunnel. Before reading your book, my wife and I were not saving any money. We would use credit cards all the time, and made the minimum payments each month. Since reading your book The Automatic Millionaire, we have paid off our credit card debt, increased my 401K contribution to 10%, opened an IRA account for my wife's retirement, and opened a money market account. I did all of this within 2 weeks of reading your book.
Thank you again for all of your financial wisdom. I feel we are on our way to being Automatic Millionaires.
Sincerely,
- Jeffrey M., Moreno Valley, CA
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Hello David,
A collegue at work gave me The Automatic Millionaire and I read it in 48 hours which is a miracle for someone like me who doesn't care about finacial issues (I think its too complicated). Your book was such an easy read. I was literally screaming and reading out lines to my spouse. I returned the copy I borrowed and ordered my own copy of it as well as a copy of Smart Women Finish Rich. I opened my RRSP account today and am on a mission to change my fortune. Although in my late 20's, I am glad I read your book now. I am on a mission to become a millionaire, so I hope to inform you in the future when I arrive.
I feel I have seen the light and I am so excited. Thank you for your books and your mission to make automatic millionaires.
Sincerely,
- Ada N., Toronto, ON, Canada
I want to clarify to all our community members that during the month of January and a few dates in February, The Millionaire Conference will be featuring an exclusive video presentation of me talking about my book, The Automatic Millionaire and sharing my philosophies on living and finishing rich. Please be aware that this is a video of me - I will *not* be at these events in person. If you are interested in attending one of these events to see my video, or to find out more about the dates and locations, you can visit their website www.themillionaireconference.com or call (800) 654-6606.
Please note that I do not endorse or recommend any of the products or services offered at The Millionaire Conference.
That said, if you DO want to see me live, I will kicking off a 14-city tour in March for The Great American Homeowner Challenge. Dates will be released soon and you can find out more about The Challenge by clicking here.
 We recently offered a holiday package that was so popular, I decided to offer it again! It's the all-inclusive FinishRich 2006 Package, now 65% off of the retail price. If you or someone you know is looking to take control of their finances this year, then this is the package that will help.
Click here for details and to purchase today.
Thanks for taking to time to read this newsletter. I, along with the entire FinishRich Team, wish you a happy and healthy 2006!
Your friend,
David Bach
Founder, FinishRich Media
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