Here are the upcoming dates for my Automatic Millionaire tour! If you're in the area, please come by and say hi...
Come Visit Me in:
Costa Mesa, CA on July 9 - Click for free registration
Boston, MA on August 6 - Click for free registration
Dayton, OH on August 27 - Click for free registration
Los Angeles, CA on September 9 - Click for free registration
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Dear Friend,
I thought it would be fun to start this newsletter with an inspiring success story from Tomas A. This month's newsletter theme is freedom. And this success story is such a great example. Tomas realized he wasn't being aggressive enough asking for a raise, so he followed my steps laid out in Start Late Finish Rich and decided to "go for it"! While he didn't get the dollars he was asking for, he did get something of greater value - more freedom and more time. Read his story below to see what I mean. The secret to Tomas' story is he took action!
How to get a SMART raise...
I work for a huge corporation [that is] extremely tight with increasing salaries. But I refused to give in to my boss's answer that there was no room in the budget for giving me a proper raise. So I told him that I understood that, but asked him how much more he thought I should have, had there been room in the budget. And he told me that I really did deserve a 10% increase in salary. So I turned it around and said - OK, I'll just work 10% less for the same pay. He agreed and I now enjoy 5 more weeks of vacation per year, and I'm still making a great wage. Now my goal is actually to get down to 80% on the same salary and possibly get a second stream of income in all my spare time!
- Tomas A.
I love this success story from Tomas because it reminds us that having additional free time can often be more valuable than money.
For me, this is a very special time of reflection and thankfulness. It is also a time of joy and celebration that I love to share with my family and friends.
Yes, I know some of you who receive my newsletter are not from the United States, so you may be thinking July 4th is just another ordinary day. But what I am about to write is important to every person I have ever met. No matter where you are from, or who you are, we all strive to be free.
As I wrote in my most recent book, Start Late, Finish Rich, if I could give you only one gift, it would be the gift of freedom. The gift to be the person you were put here to be.
Why? Because you are a very special person. In fact, you're unique. There is no one like you on the planet. You were put here for a reason, and I promise you it wasn't to struggle with life.
What does any of this have to do with achieving financial security and independence? In a word, everything. If you are worried about money and your future, it's more than likely you're not living as free a life as you want. And if you're not living as free a life as you want, how can you be living the life you were put here to live?
Here are five useful tips that will help you get back on the track to gaining financial freedom and living as free a life as you would like:
1) Learn to say "No."
One reason so many Americans are drowning in debt is that credit is so easy to get. With billions of dollars in credit lines being offered to us through the mail, at the mall, and by other means, the first thing you need to do is practice saying "No" to every credit offer that comes your way:
- NO to new credit cards
- NO to offers to transfer your balance
- NO to department store credit cards that offer one-time discounts
- NO to financing a big-ticket purchase like a big-screen TV or appliance, even if it comes with "no payments until 2010"
- NO! Repeat after me and keep saying it.
2) Figure out how much you owe.
Before you can begin paying off your credit card debt, you need to know exactly how much credit card debt you're carrying.
First, fill in the blanks below:
I have __________ credit cards in my name.
My spouse/partner has __________ credit cards in his/her name.
My children or other dependents have __________ credit cards in their names.
The combined outstanding balance owed on all these credit cards is $__________.
The average interest rate we're paying on these balances is __________%.
The average amount we pay each month on all these cards is $__________.
Now that you know how much you owe, follow the link below to find out:
What will it take to pay off my credit card debt?
Were you shocked by how long you could take to pay off your credit cards, assuming you never use them again? Most people are. Credit card debt creeps up on you; that's what makes it so dangerous. But now that you're aware of the dangers, you can set a plan to be credit card smart and never be surprised again. The ones who will be surprised are the credit card companies...when you pay off your debt faster than expected!
3) Re-negotiate your interest rates.
Credit card interest rates have a huge impact on how much you have to pay and how long you're in debt. There are three steps to lowering your credit card interest rates:
First, find out how much interest you're paying now. The fine print on your credit card statement should tell you your APR, or Annualized Percentage Rate. That's how much you're paying per year on your debt. You can also call your credit card company and ask them for your annual rate, NOT the "rate above prime."
Next, ask for a lower rate. This is surprisingly effective. After all, you have leverage - credit card companies make money off you, so they want to keep your business. If your current interest rate is too high, tell the credit card company you'd like them to lower it. If they say no, tell them you'll be closing your account this week and transferring your balance to a competitor who offers better rates. So they know you're serious, name the competitor. Most companies will drop your rate then and there to keep from losing you. But if you really want a good rate, ask to talk to a supervisor, then ask to have your rate cut in half. Supervisors have the authority to cut your rate right over the phone.
Now it's time to really take control by consolidating all your credit card balances on one low-rate card. This is another situation where you should "just ask." When you're negotiating with credit card companies for a lower rate, tell them that you're prepared to move all your balances to the company that offers you the lowest rate. The object here is not to jump from one low rate to another, but to find the lowest rate so you can pay down your debt faster.
4) Make it automatic!
The key to your entire financial future is making all these smart steps automatic - and that includes paying off your debt. Fortunately, setting up an automatic payment plan for your credit card debt is easy. Just call your credit card holder and tell them you'd like to arrange for them to make an automatic debit from your checking account each month. If they can't, call your bank and sign up for a free online bill-paying service (most banks have it these days) that allows you to have money automatically transferred from your checking account to your credit card company on a specific date each month.
5) If you are drowning in debt, get help.
Debt problems are the worst. They can cripple your spirit, break your courage, threaten your marriage, and even ruin your health. Fortunately, for those of you who feel overwhelmed, there are places you can turn to for help. Unfortunately, there are also more than a few companies that try to take advantage of people with debt problems. As a rule, fraudulent debt-counseling services over promise and under deliver.
Here's what reputable debt counselors can't do:
They can't erase a bad credit problem.
They can't get you out of debt.
They can't provide a quick fix to your problem.
A debt-counseling or -consolidation service that implies it can do any of the above is lying to you. Chances are it took you years to get into trouble with credit-card debt. And chances are it will take you a long time to get out of it.
Here's what reputable debt counselors can do:
They can help you figure out how and why you got in debt in the first place.
They can help you figure out whom you owe and how much.
They can help you come up with a plan to pay off or consolidate your debts.
Two highly regarded debt-counseling agencies are Consumer Credit Counseling Services and Myvesta.org. When you contact one of these agencies, your first goal should be to find out as much as you can about what they can and can't do to help you. One important question to ask is whether using their services will hurt your credit rating. And before you sign on with anyone, check with the local chapter of the Better Business Bureau to see if they have any complaints logged against them.
We received hundreds of success stories in June, and here are the winners. They will all receive Latte Factor mugs. We hope you will be motivated by these success stories and continue on your journey to living and finishing rich! To share your success and get the chance to win a Finish Rich Latte Factor Mug, click here.
Dear David,
I have just finished reading your book The Automatic Millionaire. For a number of years I have been looking for a book that I could give to my two daughters to secure their futures as I have mine and my wife's. I have followed just about every principle that you recommend ever since I started earning a salary, and I am now 54 years old and my wife and I are financially secure. I am eagerly looking forward to my retirement in four years time. You are so right about automating your "pay yourself first" contributions. It's funny though, when you are 21 years of age 54 seems like forever. And then the next time you look it is just around the corner. I am so glad I started with 15% from my first paycheck, and have never wavered no matter what.
By automating our financial lives we have been very fortunate that my wife has not had to work for anyone since our two children were born and we have been able to put both of them through university without asking for financial assistance from anyone. We own our own home and have done so for 15 years. We take overseas holidays every second year, but could go overseas every year if we so wished. We both drive nice cars. We do not have any credit card debt. And all because we "paid ourselves first" via automatic contributions, and made sure that we operated on a cash only basis. I also paid extra each month on our home loan, but did not think about paying every two weeks.
Rest assured though that I will tell our children. I have bought two copies of The Automatic Millionaire and will be posting them to our daughters to study once their exams are over in a couple of weeks time. To encourage them to automate their financial futures we will be donating a lump sum to each of them when they graduate and we will match their monthly automatic savings until such time as automatic saving becomes a part of their lives. Thank you for a thoroughly good read.
-Kim S.
Hello David:
I happened to see you being interviewed one Sunday morning on a news program. Your ideas made absolute sense and very much appealed to me. I am somewhat of a late starter, but had already implemented some of the ideas in your book "Start Late Finish Rich" which I purchased that weekend. I regained my momentum sparked by your words and ideas - and each day I have taken action on eliminating credit card debt by consolidating at a lower APR, calling my creditors to request a lower APR, (two of which were quite stingy at lowering the high APRs) and saving over $1,000 in one week - once
I identified my "latte factor." Yes, I am on a roll and don't intend to stop until I am "DOLPED" out and free. Also, I have my real estate sales' license and have some ideas on leveraging to buy a second home. Thank you for re-energizing my drive and letting me know that my views and ideas are shared and DO make sense. So much for the naysayers...and the old saying "follow the crowd and go nowhere."
Many thanks,
-Camille S.
Dear Mr. Bach,
I must say that I totally enjoyed your book "Start Late, Finish Rich" (for Canadians) - it offered a lot of excellent pointers and clarifications. However, one of the best parts of the way you presented the material was in the last three chapters. This is where it all comes together! As you point out so well, if a person makes a million dollars, or ten million, or a billion dollars - what good is that amount of money to them if they don't understand the concepts portrayed in Chapters 21, 22 and 23 - giving back to society, looking at life's purpose, and teaching/raising our children well. The information you provide in these last three chapters puts the whole concept of financial achievement, security and success in the proper perspective - something that nearly all financial type of books completely ignore. Thanks for the insight!
-Roland S.
Waterloo, Ontario
Dear Mr. Bach,
I am happy to report that I am doing two things with the information provided in all of your great books:
1) sharing your books and information with several family members and a younger colleague.
2) using your information to help my husband and I to Finish Rich. As a result:
I have dramatically increased my 403B contributions - I thought I was already maxing this out but at your suggestion to check with my benefits office to see if changes had been made I found out I can now contribute up to $14000/year! This will be a huge difference for me. I am also working on getting our emergency money out of stale checking and savings accounts and into money market acct. or stable fund. I have just moved two underperforming mutual funds that have not come close to the S&P 500 and moved them into better performing Index Funds with even lower expenses. I am also helping my husband to reevaluate his holdings. I have cut way back on our spending. We were already pretty good before but we needed a good reminder since our salaries had grown so had our spending. My husband is very excited about this. I keep reminding him and my daughter of the latte factor. We have already saved hundreds of dollars in just a few weeks. I have my 15 year old daughter saving 50% of her income for college/long term and it is all put in a Roth retirement acct. My mom has just lowered the interest rates she was paying on several of her credit cards since listening to your Start Late Finish Rich audio book I gave her for her birthday. I am amazed at how all of these neglected things can add up. Thanks for making me pay closer attention. I think I had lost some of my enthusiasm with saving and investing with the earlier downturn of the stock market but now am back on track. Your advice has been so helpful. Thank you for putting this information together in such an interesting, motivational and easy format.
-Donna R.
Greenwich, NY
Hi David,
My name is Joan Powell and one of your current 100 students. For the last month, I have been busy reading! As of now, I have completed The Automatic Millionaire, Start Late, Finish Rich, Smart Women Finish Rich and listened to the CD of the Smart Women Finish Rich seminar. As a single mom with two kids and always on a tight budget, at first, when I thought about my latte factor I struggled to figure out what it could be. I don't have fancy cable channels, or a bunch of phone features, and I don't smoke or buy lottery tickets. However, I was surprised when I totaled up my checkbook for the last month and saw how much money I spend between take out food and going out to dinner. I pretty much lost my appetite! Then I looked a little deeper. I have three cats that I pay $590 per year in cat insurance. The cost of immunizations for the three furry guys is only $330. The extra things that come with the insurance are not worth it so I'm canceling, saving me $260 a year. Next, I have a little Ford Ranger that sits in the garage most of the time. I pay $40 per month insurance (why?). It's now up for sale and I'm canceling the insurance. And one other biggie that gets me every time. My kids. They are always asking for five bucks here or ten bucks there. Over a months time I probably give out an average of $100. Well, I've put my foot down and told the kids we're not buying anything for 15 months! They're still getting used to the idea. :)
So here's my latte factor:
1. Take out: $195/mo = $2,340/year
2. Eating out: $80/mo = $960/year
3. Cat Insurance: $22/mo = $260/year
4. Truck Insurance: $40/mo = $480/year
5. Kid bucks: $100/mo = $1,200/year
Total yearly savings = $5,240, which is $437 per month !!!!!!
That extra $437 will go to paying down my one credit card I have left for $10,500 at 4.99%. This week I found a card for 0% for 15 months. I'll take the $437 from my latte factor and add it to the $300 I already pay and will have the credit card paid off in 15 months.
My other accomplishments this week:
1. I have a couple of interested people looking to buy the truck for about
$2,400 (which then goes to ING).
2. I just setup automatic transfers to my ING savings of $315 per month working towards a nest egg of $18,000 over the next few years.
3. I increased my 401K contributions to 8% from 5%, and will increase by 1% in Sept, Dec, Mar, June and then in Sept 2006 when the credit card is paid off, I'll jump to 20%.
4. Converted my budget to a spending plan with paying myself at the top of the list!!!!!
Your books, and now your seminar really pushed me into hyper action and I'm feeling pretty darn certain that our future will be secure and I will never have to beg and borrow ever again. My 14-year-old daughter has been playing with ING's online calculator and she's amazed with seeing the results of how saving just a little can give her a huge nest egg by the time she's 25. It's pretty exciting to see her so excited! Thank you.
-Joan P.
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Last week I read a book cover to cover twice from a
dear friend of mine Barbara DeAngelis entitled How Did I Get Here? I have to tell you that this book is
quite possibly one of the most beautiful self-help
books I've read in a decade. I loved it so much I
endorsed it on the book jacket. And now I want to share
it with you.
Barbara DeAngelis is a remarkable woman that has truly
helped millions with her work. She has over nine
million books in print, but of all her books I think
this one is going to be her biggest and help the most
people. I first came across Barbara when she wrote a
#1 New York Times bestseller called Making Love Work.
Michelle and I then went to a seminar of hers in the
early 90's and met her in person.
Three years later when I wrote Smart Women Finish Rich
I asked Barbara for a testimonial. She not only
endorsed my book but also became a very dear mentor to
me on the process of being an author. You can purchase
How Did I Get Here? by clicking here.
Also, stay tuned because Barbara and I will be doing a
live TeleCoaching call later this summer and you'll be
invited to join US.
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In closing, I wish you all a happy and healthy holiday. For those of you who have taken action, great job! Keep up the great work, and financial freedom will be yours. For those who are just starting, you can do it! It truly is never too late to finish rich.
Your friend,
David Bach
Founder, FinishRich Media
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