Wednesday, November 09, 2005

David Bach: Hype or Bait and Switch?!

I'm reading David Bach's The Automatic Millionaire. I think this book is a fun and easy read, and although I'm only about half-way through it, I had to stop and blog because I also think it's sneaky and closer to what I would call a bait and switch than it should be.

Let me explain.

The Automatic Millionaire does a really good job at pumping you up. It shows you ways to find those bits of money you are wasting and makes you feel like you can really save! This book gets you motivated and excited about 'paying yourself first', and then tells you how to save those bits of money tax-free so that you can watch it grow into a million dollars with compound interest.

Sounds great doesn't it!

OK so he's got you. That's the bait part. He has you baited on the hook ready to dive into the water and save all those bits of money tax free. Then comes the switch part of this hyped up book ... you are saving for your retirement and can't touch that money until you're 65.

NEW FLASH: The only way to save tax free is to save in a government sanctioned retirement account.

So, what's wrong with that? Well, nothings wrong with saving for retirement, but if our debt and savings problems were only about having money for retirement, don't you think people would have already been contributing to a retirement account.

Problems with debt and lack of savings are so widespread because, in most cases, people are trying to appear wealthier than they really are ... not because they just haven't thought about how much money that $3.50 daily latte can grow into if it's saved tax-free in a retirement account.

I mean, cmon, people know they need to save for retirement. But that isn't the problem (and saving for retirement isn't what was on your mind when you bought this book either).

The real problem is that people are so inundated with marketing messages that tell them they must appear as though they are affluent ... even if they aren't ... that they feel shameful, poor, and pitiful if they don't spend the money to keep up with everyone else. So they spend and spend and when their money is gone they charge and charge. Making their lives miserable with no relief in sight.

Bach does mention that many people who appear wealthy are really in debt up to their eyeballs, but he slides past this pretty quickly and goes on with his hype about how you can be a millionaire no matter how much money you are making. And you don't even need a budget to do it (more on this later).

I assume he will go on to tell you how to become debt-free, and pay off your mortgage, and save for a rainy day ... but where will you find the money for that? Since, according to Bach, budgets don't work, and you've already used all your latte and cigarette money to fund your retirement, where will the money come from?

Don't bother trying to explain (or even think) that you just can't find anymore money to save, because as Bach writes in reply to just such an assertion, "Oh, come on. Hit yourself in the head (gently) and just keep reading. What you're saying is just not true."

My point in this blog is that David Bach sells hype and misleads people with The Automatic Millionaire. He makes you think that by following his ideas, you make your life better today, and that just ain't so.

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