Video Transcript Below:
Hey guys! Kenny from learnhowtoprosper.com and I want to share with you a realization I had probably about a year
and a half ago. I had this funny thing happen and it was all based on a book that I read 15 years ago 15 to 16 years ago.
I was on this trip and I got this book and the book is called “The Automatic Millionaire a Powerful One-Step Plan to Live and Finish Rich”.
It is as simple as one step and that step is you are ready… drumroll please… what you do is automate savings,. It’s life altering right?
Here’s the way that they recommended that you do this, in essence you would take some portion of your regular income and partition that off and set up a savings account and every month just automatically send that money there.
And he recommended that you would put it in some obscure, new account that you never look at or thought about.
Actually, I did that and I remember thinking at the time, it couldn’t matter that much and I can’t remember how much I was putting into it maybe it wasn’t even that much.
Maybe a couple few hundred dollars or something, I do remember that I did “up” the savings amount a couple of times over that first year.
I actually did forget about it, it wasn’t in the main side of things and I want to say it was probably almost ten years later.
I’m looking through accounts and I had set up on a separate account so when I went and I can’t even remember, it was somewhere in this credit union and I got an alert about this other account and updating the security on that so there’s some kind of a security update, the password or something like that.
So I went and accessed this account it was the happiest day ever because there were thousands of dollars that had accumulated in that account! And the realization I had was that we do this already with so many consumer items that we purchase whether that’s something you put on a credit card.
It could be clothes or a television set or something like that and of course they’re going to set up an automatic payment plan with you and they’re not dumb these people know what it takes and I don’t know if you’ve ever done the math on what that actually ends up, costs after finance charges and everything else but it adds up in a hurry.
The whole idea of this book was that you can put the same principle into effect, but set up an account where that savings is going away every month for your benefit. So it absolutely worked and then we’ve done that ever since.
In fact, we’ve been able to increase the amount that’s stowing away every month and that is something that led to a number of very beneficial things. One is we paid off all of our cars. We had a couple of cars and we paid off the loans on those pretty quickly and then we were able to pay for the entirety of our mortgage in about eleven years.
It was all based on the same principle. So in essence the mind shift is instead of allowing consumerism to take hold. And consumerism is nothing more than allowing your yearnings to exceed your earrings and there’s this interesting phenomenon that we have…
When you buy something there’s this emotional kind of anticipation. Sometimes there’s even a euphoria that comes with buying something, in the moment, but then you forget about it. It doesn’t mean that much but what continues to happen even after you’ve purchased that thing and what continues to happen even after you’ve arrived at that place where it doesn’t even mean that much to you anymore, is that you continue to make payments on that all the way through.
So you’ve got to really get a hold on your yearnings and there’s kind of an interesting phenomenon with wanting stuff is that the anticipation of having
it is about a hundred times better than actually having it. Actually this happened to me when I bought a brand new truck several years ago.
I’d never had a new car before and back in…
I want to say it was 2004, I bought a brand new Dodge Ram truck and I’m not going to lie for the first month or two it was phenomenal because I went from driving well…
an old beat-up Nissan Pathfinder that would expel more exhaust into the cab than it did outside.
I’d probably killed some brain cells I think some might agree with that 🙂 But you know after it, it was better than that car for sure but it’s amazing how quickly that fades so keeping your yearnings within your earnings is really critical now, there’s a whole lot that could be said about this but I just want to encourage the thought or the idea that you pretend like you make a purchase for something that you really want and that your are super excited about and instead of actually getting the thing you take that money and put it away in a secret account.
And just let it accumulate and this one step plan led to us being 100% 100% debt-free. I’ll never forget the day that we paid off the last payment on our mortgage and realizing that I didn’t owe anyone.
I felt an immense freedom, it’s like it gave me so many options because now you’re not held down to the weight of all this consumer debt.
Accumulate these things that seem like they’re going to bring a lot of peace and happiness but they don’t. I cannot tell you how many people on my street I’ve seen by these humongous RVs.
These big you know what I’m talking about, the big massive deal you know it’s got maybe the tandem on there.
It’s got the big you know the big punch out windows sometimes it’s a fifth wheel.
It sits there rotting getting Sun destroyed on the side of their house except for all but maybe two or three weekends of the year.
Now they’re probably paying anywhere between $40k for something like that plus maybe less but if you buy a brand new. Same with the a boat and these things and you could just go rent those and that’s something that Tracy and I have done.
When we want to go RVing we just rent a couple for that weekend. yeah it feels great and I can always get the latest model.
I enjoy the experience and then after, I just turn it back in and its a done deal.
I wish everyone could get this feeling of what it really is to be debt-free because then you can have many more options available to you including the employment that you do because a lot of times people earn a certain salary and this always happens right like when you first start in a job.
I remember my first job I made 27 thousand dollars a year as a recruiter for a university right and over time it continued to go up and up and up. Usually happens as it goes up like this, so does your spending.
Pretty soon you’re spending and your income just stay right in line with one another and so you never have any margin in your budget.
Obviously if your salary, it’s going up like this and you keep your expenses kind of like this then overtime this margin continues to grow and I know this is like it’s like duh but you’d be surprised how many people don’t get this.
Having been a counselor; I’ve worked with many people that have come to me completely destitute and just drowning in debt.
This principle is very foreign to them it’s like well you know but they told me when I went to get my mortgage that I could get more house.
So I did and you could get the biggest house you can get a 10,000 square-foot house and after, I don’t know four months or so, it just feels like a big house. But it’s just a house but what doesn’t change is the fact you have to pay for it forever.
So, one of the ways to break out of that cycle is to take a big chunk of your money and shovel it off into an account, forget about it. That’s what you do it with all your other bills, I mean there are people who are paying on credit cards right now.
They’re paying on a credit card that they accumulated debt on 10 years ago.
They don’t remember what they bought; they have no idea what they bought.
I remember working with this couple.
One time they were a hundred and sixty-five thousand dollars in debt from student loan debt and they were using what it was called back then.
“Shoot” I can’t remember now. I can’t believe I’d ever forget it but you get this… it’s not even a loan you would get a grant.
So you get these Pell grants. And the Pell Grant would be…I don’t know it’d be something like maybe a thousand or two thousand and they just take that and they just go blow it all on something.
Of course they didn’t remember what it was and then they would use the student loan to buy things like a car and clothes and maybe a vacation.
The would think “We deserve it we’re going to get away”. Well in the end you’re left without any memory of what you did or even how it felt when you did it if you’re lucky maybe you do, and yet you know what doesn’t go away? The debt!
It continues to grow at a higher percentage every single day. I mean when I look back on that couple now and trying to work out different scenarios and it wasn’t hopeful.
The thing is the government does not forgive you of for student loan debt.
Now, they’re very excited about you getting a higher education but what they’re mostly excited about is the fact that you’re in debt and that they’re guaranteed to get that for as long as you live. So just keep in mind that there are powerful forces out there that are depending on the fact that a certain number of people will go into life crushing debt and that is a great topic for another day.
So I’m not going to go into that today so let me just recap by saying this just do one thing and that one thing is to automate some savings.
Go do it now! Go and find out whatever your bank is, if they can do this for you. When your check comes in just take, even if you can only start with ten bucks.
Start with ten bucks if you can but if you can get it up to fifty or a hundred that better. I mean look at one your consumer debt loans right now or one including credit cards and just just pretend like you bought something else that really mattered to you.
Get all excited about it too is like yes finally you know I got this lounger that you have always wanted, and then instead of having the lounger, just sit in the same one that you have. You’ll forget and it won’t matter in a week anyway but instead you’ve got this cash that’s stacking up there in the bank… so I hope you’ll do it.
I hope you’ll take me up on this one thing: Automate your savings and I’ll tell you at the end of one year go and take a peek and the feeling that you have is going to be so much more euphoric and incredible.
It’s a feeling that lasts, it’s not like when you just go buy something and then it’s gone.
I went a little bit long today but I hope that you find some value in this and if you do want this book there’s actually a quite a few little nuggets in here that I would recommend to you.
If you want to read it you can go ahead and grab it. The author, David Bach is the name.
If you want that you can click on the link in the description box or if you’re watching this on my blog go ahead and do it there.
By the way, you can see this and other videos and blog posts over at learnhowtoprosper.com.
Well, thanks for taking a minute with me and I hope to see you over there.