The Mello Millionaire with Tommy Mello
Episode: Save Smarter, Live Richer: Practical Investment Tips with Financial Expert David Bach
Date: December 5, 2025
Host: Tommy Mello (Mello Studios)
Guest: David Bach (NYT bestselling author, entrepreneur, financial educator)
Episode Overview
On this episode, Tommy Mello sits down with celebrated financial advisor and author David Bach (The Automatic Millionaire, The Finish Rich Series) to discuss proven, practical strategies for building lasting wealth. David shares actionable insights on saving, investing, homeownership, and the psychology of money, including his recently developed tax strategy for retirement accounts. This conversation is grounded in real-world experience and tough truths, blending classic discipline with modern, automated habits designed to help ordinary people achieve millionaire status—even on modest salaries. The episode’s tone is candid, encouraging, and richly anecdotal.
Key Discussion Points & Insights
The Psychology of Wealth
- Financial Resentment & Freedom: Many high earners eventually resent their jobs—not because of the work, but due to a lack of financial freedom resulting from spending instead of investing.
"It's not the job that sucks. It's that you didn't use your money to build some freedom." — David Bach [00:00]
- Overnight Riches: Bach cautions against get-rich-quick schemes.
"You want to try and get rich overnight? You will stay poor forever." — David Bach [00:41]
The Power and Simplicity of Automatic Saving
- Core Advice:
"The way ordinary people in America have become millionaires... is simple. Three words: Pay yourself first." — David Bach [01:49]
- How Much to Save: At least 10-15% of gross income—ideally, automate this via 401(k) contributions or automatic transfers.
- The 'First Hour of Income' Rule: Save the first hour’s wage each day (about 12.5% of income).
- Fidelity Case Study: 565,000 people became 401(k) millionaires in 26 years by saving 14% of their income.
- Investment Vehicles for Employees:
- Target-date mutual funds in 401(k)s
- Index funds (e.g., Vanguard Total Stock Market, S&P 500)
"The biggest no brainer mutual fund you could ever invest in..." — David Bach on the Vanguard fund [03:47]
The Roth IRA & Compound Interest
- Early Start, Huge Results: Tommy shares starting his Roth IRA at age 16 and the impact of compounding.
"That extra 10 years is crazy." — Tommy Mello [11:15]
- For Kids: Bach's advice for parents to open Roth IRAs for their children, showcasing the math:
"$20 a day... can be a life changing amount of money put away for retirement." — David Bach [07:17]
- Illustrating Small Daily Savings:
- $10,000/year = $27.40/day
- Most people can save that by cutting small daily expenses (e.g., Starbucks, fast food).
Money Habits, Technology & Automation
- The ubiquity of subscriptions and cashless spending increases the importance of automatic saving.
- Smartphone as a "money magnet":
"This phone... these are money making machines. You can make everything automatic." — David Bach [08:35]
- Being mindful of technology’s role in spending and saving habits.
Real-Life Stories & Motivation
- Success Stories:
- Teacher Tiffany (from Automatic Millionaire) went from $39,000/year and debt to millionaire status via simple, automatic strategies.
- Bach’s first stock at age 7 (McDonald’s)—the power of ownership vs. consumption.
Value-Based Financial Planning
- Couples and Money: Most people marry their financial opposite; couples must align values and make saving automatic to avoid friction.
- Avoid budgeting by making saving automatic.
- Define the purpose of money in your life; focus on purpose over possessions to avoid stress and burnout.
"If it's just to buy stuff, I promise you that stuff, long term, doesn't make people happy." — David Bach [12:45]
Homeownership & Wealth Building
- Renting vs. Owning:
"You have to buy a home because you can't get wealthy as a renter. Homeowners are worth 40 times more than the average renter." — David Bach [16:07]
- Renter avg. net worth: $10,000
- Homeowner avg. net worth: $430,000
- Mortgage Leverage: A $100k down payment on a $600k home can yield $400k tax-free after appreciation—returns rarely matched by stocks alone.
Real Estate & Tax Advantages
- Buy business real estate and lease to yourself via an LLC for maximum tax and leverage benefits.
- Consider opportunity zones and cost segregation for accelerated depreciation.
"When you have a business, it is literally the biggest no brainer in the world to buy a building..." — David Bach [19:23]
- Wealth is not just accumulation—it’s freedom.
Private Equity & Advanced Wealth Strategies
- Most "retail" investors should be wary of private equity; for most, stocks, bonds, real estate remain optimal.
- For those building generational wealth, simplification can matter more than chasing higher returns.
The Power of Relationships
- Track and nurture relationships; start a solid database of contacts early in your career.
"If I could go back... I wish I had kept a really solid database starting at 20." — David Bach [25:15]
- "Batteries included" people (Dan Sullivan’s term): Surround yourself with those who energize you.
NEW! David Bach’s Proposed Retirement Account Flat Tax
- $46 trillion in US retirement accounts; most retirees defer withdrawals to avoid high taxes.
- Bach proposes shifting from ordinary income tax on IRA withdrawals to a flat tax (10–15%) for an 8-year window.
- Analysis suggests this could raise over $1 trillion in tax revenue, $2.5 trillion in economic activity, and stimulate local economies and retirement security.
"Less tax means more retirement." — David Bach [31:10]
- Would likely increase retirement savings for millions now in their 50s and beyond.
Optimism for the Next Decade
- Despite current volatility, Bach predicts "the next 10 years are gonna be the greatest 10 years of our life."
- AI, blue-collar business opportunities, and market trends all signal huge potential.
"There’s gonna be more money made in the next 10 years than the last 20." — David Bach [32:33]
Immigrant Mentality & The Wealth Mindset
- Story of Sam, the Vietnamese barber, saving 75% of his income in his first year—contrasted with American attitudes.
- Immigrants “see only opportunity,” underscoring mindset as a critical differentiator.
Mindset, Books, and Discipline
- How to Win Friends and Influence People (Dale Carnegie) and Think and Grow Rich (Napoleon Hill) profoundly shaped Bach’s early outlook.
- Bach and Tommy debate 'live for today' vs. planning for the future; both advocate discipline via habits, making good choices automatic.
Notable Quotes & Memorable Moments
- "Pay yourself first. It's all about paying yourself first." — David Bach [01:49]
- "If you want to get rich overnight, you'll stay poor forever." — David Bach [00:41]
- "Discipline isn't a habit. Whatever the habit is becomes a discipline." — David Bach [36:13]
- "You can be wealthy and not be free... Now they've got five, six, seven, eight homes and now they have to have a whole team to manage the houses." — David Bach [19:33]
- "Everything we do, every single day, someone makes money from it. And if I can invest in those companies, that means I get to make money on it." — David Bach [14:09]
- "The next 10 years are going to be the best 10 years, I think, of our life." — David Bach [15:21, 32:30]
- "If you ask them if they rent or they own... A renter has $10,000 net worth, and a homeowner has $430,000." — David Bach [16:15]
- "My cousin goes, 'You don’t understand that extra 10 years, what it'll do.'" — Tommy Mello [10:55]
- "Surround yourself with people who are 'batteries included.'" — David Bach [26:02]
Timestamps for Key Segments
- 00:00 – 02:42: The trap of lifestyle creep and the true meaning of financial freedom
- 03:47 – 05:37: The 'first hour' saving rule; target-date/index fund investing basics
- 05:49 – 07:45: Early Roth IRAs, the power of starting young, and compounding
- 08:35 – 09:30: Automation, technology, and making savings invisible
- 10:55 – 11:56: Influential moments—Tommy’s cousin and the “extra 10 years” lesson
- 12:24 – 13:40: Couples, values, and making saving effortless
- 14:09 – 15:21: Bach’s foundational story—owning, not just spending
- 16:07 – 18:23: Homeownership’s outsized role in American wealth
- 19:01 – 21:04: Real estate, business ownership, and freedom vs. stuff
- 22:44 – 24:45: Private equity—risks for most; why Bach avoids it
- 25:15 – 26:39: Nurturing relationships and "batteries included" people
- 27:27 – 32:08: Bach's proposed IRA flat tax reform and economic impact
- 32:30 – 34:58: Optimism for the future and learning from the immigrant wealth mentality
- 35:04 – 36:55: Influential books; balancing today vs. tomorrow; habits as discipline
Conclusion
This wide-ranging episode demystifies wealth-building, exposing the myths around “getting rich quick” and highlighting the far greater power of automated, value-based choices. David Bach reiterates that anyone—regardless of salary—can get wealthy with consistency, discipline, and automation. His new IRA tax flat proposal hints at a more vibrant economic future for millions of Americans. The episode closes with encouragement to invest in skills, relationships, and habits for a truly rich life—today and tomorrow.
Recommended Resources: