Secrets of Extreme Savers

I was reading the "Secrets of Extreme Savers" article in CNNMoney, and I was struck by the ability of these people to save so much. The main principle was to live below your means and make savings a priority.

The first family profiled, Ed Haskell and Debbie Chasteen, were able to save about 50% of their after tax income. They paid cash for everything (even their house!) I was filled with feelings of awe - they put to practice what most people give lip service to. It seems like they had a goal in mind, to have financial stability so that they can retire early and it definitely takes a lot of discipline to put into practice those goals.

When I started to look more carefully, I realized that most people seemed to live in areas where there is a lower cost of living. In the Bay Area, the cost of living is so high. One who was profiled lived in Los Altos Hills, but then I read that he was a lawyer and I was like, of course they could save so much! He probably makes so much!

I had to catch myself then and not turn into a skeptic and make excuses. It was still amazing that these people made saving priority. Of course, each of the people profiled could have spent what they made or more.

Looking more closely at their profiles, I knew that I had to start thinking about how to adopt the following principles:

• separate wants from needs and really think about each purchase,
• save for each purchase,
• think about multiple streams of income (if possible),
• have a goal in mind, whether it is early retirement or freedom,
• live modestly (or reset expectations), and
• prioritize.

What exactly did I want? Did I want to retire early? Did I want to stay at home with the kids? Did I want to have a large safety cushion just in case? What was my motivation? I had always been a saver, but now I was inspired to do more to ensure my goals would be met.