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Secrets of Extreme Savers

August 22, 2010

Busy day today… so I’m reposting an email I got from my mother. Source.

You can put away a lot more than the average American without living a deprived life.

Avoid Debt

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Courtesy of Ed Haskell

Super Savers: Ed Haskell, 50 and Debbie Chasteen, 52, daughter Laura, 15
Savings Rate: 50% of after-tax income
Home: Liberty, Mo.
Occupations: Ed is a retired Air Force officer; Debbie is a college professor

Since they married two decades ago, Ed Haskell and Debbie Chasteen have saved more than half their income every year. But Ed’s aggressive savings habits go back even further. From his early 20s, Ed was determined to live frugally so that he didn’t have to work into his 60s. When the couple was dating, Debbie realized how serious Ed was about saving when she needed a new car but didn’t have the cash. Rather than have her borrow, Ed offered to put up the money so she could continue maxing out her 403(b) retirement plan. That avoidance of debt has been a key to their success.

[Click here to check savings products and rates in your area.]

Before they make any purchase, even big-ticket items like cars, they save up the cash. In 1996 they paid cash for their first home, a $105,000 townhouse in Macon, Ga. Five years later they bought their current three-bedroom home in the Kansas City suburbs for $200,000 — in cash. “Sure, we could afford a bigger house and more expensive cars, but we’re content with the things we have,” says Ed, who retired 10 years ago and now teaches and consults. By the time Debbie retires in six years, Ed estimates they’ll have a $2.5 million retirement nest egg.

Delay Gratification

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Courtesy of Nicole Elovitz

Super Savers: Nicole, 40, and Mitch Elovitz, 44, daughter Maude, 11
Savings Rate: 35%
Home: Lake Oswego, Ore.
Occupations: Nicole is director of marketing for a clean energy technology company; Mitch is a manager for the county government

Nicole is a master of the long wait. She regularly holds off for three to six months before buying anything that costs more than $100, and she never spends more than $30 without first checking with Mitch (he does the same). She once put off buying a $3.99 ringtone for her cell phone for weeks to see if she really wanted it. And when she saw a $195 pair of earrings she liked, she trimmed the grocery budget for five months to find the cash. “I usually mentally buy something before I actually do it.”

Nicole and Mitch budget for everything, from their property taxes (which they prepay to get a 10% break) to vacations ($250 a month) and entertainment ($400 a month). Because they’ve socked away $250 a month since the day daughter Maude was born 11 years ago, they already have $50,000 in her college 529 plan. And they constantly are looking for ways to save. But it’s their ability to curb impulse buys that has fueled the family’s savings. “We’re not perfect, and sometimes we overspend. But if you have a game plan for savings, you don’t get too far off track,” says Nicole.

Create Multiple Streams of Income

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Courtesy of Tiffani Murry

Super Saver: Tiffani Murry, 33
Savings Rate: 20% to 25%
Home: Atlanta
Occupation: Recruitment technology manger for a major consumer products company

Tiffani Murray’s friends call her an extreme saver, but Murray prefers to call herself a smart saver. “From the time I was a kid, I liked to have money so if I wanted something I could buy it myself,” says Murray, who opened her first savings account at age 12. Twenty years later she regularly uses coupons, always files for rebates, buys plane tickets with credit-card points and earns free stays at hotels in exchange for writing reviews about the service as a mystery shopper. “I have found many ways to stretch a buck and still live the lifestyle I enjoy.”

Murray, who earns a six-figure salary, owns a three-bedroom home in Atlanta and drives a three-year old (recently paid off) Infiniti Coupe. “I could afford a bigger house or fancier car, but what I’ve got is just fine,” she says. What’s more important is her long-term goal of retiring by age 55.

To find more money to save, Murray turns her free time into extra cash. After work and on weekends, she writes freelance articles on career advice, retools résumés and even does event planning. This work she enjoys can add up to $25,000 a year in extra income. “I’d like to retire early and when I do, I won’t have to want for anything,” she says.

Live Below Your Means

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Courtesy of Seitz family

Super Savers: Marcus, 44, and Sheila Seitz, 45, children Marisa, 18 and Alexander, 15
Savings Rate: 60%
Home: Alexandria, Va.
Occupations: Marcus is a lieutenant colonel in the Army; Sheila is a project manager for a training company

Marcus and Sheila Seitz earn more than $250,000 a year, but you might not guess that from the modest home they share with their teenage children, a 1,700-square-foot townhouse, or the family vacations of camping trips and visits to D.C.’s free museums. “We’ve always lived below our means,” says Marcus, who hopes to retire by age 50. “By saving now, we will have unlimited options later on.” Those options might include traveling for a year or moving to Vegas, where Marcus hopes to test out his poker skills and Sheila would like to teach.

With those goals in mind, the Seitzes do all they can to maximize their savings. By living in a townhouse rather than a McMansion, they not only have a smaller mortgage payment (their only debt), but they also pay less in property taxes, utilities and maintenance. The Seitzes also take advantage of the perks of being in the military (Sheila was also in the military before moving to the private sector), shopping at military stores and taking advantage of the post-9/11 GI bill, which allows them to transfer Marcus’ educational benefits to their children so their college expenses will be covered.

Cut Down on Everyday Expenses

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Courtesy of Arnheim family

Super Savers: Julie and Ralph Arnheim, both 43, daughters Natalie, 14, Isabelle, 12 and Emelia, 9
Savings Rate: 40%
Home: Los Altos Hills, Ca.
Occupation: Julie is a stay-at-home mom and co-founder of RubbingNickels.com; Ralph is a lawyer

Thanks to her husband’s successful law career, Julie Arnheim has been able to stay at home full time for the past 10 years with her daughters, ages 9, 12, and 14 (she previously worked in sales for a financial software firm). But living in the San Francisco suburbs is expensive, and Ralph hopes to retire by 55 or 60, so the Arnheims do all they can to keep a lid on spending. Julie describes their savings strategy as “eco-thrifty” — they cook at home six nights a week, skip Starbucks, get most of their fruits and vegetables from their garden and keep chickens in the backyard for eggs.

Instead of socializing in restaurants, Julie organizes pot-luck dinners with friends. The Arnheims swap items with neighbors, everything from books and kids soccer equipment to party dresses for their daughters and jewelry and scarves for the adults. Julie says some of their eco-thrifty habits are inspiring the neighbors too: “Several neighbors and local friends have either already gotten the poultry raising itch or are curious about it,” she says.

Click here to see the complete list of Secrets of Extreme Savers

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