One family sets a monthly budget of $2,500 to cover all expenses including groceries, health care bills and other extracurricular expenses. David Sapper, a car salesman, and his wife, Tina, a real estate broker who earn a combined annual income of $500,000, set this budget seven years ago to accomplish what they have now, emergency savings, maxed out IRAs each year, and paid off their home with other financial milestones to name.
Living in their Las Vegas home, where the cost of living is far lower than it is in other parts of the country, the Sappers have to budget carefully to make it work. They rarely go out to dinner, they shop at discount chain stores and many of their recreational decisions are dictated by Groupon.
Such a way of living gives one the illusion that the Sappers are poorer than they actually are yet in reality, they make an annual combined income of about $500,000. “We put over 90 percent of our income into savings or investments,” says Sapper.
He and his wife decided to make the transition to a more frugal, savings-oriented lifestyle when they wanted to save up enough money to go into business for themselves. Today he runs his own car dealership in a niche market, for people with poor credit who want to buy cars.
According to a 2013 Bankrate study, about three-quarters of Americans are living paycheck to paycheck. But while that term traditionally means living off exactly what you earn with little or no savings to cushion a financial blow, a new breed of workers like Sapper are redefining the term to mean something different: the act of reallocating your actual paycheck so at least 20 percent, if not more, of your earnings is set aside for long-term financial goals.
It’s all about the discipline to prioritize your needs from wants. Ask yourself, do I want to retire early, do I need to eat out every week? If you set your priorities right, choosing savings over the instant gratification of buying whatever catches your eye, you could end up having a financial savings future just like the Sappers.
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Original article courtesy of www.learnvest.com.