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So I bought a house with a friend and her mother.... A few years later, I focused on the next step in my incremental dreams: still owning with my friend but minus her mom. With our share of the gain from the sale of the first place, we were able to make the move—the new house was a modest 1,000 square feet, but as far as I was concerned it was a palace. Sure, just a few blocks away were majestic dwellings with sweeping views of the San Francisco Bay, but those were other people's dreams. People with a lot more money than I had. I was thrilled with what I could afford.

Jump ahead to today, and even though I'm wealthier, I'm still a practical dreamer. I don't need some fantasy mansion. I buy what I need, as opposed to what I can afford. That approach has never let me down, and I'm certain it can work for you.