That is a question we are getting quite a bit of now. I guess that is a reasonable question if you do not know any other way it could be possible to quit your jobs and go sailing. As it stands right now, we did become independently wealthy, but not in a manner one might expect. So let me explain.
Back in October of 2007, not long after Melissa and I had married, I decided to sit down and figure out our financial situation. Melissa had a few years under her belt in her new job, and I was struggling with my first independent business. I could see that we might soon struggle to pay our bills, and it was all my fault.
My first business was melting down. When I started it, I had very little business or financial knowledge or experience. I made many mistakes and burned through lots of capital. The overhead was burdensome and I had miscalculated many financial requirements. The business had failed long before I realized it, but I was still pumping it full of cash we did not have, and Melissa trusted that I knew what I was doing.
So on the day that I realized we were a couple of months from financial ruin, I decided to calculate our true burden. I opened a spread sheet and spent the day filling it with numbers. It turned out that we had a total debt burden that was 300% of our income. Needless to say, I was shocked! The total debt included household and business debt. Melissa and I talked over the situation and we decided things needed to change and they needed to change NOW. This was going to be a tough road and could be a strain on our new marriage. But it was something we would get through, together.
A few days later, Melissa found a radio program and encouraged me to listen. It was the Dave Ramsey Show on an AM radio station in our local area. The show was dedicated to teaching anyone how to get out of debt using the "Debt Snowball." Not only did I start listening to Dave's radio show every day, we also bought his book AND attended one of his seminars. We followed his directions and started the process.
We paid a huge amount of what Dave calls "Stupid Tax," which is the painful amount of money you pay when you sell a possession that is worth less than what you owe on it. This relates most specifically to cars, but real property, furniture that is financed, and just about any other financed item that is worth less than what you owe. Sadly to admit, we have paid a lot of it over the years!
During this time, I educated myself in business and finance. I read lots of books and talked with lots of successful people. I subscribed to newsletters of successful people in the financial world and started watching shows and videos of business and financial wizards. I learned the proper way to structure different types of business. I learned marketing, advertising, and bookkeeping. Robert Kiyosaki taught me how to create and read financial statements, and most importantly, he taught me the real difference between an asset and a liability.
In the end, it took us a little over 10 years to finally become debt free! That alone has made us "independently wealthy". You see, without being tied to anything, we have gained freedom which is a form of wealth. We are no longer tied to a house, car, business, or any other possession. Everything we have we own with zero ties to a lender. Our properly structured business does have debt, but it is tied to an income generating asset that is worth far more than the debt owed. Thanks Robert and Simon.
My new found business and financial education along with Melissa's corporate background, management and people skills have also made us wealthy. Not in money, but in knowledge. And knowing is 90% of the battle. With the right knowledge you know what questions to ask, you know where to look for problems, and you realize there is always more to learn.
"So how do you pay your bills?" What bills? Moving onto a boat eliminated all of our bills - like the ones you get in the mail every month. No house/rent payment, no car payment, no electricity bill, no water bill, no sewage or garbage bill, no internet bill, nothing.
Don't get me wrong, we still have expenses. Those are things like food, insurance, cell phones, fuel, gifts, etc. But these are quite minimal, and except for food, they are all voluntary expenses we choose to have. Food, water, and shelter are needs. Everything else is nice to have.
Some of our wealth is tied up in knowledge and freedom from things that tie us down. That is what is allowing us to move our family onto a sailboat and go where the wind blows us. It has nothing at all to do with money. According to the 2018 federal poverty level we will have less than half of that amount available to us. But this does not scare us and you shouldn't be scared for us.
Because we have chosen to live with less, more is available to us. We are not going on vacation, so there is no rush to see everything in a condensed time frame like someone on holiday. We do not have anywhere we have to be, and nowhere we have to go. We do not need to live up to the expectations of anyone else, especially those darn Jones's that society keeps track of. We will be able to see and experience what the free world has to offer, and not the paid tourist traps. We do not need to go to a resort where we are pampered and the drinks are free, because we are not escaping the rat race for a week or two - we have already escaped it, permanently! However, if someone wants to send us to one of those nice resorts and pay for us to enjoy it, we won't turn them down.
We have become wealthy in TIME, a commodity that is irreplaceable. No amount of money can buy time. Bill Gates, with his billions of Dollars can not buy back one single second of time lost with his children or wife. No one can. So by trading in our societal normal lives, removing all debt, and educating ourselves, we have gained a wealth that no money can buy.
Yes, we did become independently wealthy, and have no money to show for it.