3 Steps to Become Independently Wealthy

Source: Images_of_Money on Flickr.

Like I mentioned in a a previous post “7 Self Sufficiency Strategies”, becoming independently wealthy is the Holy Grail for any respectable digital nomad.

There’s a lot of crossover because people who want to be self sufficient are trying to become less dependent on others for their needs. When people become independently wealthy, they have become completely financially self-reliant.

If you don’t completely understand what it means to be independently wealthy, don’t worry, we’ll cover that now.

I’ll also tell you how I became independently wealthy after years of trial and error. 

So first…

What does it mean to be Independently Wealthy?

To be independently wealthy means that you’ve acquired enough wealth (typically passive income) to support your lifestyle without depending on others. This requires a certain level of financial acumen that not many people possess. But then again, not many people pursue it to begin with.

Becoming independently wealthy means that you are no longer a “slave” to your assets, instead, your money and assets work for you.

Here’s the 3-step process (it’s not that simple of course, but it is only 3 steps;))

Let’s say I’m a roofer. The money I make in my trade covers the expenses of my lifestyle; mortgage, utility bills, entertainment, etc., and my paycheck only barely stretches to make ends meet. But if I want to buy a new TV, a new couch, a new Xbox or anything above the basics – I have to find something like Investors Choice Lending in Seattle to accomodate me.

This is how most people live.

If I stay in this situation indefinitely, I will never become independently wealthy because I have to bring in a surplus that I can put aside to make my money work for me.

So something has to give if I want to become independently wealthy.

I either need to cut my expenses so my savings increase, or I need to find a way to make more money. Ideally I’ll do both.

Step 1: Create a Surplus Cashflow

If I take on additional hours, shave the fat off my budget (Read “Minimalist Living: The Simple Budget” for more information), or find some other way to cut expenses and/or increase my cash flow, I’ve taken the most vital step toward becoming independently wealthy.

Why is this the most vital step? Because the first successful step is the one that will transform your lifestyle.

It establishes positive habits that build momentum, motivation, and morale, which will ultimately lead to financial success. These habits become strong because of the sense of fulfillment they give, and the satisfaction of success.

Sadly the vast majority of us don’t take that first step. They live paycheck to paycheck, and are unable to see how one simple step can change their life from barely making it, to becoming independently wealthy.

Step 2: Raise a Passive Cash Cow  

A Cash Cow is simply an asset that provides a steady inflow of profit or income. I call it a “Passive Cash Cow” because I need the cashflow to be passive income, that is, steady income I don’t need to directly manage or maintain.

So if I – Josh the roofer – am able to complete Step#1, I now have a surplus of income that I can start investing with. Now when most people think of investing, they think stocks, bonds, and mutual funds, but that’s not necessarily what I’m talking about.

Any asset you buy is an investment that has potential to produce passive income:

  • Farm Land
  • Hunting Land
  • Trailers
  • Trailer Parks
  • Houses
  • Other Forms of Real Estate
  • Websites
  • Blogs
  • Forums
  • Other Online Real Estate
  • Small Business
  • Stocks
  • Bonds
  • Mutual Funds
  • Storage Units (bought through auctions)

This is just a tiny example of assets I can potentially buy to generate a passive income. They’re all investments.

The hard part however, is not simply making an investment, but making a good investment.

If I’m smart, I’ll probably start in a field I already know well, or choose one field to study and experiment in until I get good at it.

As I roofer, I decide to invest in real estate since I’ve been around houses throughout my career and learned my fair share of real estate knowledge aside from roofing.

So I save my surplus cashflow until I have enough to buy a small fixer upper for $10,000 (I bought my first 2 houses for less if you’re thinking that’s ridiculously low).

I find and buy a foreclosure I know I have the experience to fix up to par – this is my investment.

When I fix it, I have the options of either renting it out,  immediately flipping it for profit, or waiting for the real estate market to improve so I can cash in on higher flipping profit.

Since flipping the house only provides a one time chunk of income, I decide on renting it out. If I go the other route I’ll need to build up an autonomous small business for flipping houses, which is a viable option to generate passive income, but not my thing :).

Once I rent it out and hire a property manager (who takes a 10-12% cut from the rent), I’ve created my first Passive Cash Cow!

Step 3: Push Past Passive Cash Cow Equilibrium

That’s a tongue twister. Like the state of the screw in the picture, equilibrium is just a state of balance – If I’m able to duplicate the Passive Cash Cow investments to the point of budget equilibrium, I’ve finally become independently wealthy. The rental properties bring in enough income to pay for my lifestyle expenses, and now I can choose to pursue whatever I want. I’m no longer dependent upon others for my paycheck, which is just about as free as I can get.

But planning beyond budget equilibrium is a necessity that shouldn’t be ignored, especially after I’ve come so far. All it takes is one property and I’m below equilibrium and forced to rely on someone else again for enough money to make ends meet.

So I need to push past that equilibrium so I can offset any devil-in-the-detail problems that rise along the way.

And then the sky’s the limit! Should I continue to raise Passive Cash Cows to support a comfortable lifestyle of luxury? Should I travel the world?

I could use surplus cash help the people I love, and even the people I don’t! Maybe I’ll retire until I get bored, then I’ll start a business revolving around my favorite hobbies. It wouldn’t even matter whether it’s successful or not, I’ve got all the money I need because I’ve become independently wealthy!

Now let’s get into the specifics — what I did, do, and will continue to.

How I Became Independently Wealthy 

Here’s how it works.

People use the internet to find stuff.

Think about the last 10 websites you visited.

Nearly all of them had commercials, right?

They might have even convinced you to buy.

And guess what? When people like you decide to buy, someone else gets a paycheck. Who? The person who owns the website.

I cashed in on this reality years ago, and thank God I did!

Here’s what I did.

I started by attracting freelance writing clients to my portfolio website, which helped me convert those leads into cash.

Then I did some extra-credit homework —I studied the people who build websites and generate passive income from them. I observed their strategies and once I figured it out, I did it myself. I built one website, then two, then three. Now I have what I call my cash-cow fleet.

What happened? Well, I started getting hundreds of unique visitors per day, and a certain number of them click my advertisements and buy.

Does any one website make me rich? No.

Did it happen overnight? No. (It took years actually.)

But each site pulls in enough for me to be independently wealthy, and the magic happens (partially) while I sleep.

Thanks to my cash-cow websites, I graduated from being a worker to being an owner.

And that’s the only way I truly know how to become independently rich.



  1. Mr Simple May 28, 2013 at 11:51 pm #

    Like you we buy a shack under cash/loan.Live in it. Do the work. Sell it for profit or rent it. Hard graft and means always living in a building site. Have rentals, dividends, interest, two businesses, a part-time job and freelancing. Never been so busy since I became an idle bohemian.

    Really like your blog/lifestyle!


    • Josh May 30, 2013 at 9:18 am #

      Thanks! You know I enjoy your blog as well, we have quite a bit in common.

      Wow that does sound busy – I bet it’s worth it though! What would you say are the main benefits of living the way you do?


  2. wealth means July 30, 2013 at 5:31 pm #

    Thanks so much for sharing this helpful post. I’ll make sure I use it to organize my business!



  1. How Consumerism Shapes Our Lifestyle - Minimalist Living: Leadership, Health/Fitness, and Lifestyle. - April 19, 2013

    […] “3 Steps to Become Independently Wealthy” […]

Leave a Reply