What Does It Mean To Be Wealthy? (Part 1)

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Does Being Wealthy Mean a Big House and a Nice Car?

In this three part series, we will address what it means to be wealthy in today’s world. In years past, wealth was associated with the accumulation of material things such as a large house, several nice cars, a summerhouse, and expensive vacations to Europe, etc. While that is still associated with wealth, it no longer defines wealthy. Freedom from debt and the ability to live life to the fullest define the wealthy of today.piggy_bank_drowning

There have always been  people who were considered wealthy, but were in fact living hand to mouth. The difference today is that after the mortgage market meltdown in recent years, it has become apparent that this was all an illusion. The crash forced many people to wake up and break from the habit of acquisition and keeping up with the Joneses. Instead, Americans are focusing on personal satisfaction and personal goals like living with little to no debt. The numbers bear this out, consumer debt is as low as it’s been in eighteen years.

Forget numbers, let’s bring it home with a personal story. James’ story is a typical one, but it has a happy ending.

I can remember the day my Dad told me that a bum on the street was the richest man on the block. I was twelve years old. My Dad was driving me to my private school in his new truck. We had just left our nice, tastefully decorated, suburban home. I didn’t understand what he meant when he said that the 5 dollars that bum probably had in his coffee can was all his while almost everything in my Dad’s bank account was someone else’s. It took another sixteen years for me to understand what he was trying to teach me.

The crash hit me hard. I was a real estate appraiser. Times were good. I was making over $100,000 a year. I just bought a house. I bought a new BMW. I ate well. I lived well beyond my means. 6 months after the bubble burst, I was homeless, carless, and jobless. At 28 years old, I moved back in with my parents. I borrowed their cars to go look for work that just wasn’t there. One day, after my sixth unsuccessful interview in a week, I sat in my parent’s kitchen near tears, and I realized, I was going about this all wrong. I was chasing the same false wealth that got me in trouble in the first place.

The next day, I found work. I made work. I began to market myself as a freelancer doing market analysis. There was plenty of work, but I was making about half what I was before. That was fine. I used every penny I could spare to pay down my remaining debt. I got to zero and was the wealthiest man on the block — just like that bum on the street. I saved up, and within six months, I bought a sailboat. I am wealthy. My money is my own. One day I will take out a mortgage and buy a home, but it won’t be like before. I know my definition of wealth and my limits. I’ve come to love the freedom that comes with disposable income. I don’t need the fancy car or the biggest house on the block. I think the crash has taught a lot of my generation that wealth isn’t about owning things; it’s having freedom and peace of mind.

James was lucky. He had a marketable skill that he can use in a down market and  parents who were willing to help him in his time of need. Even with these advantages, though, he isn’t that much different from you or me. He defined what he wanted and what his version of wealth is and worked hard to make that happen. You can achieve your own personal finance goals. You *can* be wealthy. You just need to figure out the meaning of wealth.

Part 2: Examining the Wealth Paradigm Shift
Part 3: What Modern Americans Can Learn from the Greatest Generation

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