For most people, their Monday through Friday involves waking up to a ringing alarm,
commuting an ungodly distance to work, taking orders from a boss for 8 hours,
and commuting back home leaving them with just enough time to eat and watch a show on Netflix.
Sadly, most people are destined to repeat this mundane way of life for the next 40 years, trapped
in the perpetual cycle of working to pay bills and ultimately make the companies they work for richer
than they already are. Depressing, right? Well, fortunately, there is a way out of this rat race.
If you know the right moves to make. So, let’s dive into why escaping the
rat race is so damn hard and how you can actually go about doing it!
First off, let me ask you a question. When was the last time you met someone who truly loved
their job? No, I don’t mean they tolerate it. I mean someone who cannot wait to go
to work each and every day. The reality is that meeting someone who feels this way is
a rare occurrence and the stats support this fact. Recent Gallup polls show that
roughly 50% of employees are only somewhat satisfied with their jobs. That means that
millions of people are going about the day to day grind, praying that one day they will be
able to escape the rat race and realize the freedom that they’ve always wanted.
But, as you’re about to see, achieving the goal of escaping the rat race is easier said
than done. In fact, how many people do you know that have been able to successfully achieve this
feat? Chances are the only people you know who are at least double your age and I would guess
that you’re like 50% of the workforce and have no intentions on working at your job forever.
It’s for this reason that anyone who doesn’t want to play the role of an employee forever
should have achieving financial freedom as their top financial priority. This means
that you are continuously striving to amass enough assets that will cover all of your
living expenses and allow you to never have to rely on a paycheck ever again.
Just picture it for a second. Instead of getting up to a ringing alarm,
you get up when your body is fully rested. Instead of commuting to work, you get to sit down with a
warm coffee and relax while reading a book. Then, you get to exercise and spend time with your kids,
not having any worries about work on your mind. How great would that be, right?
However, while this is a lifestyle that’s worth striving for, admittedly, it’s never
been harder to escape the rat race. However, if you understand what obstacles are in your way,
which I will share with you now, you will increase your chances of escaping the rat
race significantly and in much less time than you ever thought possible.
Now, you would think that the obstacles you would face in your attempt to escape the rat race would
begin as soon as you start your career but in fact the issues begin many years prior during
your upbringing. Unfortunately, most people are brought up with very little financial education
and this results in not understanding the fundamental principles of building wealth
including budgeting, saving, income generation and of course investing. The reality is that if
you don’t even know the rules of the game, it’s going to be incredibly hard to win.
In the best of cases, this lack of knowledge prompts people to seek guidance but unfortunately,
this only leads them further down a path towards financial mediocrity and a life of indentured
time. What do I mean by this? I mean that you’re likely to follow the path that you see most
others taking which is signing up for college and hoping the degree you’ll end up receiving will be
a path to an income you can use to better your financial situation. Well, you may get a degree
but if you’re like 55% of college graduates, you will also be leaving school with an average
student debt balance of $28,950 that takes the average graduate a whopping 20 years to pay off.
This means that you’re starting your quest for financial freedom from a negative position but
at least you have a job that can get you out of this situation, right? Well, yes and no.
The good news is that the majority of graduates do end up getting a job after college however
that doesn’t necessarily mean that they will be swimming in cash any time soon.
Recent reports show that the average college graduate now makes around
$55,000 when entering the workforce. While this may seem like plenty of money that you
can use to start paying off that student debt and unlock your financial freedom,
when you look a little closer, that rosy thought starts to sour.
Earning a $5,000 salary leaves you with around $3,500 after tax every month. When you take
into consideration the cost of housing, transportation, food and entertainment,
you’d be lucky to be able to pay off even a couple hundred dollars of that debt balance a month.
Hence why the average person needs 20 years to pay off their student loans.
Now, I know what you’re thinking, “well, you won’t be making $55,000 forever” and
hopefully this is true. However, if your employer is like most others,
your raises will likely not be the financial savior you hoped it would be. For instance,
this year, the average annual raise was 4.8%. That means that you would progress
from making $55,000 a year up to just under $58,000. While every dollar helps,
it’s really not going to move the needle when it comes to escaping the rat race for good.
Sadly, without the financial education talked about earlier, most people never come to realize
that their 9-5 jobs provide them little support in their ultimate goal of becoming financially free.
Most employers pay you the least they can to keep you and never a penny more. In short, your goal of
financial freedom and their goal of maximum profits are totally opposed to one another.
So, to recap so far, between not having any guidance around the most efficient path to
reaching financial freedom to the outrageous costs of college and embarrassing raises employers now
offer, it goes without saying that if you take the standard life path, escaping the working
world is quite the uphill battle. Sadly though, things only get worse from here.
You see, during the time we have between every day of work,
most of us end up using it to consume. We consume TV, movies and social media and sadly,
this only further worsens our financial troubles. This not only wastes our precious time that we
could be using to improve our financial situation, but it also causes real monetary ramifications.
I know for myself personally, I get an itch to travel whenever I go on Instagram and see pictures
of my friends' vacations. I know for others, they see people getting married and feel compelled to
keep up. Do you know what these things all have in common? You guessed it, they all prompt us
to spend our disposable income - income that we should be allocating to buying our future freedom.
Now, doing this is easier said than done. It’s hard to see your friends
having the time of their lives and living a luxurious life while
you’re putting every single penny away in order to buy your way out of the rat race.
But, let’s say that you are able to sidestep the temptations of TV and social media, you’re all
set then, right? Well, while this is a step in the right direction, there are external factors that
will pose as obstacles in your quest for financial freedom and sadly they are out of your control.
The main financial phenomenon that separates most people from amassing the money they need
to escape the rat race comes in the form of inflation. When inflation is on the rise,
prices of the common goods and services you buy shoot up, ultimately erasing any of the
financial benefits you would have gotten from raises and promotions received at work.
Therefore, whether you are the one holding yourself back from
saving money or it's the economy, in your quest for escaping the rat race,
there will always be a foe you are trying to defeat. This leads us to the realization that
most people have once they’ve been in the working world for a while and see how all
of these pieces come together, especially in relation to becoming financially free.
What most people come to realize after working for a few years is that their 9-5
job simply isn’t going to cut it. This is why right now roughly 93% of Americans now
have a side hustle that they either use to cover their bills or make progress in their
savings efforts. If that’s not a sign of how futile jobs are for making money then
I don’t know what is and if you yourself want any chance at escaping the rat race,
working more is in the cards for you too. However, here’s where things get a bit tricky.
When you’re young and have very few responsibilities,
it’s easy to pick up a part-time job, drive for uber or ask for overtime. But,
as you age, your time becomes more scarce. All of a sudden, you have a partner to spend time with,
kids to care for and this is assuming your job doesn’t extend beyond eight working hours.
In fact, it’s this shackling to your daily responsibilities that
acts as the nail in the coffin of anyone who wants to escape their
9-5 life and why most people are destined to work until they die.
Fortunately for you, there is a way out and if you ask me, it’s the only way to escape the
rat race and live a balanced life because even though money is important, it’s not everything.
First things first, you must create a 9-5 escape plan. This escape plan will
include everything from when you want to escape,
to how much you need to save and invest, and even the means of doing so.
Working backwards, we must start with how much money you need to retire or escape.
This amount is entirely dependent on how much it costs you to live and is why if you want to
speed up this process as much as possible, you need to become less income reliant.
This means downsizing your living space, spending less on entertainment and being financially
conscious in how you get around. Given that these are the most costly expenses most people have,
these will give you the most bang for your buck and will naturally allow you to save more money.
Once you have an understanding on how much you can reasonably live off of,
it’s time to determine what your escape figure is.
I recommend having 30 times your annual living costs just to be safe
because once you leave your job, you don’t want to ever have to go back.
For example, if you can live off of $40,000 a year, you’d need $1.2 million to retire.
Next, you have to determine how long you are going to give yourself to save up this amount
of money. Generally speaking, the longer you have the lower your contributions to
your investments will be but given you probably already don’t love your job,
I’d guess you want this timeframe to be as short as possible.
For the purposes of our example, let’s say you have no money saved so far and want to escape in
15 years. This means that you’d need to invest $4,000 a month, assuming an average 7% return.
Now, clearly you’re not going to have the cash to contribute this month solely from
your 9-5 job which is where the final piece of the puzzle comes into play.
As we already stated, your life won’t be 100% committed to making money which is
why you need to start using whatever spare cash you have from minimizing your expenses
and working extra hours to acquire assets that will pay you when your time becomes more scarce.
For instance, generating $4,000 to invest could come in the form of a blog, a rental property,
a digital product and the list goes on. Sure, this will take a bit of time to get
off the ground but if you don’t find a way to generate the income you need passively,
at some point you will find that you will no longer have the time to work more hours,
and this is the trap most people fall into and end up stuck in the rat race forever.
Therefore, if you’re serious about escaping the rat race,
avoid the mistakes I just shared, minimize your expenses and funnel every extra dollar
you have towards your escape fund and soon you’ll be kissing that cubicle goodbye!
If you want to learn, grab my course where you’ll learn personal finance skills which
school likely never thought you, time management with my “Time Master Course”
and Side Hustle success where you’ll learn how to make an extra $1,000 a month or more!
Until next time friends. Have a good one!