The Rat Race Explained - Life's Financial Trap (Avoid This)

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!