What Do You Need to Get out of the Rat Race and Achieve Financial Freedom?

What does it mean to get out of the rat race?

Rat race. Source: http://thinkingnectar.com/2008/winning-the-rat-race/

To me, the phrase “getting out of the rat race” represents the desire and drive within most of us to live our passions and achieve our goals. If you are living the life of your dreams at a 9 to 5, then the rat race does not exist for you. If, however, you are simply working at a 9 to 5 (or 8 to 5, or 7 to 3, etc…), out of safety and inertia, not out of love and passion, then you could be looking to get out of the rat race, too.

I currently have it good for my stage in life, and compared to many other people and where I could be, I really have no right to complain. I do, however, still feel that I am leaving something behind. I don’t want to do 9 to 5 for the rest of my life, and I believe that something better is possible.

The keys here are to both increase income and reduce expenses.

What are your financial dreams?

Getting out of the rat race is one of my own financial dreams, and achieving it means having the ability and freedom to just pack up and take off anywhere I want, without wondering how I’m going to pay the mortgage next month. My job is pretty good for a 9 to 5, and I currently make a good living, but nothing is certain in life; I never know what can happen next year. Also, a 9 to 5 career does not intellectually nor emotionally appeal to me.

I don’t just want to sit on my ass in an office all day; I want to get out there, do things, and see the world. I do want to continue working, and hopefully begin generating significant income online.

There are financial barriers to just packing up and heading up today, but there are emotional barriers as well. Without a significant wall of savings, there is less security, and without that security, I don’t feel that I’m ready to leave the 9 to 5 just yet. I need to start working on my infinite portfolio before I can do that.

How do you start building up your financial scaffolding and leap over your emotional barriers?

Pay down debt

I believe that the primary source of insecurity is debt. Mortgage debt, consumer debt, student debt are simply some of the different types of debt that we can have. Debt is lurking around every corner, and waiting to take ahold of us if we are not careful.

Dealing with the largest debt of all: housing debt

In some situations, debt is unavoidable. In Canada, housing prices are on the high side, though not the extreme side. Higher housing prices necessitate taking on more debt, so unless you have a lot of cash sitting on the side or you are willing to rent for the next couple of decades, you will need to take out a mortgage.

You also need to ensure that you have adequate insurance, just in case something bad happens. You need to make sure that all your bills are paid on time, as you don’t want to end up like the man whose house burned down, with the firefighters just looking on because he hadn’t paid his bill!

I, for one, am not willing to rent for the next couple of decades. The rental stock around here is of inferior quality, and rents are not significantly lower than housing prices when discussing similar locations. I need to consider the quality of life, not only for myself, but also for my partner in life. Therefore, I do currently carry around mortgage debt.

My personal recommendations are that total housing expenses should not exceed 33% of net income, with some planning for future interest rate increases. Some leeway is acceptable, but if you find yourself in 38%-40% territory and beyond, perhaps you should reconsider your decision to purchase.

The important thing to understand is that debt is not evil nor objectively bad. When debt is used with caution, then it can be a wise choice. Ultimately, however, if one wants to speak about getting out of the rat race, then one has to pay down debt, supplant that debt with income, or use that debt to invest.

By doubling our mortgage payment, we could bring down the mortgage to a very small amount in 7 years time, and completely pay it off by 9 years time. We would be in our mid to late thirties by then, but with no mortgage debt.

Diversify income

In addition to paying down debt, the other key to getting out of the rat race is by diversifying your income. If I had enough side income to support a backpacker’s style of traveling, then I could conceivably take off for a year and just travel around the world. One of the ways that I personally want to focus on is building up online income.

What about the condo? Market rents in the area are high enough that it could be rented out at between a small gain and small loss in cash flow. At the worst case, the burden might be $300 to $400 a month.

Instead of renting the condo out and taking off, I could also use that side income to accelerate the down payment of debt and investment, thus allowing me to pay off the mortgage fully in 5 years instead of 9 while taking a nice vacation each year, or I can use that side income to expand and generate more side income!

Diversifying your income so that you are not solely reliant on your 9 to 5 opens up a new world of possibilities.

What is your rat race number?

Your rat race number is simply the amount of money you need to have in your investment portfolio in order to never have to work another day in your life. This is what I call the infinite portfolio. The formula for the rat race number is very simple: (expenses – income) / 3%.

Over the long run, a 75% stock/25% bond portfolio with a maximum of a 3% rate of withdrawal appears to do pretty well, even through depressionary events. Going all-in stocks when the markets crash will simply increase returns. Being all-in stocks the entire time might also increase returns, but opens yourself up to more variance in income and long droughts, such as the last 10 years.

I recommend a maximum of a 3% rate of withdrawal because this allows you to build up capital reserves during the good years, which can then be drawn down during the bad years without having to drastically alter your standard of living.

So, what do different rat race numbers look like? See below:

Costs for a couple (examples)
Item Monthly Expense Rat race number @ 3% withdrawals
Internet $40 $16,000
Food $350 $140,000
Shelter (no mortgage or rented) $700 $280,000
Shelter (mortgage) $2,000 $800,000
Public transportation $100 $40,000
Transportation via used car $470 $188,000
New car $720 $288,000

So, once you have $16,000 invested, you’ll likely never need to work to pay for the Internet ever again. 😉

These numbers look large, but don’t succumb to sticker shock. While you carry a mortgage around and a new car, it will be difficult for you to exit the rat race. What about if you pay off the mortgage and go with a used car? Your base monthly expenses might be around $1600 for a couple. If you never worked a day again in your life, you would need a rat race portfolio of about $640,000 in order to accommodate your base expenses. Since the markets have historically returned more than 3% over the long run, your portfolio and income will continue to grow over time.

Wait a second, I am asking you guys to both pay off your mortgage AND save up $640,000? I agree, that is a tall order, but this is just what I consider the minimum number to be safe, if you never work a day again in your life. What if you do continue to work? Generating $2000 a month for a couple is very doable, and with a rat race portfolio of only $320,000 and an income of $2000, you would spin off plenty of income to travel and enjoy life with. One guy is already doing it and enjoying life with less than that.

The best way to exit the rat race might simply be to generate as much income as you can during the most productive years of your life. I don’t believe you need a massive income either; $60,000 to $100,000 for a couple is very reasonable and doable. Some familes have had success with much less than that.

Before you hit 40, focus on your career and on your side business income and generate as much income as you can. Aim for a savings rate of at least 25%, but 40% or more is even better. Don’t forget to enjoy life and take vacations, but build up your reserves and pay down that debt. Reduce your expenses as much as you can, and take advantage of ways to save money, like a tax free exchange. By the time you are in your mid 30s, you’ll have built up a nice war chest that should spin off dividends and that will continue to grow with time, and help you achieve your dreams of getting out of the rat race. This is what I’m personally hoping to do!

Further Reading

So, reader, what are your own dreams, and what steps are you putting in place in order to work toward achieving your goals?

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  1. larry macdonald says

    Life style considerations are important.
    Postponing marriage/kids helps. Some people don’t even have kids for financial reasons. Living like a student after start career helps too. Not buying a car and instead living within walking/biking distance of soffice, stores etc.

    • says

      We’ve postponed the kids until now, but as the 30s approach, I’m not sure how much longer postponing we can do. The car is also a big expense; bigger than it seems if you go by just the monthly payment!

  2. says

    My Financial Dream is simple – Freedom to choose when and how to work. I would still choose to work where I am right now, but that kind of freedom makes me smile. Fantastic Post…I think you just inspired/deserve a full response.

  3. says

    Interesting way to present the Rat Race Number. I never thought of how much I need to quit the Rat Race. I just thought that since all rats get a job and work harder everyday in their own “labyrinth”, I rather stay away with the “normal path to the rat race” and start a company as soon as possible 😉

    I would also like to live from my online income because it would mean that I could live from a hobby instead of working everyday. this is my definition of leaving the rat race.

    • says

      Making a living from a hobby would be a dream. I would personally stay with the day job until I at least had my debts paid off… or, the hobby became REALLY big and could replace my day job! If I got to that point, I would be pretty pleased with that, too.

  4. says

    For one of us to stop working, we need 1 million saved and invested. For a real lifestyle change we need around 10 million… that’s what we need to buy a house in the SF bay area (around Palo Alto) with cash, and pay taxes, college education for kids and related expenses, and be able to eat out as much as we want to do. So it will be a while before we leave the rat race. Though we might change mazes before then.

    • says

      With 1 million you could live like a queen in many parts of the world… and live very comfortably in many more parts… hmm, maybe it is time to change mazes?

  5. says

    i like the rat race# and infinite portfolio concept. i’m gonna start using those terms around the house :).

    unfortunately my portfolio is very “finite” at the moment, but hopefully not for long. I’m hoping I can get there within 10 years….yes it’s agressive, but i’m an entreprenuer and the risk/reward thing could make it happen in a very quick time frame.

    • says

      Entrepreneurship is a great way to vault past those barriers. My own portfolio is quite finite as well, so working on building that up too!

  6. says

    Great article. I like the point about diversifying income.

    My strategy to get out of the rat race is to focus on dividend investing. Stocks paying passive income really help cushion a portfolio during recessions, plus it’s a great motivator to see a larger and larger passive income stream each year.

    • says

      Dividend income looks like it would play a decent part in a rat race portfolio, though I think that tax treatment would affect your investment decisions, too. For example, if you were in a jurisdiction where capital gains were not taxed, then you might prefer to receive those over dividends. In Canada, I believe that there are stocks that are eligible for preferred dividend tax rates, so the calculation can also swing the other way.

  7. says

    Financial freedom is the ultimate goal, the way I see it, when it comes to personal finance. What income stream results in freedom may be different for each of us. Our rat race numbers are all different, and I think it makes sense to be able to live on a number that accounts for a low expense portion.

    Anyway, what I really like here is how you advocate saving early and often. The much repeated figures of 10% or so really won’t get people to financial freedom all that easily, in my opinion. I think you’re spot on when you mention 25% or even 40% if you can. As shocking as that might seem to the general public, I think it’s actually smart in this day and age.

    • says

      Financial freedom really does open up a lot of possibilities. I have repeated the 10% figures myself, but I now look at these as the bare minimum. 10% will allow you to build some savings, but if you want to really be aggressive about financial freedom, you are going to have to do more than that. In many parts of the world, 25% and 40% are normal.

      A middle-class family can achieve a very good retirement and still live a good life with a savings rate of 25% to 40%. They might be driving somewhat older cars and spending less on certain consumption items, but in the bigger picture, they will only be giving up a little bit in the near term in exchange for much more down the road.

    • says

      I would prefer to shift income over into activities that I enjoy doing and activities that I can do with just a laptop and an Internet connection! I think I will stay career-oriented for a few more years until I’ve paid down a significant amount of debt, but I think even with just 500k banked and some decent online income that I could start living some dreams, like spending a year travelling around the world.

      Of course, a lot depends on if we have kids or not and when. If we do, maybe we’ll be doing something else instead or maybe taking many shorter vacations; I really don’t know. Life never goes entirely as planned, and there are so many things to do but only so much time.

  8. says

    Interesting number presentation. I never thought about my future “need to have in order to stop working” number. Now I know how to come up with this number! Thank you for a great post!

    • says

      Although the number represents the “what you need to stop working”, in truth these numbers are overstated because few people will stop working entirely. I personally won’t stop working; I would just prefer to shift my income generation and diversify so that I am not overreliant on the 9-to-5. For now, I will use the 9-to-5 to save and build up net worth though, because compounding really makes a difference over the long run!

    • says

      Be sure to check out the recommended reading as well! Each blogger has a different focus (Jacob focuses on reducing expenses and saving, while AJC focuses on wealth generation, for example), and there is something great to learn from each and every one of them!

  9. says

    Looks like your # if you total everything up is $2,000,000!

    When you say 3% withdrawal, do you mean after one year, you have $2,060,000 and you withdraw $60,000 so that you always have $2,000,000 in the bank?

    Or do you fade it til a certain age of death?

    • says


      I think it’s better to have the margin of safety that Kevin is alluding to with that 3% rate of withdrawal. Or 4%. Seeing the portfolio as an annuity of sorts ensures that you could live forever and not run out of money, if you’re conservative with the amount you take out. If the markets ending up producing 1% per year, including dividends, as an average during Kevin’s retirement, then he’d be facing that big ugly monster of penury anyway. Why not put the odds in your favor, withdraw 3-4% annually (indexed to inflation) rather than PLANNING to draw it down as time goes on with a larger withdrawal rate? There’s never any certainty, but it’s nice to cover as many bases as you can.

      That said, few of us will make nothing during retirement. So many of you guys have your blogs, and probably some future consulting gigs as well. They could go a long way–even if you only make $15K per year in today’s dollars.

      One of the toughest things, I think, is doing something you don’t enjoy. If you die at 50, then you may have spent the best years of your life doing a 9-5 that you hate. My wife and I sometimes travel, backpack style. And it’s so refreshing to see older people working here and there because they enjoy doing that. It’s funny. Some of them don’t even have a lot of money, but they love what they’re doing: dive mastering in Malaysia, helping to run a Thai resort, or writing freelance pieces for a magazine. There are risks with anything in life, but I think the biggest risk might be doing something you don’t enjoy. Your employer is essentially purchasing your life. And what price $ is worth that?

      As always Kevin, this was an excellent post. And I look forward to reading what other people feel/observe/believe etc.

      • says

        I think that the annuity analogy is a great way to look at it. I also see 3% as really around the maximum withdrawal that you want to do. If you can generate income on the side and reduce withdrawals to 2%, 1%, or even 0%, then that’s even better. Your portfolio will continue to grow at ((8% to 10%) – withdrawal%) during the good years, and around (0% – withdrawal%) during the bad years.

        Once you’ve paid off your home and car, these type of expenses should not grow faster than the rate of inflation. Over time, your income to expense ratio will continue to improve, and your standard of living will continue to rise as the capital that you do not consume contributes to income in future years.

        One thing to watch out for might be rising healthcare costs in the late years, but if one commits to paying down debt and compounding growth as early as their 20s and 30s, they should have a great war chest by the time they hit the 70s and 80s.

        I haven’t looked at government transfers at all, but those who paid into CPP and its equivalents should expect to see at least some % back in their later years, assuming that the government does not completely renege on its promises. I think it is better to do the calculations without assuming any kind of transfer, though, and to look at the pension payments as a pure tax.

        P.S. Great observations regarding quality of life and doing what you love, Andrew. In the end, it really is about that, and finance is just a tool to help us get there. Thanks for mentioning that!

    • says

      3% means that you only withdraw that much from your portfolio, so if you have $2,000,000 you won’t withdraw more than $60,000 in a single year. Historically, portfolios with this withdrawal rate have survived major events, even the great depression.

      This is the number if you never work a day again in your life. If you can generate $15,000 with side income that you do as a hobby, and you have fixed expenses of another $20,000 or so, then you only need to cover $5,000. Your number would be $166,667. You could double it given that you might not generate income for a year or two, and for maximum security, $666,667 would be the number that you would need to never have to work another day again in your life, at least for your main expenses.

      These numbers are meant to guide you rather than serve as absolutes set in stone.

  10. says

    Great post that got me thinking and motivated. I also like your discussion of creating multiple streams of income, breaking down your expenses and having focused goals!

    Side note, I hate that we call working the rat race. It’s quite insulting to the rat. Even rats have more sense than to stay in that ridiculous model!

  11. says

    Another great post Kevin!

    while financial freedom is the dream and the goal for many amongst us starting with myself, one should never forget to live.

    Do not focus so much on your goal that you end up ignoring your significant other or alienating your kids.

    Life has its pleasures no matter which class you belong to, make sure you don’t miss out on those moments!

    There is so much more in life than money….

    • says

      Agreed, Mich. Some sacrifice is needed if you want to build up a bright future, but the sacrifice should not lead to unhappy family members. The most important thing you can give them is time & love, and never lose sight that the whole point of financial freedom is so that you have more time and freedom with them, together!

  12. says

    I love this post because it challenges us all to think beyond our current circumstances and ask ourselves what we REALLY want in life. It is easy to simply go through life in a rut and believe that is all life has to offer. I am convinced that will not be you!

    As for me, I can say that at retirement age that I have financial freedom. I was fortunate to be able to work a job that I liked (but didn’t love) that provided for my family. My wife was able to stay home with the kids, which is part of family financial freedom. Today we have zero debt, good cash flow, and live a simple life style we are happy with. I even get to blog…when I want to. :)

    • says

      Good thing you get to blog every now and then, as I always enjoy your posts!

      I was once a little more of the persuasion that life was a rut, but my eyes have been opened a lot over the past few years. All it takes is some imagination and role models to look up to, and an application of perseverance and dedication to the goal. I believe that anyone can do it if they are committed to it. It doesn’t matter if you’re rich or poor; it’s all about your mental state of mind and what you want out of life.

  13. says

    Wow, great post Kevin.

    For me financial freedom is to not work for money. I will probably do the same thing I am doing even if I achieve that, but I can choose to not go to office and not fear a layoff…

    That said, we have been putting away as much as we can without sacrificing our lives too much now. I have been looking for a way to calculate my “number”. This is an excellent way to do it, I will try to see what is our rat race number.

    • says

      So long as the number is something achievable and realistic, you are well on your way! I also agree about the security of not having to fear a layoff and working because you enjoy it.

  14. Mike says

    Hey Kevin,

    Another great post. I especially like the idea of diversifying one’s income. Whether or not someone feels they are in a rat race, the mere ability to learn how to diversify your income and (more importantly) CREATE your income without a job, is a skill that will only serve you and provide you more financial independence/freedom.

    On another point, the more you build up the online income (diversify) the less “do or die” the investment portfolio income becomes. Multiple streams of income and balance are never a bad idea.

    • says

      Definitely agree with you on the importance of diversified income. I added your article to the list of recommended reading, as it was one of the inspirations for this article!

  15. says

    Another excellent, well thought out post.

    My dream would be to be able to live a few months in a different location each year in retirement. (Meaning, head to Florida one winter, Costa Rica the next, etc, and have my current home in the north for summer.)

    We are a looooong way off from attaining that goal as I have three little money suckers taking up all our discretionary income! :) However, we have plenty of time to save, and we are doing our best to put away every spare dime we have, but we do like our vacations.

    I would love if my blog could provide a decent income, but that is incredibly far off. If I had a lot of extra cash, I would be purchasing rental property. So, we are just accumulating what we can and will look to appropriately invest it when the time comes.

    • says

      I think the idea of living in different locations each year is quite cool, actually! I definitely would not mind that lifestyle at all, and explore a little bit of the world each time.

      I wish I had cash to invest down south; I’d also go for properties given all the opportunities currently available. For now, I’m with you on the blog income. I’m going to keep focusing on that, and hopefully my site finally gets a rank sometime! 😉

  16. says

    Firstly, thanks for the mention Kevin!

    Secondly, great post and well articulated!

    Thirdly, I love this post (like Joe above…) since it asks us to stop and reflect what we’re really striving for. I too, don’t want my 9-5 job in another 25 years. I want to leave the workforce early, while I still have my health and sanity :) Besides, there are too many other things I wish to accomplish in life. Life is very short. You need to do what you want with it before it passes you by.

    My wife and I are planning a move soon (post to come) and our plan is to play off our mortgage by the time we’re 55 and have a war chest of dividend paying stocks of about $500,000. Add in our work pensions, RRSPs and we’ll be fine. That’s our formula.

    I look forward to chatting more Kevin, and with your readers as well, to see how we’re all progressing towards our respective lands of freedom 😉


    • says

      That is a great warchest and plan, and I think it will set you up for a great life of travelling to different countries, enjoying the different wines, and seeing the world out there. I have to crunch my numbers again; I have not thought too much about dividend investing, but there do seem to be some merits to receiving dividend payments instead of reverse dollar-cost-averaging an indexed portfolio once you are in withdrawal mode (though I would never withdraw more than 3% under normal circumstances).

  17. says

    Well presented! As you mention, I have a similar philosophy but one based around a 5% ‘rate race’ multiplier. But, I would never advocate actually withdrawing the 5% per year … it’s more of a ‘planning number’.

    Then again, my multiplier assumes that you will plonk your money in a an asset class that prevents 100% loss of capital AND provides an inflation-adjusted income, for example:

    1. TIPS – Treasury issued Inflation Protected bonds do just that, but at a low income, or

    2. A reasonably diversified real-estate portfolio – eg buy outright (i.e. no mortgage) a few commercial properties and live off the rents (keeping a suitable buffer for expenses and vacancies). I can’t think of a situation where all of my properties would have $0 value after 10 or 20 or 40 years of living off the rents.

    Thanks again for the mention!

    • says

      Those options seem like they would provide a very stable income that could be expected to rise with inflation, and with the properties you have the potential for some capital appreciation of the land, too.

      I like your philosophy of striving to increase income in order to catapult over the walls, as savings alone with a regular income will do so much. With diversified income, you can invest more, pay down debts faster, and achieve your goals that much quicker. I definitely don’t want to be in my 50s and 60s when I finally achieve financial freedom!

  18. Mark says

    My dream is to work out of choice not out of necessity. I agree with the most important factor being generating as much income as possible. You can only cut expenses so much but your income can rise forever.

    • says

      Definitely true. Reducing expenses will help a lot, but it’s just one component. Saving early & often and increasing income are very important, too.

  19. says

    For me, definitely the rat race is defined as the 9-5 job and ultimately doing something you love. It doesn’t necessarily mean you don’t have to work for me, but that what you’re working on makes you happy and you don’t dread working every day. I feel like in the US, more than anywhere, the rat race is the biggest problem (very few vacation days, longs hours, etc.)

    What do you think of the new ING calculator thingy that tells you how much you’ll need to retire?

    • says

      I just tried it and it said that I’ll meet my objective by age 65. My portfolio kept rising after that date so it was an infinite portfolio. What I don’t like about these calculators though is that they don’t have a concept of the rat race or infinite portfolio in mind. They are built with the (IMO) out of date assumptions of working your ass off until 65 (or whatever date) and doing nothing afterwards except for drawing down capital.

      Maybe I should work on a “rat race” calculator. 😉

  20. says

    It seems that you have read “Rich Dad, Poor Dad” :-) Knowing that you are trapped in a “rat race” can be very disturbing, at least I felt that way once I got a regular job. My salary is high and I am content, but since I am aware of the “rat race”, there is an inner force that is in lust for finding a way for financial freedom, and getting rid of work.
    As I discussed earlier, I am in doubt that people should work 9-5 ! I think that is product of society, not of human’s nature! And while all this is survival, not everyone will understand that.

    • says

      Yep, I have read it. I am not an overall fan of the guy or the book, but I do find the basic concepts very powerful, and very important for anyone to understand.

      It is incredibly liberating to know that there is a second way, and that the path that has been made obvious and expected of you is not the only one there is, and that you have a choice.

      • says

        That is true, Kevin, I am not really big fan of Robert as well, since I think the book is more like a wrapped marketing box, but at least it made me think – to think hard and to be careful with my money. Now I tend to gain some assets, up until that moment I had never thought on that topic. Quite interesting indeed.

  21. says

    Great post! My goal is to get out of the rat race by the time I’m 40. I want to leave the corporate life behind, but I’m not going to stop working permanently though. The goal is to find something I love to do and just make enough money to pay the bills. Hopefully by 40, I would have enough saved up for the 60+ phase of life.

    • says

      That’s a great goal, IMO. I would like to do that the earlier the better, but realistically speaking I think by mid 30s or by the time I’m 40 I will be able to do it. That’s still much better than 65.

  22. says

    As I sit here at my desk I agree with working a 9-5 or in my case 7-430. I reference frugality quite a bit because I believe that we live overcomplicated lives. Personally I never watch tv so why should I pay for a TV, the electricity for it and the cable? I wash my dishes by hand so I’ll never have to pay for dish detergent nor the maintenance on the washer nor the electricity. I rarely if ever eat out and I cook a lot of my food from practically scratch. I try to make my life more enjoyable by having a sense of accomplishment. I not only save money but I boost my self asteem. Besides that I think your article is great and I have a feeling that if more people chose the harder road they would have an easier time later on in life.

    -Ravi G.

    • says

      No, this is a great point. A lot of it is about cutting out unnecessary expenses, not simply building up capital to live exactly as we live now because that might take longer than we expect especially with lifestyle creep. There is also nothing wrong with a 9 to 5 if you enjoy it, but I feel it’s even more enjoyable when you know you don’t need to depend on it to survive the next month. :)

  23. says

    great angle and way of presenting the cash needed for the various expense line items. i like the way you concluded your post. i agree with this. many choose to expedite the journey by starting side gigs and working hard on them during their most productive years so they can reap the rewards later on. that is exactly what i am partly doing as well

    • says

      You’ve shared a lot of great information on these side gigs, and I appreciate it! This is something I’m moving into over time as well.

  24. says

    we all sometimes feel a little bit under the weather but… these days passed fast… most important is in this time, that you stop and think for a minute – think about how short life could be and what you want to make of it. think about beeing 60-70 years old… and do you think, that you will regret a lot of things that you have done in your life? would you change anything? Dont forget, that we should enjoy in life and smil as much as we can. These woul b great memmories.

    Thanks for the article and good tips. We need good advices all the time.


    • says

      I agree, and that’s why I don’t see the “work your ass off until 60s and then don’t do anything” mode as ideal. The earlier I can hit financial independence the better! Thanks for the comment.

  25. Choodeelown says

    The essay is very wonderful. Thanks for the sharing. Hope the author can update it often.


  26. Timberlake says

    I stopped the rat race and started a new live with new non-business goals with the help of a special income increasing investment method I had tested and studied over years just in the hope to stop the rat race without having to reduce to much of the expenses of my family. I just recently published in my website the investment strategies which I found to be helpfull for many to increase income, build quicker capital or rebuilt battered savings and require only small investment funds. The results are great, if you always remain within your risk tolerance levels und don’t invest but a few thousand dollars to build up your capital reserves and your risk capital over some years.

    • says

      Thanks for stopping by! I’m happy to hear it, and I also agree that one doesn’t have to be a millionaire or deploy massive capital funds to get out of the rat race. It just depends on where you are, and if you want to do it the “easy” way or the “hard” way!

  27. says

    You know, I was almost the same a few years ago – promising myself, that one a have enough money I will travel the world, buy BMW and see the world.

    You have everything to realize your dreams, if you do not do it now, no money could help you.
    I do have money to take 10 years off, should I want it but I do not do it… The reason I want something else. Albeit, I visited 4 new countries last year.

    I do like how you presented the rate race number. However, I have recently added two other factors – inflation and administration fees. Both of them could add up to 4%, it means that at current stock market & bonds performance it means negative returns.

    • says

      Enough money to take 10 years off definitely sounds like financial independence to me. :)

      The rat race number is a useful concept, but I personally don’t think I would stop working at all. You could use it more like “well, if I have X amount, then I don’t need to worry so much about being tied to my day job if I can make Y doing this. If it doesn’t work out, well I can still survive because I have enough to cover the base expenses.” Just being there would be pretty amazing.

      I definitely agree about inflation/admin fees too. I recommend index funds to reduce those fees, as well as the taxation aspects from active investing.

  28. says

    Just in case anyone was wondering, to figure out the multiplier for any given rate of return, simply divide the rate into 12.
    So, 3% return = 12 / 3%, or 12 / 0.03 = 400
    4% return = 12 / 4%, or 12 / 0.04 = 300
    8%return = 12 / 8%, or 12 / 0.08 = 150

    Take the multiplier and multiply the monthly cost of a given service (i.e. Internet @ $40/month), and multiply by that.
    $40 * 400 = $16,000 (since we’re using the 400 multiplier it’s 3% rate of return)
    $40 * 150 = $6,000 (or at 8%, you’d only need $6,000).


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