To me, it's the ability to cover my living costs through passive income.
This does not mean replacing my full salary which is much more than my current living costs. What it does mean is that I would have the ability to leave my job while maintaining my current living standards.
Getting out of the rat race doesn't mean stopping work either. It just means stopping working for someone else for a salary.
It's the just first step. It's independence from a traditional job.
If I knew anyone who was out of the rat race, it would be you, TW!
I guess I would have to first define what the rat race is. To me, the rat race is:
- having to get up in the morning at an hour defined by the time I have to report in to work, 5 days a week,
- driving through peak hour traffic, 5 days a week,
- reporting in to work, 5 days a week,
- being accountable to a boss who has power of approval over my presence or absence from work (annual leave as well as retrenchment),
- being subjected to a periodical review of my activity ("I have noticed you spend a bit more time on the phone...")
- having to sell my soul, play politics or brown nose to get a higher pay
- being told what to do at work
- not being recognised for the efforts I do.
So getting OUT of the rat race for me means not having to work for a boss, I guess! I would much prefer having my life regulated by my beautiful wife and sensational two sons (who are my whole reason for existence), and enjoying what I would need to do to finance that life. I would extend that to being able to finance that life through passive income (i.e. return on my investments, or residual income).
But pray tell, TW, why do you ask?
(aka Jacques in the old forum)
Firstly I will define what I think the "Rat Race" is.
It is being stuck on the tread meal of working 9 to 5 (or 7.30am to 8pm!) either as an employee or a business owner (working IN rather than ON your business). It is a feeling that your life is not your own and that you are barely treading water in terms of keeping up with your daily bills.
Getting out of the rat race would mean different things to different people. For some it would mean a passive income that covered all of their expenses and some and they need do nothing to create this money. For other people doing their property stuff on a full time basis would make them feel that they were out of the rat race.....even if they do have to put in their own time to create a cash flow each month.
Whatever else it is for me it is a feeling that your life is your own.
Great question and one everyone should think about.
Have to agree with everyone of the "passive income = living expenses" for the definition of "getting out".
The "rat race" is the requirement of living from "paycheck to paycheck" I think.
One extra qualifier I would like to add, is that being IN the Rat Race is where you're worth is measured by others and not yourself.
Your salary (income) is determined by your Manager or Boss, and this can even vary by how much they like you or not. Or even due to clerical errors. Whereas investing is a better reflection of your own efforts and abilities.
You wake up, dont do a deal means you dont generate some income/cash. Simply the more skill/effort applied the more results you get.
Funny enough, it was that thought that turned me into an investor. One year "no promotion" and realised that my value is not based on my efforts, but what others "think" of my efforts, so from that day forward I just come in and do my "work", not even concerned about "climbing" the ladder, and better spending my time/creativity/energy towards investing which has better returns for effort.
I actually prefer to use the other Kyosakism, that being 'Financial Freedom'.
In my opinion financial freedom is the main objective and it is when passive income equals or is greater than expenditure. To me being out of the rat race means not having to work within tight externally imposed constraints as opposed to not having to work at all.
I am in agreeance with just about everything said on this subject so far.
I asked the question, as there seems to be a lot of different ideas, of what "getting out of the rat race" means.
To me , getting out of the rat race, is where my total expenses, INCLUDING my husbands, and childrens, are covered by the passive income my husband and I have worked so hard to generate.
I am in agreeance, that it doesnt end there, and , once you are in the position of having a large passive income, you want more, and the natural laws of nature, make it so you spend more.
(Also, school fee's go up etc etc etc)
Fortunately though, once you are out of the rat race and you or your partner, no longer needs a "job", you also have an enormous amount of time, to get creative, and think of other wild ideas, to make you MORE money.
The brain is a wonderful thing!
I like Kiyosaki's words....
You are as rich as far as your passive income can feed you,
so, If your family was to stop "earning income from a job" the amount of time you last, is how rich you are.
We have done this exercise with quite a few friends, and the results are amazing, we had friends who were rich indefinetly, we calculated, their passive income would go on for ever! At the same table, we had friends who were one week rich, and another couple that said, that if they didnt pay any bills or mortgage, they could probably survive a month before one of them had to get a 'job'.
I love the indefinetly, what a legacy these people are leaving their children and future grandchildren.
I tend to agree with most posts here on this subject, but rather than needing more Income than Expenses from pasive income, I will feel free when I no longer need to do overtime to supplement my income. But after that I think I would feel trapped again and need a step 2 escpae of not working for some one else.
Then probalby a step 3 escape of never having to work again , but just spend my time on hobbies and recreation
To me the Rat Race is something more basic than lack of Financial Freedom. There are many who opt out of "the rat race" without having achieved financial freedom.
Going back to where ( I assume ) the phrase comes from , I see rats running around lab experiments mindlessly , without any concept of their reason for existence, being controlled by forces over which they have no influence.
So for me it means a pointless directionless existence , where one has no long term goals, let alone any plans on how to get there.
There are some who have not achieved financial independence, but who have a clear plan on where they are going and their current , high pressure / high pain(d) job would be part of their overall plan. Does their use of "the rat race " to finance their long term goals make them victims, or by using the system do they avoid being part of it?
>I like Kiyosaki's words....
>You are as rich as far as your passive income can feed you,
>We have done this exercise with quite a few friends, and
>the results are amazing, we had friends who were rich
>indefinetly, we calculated, their passive income would go
>on for ever!
>I love the indefinetly, what a legacy these people are
>leaving their children and future grandchildren.
What were they doing, TW? IP only? Shares? Business? A mixture? Author of Harry Potter books?
Is there something we can learn from what they are doing?
(aka Jacques in the old forum)
I cant remember where I read it, but a nice measure of freedom is, if one were to stop working the next day, based of your monthly(or weekly) cost of living. How many months (weeks) could you sustain yourself for with the assets you have. This may include selling up your assets to support this.
Unless one can say indefinitely then one is not truly financially free.
It consisted of getting out of bed @ 5am for day shift. Working your butt off for 8 hrs . Putting up with commuting, D/hd bosses & other employees. Putting up with people that thought they were so wonderful because they were one level above you. Constant changes and threats of being made redundant. Years of improving your education at Tech & Uni to allow you to obtain a job that would pay $5 p/hr extra. But still placed you at the pressure of those that ran the system.
Having left the Rat Race I now earn less in the form of wages.
However I decide what i want to do each day. I get out of bed when I want. i go to playgroup or to the park or the beach as I please.
I set out developments and delegate it all to contractors. I run my investment portfolio via my mobile & fax.
I do what I WANT TO DO!
I could earn more if I went back to shiftwork 7 days a week and also ran my property business. For what? At the end of the day I am in CONTROL of MY LIFE.
To be Out Of The Rat Race To Me Is To Be In CONTROL.