Ever since I was young, I looked at the world and thought, really?
We drive to jobs we don’t like, in cars we can’t afford.
We buy coffee to give us energy, and have a drink at night to help us unwind from a hard day at the office.
We spend more of our conscious time with our colleagues than our family and friends, and collapse into a heap at the end of the week, cherishing those moments away from the office.
We go on lavish vacations to get away and destress, only to still be connected to our work emails at any given notice.
We undertake expensive qualifications to do all the above, and pay expensive school fees for our children to go through the process themselves.
I genuinely enjoy working and being productive, and working with clients that appreciate my services. But the monotony of the above does wear you down over time. When I was at school, I noticed this peculiar cycle of life even before I started to work myself. I always wondered if there was a better way.
One thing I’ve always known is, I’ve always wanted to leave the rat race.
The rat race: an ideal that earning more money and owning more material possessions will lead to a better life, and pursuing this ideal by constantly working more to increase your income, while continuously upgrading your material possessions, ultimately resulting in less time available for family, friends and lifestyle. The rat race is perpetuated by a desire to ‘one up’ your peers, to keep up with the Joneses, resulting in a work life imbalance, burnout and fatigue. Likened to a rat on a hamster wheel, constantly running, but getting nowhere.
In the back of my mind, I’ve always been looking for an alternative path, but I always thought I needed millions to retire. My idea of retirement was sitting on the beach, a beach house on the water, the Porsche in the garage. This kind of lifestyle takes a lifetime to build, if you can even get there in the end.
It took me longer than I’d like to admit, but I have now realised that the biggest factor determining when you can retire is your spending rate. If your lifestyle dictates that you will need to earn $200,000 a year to fund your lifestyle, you’re going to need $5million stashed away and earning 4% per annum to never run out of money. That kind of wealth is beyond the average person.
If you can alternatively live on just $30,000 a year, you’d only need $750,000 invested and earning 4% per annum to retire. That’s something I felt I could achieve. $30,000 is an ambitiously low yearly spend, but the point is that people get caught up collecting material possessions, when their lifestyle could be greatly improved by buying more time to live a lifestyle of their choice. There are many long held theories that material possessions don’t lead to happiness, so why do we relentlessly pursue them?
Think to the best times of your life. What were you doing? Who were you with?
I’m sure your favourite memory isn’t being at work responding to emails, or the mind numbing drive to and from your workplace by yourself, no matter how good your car was. It was probably when you were away from work, spending time with friends and family. Maybe you were on holidays, going to a new location and not being ‘on-call’.
You’ve got really ask yourself, if the things I am working for don’t buy me happiness, why am I still doing it? For me the goal is not to completely retire, but to retire from the rat race. It’s to have the independence to do what I want, when I want. To earn income passively, without having to trade hours for money.
The question then becomes, what am I willing to sacrifice in order to achieve this?
What would I sacrifice to be able to retire earlier?
Would I give up owning a brand new Porsche in order to be able to retire 5 years earlier?
Absolutely.
Would I give up a beach side residence if I could retire 10 years earlier?
Yes, I’ll take those extra 10 years of available time and spend it at the beach, rather than working my ass off to buy a beach house in my twilight years. I won’t need the convenience of a beach house as I’ll have so much free time to travel to the beach whenever I want.
You can exponentially increase your wealth and freedom by reducing your material possessions and material desires.
You need to mercilessly scrutinise your expenses to ensure they are adding value in your life.
Is that new car really worth working for a year to pay off?
Is that house with all the rooms we don’t use really worth an extra 10 years of working?
Imagine how much bigger we could live our lives if we lived in a house that was paid off, and we didn’t have to go to work everyday to make the repayments.
Feel the weight of responsibility falling away, as you think of what could be achieved if you could live off your investments and do whatever you want with your free time. And hey, if that new car really does bring you happiness, that’s fine too.
Do you want to be defined by your possessions, or by what you give back to society? There tends to be a trade off for everything in life. That house with the extra bedroom you never use, is it really worth working an extra 5 years to afford it?
How many of us go to jobs we don’t like, to buy things we don’t need, to impress people we don’t like?
What’s more important to you - your material possessions, or your financial freedom?