Rat Race Off Ramp

Wake up, go to work, come home, go to sleep, repeat.  Work, get paid, spend, repeat.  These are the cycles millions of people go through constantly all over the country.  And sadly, millions of these people will go through this cycle for most, if not all, of their adult life.  But why?  We live in a consumer-driven, instant satisfaction society and haven’t been taught the basics of personal finance.  This is what I call the ‘Rat Race.’  We have tons of educational requirements around the country, but only 21 states require any personal finance instruction in high school, with only six requiring a stand-alone course as a high school education requirement.  Last time I checked, every single person needs to have some sort of income and pay bills. 

According to recent polls (see here and here) only about half of workers are satisfied with their jobs.  Sadly, that also means about half of workers aren’t satisfied with their jobs.  Which half do you fall into?  And even if you are satisfied with your work, it’s likely that you’ll reach a tipping point where the work isn’t as satisfying for the compensation you’re receiving, or the hours and time at work are taking too much away from friends and family. 

Okay, so what is the ‘Off Ramp’ and how I can I get on it? 

The ‘Off Ramp’ is the path out of the ‘Rat Race’ and towards financial freedom.  Taking the ‘Off Ramp’ is your choice.  It is prioritizing your future time through spending less, paying off debt, and investing more.  If a secretary, janitor, librarian, and flight attendant can all become multi-millionaires, it is definitely possible for you too.  The ‘Off Ramp’ leads you towards ‘F.I’ or ‘F.I.R.E.’

Simply put, the ‘F.I.’ stands for ‘Financial Independence’ and ‘F.I.R.E’ stands for ‘Financial Independence, Retire Early.’  These are growing movements, oftentimes young professionals, to save significant portions of their income to build a nest egg so they can ‘retire early’.  ‘F.I.R.E.’ can be somewhat misleading.  Personal finance writer David Bach thinks the ‘F.I.R.E’ movement should be renamed the ‘F.I.T.E’ movement, ‘Financial Independence, Transition Early’.  ‘F.I.R.E.’ isn’t necessarily about retiring early.  It is about saving enough money, so they don’t ‘have’ to work 60, 70, or 80 hours a week, and it gives them options.  Some options are:

1. Working in a field they are more passionate about
2. Volunteering more
3. Transitioning to a lifestyle that is more in-line with long-term goals

It will allow you to do more of the things you want to do, instead of things you have to do.  You’re probably skeptical, and that’s totally understandable.  Maybe you’re not interested in retiring early and that’s fine too. But that doesn’t mean you shouldn’t be thinking about and contributing towards your retirement, from today until the day you do retire.  But let’s be hypothetical for a minute… 

Could you ‘retire early’?  How could you get to ‘retire early’?  And what would your new life look like?  Imagine slashing your expenses as you approached your early retirement goal.  Your primary residence paid off.  A reliable car paid off.  Student loans paid off.  No credit card debt.  How much money would you need to stop working? Could you get a part time job? But for significantly fewer hours?  One million dollars invested and paying a 2.5% dividend yield provides $25,000 per year in income, which is over $2,000 per month.  It may not sound like much, but if your mortgage, car payments, student loan payments, and child care costs are zero, your monthly expenses would be drastically reduced. 

Not only could most Americans be financially prepared for retirement by ‘retirement age’, a significant portion of the country could retire early if they choose to make saving, investing, and paying down debts a priority. 

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