Opting out of the rat race isn’t always that easy. Most people already have bills to pay whenÂ they see the futility in trading their time for money. They already have a mortgage or rent to pay every month, a car to run, food to buy and various other outgoings. This in itself is part of the rat race. We have ‘bought into’ this realityÂ because we are taught it.
By the time we realise we are trapped, it is so much more difficult to escape. When the bills start overtaking the income, debt builds up. When it does you begin to fall behind. You now have interest to pay on your debt, and this can suck all the joy out of your life, and lead you into a downward spiral.
Opting Out Of The Rat Race
Opting out of the rat race seemed like the obvious to me. I despised the 9 to 5 and most jobs stole my joy and made me feel repressed and miserable. I longed for ‘freedom’. But the freedom I had came at a price. I never had any money! For several years I lived in a run down house in the middle of nowhere, I was living on benefits and doing the odd job here and there.
I lived quite a ‘free’ life in many ways but the price I paid was in having no money most of the time. I had time freedom but no money freedom. Opting out of the rat race had come at a price. Money. I wanted a means to keep my time freedom while making money. But every job seemed too high a price to pay – theyÂ took all my time. By the time I had paid all my bills, rent and costs of running a car, I had nothing left.
I searched for another, better method of making money by using the internet to sell digital products online.
Paying Yourself First
My father lent me a book called ‘The Automatic millionaire’ by David Bach. This book taught a lot of money principles. The kind we should all be being taught at school. One main principle is that of paying yourself first. Rich people understand this principle. Basically it means paying your wage into a savings account before you spend any money. Most people pay all their bills and then spend what’s left. Wise people pay themselves first. The small amount of money they pay themselves gets deducted straight away from their income. So they learn to live on less that their wage.
The interestÂ which builds from this savings account compounds over many years to generate larger sums of interest.
Pay Off Debt
Paying off debt is more important because you pay interest on that debt. It’s worth paying off debt with savings because the interest on debt is likely to be far greater than the interest on your savings. Paying off debt and lwoeing your outgoings is a main principle of opting out of the rat race. When debt builds you pay interest. Many people borrow to buy things and then pay the minimum amount off each month. That will keep you in debt forever. Your debt will grow and so will the interest.
Control Your Desires
It’s not always easy to make money income. But haveÂ far more control over what you spend. In The Automatic Millionaire David Bach talks about another money principle called The Latte Factor. The Latte Factor refers to those little ‘treats’ you get for yourself every day such a a cup of coffee – a latte! In a single day this might seem irrelevent, especially if you’re looking at a mountain of debt.
However, if you just spend Â£4 on a latte every day, over the course of a year you will have spent Â£1460. If you also get yourself a biscuit at Â£2 too, you will spend Â£2190 over the course of a year. Look at your little habits and you will soon see you can increase your income simply by giving some of them up. How much do you spend on cigarettes, coffees or alcoholic drinks every week? How much does that make over the course of a year?
Don’t Trade Time For Money
The limiting factor with a job is that you trade your time for money. Time is always limited. Even if you made Â£60 per hour, you are still trading time for money. You can’t stop working, or the money stops coming in. Finding a business model which allows you to sell over the internet without having to trade your time means you can leverage the internet to make money. The internet lets you trade other people’s products to a global audience. You can sell products over and over again, making money from multiple sources. Learn how here.
Pay Off Your Mortgage Early
Paying just a little extra on your mortgage (if you have one) every month means you can shave years off its duration. It might mean having less holidays, a smaller car, or making do in other areas but it will save you a lot of money in interest. Plus, once its paid off you are mortgage free. Having less outgoings means your income will stretch further every month you are without it. Paying off your mortgage early is a great way to start opting out of the rat race.
Dropping Out Of The Rat Race
If you’re serious about dropping out of the rat race you also need to have a look at what lifestyle choices you have bought into. Do you have a lot of stuff? Do you need the very latest model of car to keep up with the neighbours. Having a high price on your self image means you are already tied into needing money. The money you save by having a more modest facade, can mean you have a whole lot more freedom in your life. Take stock of your jewellery, car, posissions and house.
How much energy (and money) goes into your external appearance and the image you attempt to portray to the outside world. In David Bach’s book The Automatic Millionaire he calls this “Big hat no cattle”! It’s like trying to give the impression of being an important person with impressive and expensive material possessions, but without having the ‘cattle’ of business to back it up. Are you ‘big hat no cattle’. I was, and this struck a cord with me. I wanted the external ‘trappings’ of wealth but didn’t have a business to fund it!