Getting out of the financial rate race is on everyone’s mind, especially among salaried employees who must toil no less than eight hours each day and usually go through the rush hour traffic that can take another hour or two just to get to the office and back home. This freedom is what many people pine for and often makes them gullible to quick-rich schemes that only sink them further into financial misery. In a highly consumer-centric capitalist world where the lure of acquiring this or that material possession and having an upscale social presence takes top priority, getting out of the rat race can remain illusory. But have no doubt, with determined zeal, it can happen.
Make that conscious decision now!
It will require time. Unless you win the lotto, inherit a fortune from a rich relative, or marry a rich tycoon, getting the financial freedom you long for will require about the same time it took you to sink into the rat race to begin with. In addition, it will require a level of patience and resolve that only a mature mindset can have. Consider the following:
(1) If you have been using your credit card with on a regular basis, it is time to make a conscious effort to rethink your irresponsible spending habits. Go back to the basics of spending only what you can afford, even if it means using your credit card, provided you pay all of your outstanding balances on the due date, leaving no balance that exact interests. Leave your credit cards at home when visiting the mall. Better yet, reduce them to just one or two for emergency and routine groceries. The money you spend on interest and paying for things you bought impulsively is the money you need to save and invest if you really want to get ahead.
(2) Review your utility bills and see how much waste you generate that eats unnecessarily into your current income. You can reduce your electric bills by unplugging appliances that consume idle current before retiring to bed (8 hours of saving) and leaving home for work (another 8-10 hours of power saved). Idle power consumption for each appliance may be small, but if you have many of them, like your LCD HDTV set in each room, or your disk players and audio systems continuously plugged to the mains, the aggregate amount of wasted power can be significant over the billing period. This is just one of those things you can do to lessen your monthly obligations. Do you leave the lights on when you leave a room? Do you run air conditioning when you are not at home just so it’s comfortable when you return? These all add up and limit the options you would have with more money to invest.
(3) Simplify your life. Do you really need all that subscription magazines and club memberships? Can you limit your eat-out dining experience to just once a month or during special occasions? How many DVD or Blu-ray titles you’ve watched once that are now gathering dust on the shelves? Can’t you just rent them out online? A little less exciting life today can lead to a much brighter future.
You may think that getting a promotion with a higher salary can give you financial freedom. It helps but don’t count on it. A promotion only allows you to step up in the consumptive lifestyle ladder. Because you now earn more, you get to spend more, mostly on the same useless things, like a fancy vacation, spending more on health club membership dues, or upgrading your smartphone data plan to something higher. Before you know it, you’re back to the same rat race that you had before getting the promotion, spending everything you make by your next payday. Getting out of the rat race, whether you earn more or not, is about a strong-willed determination to curb your spending lifestyle, so you get more disposable income to save with and enjoy life without incurring much debt. Only then will you be able to capitalize that great idea or invest in the real opportunity of a lifetime.
Michael Hastings is passionate about saving, investment and business. He is also a savvy investor who works for Nick Scali furniture company