How to Escape the Rat Race

If you are familiar with the book Rich Dad, Poor Dad then you should already have a pretty good understanding of how to get out the rat race. If you are not, then keep reading and I’ll try to give you my understanding of what the rat race is and how to get out of it!

Firstly, what is the rat race?
The rat race is a way of describing the tedious process we as humans go through 5 days a week to live. Monday to Friday we get up early, commute to work to make someone else rich, and commute home. By the time we get home the kids could be in bed and you don’t see much of your wife. You work hard but never seem to get ahead – there are too many bills and loan repayments to make!

This is the rat race - running in a circle never getting ahead. This blog will try to give you the knowledge and tools to escape the rat race once and for all. However, it’s not going to give you get rich quick ideas, because these are pretty much non-existent (except perhaps the lottery!). What it will do is try to change your way of thinking and educate you financially.

When do you know you are out the rat race?
Well, according to Robert Kiyosaki, the author of Rich Dad, Poor Dad you are out of the rat race when your monthly passive income exceeds your monthly expenses. That simple. Once you hit this mark, you’ve done it! You could, if you wanted to, sit on your ass and do no work ever again! You could, in other words, retire.

So how can you get there?
I will try to show you that there is really only one way of getting out the rat race. That is the following:

LIVE BELOW YOUR MEANS and BUY ASSETS with what’s left.

And what’s an asset?
Well, those who have read Rich Dad, Poor Dad can smugly answer. An asset is something that puts money into your pocket without any intervention from you. Interest from money in a bank. Dividends from shares. The rent from a house you let(assuming of course the rent covers the mortgage!).

Is the house you live in an asset? Nooooo!!! Does your house or car put money into your pocket? Absolutely not. They take money out of your pocket, and a lot of it at that!

So, live below your means and buy assets. Seems pretty obvious huh? Well, too many people unfortunately live where their paycheque meets (or even worse doesn’t meet) their expenses exactly, leaving no money to invest.

More to following in the coming blogs!!!