How To Get Out of the Rat Race?

In 2003, professional boxer Mike Tyson filed for bankruptcy with 30 million in debts, despite accumulating 300 million in his career. 

This poses a lot of questions about money itself because a great deal of our actions or motivations in life has an underlying desire to acquire it. But what is the point of acquiring it if the issue seems to be our ability to manage it? According to CNBC, 64% of Americans are now living paycheck to paycheck.

Americans now have the highest credit card debt in history.

In the UK (Jan 2020), the total unsecured debt per UK adult is £4,264.

Consider for a moment the money in your own life:

• What is money to you?
• Does it depart from you once you get it?
• Has it ever put you in a vulnerable position?

What I've come to realise is our perceptions of money are sometimes more crucial than our ability to generate it.

The money trap

What is money?

The other way to phrase it is "what does money represent?". You get paid for your time working at a job. Hence, money is a medium of exchange. It is an instrument that facilitates the purchase or sale of goods and services.

It is the perceived value. It is when you hand over something in exchange for something else because you perceive its value to be equivalent to the money you handed over.

Money= Value

This is so important because we give money a moral significance.

You can probably agree:

There is this saying money is the root of all evil. 

When we see a wealthy person most people assume:

• He got lucky.
• They took advantage of others to get ahead.
• Someone else had to lose for them to gain.

They don't often consider what value was created to generate that money.

Money isn't necessary evil nor does it make a person evil. Money simply opens up your horizons and broadens your experience. The choices that you make with that money has more to do with your moral disposition than the money itself.

How does this change the reality of a person living paycheck to paycheck?

To answer this question let us consider this question. What is your relationship with money? Money will come into your life and it will leave your life.

Think of it this way production versus consumption.

When you produce value= Money come in (labour, job, business).

When you consume something= Money goes out (food, accommodation, expenses).

Net worth

In a way, you can look at a person's net worth as their individual metric between their production vs consumption.

It is worth considering in your own life, the money that has come in and gone out in your own life. Based on the statistics the issue lies with consumption.

If Consumption> Production then this leaves most people in the red line of the scale. As you have seen with Mike Tyson, production means nothing if you have a problem with consumption.

Rat Race

The rat race is an endless self-defeating race of endless pursuit. The rat keeps on chasing the next big thing until it ends up dying. It is no wonder most people don't ever win the rat race.

That's the trap of being stuck in a rat race. Your job no longer becomes an option, it becomes a necessity to fund your lifestyle or pay off debt.

The things you own end up owning you- Tyler Durden (famous line from The Fight Club).

Consider this

Step 1: Understand your relationship with money

Consider how much money is coming in vs going out.

• Understanding your production vs consumption.

Step 2: Take control of your finances

• Budgeting and journalling your finances
• Adopt a lifestyle that leaves you with enough to save/ invest in one form or another.
• Before investing always remember to have an emergency fund (3–6 months of living expenses).

Avoid:

• Tendency to favour short term rewards as opposed to long term rewards.
• Keeping up with the Joneses.

Step 3: Make money

Personal channels like Graham Stephen and Dave Ramsey is great for working on your consumption site but if there is one thing I've learned is the importance of making money.

It is easier to talk about the amount you consume than it is to increase your income. When speaking to a mass audience giving advice that will work for most people is typically the best choice.

• There is a whole community of frugalism.
• FIRE movement, financial independence retire early.
• Save and invest for the long term.

Personally, I adopt these practices myself. They are huge role models that I follow and I believe most of their audience do as well. However, if we are being pragmatic, Graham Stephen's frugality of cutting coupons and saving every penny did not earn him a millionaire status. Dave Ramsey does not pinch pennies to earn him a millionaire status. 

These finance experts are producers that produce value at a large scale to the mass audience. 

They adopt an entrepreneur route:

Money= Perceived value in the market 

1. Finding a problem.
2. Create a solution.
3. Selling the solution.

This helps consumers move away from the pain problem to an elevated solution.

This isn't a route that everyone can or should take. It is reflecting on your own capabilities and considering if entrepreneurship is suitable for you.

This means it's important to produce value on a large scale. The internet has thankfully provided us with an opportunity to produce something and put it out to the market.

• Graham Stephen uses his channel to help us build better personal finance knowledge.
• Kevin David teaches us about Amazon FBA and setting up e-commerce shops.
• Ben Francis created his own fitness brand Gymshark and it branded extremely well, better than most fitness brands.
• For you, your production could be your 9–5 day job. However, this doesn't mean your production stops there.

Understanding yourself as a producer is about understanding how you can produce and add value to the market.

Conclusion

If you can produce value at a large scale, then it means earning money at a large scale. Escaping the rat race is possible if you find other ways to live to better understand your relationship with money, live within your means, and find ways to add value to the market.

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