By Matt Theriault
Having now read the book Rich Dad Poor Dad more than 15 years ago, I remember when I was first exposed to the idea of escaping the “rat race.” I had heard the rat-race expression before, but didn’t know how to define it in quantitative terms. That book gave me that definition, as it did for countless others. Simply put, if your monthly expenses exceed your monthly residual income, then you are IN the “rat race.”
From that point forward, I had a new definition of wealth and independence. If I were to shift my focus from making piles of money to that of making streams of money, just maybe I could escape the rat-race. I became obsessed with this new focus. After a moderate investment in my financial education and taking action on what I was learning, in less than four years I had managed to create a monthly passive income that exceeded my monthly expenses. Per Robert Kiyosaki’s definition, I had officially escaped the rat-race. I was free!
I’ve shared this story over the years with many. Some were amazed and inspired; others were skeptical. Knowing what I know now, I could manage my escape in half the time, at least. In this past year I’ve helped two of my clients, Parker Stiles and Corey Kendig, escape inside of 12 months. That’s not meant to impress you, but to merely demonstrate what’s possible with the right mindset, strategies and guidance.
It’s rather simple to escape the rat-race, and it doesn’t require an extraordinary effort to escape quickly, either. I’ve compiled a list of eight actions any one can take to start now and accelerate their escape.
- Get your mind right. The great escape begins with your thoughts. Specifically, shift your focus from making piles of money to creating streams of money. The mathematical truth is that it takes just too long for the average person to save a large enough pile of money that will create enough of a residual income to escape. It can work, but it’s a 40+ year plan for most.
- Invest in your education. Become a lifelong learner. Turn off the radio in your car and listen to educational audio programs like audio books and podcasts. Go to meetup.com and look for financial, investing and entrepreneur events in your area and put as many as you can on your calendar, and attend. Make it a point to attend a seminar or workshop at least once a year. Keep your eyes and ears open for mastermind groups. There are many ways to invest in your education from completely free sources to big-ticket organizations and groups.
- Assess your assets. Take inventory of your assets and create a list sorting them from the highest yielding asset down to the lowest. The goal now being to move your lowest yielding asset to the top of the list. Ideas in improving your asset yields are, but not anywhere limited to, selling and re-investing, exchanging, leveraging and improving.
- Assess your expenses. Take inventory of your fixed expenses and create a list sorting them from the largest expense down to the lowest. Work big to small reducing expenses and eliminating what isn’t necessary. Working on your tax liability (since its most people’s largest expense) will likely be the first order of business. Schedule regular meetings with your CPA for tax planning and strategy. Other ideas may include refinancing your mortgage, refinancing or paying off your car loan and consolidating credit card debt to a lower interest card. Expenses vary greatly from person to person, just remember to work from biggest expense to smallest for maximum impact and speed. Ignore Suze Orman and enjoy your daily $4 Starbucks, unless of course that is your biggest expense.
- Include your spouse in your rat-race escape plan. Mercedes and I talk to countless aspiring real estate investors each year at Cash Flow Savvy, and the number one reason we see people fail to even take the first step in escaping the rat-race is that they don’t see eye to eye with their spouse. You MUST get on the same page with your partner or it’s going to be a tough road to navigate. If you’re already at odds with your spouse in the financial department and the thought of sharing your escape plan with them makes you a little nervous, try easing them into the idea by allowing other sources to educate them. Share with them a book or a podcast that supports your financial ideas, or attend a workshop or seminar together.
- Be intentional about creating your environment. Guard yourself from the naysayers and 9 to 5’ers. Network with like-minded people that are on the same path as you, and take your financial advice from someone who is leading the life you want to live. Ultimately, your results will be impacted by your surroundings and whom you spend your time with more than anything else. Don’t leave your environment to chance.
- Start. You can’t steer a parked car. There will never be a perfect time to launch. Travel as far as you can see, and when you get there you will see further. The road to your escape is passive income. The most logical vehicle for most people is income real estate. The fuel to accelerate your journey brings us to the 8th way to escape the rat-race faster, and that is…
- Leverage. You’re only one person and you can only move so fast on your own. Escaping the rat-race fast will take a team. By leveraging other people’s time, experience, money, resources, effort and deal flow, you can 10x the speed of your escape.
If I were to start my escape over, those are the first 8 things in my life that I’d address. Had I had this information when I did start, there’s no doubt I would’ve escaped twice as fast, if not faster.
A final thought on escaping the rat-race…
You may have heard the idea of “compound interest” referred to as the 8th wonder of the world because of its wealth creation power. If you’re okay with waiting 40 years for the magic to happen, I’m not going to try and dissuade you from applying it to your rat-race escape plan. However, if you like the idea of escaping the rat-race in more like 10 years, understand the pursuit, growth and management of passive income is what will set you free. If even 10 years is too long to wait for your escape, apply the eight strategies above and you can be out in no time. Mercedes and I created a step-by-step escape plan and passive income guide so our clients can get started on the right track, and fast. If you’re at a loss for where to begin, you’re more than welcome to a free copy of our plan and guide. Go to CashFlowSavvy.com to download these rat-race-escape materials.
By the way… Matt Theriault has a new project to help investors bring credibility and some “celebrity” to their business all the while sending organic motivated seller leads to them, indefinitely. He can only take one full-time real estate investor per region and he still has Orange County and Los Angeles available. If this seems like it might make sense for your business right now, you can view a short video he made about the project here -> https://youtu.be/V5mzxoz13Kk or read about it here -> http://NoAgentNeededBook.com
