The response to this post has been powerful, and we've had many requests for tools to help. I've created a free site which helps with calculating early retirement in a variety of places around the world: nomad saver
This series presents a clear evaluation of the main rat race escape options, along with their merits, timeframes, and chances of success. It contains relatively few attempts to sell you things. There will be plenty of information you do not want to hear, and some that is not very politically correct. These posts are what I wish I could have read, and been ready to listen to, when I was 17. The older you are, the more frustrating it can be to consider this challenge. But hey, don't worry about what you can't control, channel your inner stoic:
The best time to plant a tree was twenty years ago, the second best time is now
This is the first of a three part series. Here are the sections, with links to navigate around:
Part 1: Why [this post]
Posts are best read in order, but if you want the quick fix go to part 3. Part 2 is about why quick fixes don't work.
Part 1: Why Should You Escape the Rat Race (and what is the rat race anyway?)
I make no claim to have it all figured out, I'm a random guy on the internet with modest credentials. But I have spent years thinking, studying, acting on, and educating myself about this challenge. I've made progress. The following is my working hypothesis, I apply it to my own life.
This post assumes you are not a lottery winner or a superstar athlete. It assumes you are not one of those lucky enough to be born or marry into an ultra-wealthy family who will gift you houses, companies, trust funds and the like at a young age. For those fortunate enough to be in that position, a new challenge awaits: how not to blow it (which is not necessarily easy, but not relevant to this series). I assume you are not one of those unlucky enough to be born in a country where opportunities and/or wages are limited. If you are in the latter category, your best bet is highly likely to be (at least temporarily) relocating to a country where your prospects will be better - obviously easier said than done, but this is a no BS guide, and I'm not going to sugar coat things.
Here's a sneak preview of what's to come:
But before we get into the specifics of what this all means, we have to talk about the "why" and the "how". Without this foundation, attempts to escape are unlikely to succeed.
Understanding The Rat Race Whirlpool
The rat race is that feeling you get when you are doing work that you don't like, to pay for things that you don't need, in order to impress people who don't care if you live or die. It's not being rewarded for the value you create, or seeing the value you create squandered. It's devoting your time to projects which do not matter. It's not being surrounded by motivated people. Being told to work on something because it's in vogue. It's a brilliantly crafted prison which allows a small percentage of the population to be fantastically more wealthy than the majority. If you've ever felt trapped in a cycle of commute-work-bills-more-bills that's indicative of the power of this prison.
The rat race is also the feeling of frustration you get when you realize what a bitch you are. You've got to ask someone permission to go on vacation. To leave early. In some cases to go to the bathroom. You've got to smile and hold your tongue. To guard your ass. To commute. To wear a fucking noose around your neck.
How did it come to this? Typical cages include: bills, mortgages, debt, dearth of other job prospects and family obligations. The rat race comes on a spectrum - some people feel it very acutely, say, those who get yelled at by their bosses on a daily basis but are unable to quit for fear of being unable to feed their kids. At the other end of the spectrum are people with great jobs, say engineers at Google who have their every meal catered, free massages and (mostly) interesting work. But make no mistake, if they are not there by choice (more on this soon), then they are in the rat race too.
This, like so many other things, is a classic case where hindsight is 20/20. There are a number of forces at work which make it very difficult to put the pieces of this puzzle together without experiencing quite a lot of frustration first. Here are the key blockers:
More specifically, the high school system in most western countries. Have you ever heard the expression, "if the product is free, then you are the product"? This is the case for services such as facebook and Google, where the real customers (not to be confused with "users") are companies who pay for ads to display to you as you browse. Well, what do you think high school is? It's free. And you are the product. Consider who you are making rich: Quite a few different potential answers here - but the main two are the government, with your taxes, and the ultra-wealthy with your labor. For example, if you work at Walmart, you create hundreds of thousands of dollars worth of revenue every year. Unless you are a senior executive, you will see very little of this value.
Now it's true you get some benefits from those taxes (for example, a standing army to protect you from being invaded by another country, who would then tax you more), so it's not all bad. But make no mistake, it is in the government's and the elites' interest for you to be an employee. You generate revenue for them. High school education teaches you to be an employee - it does not give you the skills required to follow the four main escape strategies detailed in this series. And is that surprising? The vast majority of teachers are career-employees. I'm not saying that high school is worthless, but I am saying that it is overrated. It was designed for a time when you didn't have all of humanity's knowledge in your pocket, when teachers were legitimate gatekeepers of information.
And the thing is, education has had perhaps the best marketing campaign in history. Not many parents or politicians would want to be overheard saying something like, "formal education is, by and large, about creating reliable cash-cows". Plus, schools provide an effective baby-sitting service so that parents can spend more time working in the rat race. It's only very recently that people have begun questioning the value of a University degree (which is a far more obvious scam than high school education), but I think it goes much deeper than that. So does Elon Musk, which is perhaps why he founded a school where the emphasis is on problem-solving:
Musk describes a school without the traditional grade structure of American primary education, with the goal of catering to students’ aptitudes not by arbitrary schedules but in real time, and using problem-solving methods to teach critical thinking.
Paul Graham also discusses the lack of value in traditional education in his fascinating essay on why nerds are unpopular, opining:
The mediocrity of American public schools has worse consequences than just making kids unhappy for six years. It breeds a rebelliousness that actively drives kids away from the things they're supposed to be learning.
I recently coded up a money lending program. Even though it's something I was aware of in abstract, seeing how profitable lending money is reminded me about the power of this business. Hence banks love mortgages. You end up paying them back huge amounts more than you borrowed, hundreds of thousands of dollars more over decades. Banks really want people to keep taking out mortgages that will take them a long time to pay back, because then they make more money. Combine this with societal pressure to "get on the property ladder" and you create a highly effective trap.
Your parents probably grew up without the internet. Back then, people stayed in jobs a long time, things didn't get routinely outsourced, and pensions weren't a joke. International travel was rare. As a result, a lot of the options you have available to you, they will struggle to appreciate. They also want things which are not in your interest, like for you to have a "stable job" (which is actually a deeply flawed concept, as Nicholas Taleb explores at length in Antifragile: Things that Gain from Disorder) This is because:
a) They really don't understand how much things have changed, in particular with the growth of the online businesses, the ability to build online products for previously infeasible markets - The Longer Long Tail , and remote working.
b) They worry that if things go wrong for you, it will create a burden for them. If you are in a scenario where your parents are actually counting on you to help support them later in life, then there is a much more serious conflict of interest.
c) Ego plays a role. Pressure to "settle down", so that talk at the bowling club (as it were) can switch to weddings/grandkids is attractive. Such advice is often highly counter-productive (more on this later).
It is staggering how many adverts we are exposed to everyday. Like filthy contact lenses you have no choice but to wear. Over time, these forces, combined with social pressure, shape your thinking. You begin to believe that getting more stuff is the answer to whatever question you may have. That you are "wasting money" on rent. That you need an SUV "to be safe". The end result is that you end up not saving very much of your paycheck, which is a critical error (more on this later).
As you can see, there is quite a cocktail of forces fighting to drag you into the rat-race. The final (but perhaps most brutal) obstacle is ignorance. Until I had started working, I hadn't realized that I would feel this sense of imprisonment. I mean, when you are a kid you kind of know that "grown-ups" have to go to work, and that they mostly don't seem to like it. But that wouldn't happen to you, would it? You would somehow be different, find a great job and basically you'd be the president/CEO/boss after doing a few years of strategy or something. When this doesn't turn out the be the case, you think "ah, well it must be this job then, so you try another job. You then get the "honeymoon" period where you're learning new things and everything is great. Then the desire to do other things creeps back, along with the feeling of "the grind". So you move again. It's only after working for quite a while that it starts to dawn on you: Shit, most work just sucks balls. There are some exceptions here, but if you are an intellectually curious person it is highly likely that the inability to work on something you really find interesting and/or worthwhile (not something that you've double-talked yourself into thinking is "good enough") is, over time, like a thousand paper-cuts to your soul.
The end result is that most people, though they don't like it, fail to escape the rat-race until around the legal age of retirement, and often after having worked in careers that were at best "OK". Guess what? That's a really fucking long time, and all your best years. This series will teach you how to avoid this scenario.
For those who genuinely love their job, then this series is not for you. If you inherited a billion dollars tomorrow and your routine would remain unchanged, then congratulations, you are blessed.
What does escaping the rat race even mean?
The short answer is financial independence. The long answer is: the point at which you feel able to do things you really want to do. Financial independence depends on how much money you are comfortable living on, which depends on your circumstances but not as much as you think it does. More on specifics in part 3.
For now, it's really important to talk seriously about why.
Why You Should Care about Escaping the Rat Race
There are five main reasons why escaping the rat race is worthy of time and consideration:
1) Freedom to pursue your interests and/or worthwhile work
2) Freedom to spend time with loved ones
3) Live a more moral life
4) Greater ability to contribute back to society
5) Self protection
Each of these is nuanced and complex. Let's explore:
1. Freedom to pursue your interests and/or worthwhile work
There are two fundamental ways to go about creating your "life's purpose". You can take the route of our current age, that of individual autonomy, by asking what is really important to me and thinking about your deepest passions and priorities. Alternatively, you can take the more classic route and ask What are my circumstances calling me to do? What does the world need? I don't know which of these is "best", but they both deserve consideration.
What I do know is that trying to pursue either of these options without upsetting compromises is extremely difficult when you are still in the rat race. Sadly, art rarely pays the bills. Even those fortunate enough to be living the "life of the mind" in academia and research labs face horrific bureaucracy and internal politics as the whims of governments, executives and elites change.
That’s really the great mystery about bureaucracies. Why is it so often that the best people are stuck in the middle and the people who are running things—the leaders—are the mediocrities? Because excellence isn’t usually what gets you up the greasy pole. What gets you up is a talent for maneuvering. Kissing up to the people above you, kicking down to the people below you. Pleasing your teachers, pleasing your superiors, picking a powerful mentor and riding his coattails until it’s time to stab him in the back. Jumping through hoops. Getting along by going along. Being whatever other people want you to be, so that it finally comes to seem that, like the manager of the Central Station, you have nothing inside you at all. Not taking stupid risks like trying to change how things are done or question why they’re done. Just keeping the routine going.
-William Deresiewicz, from "Solitude and Leadership"
The ability to choose how you use your given time, without the fear of being unable to meet financial commitments, the fear of job loss, the fear of being shunned by a community, gives you an immense freedom.
2. Freedom to spend time with loved ones
Although most people say that family is very important to them, how many people end up having their children raised by relatives, spouses or childcare staff so that they can work in time-consuming jobs? Being financially free gives you the option to raise your children yourself. To spend as much time with your family as you want. Do you really have an argument against this? The desire to be able to spend more time with family has been a key motivator for many in the early retirement community.
3. Live a more moral life
Maybe you love your job, and feel you are doing worthwhile work. You are in a fortunate position. Or perhaps you hate your job, but think that the work is important enough to be worth the sacrifice (I think this may be the case for many called to public office). Now consider the scenario where you know you don't need the salary. Suddenly, you are much more likely to behave in a way that is congruent with your own values. If your employer asks you to do something you think is ethically dubious, or negligent, you can stand your ground. This is much harder to do if you are a paycheck away from the abyss. Financial independence purifies your agenda, and you find yourself no longer living a life where you have to take as much shit.
4. Greater ability to contribute back
For some people, the answer to "how much is enough?" is always: more. These people will probably never give back. They are also unlikely to find much happiness in their lives. For others who recognise when they have reached financial independence, another opportunity presents itself: The ability to give back, to help others. This can take many forms, from low effort activities such as giving money to charity, to full-time efforts such as running for public office, creating not-for-profit businesses, mentoring others, or simply creating things that bring others joy. Now some of these things can be done whilst trapped in the rat race, but all of them can be done better after you have escaped. Giving back is a recurring theme among successful people - my favorite example is in Arnold Schwarzenegger's rules for success - number 6.
5. Self protection
We live in a turbulent time, where job security is growing scarcer. As Tyler Cowen writes in Average is Over:
These trends stem from some fairly basic and hard-to-reverse forces: the increasing productivity of intelligent machines, economic globalization, and the split of modern economies into both very stagnant sectors and some very dynamic sectors. [...] We have been seeing what is called "labor market polarization," a concept that is mostly identified with MIT labor economist David Autor. Labor market polarization means that workers are, to an increasing degree, falling into two camps. They either do very well in labor markets or they don't do well at all [...]the trend is clear: The middle of the distribution is thinning out and this process appears to have a long ways to run.
If you, or friends and relatives, have experienced layoffs, then you've seen the trend described above first-hand. The process of executing the strategies outlined in this series will help to protect you while you are still stuck in the rat race. And of course, the end result of escaping the rat race frees you entirely.
Hopefully this first instalment makes it clear that escaping the rat race is not about being able to sit on the sofa eating ice cream all day. It's about being able to live a more fulfilled life, having the time to be present for those you care about, and contributing more effectively to the world.
But it is not easy.
Part 2 is about setting yourself to increase your chances of succeeding. See Part 2: How