There are many resources on the internet relating to leaving the rat race. “FIRE” (Financial Independence, Retire Early) is one such radical and fast track approach. The FIRE philosophy is based on saving and investing a large proportion of your salary (50-70%). This will enable you to accrue sufficient funds or assets to generate enough income to live off. Therefore, you need to acclimatise to living frugally so that your investments will be sufficient to sustain your living expenses.
A key part of this approach is to develop good spending habits early on rather than have to reduce outgoings later. This is a great strategy for those who wish to diverge from the conventional career path and not have to rely on a large salary. We certainly wish we had thought and planned for this earlier!
If like us you are already bound to the conventional consumerism path with a mortgage, annual long haul holidays, cars, and regular bills etc, you may need a more balanced approach. Whilst we don’t overspend or over borrow, we have followed conventional career paths and have become reliant on reasonable salaries. Although we planned for the future, we have only really maintained an average savings rate. Like many, our investments and pensions have been targeted for the normal retirement age. Therefore, we need a less extreme strategy to allow us to gradually reduce the need to maintain high pressure jobs.
Although we do adhere to some of the recommended FIRE principles, we are not quite ready to make the escape in one jump. We would, however, like to have the rural idyll and a better work / life balance and are taking steps to achieve this. Many people will be in a similar situation and if you have children that need support until they are independent, it will be even harder to make a radical change.
Our Strategy to Escape the Rat Race
Our strategy was to accept that whilst we would probably need to keep working for a while, we also needed to set goals to accelerate our escape from the rat race. We want to bring forward the point at which we will be financially independent. The aim is not to be reliant on career incomes by the time we are in our mid 50’s. In the meantime we want to live closer to nature and have a small plot of land to allow us to gradually become more self sufficient. We want to make this move now rather than wait until “retirement” to bring a greater sense of calm to our lives.
We aim to do this by following the steps below:
- Reduce our spending to allow us to save more.
- Learn more about investing and create a diverse portfolio of investments.
- Waste less.
- Create a more self sustainable life by moving to a rural area and buying a property with land. We aim to do this before “retirement” so we can enjoy the calmer space whilst we are still working.
- Pay off our mortgage by 55.
- Create streams of passive income or side hustles to enhance the reduced pension incurred by withdrawing early.
You can follow our journey to see how this strategy is working out for us. You may also be interested in the more radical FIRE philosophy mentioned in this post. For additional reading on this, one of the main proponents of FIRE is “Mr Money Mustache“, who managed to retire at age 30 after saving a huge proportion (around 70%) of his income. There are no rules to say you can’t pick strategies from many methods. It is well worth checking out his blog which has many interesting articles.