View Full Version : How to Escape the Rat Race

11-23-2009, 02:14 PM
How to Escape the Rat Race
by Brett Arends
Friday, November 20, 2009

How much money do you actually need to take this job and shove it?

Go on, admit it: You've thought about it. Maybe you've imagined quitting your job and easing into early or semi-retirement -- or starting your own business.

It's a perennial topic, but it's especially timely now. Millions are either unemployed or working part-time. Millions more fear their job could be next.

Obviously there are a legion of complicating factors involved in anyone's decision. Sherrill St. Germain, a financial planner in Hollis, N.H. with a lot experience in the field, says the big issue for many clients is losing group health insurance. "That's the thing that keeps them stuck," she says. "That's the deal-breaker." Say what you will about healthcare reform: The present system is a huge drag on economic mobility and entrepreneurship.

But even if you can surmount all the other complications involved in escaping your current situation, how much money would you need to have saved up to make it a viable idea?


How far will your savings get you over the long term? Someone investing their savings conservatively should certainly be able to earn about 3% a year over inflation. If you want to withdraw $10,000 a year and make it last for, say, thirty years, you will probably need to have about $200,000, or twenty times as much, saved up now. Anyone giving serious thought to the idea of escaping is going to need to take a hard look at their expenses. "It's all a game of cash flow, in or out," says Mitchell Reiner, a financial planner in Atlanta. One of his clients, a senior executive in Atlanta, recently managed his escape: He and his wife threw in their expensive lifestyle and took early retirement to the mountains. But they axed their monthly expenses in half, from $7,000 to $3,500.

The biggest saving was simply on real estate: Mortgage, property taxes, insurance and other expenses. They sold their expensive home and moved somewhere cheap.

What can you live without? It's a truism but worth repeating: Most middle-class household budgets can be cut. The most common advice is to look at your current expenditures and see where you can pare back. But if you really want to escape, the more radical idea is zero-based accounting: Start with a blank piece of paper, and see what you would need to spend to be comfortable.

"The problem with people nowadays is that a 'necessity' is any luxury your neighbor happens to have," jokes Ernie Zelinski, a frugal living guru and author of "The Joy of Not Working and How To Retire Happy Wild and Free." He adds, "We can all live on less than you think."

You might not want to go as far as Mr. Zelinski–"I don't own a cellphone, I drive a '95 Camry, and for two years I lived without a sofa," he says–but the principles he espouses aren't crazy. "You're financially independent if you have $15,000 coming in and $14,900 going out," he says.

How much do you need to be free? Maybe you should ask instead: How much do you really want to be free?

Interesting. I wonder why health insurance is considered more of a deal-breaker than a mortgage? :confused:

Yahoo (http://finance.yahoo.com/career-work/article/108206/how-to-escape-the-rat-race?mod=career-selfemployment)