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  • Dec 6th, 2018 11:00 am
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[OP]
Jr. Member
May 18, 2007
125 posts
180 upvotes

The rat race

Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.

Ellen Goodman

Is there anyone here who has or is in the process of escaping the "rat race"? What dollar amount is sufficient for you to be financially independent? $1 million? $10 million?
105 replies
Deal Addict
Apr 9, 2010
2660 posts
810 upvotes
Montreal
wonginator wrote:
Nov 24th, 2018 7:45 pm
Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.

Ellen Goodman

Is there anyone here who has or is in the process of escaping the "rat race"? What dollar amount is sufficient for you to be financially independent? $1 million? $10 million?
Depends on your age but if you're 25-35 years old about 1.5 million if you rent or buy a condo in an affordable market and invest the remaining 1.2~ million.
[OP]
Jr. Member
May 18, 2007
125 posts
180 upvotes
kenze wrote:
Nov 24th, 2018 8:04 pm
Depends on your age but if you're 25-35 years old about 1.5 million if you rent or buy a condo in an affordable market and invest the remaining 1.2~ million.
Have you quit the rat race? I understand the general recommendation is 4% withdrawal rate but this based on studies with retirement lengths less than 30 years. With increasing interest rates and possibly inflation in the future I wonder if this is still valid for someone who wants to quit the rat race earlier..
Deal Addict
Jan 2, 2015
1314 posts
361 upvotes
Toronto, ON
People used to need $1 million. At a 4% withdrawal rate, that was $40,000 per year. It takes more money now. If you could retire on $80,000 per year, then you could retire on $2 million. You might not need that, if you pay off your mortgage before retirement.

That's assuming no annuity or defined benefit pension plan; both state what your annual income would be (at least, if they're inflation-adjusted).
Member
Jun 13, 2018
208 posts
154 upvotes
Money will not buy your way out of the Rat Race. It's a voluntary action
Member
Apr 2, 2016
331 posts
150 upvotes
Wouldn't take much. I can live very comfortably on $2000 net income if I had to. My retirement plan is to live on investment income and not touch the principal.
Deal Addict
Jul 27, 2017
1807 posts
658 upvotes
GTA
wonginator wrote:
Nov 24th, 2018 7:45 pm

Is there anyone here who has or is in the process of escaping the "rat race"?

What dollar amount is sufficient for you to be financially independent? $1 million? $10 million?
when I was young, newly married in my 20's I also wondered about that, based on staying in Canada

I wanted to quit the rat race, go somewhere, anywhere where we could get off the grid, not answer to anyone, just be my/our own persons, live a care free happy existence.

using today numbers I'll give you the numbers that we would do today

a) first off we'd need to find a place somewhere in Canada (posted on another thread tonight) that we could buy cheap.

I found a multi-family income property in the Maritimes Moncton NB for $50k (yes that's $50k), this way we could live in one half of the property, rent out the other side which would pay all the running costs ... utilities, property tax etc

b) we would then need an amount of money to live on from investments. so being the eccentric thrifty folks that we are, I figured $100k invested returning 11%/12% year or $1000/mth would be plenty for a mortgage free, zero property running costs would do it. Yes it possible to get recurring income safe'ish at those levels in Canada .... just needs a bit of ingenuity.

what would we spend & what would our running costs be?

a small vehicle (4 cyl pick-up truck would be ideal) with with 3rd party insurance & gasoline, free provincial healthcare, prescription/dental bills need to be covered, clothing from the thrift store, oil change & repairs I'd do myself, a phone/internet package.

Total $300 - $400/mth

to support our lifestyle we'd grow our own veggies, bottle & can stuff, buy everything on special, price match & in bulk .... grocery bill for 2-people ~$200/mth

misc costs $200/mth

c) bottom line: $150k of capital would do it, no leverage, zero mortgage & we don't need to live in a third world country

d) with a bit more capital I would probably do a wind/solar power system that has a 20 year payback & maybe feed back into the grid for extra income.

e) rural Ontario (there are places at each end of the 401) a triplex, $400k, or the Maritimes - a triplex, $200k, live in one section, rent out the other two - $800 - $900mth rental income, to pay property tax, utilities, repairs.

$100k invested as in b) & c) above

basically for e) $500k

footnote: since we are seniors it would be a piece of cake

if we were 20's to age 60, we'd probably also do part-time work, Tim's, or something that's 25 hrs week, minimum wage as extra cash for toys or vacations
Last edited by porticoman on Nov 24th, 2018 9:25 pm, edited 1 time in total.
[OP]
Jr. Member
May 18, 2007
125 posts
180 upvotes
porticoman wrote:
Nov 24th, 2018 8:56 pm
when I was young, newly married in my 20's I also wondered about that, based on staying in Canada

I wanted to quit the rat race, go somewhere, anywhere where we could get off the grid, not answer to anyone, just be my/our own persons, live a care free happy existence.

using today numbers I'll give you the numbers that we would do today

a) first off we'd need to find a place somewhere in Canada (posted on another thread tonight) that we could buy cheap.

I found a multi-family income property in the Maritimes Moncton NB for $50k (yes that's $50k), this way we could live in one half of the property, rent out the other side which would pay all the running costs ... utilities, property tax etc

b) we would then need an amount of money to live on from investments. so being the eccentric thrifty folks that we are, I figured $100k invested returning 11%/12% year or $1000/mth would be plenty for a mortgage free, zero property running costs would do it. Yes it possible to get recurring income safe'ish at those levels in Canada .... just needs a bit of ingenuity.

what would we spend & what would our running costs be?

a small vehicle (4 cyl pick-up truck would be ideal) with with 3rd party insurance & gasoline, free provincial healthcare, prescription/dental bills need to be covered, clothing from the thrift store, oil change & repairs I'd do myself, a phone/internet package. $300 - $400/mth

to support our lifestyle we'd grow our own veggies, bottle & can stuff, buy everything on special, price match & in bulk .... grocery bill for 2-people ~$200/mth

misc costs $200/mth

c) bottom line: $150k would do it, we don't need to live in a third world country

d) with a bit more capital I would probably do a wind/solar power system that has a 20 year payback

e) rural Ontario (there are places at each end of the 401) a triplex, $400k, or the Maritimes - a triplex, $200k, live in one section, rent out the other two - $800 - $900mth rental income, to pay property tax, utilities, repairs.

$100k invested as in b) & c) above

basically for e) $500k

footnote: since we are seniors it would be a piece of cake

if we were 20's to age 60, we'd probably also do part-time work, Tim's, or something that's 25 hrs week, minimum wage as extra cash for toys or vacations
Please tell me what types of investments can give a return of 11% that are safe. I've been investing a big chunk of savings into a diversified 60/40 portfolio that has about 7% return. That's about the amount of risk I can tolerate while sleeping soundly at night.
Jr. Member
Jul 26, 2015
134 posts
76 upvotes
Vancouver, BC
Ideally you need to have a certain amount of investments that generate return/interest and you should not use out all the interest you receive to support your lifestyle. Then you are all set: you don’t dip into your principal investment and at least try to fight the inflation by not using out all the interest you get and reinvesting it. How much do you need to spend a year? Only you know the answer. Then it’s up to the investment return and your risk tolerance.
Member
Apr 14, 2017
492 posts
149 upvotes
DT Calgary
Definitely not by being a young person in Vancouver or Toronto. You'll need to move to a more affordable place.
Deal Addict
Oct 8, 2012
1407 posts
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TBD
Get a more enjoyable job. Find work that you find satisfying and rewarding. Personally, I get enjoyment out of my job and wouldn't classify it anything close to a rat race.
Deal Addict
User avatar
Nov 14, 2003
2575 posts
973 upvotes
Everywhere
Getting out of the Rat Race is determined by how fast you can run. If you spend the same amount of money when you make $150k/yr as you did when you made $50k/yr, you wil pull ahead. But if you spend a proportional amount more, then you will fall behind.

It really depends on how much you spend and what you want out of life. I worked for less than 20 years and crossed the finish line. I live on about $2k per month, and I can probably go lower. For me, it was part planning, part discipline and part luck.

As for a dollar amount you can retire on as little as $200k if it pays you $25k a year in revenue.
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User avatar
Mar 31, 2009
1047 posts
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This is a variation on the 'financial independence' and 'when can I retire' question.

A component to this equation is definitely your spending habits. No one can answer that accurately but yourself.

I think that if you're someone who wants to get out of the rat race, the first question is 'what makes you happy?' Obviously your job doesn't, it sounds like your car doesn't, your house doesn't. Otherwise you wouldn't have listed those things as being part of the race. So work on minimizing your spending on the things that don't make you happy and focus on spending big on the things that do make you happy. If you basically think of your car as something that just gets you to the rat race, I hope you're driving an extremely cheap reliable car that you bought used. Like a used Honda Fit or Toyota Corolla. Maybe you bought it with cash, and maybe it costs $1000 /yr to maintain and gets great gas mileage. I hope you're not driving a $60,000 SUV. Just as an example.

These days people invest a lot into things that they don't actually care about, that don't really pay off in terms of happiness. Any time you pay for anything, think about "how much happiness am I gaining per dollar spent" (happiness per dollar ratio) and if the ratio is poor (low happiness per dollar) then you should try to spend less on that item over time. If you gain a lot of happiness and the happiness per dollar ratio is high, it means it's worth spending money on. It doesn't mean you don't buy expensive things, it just means you buy expensive things that actually are enjoyable for you that actually make your life better based on your own values, goals, desires instead of what other people tell you that you should spend money on.

This would allow you to hopefully reduce costs and spending relating to things that don't bring you sufficient happiness to justify their cost, and increase spending on things that do give you a lot of happiness. But think about it hard, and think about it carefully. Because everyone is brainwashed into consumerism and what they see on TV, what they see on reality shows, what they see in magazines, etc. You see everyone has a big house, so instinctively you sort of buy a house in your 'class' of neighborhood and furnish it the way you see on TV, and that costs a fair amount because they want you to spend big money on your house. But if your house doesn't bring you happiness, why are you doing that? Own a cheap house. Make it clean, make sure it's not a dump that's falling apart. But it doesn't have to be like what your friends have, what you see on TV, or what's at Home Depot and Ikea this year.

Once you have this figured out, either your existing life will feel less like a rat race because you'll be getting more of what you actually want from it, or, you'll be able to end the race sooner because your financial requirements to do so will be far lower and you'll hit those requirements easier along the way.
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Oct 7, 2007
4181 posts
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unknownone wrote:
Nov 25th, 2018 9:14 am
This is a variation on the 'financial independence' and 'when can I retire' question.

A component to this equation is definitely your spending habits. No one can answer that accurately but yourself.

I think that if you're someone who wants to get out of the rat race, the first question is 'what makes you happy?' Obviously your job doesn't, it sounds like your car doesn't, your house doesn't. Otherwise you wouldn't have listed those things as being part of the race. So work on minimizing your spending on the things that don't make you happy and focus on spending big on the things that do make you happy. If you basically think of your car as something that just gets you to the rat race, I hope you're driving an extremely cheap reliable car that you bought used. Like a used Honda Fit or Toyota Corolla. Maybe you bought it with cash, and maybe it costs $1000 /yr to maintain and gets great gas mileage. I hope you're not driving a $60,000 SUV. Just as an example.

These days people invest a lot into things that they don't actually care about, that don't really pay off in terms of happiness. Any time you pay for anything, think about "how much happiness am I gaining per dollar spent" (happiness per dollar ratio) and if the ratio is poor (low happiness per dollar) then you should try to spend less on that item over time. If you gain a lot of happiness and the happiness per dollar ratio is high, it means it's worth spending money on. It doesn't mean you don't buy expensive things, it just means you buy expensive things that actually are enjoyable for you that actually make your life better based on your own values, goals, desires instead of what other people tell you that you should spend money on.

This would allow you to hopefully reduce costs and spending relating to things that don't bring you sufficient happiness to justify their cost, and increase spending on things that do give you a lot of happiness. But think about it hard, and think about it carefully. Because everyone is brainwashed into consumerism and what they see on TV, what they see on reality shows, what they see in magazines, etc. You see everyone has a big house, so instinctively you sort of buy a house in your 'class' of neighborhood and furnish it the way you see on TV, and that costs a fair amount because they want you to spend big money on your house. But if your house doesn't bring you happiness, why are you doing that? Own a cheap house. Make it clean, make sure it's not a dump that's falling apart. But it doesn't have to be like what your friends have, what you see on TV, or what's at Home Depot and Ikea this year.

Once you have this figured out, either your existing life will feel less like a rat race because you'll be getting more of what you actually want from it, or, you'll be able to end the race sooner because your financial requirements to do so will be far lower and you'll hit those requirements easier along the way.
Excellent advice.
Sr. Member
Nov 8, 2017
632 posts
261 upvotes
I live on Vancouver Island. "Rat Race" isnt a vernacular we use here

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