RAT RACE

WHAT IS RAT RACE ?

Accordingly to Wikipedia, rat race is a term used for an endless, self-defeating or pointless pursuit. It is just like a rat trying to escape whilst running around a maze or in a wheel.

In an analogy to the modern city, many rats in a single maze run around making a lot of noise bumping into each other, but ultimately achieve nothing (meaningful) either collectively or individually.

Rat race is a term often used to describe work or excessive work in particular. If one works, one is in the rat race. This terminology contains implications that many people see work as a seemingly endless pursuit with little reward or purpose.

The increased image of work as a "rat race" in modern world has led many to question their own attitudes towards work and seek a more harmonious Work-life balance. Many believe that long work hours, unpaid overtime, stressful jobs, time spent commuting, less time for traditional family life, has led to a generally unhappier workforce to enjoy the benefits of increased economic prosperity and a higher standard of living.

Are you stuck in the rat race?

If you work minimum 8 hours a day and trade your time for paycheck in order to pay bills, there is a high possibility that you are caught in rat race.

Escape from rat race? Why?

Don’t get me wrong that rat race is something very bad that you must escape from it. It is your choice whether you are happy to stay in the rat race or not. The only challenge that I see in rat race is that even if you win the race, you are still a rat. No matter what you do in the rat race, success is uncertain. However, if you do nothing about it, worry about your retirement is on the way.

Accordingly to surveys performed in Malaysia, it showed that if we take any group of 100 people at the beginning of their working career and follow them for 40 years until they reach retirement age, according to the Social Security Administration:


- Only 1 will be wealthy

- 4 will be financially secure

- 5 will continue working because they have to for a living

- 36 will be dead

- 54 will be dead broke and dependent on the Social Security checks, relatives, friends and even charity for a minimum standard of living.

These, of course, are Malaysia statistics. In the rest of the world, especially the developing world, the scenario might be far worse.

In short, there is only 5% of the population have enough to retire by age 65. There will be a high possibility of 95% that we will be either dead or dead broke by 65 years old. Isn’t that scary?

How do the rich escape from rat race?

The rich who is financially successful do not trade their time for money. Conversely, the rich leverage on other people money and time to make money.
Instead of working hard for money, the rich ensure money working hard for them through investment.

Property investors leverage on other people money by borrowing from banks to purchase properties or assets. They rent out the properties and have the tenants pay off the loans. Other than getting the tenants to pay off their assets, the property investors make even more money when their assets appreciate in value. Property investors leverage on other people money to make money.

Business owners like Bill Gates leverage on other people time by hiring employees to work for them. Investors, who invest in stock market, leverage on business owners and employees time to make money for them through capital gain from stocks.

Can an average ordinary person escape from rat race?

Absolutely Yes!

No doubt it is difficult to leave our comfort zone and risking the secure regular paychecks to pay off our bills. We need to take the first step and action to start somewhere. We need to change our mentality and reprogram our minds to mirror the millionaire minds.

At the same time, we have to start financial planning and saving to cumulate capital. Acquire the skills to generate passive income. Learn how to invest in assets like properties, stock market, etc or own and run businesses.

As our assets growing which in return generating more money, more money will increase our capability to increase the number or size of assets. The same “money working hard” cycle repeats by itself until such time that we no longer need to trade our time for money where we can live, work, play and give freely.

Congratulations!

NOW is the time that we are out of rat race and achieve financial freedom!

CASHFLOW QUADRANT

As a recap here are what the letters in each quadrant represent:

EMPLOYEE: Employees earn income by working for other people.

SELF-EMPLOYED: Self-employed people earn income by working for themselves - they own their jobs.

BUSINESS OWNER: Business owners earn income from the businesses they own

INVESTOR: Investors earn income from their investments - from money generating more money

Everyone is at least on one spot of the quadrant. Generally speaking, people in the B and I quadrants reach their financial goals more quickly than people in the E and S quadrants. The good news for you, if you inhabit the left side of the quadrant, is that you don’t have to be stuck there. You can move to the right side. Indeed, if you want to be financially free you have to move to the right side. Moving quadrants is a matter of choice and financial education.

Changing quadrants means altering who you are, how you think, and how you look at the world. The change is easier for some people than for others simply because some welcome change while others fight it.

Think about how you generate most of your income. In which quadrant do you primarily fall? Knowing the answer will help you chart your course into the future.

Where Did Robert’s Rich Dad & Poor Dad Fit In? Robert’s poor dad worked hard, but on the left side of the CASHFLOW Quadrant. By working hard, he got promoted and gained more responsibility, but as he climbed the ladder, although he earned a higher salary, he never had much to show for it beyond longer hours at work and higher tax bills.

Robert’s rich dad worked hard on the right side of the CASHFLOW Quadrant. He climbed his own ladder, and the higher he climbed, the more time he had for his family. When his business reaped profits, he expanded the business and simply hired more people to do the work. If his investments did well, he reinvested the money and made more money. Most importantly, even as he made more money than Robert’s poor dad, he paid even less in taxes due the advantages on the B & I side of the quadrant.

If you’re like most people, you’re on either the E or the S quadrant. But the simple fact that you are reading this blog entry means you’re contemplating becoming a B or an I. You’re getting ready to move beyond what you think is job security and toward financial freedom.

So where are you in the ESBI Quadrant? As for me, I’m still in the S-Self Employed Quadrant. Occasionally, when opportunity arises, I also shift to the right particularly in the I-Investor Quadrant for my money to work hard for me. This is through investments in UITFs, stocks, and mutual funds. When time comes, I would like to devote more of my time in the left quadrant to have more free time and achieve financial freedom.

Source: Robert Kiyosaki’s Coaching Program

Bonny
'Business Is About Passion'

FINANCIAL FREEDOM

Financial Freedom? What is that?

The definition of financial freedom can be very different from one person to another. Some may think that as long as we are debt free, we are financially free. Others believe that having the luxury to spend money in a worry-free way is financially free.

In accordance to Wikipedia, financial freedom is defined as a well-planned lifestyle where one no longer is required to work for income to cover their expenses. Contrary to popular belief, it does not require being free of debt, as a debt payment is just another expense.

Typically, "Financial Freedom" can be attained in one of two ways (or a combination of the two):

1. Enough passive investment income to cover one's expenses.

2. A large enough "nest egg" that can be liquidated over time to cover one's expenses.

Simply said, financial freedom is one point in life when you do not work for money anymore.

A passive income stream is one where money is received usually on a regular basis, without continuing effort. This does not mean no effort at all; most passive income streams require great effort to start with. For example, rental income from property, royalty income from patent rights or writing a book, bonus income from network marketing or set up internet businesses by selling digital products like ebooks, softwares, etc whereby you can still generate income while you are sleeping.

I personally believe that financial freedom is having adequate money to survive without working while still maintaining my preferred life style. It eliminates all the unnecessary stress from work and enables us to stay healthier. It provides a comfortable life at present and in future whereby we can have worry-free early retirement. Financial freedom practically enables us to do absolutely anything we want and we have total control of what, where, when and how with minimal restriction.

Only the rich deserve to have financial freedom?

OF COURSE, NOT!

EVERYBODY DESERVES FINANCIAL FREEDOM.
Yes, everybody includes you, your family, relatives, friends, neighbors, etc.

If we have the mindset that “achieving financial freedom is something very hard and impossible for us”, “financial freedom is just a beautiful dream”, “money is the root of evils”, “I don’t have capital to start off like the rich”…etc, these are all excuses that we have created for ourselves.

“Achieving financial success is something very hard and impossible?”

Nothing is harder than when we realize that we don’t have enough money to retire by 65 years old.

“Financial freedom is a just beautiful dream?”

If we are going to dream any way, why not dream big since dreaming is free whether big or small.

“Money is the root of evils?”

Think about it again… Lack of or no money is the root of all evils.

“I don’t have capital to start off like the rich?”

We have to take immediate action to start small and make a difference. If not, we will be stuck with no capital forever.

The list of excuses that prevent us from financial freedom can go on and on…These are mind block that stopping us from making any move to improve our life.

To be rich or millionaires, the first thing that we need to do is not learning the best strategies on how to make or invest money but having the right mindset. Acquiring knowledge and skills about running business, marketing, investment, etc are great “tools” to be rich. We will eventually lose the tools if we do not have the right mindset which is acting like a “toolbox” to keep the tools.

If we want to get rich, we must think like the rich.

If we want to be millionaires, we must develop the millionaire mindsets.

What is the different between the average and millionaire mind then?

Stay tune for more on this...