Sunday, June 21, 2020

How to Avoid the Middle-Class Rat Trap


I recently ran into a former co-worker of mine. We ended up spending quite a few hours reminiscing about "the good ole days," and then the conversation turned to entrepreneurship. My husband and I have been full-time entrepreneurs now since 2005, and my friend expressed that full-time entrepreneurship was beyond his reach. Of course, I immediately objected to this belief. That's because I have found that the formula for exiting the Rat Race is EXTREMELY simple once you get past what I call the Middle Class Rat Trap.

You see, my 18-month plan for escaping the Rat Race turned into an 8-year task. It wasn't that my plan was unrealistic; on the contrary. It was really conservative. But I became a victim of several Rat Traps, designed to keep individuals struggling to maintain their middle class status.

Middle Class Rat Traps are the accouterments of having a "high-paying" job. And it can be easy to fall victim to these temptations that do nothing but undermine an unfocused individual's desire to one day exit the Rat Race. If you want to avoid these trappings, here are some tips I found helpful once I re-affirmed my goal of entrepreneurship.

Keep Your Eyes on Escape Opportunities

There is an old proverb that states, "An idle mind is the devil's workshop." Remaining focused on your exodus goal can be easier when you are actively seeking an escape vehicle. There are a host of other activities to participate in rather than spending time in the shopping malls. Watch investment product infomercials on TV, rather than home and gardening shows. Check the local paper and the internet periodically for rental real estate for sale. The next time a family member or co-worker invites you to a network marketing prospecting meeting, go. You don't have to commit to anything you don't want to, but keeping your mind focused on opportunities to increase your income will cause the right opportunity to appear.

Reinvest Every Dime into Your Business

This concept is often misunderstood. I'm not advocating neglecting your bills; nor am I suggesting that you become a tight penny pincher. I'm simply advising that you create a budget that includes funding for your business (or building up capital while you look for a viable opportunity). While I do understand that money is meant to be spent and enjoyed, I feel that it is more than prudent that you stick to your budget while executing your exodus plan.

Now, it's easy to simply add a line item into your budget for personal spending items, like concert tickets, Christmas gifts, and occasionally eating out. But be disciplined. If those concert tickets cost $130 and you've only budgeted $100 this month, then guess what? You had better get your buddy to cover the difference, because now is not the time to be borrowing from your business! This principle also applies to funds within your business. Unless you somehow create some uber-profitable enterprise that covers your salary and creates an extra 12 months' worth of living expenses, take every single dime and put it back into the business in the form of cash reserves, extra loan payments (if applicable), or products that automate some of your business's functions.

Do Not Add New Personal Debt

This one may sound simple, but one of the worst Rat Traps ever invented is the student loan. You may be thinking that your less-than-deserving colleague got the promotion over you because she's got an MBA. But your desire for more education (and the debt that most often accompanies it) is counterproductive to your Rat Race exodus. Unless your employer covers 100% of the cost (and your studies do not detract from building your business), do not go into debt in the hope of getting a better job or a promotion.

Do Not Pay Down Personal Debt

Many people fall for this trap. But upon closer examination, it is clear to see that paying down debt does very little to move most individuals towards financial independence from their jobs. Let me give you an example. One Christmas, both my husband and I received 5-figure bonuses from our jobs. My first inclination was to pay off our car. That $20,000 would have saved us $300 a month in car payments. My husband instead suggested that we become limited partners in a real estate venture with some friends. That $20,000 investment paid us$900 a month, and then our friends bought us out for $65,000 after only 9 months. In this example, paying down debt would have cost us $600 per month in lost income, plus the buyout amount. Paying down debt may reduce your expenses, but only increasing your investments and business income can replace the income from your job.

Take Time to Re-focus

Consider periodically attending business-building seminars and workshops. Even though I traveled for work an average of 25 days of every month, I found that there were constant opportunities to attend free or low-cost seminars on tax lien certificates, online currency trading, internet marketing, and real estate investing groups, in most major cities, and even internationally.

These are just a few of the Rat Traps that kept my family in the Rat Race for so long. If you want to get on the direct path to escaping the Rat Race, avoid these and other hindrances. And as always, don't just take my word for it...take it for checking!


Source by Kafi Tamu Burris