This sheet tells you when to get out of the rat race


One of my favorite movies of all-time is American Beauty. The 1999 award-winning film stars Kevin Spacey who played Lester Burnham, a 40-something guy who hated his job and was on the brink of a mid-life crisis. The inflection point was when he saw his daughter’s gorgeous 16-year-old cheerleader friend, Angela Hayes (Mena Suvari), perform a half-time dance routine at a high school basketball game.

Lester becomes so infatuated with Angela that he began having sexual fantasies with her. He becomes obsessed with youth that he started to live his life like he just graduated from high school. And when he was told that he was about to get laid off, he instead blackmailed his boss for $60,000. He then quits his relatively decent paying job choosing to work as a crew in a fast-food chain instead– the position with, in his own words, the least amount of responsibility.

But what really caught my attention is the scene where Lester Burnham wonders in his cubicle while seeing a reflection of his image on the monitor, which resembles a guy trapped in a jail cell.


With the numbers on the spreadsheet forming the jail bars in his mind, it’s pretty obvious that he felt imprisoned by his job and wanted an escape. A feeling that many people can sympathize.

Are you in the same predicament as Lester? Do you want an escape?

No, I’m not telling you that you should quit your job and start chasing 16 year olds like what Lester did. Far from that. If you’re like many people in dead-end jobs, you probably dread that messy, stinky, disgusting, abominable, frightful (I’m running out of adjectives here) square footage of your cubicle.

What if I tell you that there’s another way, a better way that doesn’t involve blackmailing your boss to freedom?

Perhaps you don’t really dread going to work. You just want to pursue things that matter to you and not your boss. Many people crave the freedom of not having to answer to other people on every decision that they make,  stopping them from achieving their dreams, and robbing them of the valuable time they need to fulfill their goals. Work is better when you don’t need the money.

There’s only one answer.

It’s called Financial Independence.

There’s a lot of misconception about being “Financially Independent”. Your 18-year-old who recently moved out of the house is not anywhere near F-I. He just transferred his dependence from you to his employer.

I may have misled you. But becoming a millionaire would not necessarily make you financially independent either. I may be worth more than a million dollars, but I’m not financially independent just yet. Being F-I is actually a much better state to be in!

Here’s what Wikipedia has to say about the topic.

Financial independence means you have enough wealth to live on without working. Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses… A person’s assets and liabilities are an important factor in determining if they have achieved financial independence.

If there is a mathematical formula, it can be summed up into the following equation:

F.I. = Passive Income >= Expenses

The key is to be able to generate enough passive income that meets your expenses. Examples of assets that generate passive income include ownership of stocks, bonds, rental properties, patents, royalties, book deals, etc. Notice the important of having a “passive” income stream here. An active income stream from self-employment won’t do here. You may be independent from an employer, but you’d still be dependent on your job. I really hope not, but on any given day, you could end up in the emergency room severely jeopardizing your ability to generate income.

It doesn’t take a rocket scientist to figure out the relationship between Passive Income and Expenses. If you analyze the above equation carefully, you should be able to infer the following:

The fastest way to Financial Independence is to increase your passive income AND lower your expenses!

You should take advantage of the power of compounding interest by substantially bumping up your monthly contribution. And the easiest way to be able to do that is to cut down your expenses.

Here’s a spreadsheet that won’t imprison you. Rather, it somewhat does the reverse– it tells you exactly how much you need to save in order to make your savings last a lifetime. In that way, you know exactly when to quit the rat race. It should be easy enough to use because it’s color coded– just change the values in the green fields with your own and you’ll instantly get the answers in the ones highlighted in yellow.

It’s based on the Trinity Study, a very influential research in which three professors  back tested a number of stock and bond investment mixes to come up with a “4% safe withdrawal rate” taking into consideration various risk factors, including market volatility and inflation.

Retirement Savings = 25 x Annual Expenses

As a general rule of thumb, you need to save 25 times your annual expenses (not income) before you retire. If you achieve that milestone, you are considered financially independent. The number could be lower if you have other sources of income such as a pension or social security.

Of course, there’s no guarantee that you’ll not run out of money in retirement. But planning your future is a much better strategy than cheating your way to freedom by blackmailing your boss.

May you be able to retire early.

Copy Financial Independence Calculator

And here’s the most popular scene in the movie.

I like staring at figures . . . on the spreadsheet. Thanks for the spreadsheet. I have a long way to go but nothing is stopping me for FI. I appreciate that you back up your post with study and movie. This give me a reason to watch American Beauty which is more modern compare to my favourite movie, Working Girl, which is also about finance and outwitting your boss.

I have to admit that reflection of Lester on the monitor and working in a fast-food chain when your close to retiring age are quite scary thought. Having a photo of a hamster on a wheel up on a wall is always a good reminder to keep working to achieve financial independence. And might as well work out to have the flexibility of a cheerleader for physical independence.

American Beauty probably appeals more to men than women. I’ll check out Working Girl, is that available on Netflix? I’m a fan of office culture movies. Hope that’s not the cheesy 80’s Filipino movie though. Everyone should have that photo as a reminder. Besides, nobody should have to work only so they can buy food to give them energy to work again the next day.


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