The Exit Strategy: How to Capitalize on Capitalism

Many of my friends complain about the “rat race” of capitalism.  The American worker is constantly rushing around to address one (often fake) emergency, then the next, trying to prove they deserve a promotion more than their colleague who is also tending to fake emergencies.  It feels like a hopeless slog, a 40-year marathon without a break.  Almost everyone I know complains about this slog, or capitalism in general, constantly.

I escaped this slog.  Most Americans can if they are willing to use the wealth-building opportunities provided by capitalism without getting sucked into the wealth-diminishing consequences of capitalism.  Both exist, and capitalism is built to keep you running a long marathon so you stay in the system.  But you can reject it.

While everyone else is running a 40-year marathon, you can choose to sprint.

That sounds horrendous initially because sprints are even faster than marathons, and you are already tired from your daily slog.  But sprints are also shorter.  Sprints end quickly, and then you can choose to walk, run, or flop on the beach.

If you are willing to sprint instead of slogging, you can use capitalism to build the resources you need to leave the capitalist rat race as quickly as possible.  Capitalism gives you all the tools you need to beat capitalism, but you have to choose to capitalize on them.

The Normal Capitalist Path

The 40-year slog is easier because everyone does it, and keeping most people in the slog is how capitalism sustains itself.  Capitalism relies on you continuing to work a job to contribute to the system.  It also relies on you making numerous purchases along the way to keep other people employed at their jobs.  You get paid for working in the system, and you pay others for also working in that system.

When you run a marathon, you need help sustaining yourself over many miles.  You stop at water stations, eat some Gu, use an entire container of Vaseline, and more.  If you commit to 40 years of capitalist slog, you need your morning Starbucks, takeout dinner to fuel yourself after a long day, and gas in your car to fuel your commutes.  Capitalism keeps you stuck because you need to support the act of you working over and over each day for 40 years.

Moderate levels of consumption will keep you stuck in the rat race for 40 years.  Read that again.  You do not need to overspend, dine out every day, max out credit cards, or purchase vacations you cannot afford to remain stuck.  Being an average consumer is enough to keep you stuck in the capitalist system, working without any other options.

Recommended saving and investing levels assume your compliance with the normal capitalist path.  If you are saving and investing 20% every year like a responsible investor, you will have enough money to retire and support your lifestyle after a little more than 30 years working.  If you encounter the cost of an unforeseen medical event, sudden job loss, having a child, paying for college, or taking care of an aging parent, you may find yourself contributing less for a couple years, and those couple years will slow your investments to make you an average 40-year slogger.  You also get stuck on the 40-year path by starting late where “late” means after age 25, thanks to losing years of compound interest.

For those 40 years, you are completely reliant on the capitalist system to survive.  You are one job loss away from financial turmoil if you are early in your career, and delaying your retirement if you are later in your career.  An unfortunately timed life event could push you to work more than 40 years.

But Americans still think that moderate spending and slogging for 40 years is normal.  While it is the path of least resistance, it should not be normal.  Living with mild discontent towards your job, or even towards a particular aspect of your job, can take a huge toll on your health over time.  Living in mediocrity costs you time.  It costs you life.  When it comes down to it, moments of living our preferred lives are the cost of staying in the capitalist system where we work mediocre jobs to maintain our moderate spending levels.

Choosing to Sprint

Opting out of capitalism is more difficult than settling for the capitalist system.  Everyone will call you crazy while you are sprinting and then scoff that “it must be nice” when you finish your sprint and remove yourself from the capitalist system.  It is nice, and I recommend trying it rather than acting like a helpless capitalist pawn piece.

Most people who do not like capitalism choose to complain about it and act like victims, but the same tools capitalism uses to keep you stuck in the system can also help you escape it.  Complaining is unproductive.  Escaping lets you improve your situation so you have the time to productively reflect on how we could build a better economic system for ourselves in the future.

The premise behind capitalism is that you can gain wealth by working hard, if you are willing to work.  We are not stuck at “stations” like the characters of Bridgerton.  We can start our lives in poverty and become billionaires, however unlikely such an extreme climb is.

Fortunately, you do not need to become a billionaire to escape capitalism.  You may not even need to become a millionaire, but most of us need around $1 million to $3 million to live the lives we want.  Our household needs about $2 million to live off of $80,000 in perpetuity, and we live in a high cost of living area and love to travel!

Knowing how much money you need to live happily is essential to eventually opting out of capitalism.  Capitalism wants you to crave more and more wealth, never knowing where the finish line is.  No wealth is enough for the true capitalist.  Knowing your enough is power over capitalism because you know when you can opt out and end your sprint.  

We call enough a Financial Independence Number, or “FI Number,” and most define it as 25x your annual spending.  At the point that you accumulate 25x your annual spending, you can live off of the interest of your invested money for the remainder of your life, and the growth will account for inflation as well as the amount you need to withdraw.

This may sound like a lot of money, but the act of sprinting to accumulate it can often reduce the amount of money you need because you become accustomed to a less expensive lifestyle.  If you sprint to accumulate enough money, you do not have time for a monthly trip to Target that costs $250.  If you do not have time to spend $250 at Target, you save $3,000 annually.  If your lifestyle costs $3,000 less annually, you need $75,000 less to retire.

Yes, spending $250 a month at Target actually means you need an additional $75,000 to maintain your lifestyle in retirement!

Knowing you are sprinting rather than slogging makes it easier to forgo these purchases.  Over time, these little decisions add up to significant savings when it comes to your annual spending and your FI Number.  Sprinters get better at recognizing what purchases add real value to their lives.  They do not spend out of boredom or in accordance with their friends’ values.  Sprinters develop their sense of value judgment quickly, and spend according to their values.

This makes sprinters spend less than they “should” be spending according to capitalist society.  They may make $100,000 annually but spend like someone who makes $40,000 annually.  This gives them more and more financial security to eventually allow them to escape capitalism, and it also lets them vote no on developing capitalist tendencies along the way.

If you spend frivolously while complaining about capitalism, you are actually voting “yes” for capitalism with no end date.  You are keeping yourself stuck in the system, and that helps the system keep running.  Choosing to sprint is the way to free yourself from capitalism.  Once you know how much you need to exit the capitalist system, you need a plan for how to accumulate that wealth.

How to Sprint

There is no one way to sprint, but there are basics that everyone must follow to start sprinting.  Sprinting requires creating a large gap between the money you bring in and the money you spend.  You can do this through two approaches:

1. Make more money.

2. Spend less money.

It is that simple!  How to accomplish either goal or a combination of the two is where sprinting to escape capitalism gets more complicated.

How to Make More Money

Initially, making money means one of three things:

1. Securing a higher salary.

2. Securing more salaries.

3. Starting or owning a business or asset that earns you money.

We have done all three.  I secured higher and higher salaries by job hopping intentionally to increase my salary, develop my employable skills, and maximize my earning potential without dedicating any additional hours to work.  You absolutely can make $175,000 annually without working more than 40 hours a week.  I know because I did it until December.  I also know this is a scarier approach in the current job market because jobs are more difficult to come by, and the hiring process is slow.  This makes employable skills more important than ever.  Develop them, prove that your skills save your employer time and money, and improve your salary, through job hopping or career advancement at your current company.

If that is not enough, consider adding a stream of income.  This can be as easy as driving for Uber, but it can also be a more passive income that does not require you to trade time for money.  I run an Etsy shop to get a little extra money, a side hustle I began aggressively in 2020 when we decided to accelerate our FIRE journey.  Side hustles are also a great place to refine employable skills to allow you to earn more at your main job and your side hustle!

Another approach to securing more salaries is overemployment.  Some will say overemployment is unethical because you are being paid for hours of work.  (Overemployment can also mean working a side hustle at nights or on the weekends in addition to your day job, so there is no overlap.)  I think the best employers assess work based on outputs rather than inputs.  Inputs are how many hours your butt is in a chair at an office, whether you are chatting with your colleague about lunch plans or working on a spreadsheet.  Outputs are how useful that spreadsheet is to others, whether the data is complete, and how well the data is displayed to tell the story in a presentation.  Outputs make companies money.  Inputs are arbitrary measurements of time that serve as a poor proxy for gauging output.  If you can deliver high-quality outputs with half of your work time left over, overemployment may be a solution for you to add another salary and grow your wealth quickly.  Just make sure you are delivering high-quality products and meeting all deadlines for your first job before experimenting with overemployment.

Starting or owning a small business is a terrific way to increase your wealth generation.  It comes with risks, but if your goal is exiting capitalist society, these risks are likely worth the reward.  When you become your own boss, your salary is no longer capped at what an employer decides you are worth.  It is now capped at how much you can earn.  As you grow and hire employees, it is also capped at what you earn while also paying them, and we recommend treating your employees well so they too can eventually retire from capitalist society.

None of these trajectories to make more money need to be performed alone.  I am retired because we chose option four, all three methods of making more money!  Both Patrick and I increased our salaries for some time, but I was able to increase mine more rapidly.  He left his job and was able to increase his earnings more rapidly owning a business than working as an attorney with the Department of Justice.  We also have passive incomes that continue flowing, like the Etsy shop or our printable resources, and had other income sources, like small rental income, at times along the way.

How to Spend Less

While earning more money is the fastest way to sprint towards your exit from capitalist society, spending less makes your post-capitalism existence more sustainable.  The less your lifestyle costs, the easier it can weather market downturns and the unpredictability of the future economy.  Even if you decide not to sprint rather than slog, it is still worth learning to spend less money in case you need to survive on less one day.

Spending less is also empowering because it is the side of the equation that capitalist society does not want you to complete.  Capitalism loves when you make more.  You are supposed to want to make more and more and more to become addicted to wealth accumulation.  You will not because you know how much is enough for you to live happily, but spending less is how you can work against capitalism before you exit capitalist society altogether.

There are a few areas that significantly decrease your spending.  Decreasing your housing and transportation spending is the biggest hack to reduce your spending significantly overnight.  On the housing side, a househack can let you purchase an appreciating asset and have others help you pay down the mortgage.  Househacking is when you purchase a property that can be shared by roommates, often a duplex or triplex where the individual apartments also have multiple rooms.  You may live in one room in a two-bedroom apartment in a triplex and have five people paying you rent in the other apartments and rooms.  The rent they pay helps pay down the mortgage on the property you purchased.  Eventually, you may have enough equity for the down payment on your desired home, or you may just keep another stream of income when you move on to another place!

There are other less extreme opportunities to reduce your housing cost than a househack.  A live-in flip can do the same, especially if you have the skills to improve a property.  If you do not have the money for a down payment on any property, even having roommates can significantly decrease your rent.  I paid $250 a month in rent at one point thanks to living with roommates, and my apartment complex still had a nice pool and gym.

Transportation is another terrific area to cut costs, especially for those living in areas with public transportation.  If you are a two-car family, think about moving down to one car.  If you have a car in a city, think about selling it and relying on public transportation, biking, or walking.  We did not have a car for our first five-plus years in Washington, DC.  I even took it a step further and made sure to keep my metro spending under $100 each month by running to work some days.

Beyond the big expenses, where you can reduce spending depends on your lifestyle.  Cancel subscriptions, dine out less, and avoid frivolous spending on Amazon.  But keep whatever gives you the most joy.  We all need some joy, and it makes sense to account for it while still working because you are going to want to spend on your favorite things when you exit capitalist society!

Leaving Capitalist Society

In some ways, leaving capitalist society is harder than accumulating the wealth to make the jump because we are so conditioned to think that slogging for 40 years is normal.  We are taught that being different is risky, but that is not true.  The 40-year slog is risky.  You risk your health by sitting in a chair for 40 hours a week, possibly more, and maybe with more sitting during a commute.  You risk your well-being by remaining dependent on a system completely outside of your control.  You risk regretting all the adventures you said no to because you had to work.  Following the normal trajectory means having no choice when it comes to how you live your life.

But opting out of capitalist society requires more confidence than you expect.  The number of people that will make a snide comment about how lucky you are without acknowledging that you just completed the sprint of your life is shocking.  It does not matter that the sprint is a more difficult all-out effort that requires reshaping your entire existence.  Those around you will only look jealously at your current situation.  Despite this, opting out of capitalism gives you the opportunity to start helping them be a little less miserable, and you should help so we can start improving our society as a whole.

If you complain about capitalism while continuing to spend moderately and locking yourself into the job-reliant population for 40 years, you are complicit in the survival of capitalism.  Your choices help capitalism continue to thrive.  If you actually think capitalism is so terrible, opt out of the 40-year slog.   You are beating capitalism as well as voting against its sustainability!  The only way we will collectively rethink capitalist society is if enough of us capitalize on capitalism, opt out, and rethink what a future society should prioritize.