I was married on November 19, 2005, and with a baby on the way, thankfully had a new job starting on December 1 as an engineer with Golder Associates, a worldwide environmental consulting firm. As I settled into my new job in the weeks that followed, obviously the work was very different compared to the world of designing and manufacturing widgets. I enjoyed the new challenges and the work environment was a huge improvement relative to my prior employer. It was odd for me to work somewhere where overtime was not a requirement based only on a manager’s need to puff out his chest and show everyone who’s boss. In my new role, if I needed to work overtime, it was only because I over-committed to a client and didn’t plan my schedule well enough. Sure, sometimes unforeseen things happened, but these were mostly understood by clients and scheduling changes were made on the fly where possible. This comfort level would come back to bite if only a little bit.

My daughter was born soon after, and during the lead up to her birth, my wife and I had discussed the possibility of her leaving work to stay home full-time. We both had our moms at home during our early years and we wanted to give our children the same benefit. To us, it made no sense to pay a good chunk of my wife’s salary for strangers at day care to raise our child. Plus, we could only imagine the logistics of running back and forth to day care and jobs. It took all of a day or two after our daughter’s birth to confirm she wanted to stay home.

The first step was to look at our budget and see if we could ‘make it’, which in yuppie speak means do we have enough money to cover current minimum monthly payments. We decided it was possible, but it would be tight. I had already cut out the regular happy hours when I left my former employer, we agreed to sell her new motorcycle that wasn’t being ridden anymore, and her commuting costs went away. Yes, it was tight, but we could make it, and we did sort of.

Within a year, I was starting to burn out and looking for a way out of the seemingly never-ending financial struggle. The long commute of an hour each way to work was wearing on me, and God forbid if there was an accident or bad weather, it could quickly become 2-hours one way! Also looming in the back of my mind was how worried I was when I had been recently laid off and how badly I wanted to avoid that situation from ever happening again. We were still buried in thousands of dollars a month of payments. There’s no way I wanted to stay status quo, living paycheck to paycheck, forever fearing a layoff. I’m not sure why or how, but the question hit me, why can’t I be rich? Lots of people are and I’m a pretty smart guy, so I should be able to figure this out too. I started checking out books from the local library about getting rich, but frankly, it was tough to find the time to read them. Between my long work days, the stresses of a new job and baby, and simply being tired after catching up on yard work and squeezing in family time; it felt like too much to find time for reading. While I’m ignoring the fact my ass was parked on or in front of the couch for a couple hours each night, I just felt too mentally exhausted to take in a book and learn anything. Thankfully, one book I was able to get through in early 2007 (actually about half, but that was enough at the time) was “Your Money or Your Life” by Joe Dominguez and Vicki Robin.

In that book, I was introduced to the concept of calculating a balance sheet and net worth. While reading that book, I also reviewed monthly expenses and income for the first time since before buying our house in 2004. It was in developing these that I realized we were in deep dog shit financially. It’s kind of a “duh” moment now that we’re so on top of finances, but it was a real eye opener at the time. Despite having all these nice things we had been paying on and having above average income, all we had to show for it was a pile of debt worth about -$370,000 and NEGATIVE net worth!!! Just as dire, our monthly budget was running a negative balance of a couple hundred dollars per month… WTF!!! HOW IS THIS POSSIBLE?? (I later realized this was possible through the magic of carrying credit card balances and only paying attention to monthly payments.)

Here we are, this great couple with a new baby, living in a nice new neighborhood, both with college degrees, all the nice things one might want, paying all of our bills on time, and we were genuinely F’d financially! This was my hair on fire, pants on fire, drowning in debt wake-up moment! I brought the news to my wife, and she wasn’t happy either, I think because she realized it meant big changes were coming… not what a new mom probably wanted to hear. While she wasn’t borderline panic stricken like I was feeling (I’m pretty sure I was nervous laughing to hold back tears), she definitely had a blank stare of disbelief. I went through each line of assets and liabilities/debts and the totals. Sure enough, it added up. I remember saying that I don’t care how it happens, this is getting fixed.

We had paid off our motorcycle loans by this time, but our outstanding debts still included:

Liability	Outstanding balance	Monthly
House	$256,500	$2030
Nissan Maxima	$23,000	$432
Scion xB	$14,500	$217
My student loan	$22,000	$128
Wife student loan	$34,000	$219
Credit card 1	$10,000	$103
Credit card 2	$7,000	$66
Credit card 3	$3,000	$30
TOTALS	$370,000	$3225

Thankfully, we did have a few assets at this time to help (but not fully) offset the student loan and credit card debts; we had money in our IRAs and about $5000 equity in our motorcycles that were now owned free and clear. The house and cars were worth about what was owed at the time, so no equity in those (but not upside-down either). Our monthly expenses and cashflow were just as bad, especially after looking at our other monthly expenses of food and gas (~$425/month), car and cycle insurance (~$160/month), and utilities (~$527/month). Have I mentioned that I only brought home a little over $4000 per month after taxes and health insurance? Correct… it doesn’t add up to a positive balance.

As we started discussing ways to fix our financial situation, I also came across the Rich Dad, Poor Dad series of books by Robert Kiyosaki. The more I read, the more I saw real estate as a potential path to getting rich and getting out of the rat race. I viewed my house as a liability more than an asset. Sure it was a great place, but the mortgage owed combined with high utilities, property taxes, and the costs of commuting caused me some buyer’s remorse. I had never considered all these related costs before, especially the costs of commuting, but on top of it was was time. The time I spent commuting every week would never come back, and I was burning at least 10 hours per week of my waking hours sitting in traffic. One of the lessons of the Rich Dad, Poor Dad book is we can always make more money, but we can’t make more time. With this, it was time for some serious changes, to treat it as a true ‘pants on fire, we’re going to die if we don’t fix this now’ type of moment.

Coming soon… Time for Change