As we were living the American dream in 2012 and I was starting to dig a hole in the corporate world again, I won’t say I forgot my financial education or the dream of owning rentals and escaping the rat race, but it certainly took a back seat. I guess it was more like a 3^rd row seat. We had added some debts that we might have argued were necessary, but in truth, they were not.

An unnecessary debt, but one that was hugely positive, was my company stock. While we had no luck finding real estate that I could buy with our $21k HELOC that was burning a hole in my pocket, here was another investment that sort of fell into our laps. By now, I was putting 6% per year into my 401k, but this was the first time I would use after tax dollars to fund stock investment in a company, and it might as well be the one that I work for. Golder Associates’ stock had a long history of increasing in value almost every year, so without any real estate options, I figured this was a good backup plan. The one negative is that any money invested couldn’t be cashed out unless I left the company or had one of a very limited number of hardships. In hindsight, knowing what I know now about stock market index funds and exchange traded funds like Vanguard VTSAX and VTI, I would have bought VTI instead for even better returns and ease of liquidity, but it was a good move to start investing and showed my employer that I was ‘on board’. Plus, interest paid on the HELOC I borrowed from was tax deductible; win-win!

More unnecessary debt… we definitely needed to make our fixer-upper livable and used our cash reserves to get it most of the way there, but $10,000 was added to credit card debt for materials including wood flooring, cabinets, and granite counters. We could have thrown down sheet vinyl, in-stock cabinets, and formica (particle board) countertops to avoid credit card debt, but in the grand scheme of things, an extra $10k to make things really nice as opposed to bare minimum seemed reasonable, albeit unnecessary (for the record, I would do it exactly the same way again rather than consider bare minimum just to upgrade a couple years later). Another unnecessary debt was the car payment we had just signed up for. One car had died and the other was a ticking time bomb with transmission issues, so we needed reliable transportation fast. In hindsight, I should have sold our time bomb and added the couple thousand cash we could afford for a $5-6000 beater until we could upgrade later. My work and everything we did was within 2-3 miles now, plus my mom lived within walking distance if I needed a car in a pinch; but alas, we signed a $10k car loan. Another $15k in medical bills? Thankfully, those were for elective and unnecessary stuff, but again, getting comfortable in my golden (er, silver) handcuffs had me thinking that was small change in the big scheme of things.

Also, indirectly adding to our debts were the memberships and activities we were signing up for. Sure, we were running like chickens without their heads most weeknights and couldn’t go anywhere on the weekends because of all the things we had going on, but what good parent wouldn’t do that if they could afford it??! So rather than paying down 20+ year old student loans and other debt, we kept ourselves in debt limbo by spending our money on activities and things.

Oh yes, I forgot to mention things! Getting comfortable in the rat race has a weird effect of causing you to buy stupid shit you don’t need. How about a 60-inch TV even though you have a 47-inch that works perfectly fine? Maybe $100 cable bills because you NEED to sit and relax somewhere after a long day at work, and it might as well be at the TV. How about buying both a Playstation and a Wii? Well, we’re not going to play the same system as the kids, are we? We NEED 2 different systems! What about a huge pile of gifts under the Christmas tree even though your kids’ rooms are already filled and we would literally need to start putting toys in the attic so we have room for the new stuff? We did all that stupid shit. All stuff of the American Dream, right?

So while all these activities and gift-buying sprees are going on, we’re driving between New Jersey and Pennsylvania on the regular to visit family, I’m driving to job sites with our personal car (rather than using a rental), and we’re driving to all the kids activities during the week, racking up a lot of mileage to our newish car. In less than a couple of years, we logged 40k miles and now had a Kia pushing 100k miles (speaking of ticking time bombs).

As much as I was enjoying my job, occasionally I’d be stuck at the office or late coming home from a site visit, but we only had one car! Which meant we’d call my mom to borrow her car. Needless to say, this got old quickly. Although we had gone back and forth between being a 1-car and 2-car family, we were convinced with all the activities, we needed to be a 2-car family again. We also convinced ourselves that since the Kia was pushing 100k miles, it was going to start having problems and needed to be replaced. But, what to buy? Well, ever since 2002 when Subaru began importing the Impreza WRX to the United States, it was on my ‘dream car’ list, so I started looking at used WRXs. My wife missed her 2004 Scion xB that we sold in ‘07, so another xB was on her short list.

I didn’t need to look at many WRXs to realize it’s buyer-beware as it is with any performance car, especially a relatively affordable one. A newer used version was likely beat less (less driving time and probably a more affluent driver), but the prices often eclipsed what a new stripped model would have cost. It didn’t take long to convince my (corporate KoolAid drunk) self that a new WRX was my best option. Besides, interest rates were less than 2% (even lower than inflation), and if I was ever going to buy one, does it matter if I started saving now and buy with cash or just bought on credit now? Of course it does, you idiot (I tell my past self now)!!!

My wife’s venture was much the same as she was also looking at a high value type vehicle. Younger drivers tend to beat them up, and older buyers tend to keep them forever. The rare one that showed up for sale was either gone within a day or a dealer was asking thousands above what a new one would cost. If I was buying a new WRX, I wasn’t sure about payments on two new cars, so we decided a short lease on a new xB might be our best option. Besides, isn’t that the best of both worlds? We could lease for two years with lower payments, and in a couple years we could buy out the end of the lease for a couple thousand less than what dealers would typically charge. Does it really matter if I’m paying interest on loans for 8 years for a $19,000 car? Of course it does, you idiot (I tell my past self now)!!!

So in 2013, we’re both driving new cars with payments, and the American dream is complete. In retrospect, we had obviously and completely lost our way. Far in the rearview mirror were dreams of escaping the rat race and buying rental properties. Occasionally, I’d hop on Zillow or Realtor.com and see something worth driving by, but would quickly realize it was all for naught as our bills stripped away any cash we might have been able to save. I figured I could wait to leave the corporate world until after we got our nice things paid off.

Over the next couple years, we drove those cars, but the luster of the American dream had started to tarnish. While we were making timely payments on everything we owed, it seemed like we couldn’t get ahead, so we started making small incremental changes. We ditched cable TV for Netflix and Hulu, which saved us about $80 per month. We also switched from AT&T to T-Mobile for cell service to save another $40 per month. We cut back on activities we had the kids enrolled in, which helped our sanity and saved money, but it wasn’t enough.

Very thankfully, much in the same way I stumbled upon “Your Money or Your Life” back in 2007, I happened to stumble upon the great Mr. Money Mustache’s blog (www.mrmoneymustache.com) while searching for ideas on how to add a shower to our downstairs bathroom. After reading that blog entry I thought, ‘hey, this guy seems alright’ and wondered what other ideas he had. Reading through his blog entries, I quickly realized this was no home renovation blogster. He was THE definitive badass early retiree money guru and pulled no punches in telling people their financial choices were stupid and they needed to stop being such pansies and fix their wallets. I loved it! I read page after page as he delivered financial wisdom and quipped with ‘complainy-pants wussies’, but I started to put 2 and 2 together regarding my own recent financial choices and then it clicked…

I fucking did it again! The ultimate yuppie corporate tool resurfaced, bought a bunch of fancy crap, and is buried in debt! I just did this shit 8 years ago and already forgot what a damn idiot I was then! Why the fuck am I driving a brand new car with $400 a month car payments when my work is only 2 frickin miles from my house?! Why the hell can’t I put my lazy ass on a bike for a whole 15 minutes instead? I wouldn’t even break a sweat and it wouldn’t take any more time than driving with all the stop signs and lights! And why do we have not one, but two brand new cars??! All our driving is within a couple miles! How could I be so dumb and careless with our money?!!! I wanted to punch myself stupid, but it wouldn’t matter. I was already there.

Although I’d largely ignored reviewing our overall finances since purchasing our fixer-upper, it was time. Mr. Money Mustache said I needed to take control of my finances, and dammit, he was my new hero. I dug out my spreadsheet and updated it, and it was exactly as he said… our new financed cars were making us poor (https://www.mrmoneymustache.com/2011/11/28/new-cars-and-auto-financing-stupid-or-sensible/). Between payments on two new cars and carrying full-coverage insurance on them, we were spending about $825 per month, plus we were only getting between 15 and 25 miles per gallon! The most discouraging calculation in my spreadsheet was years to pay off debt assuming no financial changes; we were looking at another 13 years and I was already in my mid-40s. I’d be lucky to retire at 65 at the rate I was going!

Again, it was time to get rid of the new cars, but this time I would NOT have a repeat. No more stupid financial decisions. My WRX sold in only a few weeks to a private buyer. We tried to sell the Scion to no avail, so it went back to the dealer a couple months later when the lease was up. Because of the WRX’s relatively high resale value, we netted about $6000, added $1000 to it, and bought a used Honda Fit (https://fthattreadmill.com/2021/07/05/2009-honda-fit/) that we still own today with over 185k miles. Of course we switched to liability only insurance and saved another $120 per month.

I dusted off my 15-year old mountain bike, added some city tires, and started biking the 2 miles to work. The Honda Fit stayed in the driveway unless it was raining or there was snow on the ground. Much like when we sold the new cars in 2007, we realized paying down other debts was a lot easier without the liability of new car payments and insurance, and suddenly we had an extra $1000 or so to throw at our credit card debt at the end of each month. We were about to take control of our finances for good and knew an end to the rat race was on the horizon. What we didn’t know is another curve ball was about to hit us in the face, and this would strengthen our resolve even further.