Posted by Tim Stobbs on October 16, 2007
*** Warning – This is a VERY long post***
Over at Get Rich Slowly, JD is having a contest which is part of his group writing project which asks people to write their own success stories. Since I really haven’t gone into this topic in much detail I thought it would also provide a little history on where I was and how I got here.
It began in 2000. They shoved a engineering degree into my hand in the spring then then I added a wedding ring that fall. My wife and I were $60,000 in school debt combined and working minimum wage jobs trying to make student loan payments. I remember it well. I was basically broke all the time, but strangely enough I was happy. I had good friends and a wife who loved me. Besides, we were just out of university, so we knew how to deal with being broke and still have a good time.
Then about eight months later I got my first ‘real’ job. The base pay sucked, but I would be earning bonuses on each job I did after I completed the training in six months or so. My mistake here was I leased a new car and added $20,000 to my debt load. I thought I ‘deserved’ the car after getting a ‘real’ job. Perhaps the only smart thing we did is we continued to live on the base pay even after I got bonus cheques. So that way I was already living below my means and paying back our debt.
Then one day I realized I hated my job. I mean I was almost physically ill going back to work after my days off. I realized this was no way to live. So I resigned. They instead transfered me to another department giving me an extra six months to try to find another job. I didn’t get one, so I ended up getting ‘laid off’ so at least I could collect Employment Insurance (EI). I spend the next two months constantly worrying about not having a job. Despite the fact we were fine for money during this time I still worried.
Then I took an entry level position with another company. The work was alright, but the pay sucked again. But we got by. Then after while I got a promotion/transfer to northern British Columbia. Despite not having earned all that much money during all this time we managed to save enough to buy our first home. I felt so proud, yet at the same time I was now drowning in debt buy adding a $108,000 mortgage. My new job was similar to my first real job. I got a small base salary and then large bonus cheques each quarter. We continued to live on just the small base salary.
This we found out was a very good thing. Shortly after moving into our home we found out we were expecting our first child. It was like a dream come true. A home, a wonderful wife and a baby on the way. The dream came to a crashing halt 30 weeks into the pregnancy. The baby came 10 weeks early. We were tossed into a world beyond our control and I just found out our house’s main structural beam was rotted and had to be replaced. Also our buy out came due on my car lease and that was on top of the medical related expenses such as my plane ticket south to a hospital that was equipped to deal with our son. We were now beyond broke, I had a baby I didn’t know was going to live and $20,000 in unexpected expenses.
This was when I learned, when you’re at the bottom learn to swallow any pride you have left and ask for help. The helped poured in. We stayed with friends in cities where our baby was located and saved hotel costs. Gifts and prayers flowed in from family and friends. I managed to strip out ever dime of savings I had and max out my line of credit to cover $15,000 of the expenses. Then my parents came forward and offered us a loan for the remaining $5000. My work gave me an unlimited paid leave to deal with the crisis. Our baby grew and got stronger and somehow so did I.
I’ve often been asked by people how we dealt with it all. To be honest I don’t know. Somehow I woke up each day and held it together. After 64 days in various hospitals and neurosurgery we got our son home. At this time we also learned my wife would only get part of her maternity leave. She was working as a teacher’s aid at the time and had collected EI the previous summer, so she would only be able to collect six months of the normal twelve that she would have got (she didn’t have enough new work hours between claims to get the full time off).
My finances were in tatters, but my family was home. That’s all that matter. So we cut costs to the bone and I saved like never before. In nine months we had paid my parents back. We continued to pay down the line of credit, yet as my wife’s maternity leave money ran out we came to a decision. We wanted my wife to stay home to look after our son, but in doing so we would have no extra money for anything. No vacations, tiny amounts for Christmas presents and no extra spending money beyond the basics. So I offered my wife a challenge, you can stay home, but you have to find a way to make some income. I don’t care how much, but you must make something.
So the daycare opened and we continued to claw our way out of debt. After a year I had an opportunity arise. I had a job offer back in Saskatchewan. We could move back to be near both our families and share our son with those that helped us so much in the beginning. Yet there was a cost. I had to take a 27% cut in pay. At this time we had paid back all of my student debt and had less than $10,000 left owning on my wife’s student loan. So we took the chance and moved. As it turned out my house had increased in value substantially after our renovations to it. So after selling the house we had made $55,000 in profit. We took $40,000 and used as it as a payment on our new house. Then we cleared the remainder of our other debts and moved with just a mortgage.
Now about 15 months after that move my net worth is pushing $200,000. Granted $100,000 of that is gains on the new house, but still even without that gain, I went from -$80,000 net worth to $100,000 net worth in just over seven and a half years. That’s a average gain of $24,000/year to my net worth when our household income never went near $100,000/year.
To be honest, I never did the math on our average savings until this post. I’m shocked we managed to save that much money for that long. To me it was never about getting rich, but rather providing the best foundation possible for my family. To allow us the freedom to let me take a lower paid job to move closer to our family to share our son whom grew up to be perfectly normal despite being warned repeatedly of all the problems he might face from his premature birth.
Now with our second child on the way I’m still well on my way to retirement on my 45th birthday. I started this blog to share this one story. It is possible to defy the odds. You don’t have to have a huge income to enjoy the one thing that matters most about having your finances under control: freedom.
This post is now part of the 123rd Carnival of Personal Finance.