This is the story of how my family reached the proverbial “end of our financial rope” and how I became a personal finance blogger. Today’s post is the first in a series that will continue over the course of the next week.
At the beginning of 2007, my base salary was $28,000 per year. My wife worked a part-time job that netted another $400 to $600 per month. I also freelanced a little in order to bring in a little extra money – usually around $1,200 a year. Our total monthly household income was around $2,900 a month. With two kids, a mortgage, and a HELOC, We were breaking even, sometimes a little better than even and we had started to put a little bit of money into savings each month. Our total cash on hand was less than $2,000, we had no room for error.
But this was the beginning of a perfect financial storm. Throughout February and March, I began to anticipate three important events:
- The birth of our third child at the end of March.
- The interest rate on our 3 year ARM adjusting up two points.
- The need for my wife to stop working outside the home to care for three kids.
Furthermore, it was becoming increasingly clear to me that my family needed me to be home more than ever, both to give Mrs. Rocket a break and for the simple fact that children need a father. I had worked a second job in the past, and on most days of the week, I was only home long enough to change clothes between jobs. I even worked on the weekends. At one point, I volunteered for more business trips because I could save most of my per diem and bring home extra money. We were dangerously close to a financial precipice and I was clinging to whatever I could in order to keep from slipping.
My first strategy was to sell our stuff. Anything of value that was laying around the house was listed on ebay or craiglist: my truck, my trailer, our old hot water heater, baby formula, and more, but there is a limit to how much of your own stuff that you can sell.
I needed a reliable alternate stream of income. One that did not require me to be out of the house. I tried making money with online surveys – I must have filled out 50 different forms that promised to enter me into paid surveys and I am still dealing with the spam today. I think I made $35 after about 40 hours of clicking. I even poked around Hedgestreet for a while, to see if I could turn a thousand bucks into $5 or $10K. I was thinking of using our tax refund as seed money in a hedge fund! I used the Hedgestreet Mocktrader for a month and quickly turned $2,500 worth of play money into $64,000 – only to lose it all a week later. I also researched forex trading and margin investing.
I was certain that someone somewhere was making money online, I just had to find the right spot. So I started to “google” different search terms like “online jobs”, “ deals”, “free stuff online”, “free money” or “money hustle”. I was not interested in gambling or anything illegal and the more I considered our situation, I realized that whatever I did, our family could not tolerate any level of risk.
Tomorrow, I will share how Mrs. Rocket and I successfully managed a yearly budget deficit of around $5,000 without getting another job, without adding debt and without risk.
Read other posts in this series: