1. Your marriage can be saved. She gave you several clues: "...there is no passion." and "...why didn't you change 1 year ago...". She wants to live in passion and excitement and intimacy with you. Most marriages end, not because they are bad, but because they are lack-luster. This OM is a symptom. The disease is she's lost her attraction for you.
2. DON'T MOVE OUT. You can't afford two households. She can't afford to move out. She'll have to divorce you to move out with the kids. She's not ready to do that yet. She's having an affair and wants YOU to move out. The answer is, "Honey, no thank you." If she says that she'll need to move out with the kids, tell her, "You are free to walk out the door, Hun -- I don;t want to keep you against your will -- however, we really can't afford to separate right now. Even if we both wanted to end this today, we would need to live together for a while until we both could get on solid financial footing to live separate lives. Look, until you are 100% sure about ending the marriage, and we are financially stable, why don't we put the separation on hold? Are you willing to revisit this in 2-3 months?"
In addition, moving out would put you at a disadvantage with the kids, legally.
DON'T let her push you out.
If she insists on you leaving, and says, "So you are making US leave?", you say, "Not at all. I'm not making anyone leave. Nor am I asking you to leave. I just want to stay in OUR home with OUR children. YOU are the one confused about our marriage, and YOU are the one ready to pursue an affair with someone else, so why should I leave? Take your time to figure things out. I'm not pushing YOU out the door, am I? I'll give you all the space you need. I'm just asking that you respect my desire to be with OUR children?"
3. See a lawyer. Not to get a divorce, but to know your rights. Can she leave with the kids? Can she force you out? Etc.
4. Stop chasing her, smothering her and talking about the relationship. Take a break for 2 weeks. I'm serious. You are trying to talk her into staying with you. It will only backfire. If I were her, I'd run from you, too.
5. Don't focus on the OM. He's a scum-bag. Only scum-bags steal other men's wives and destroy their families. Don't try to separate them. Don't worry about his background check. The more you try to interfere, the more it will make him look attractive and exotic to her.
6. If he calls, and you see the number, and wifey isn't around, go ahead answer the phone. You are the man of house. It's your home. Don't be afraid of him. Has she now got you afraid of your own telephone? F*ck that sh*t. ANSWER THE PHONE. Take the message. Show him you couldn't care less. Don't berate him on the phone, etc. Don't engage him. When she comes back, tell her, "OM called. He wants you to call him back." Look completely neutral about it. It'll freak her out. Don't show weakness or fear. She and the OM feed on your fear.
7. Most important. Get a life. You have lost your passion for living. That's what's really killing your marriage. You need to have a full, fun and attractive life. If you run around crying and whining about your lost marriage -- she'll run away even faster.
Excercize -- start right away. It'll boost your spirits.
Hobbies --- choose ones that require extreme focus like rock climbing, karate, boxing. These cause to to lose your focus on the marriage problems. In addition, martial arts build your power, confidence and inner ctrength. They encourage self control.
Friends -- rekindle old friendships. Seek new friends. find a group of men who can support you. Don't confide in women about this -- it'll lead to no good.
Start having fun. It will shock her to see you live an fin life. She might want in on the fun one day. She certainly doesn't want in on a guilt-inducing, miserable, clingly, smothering, depressed guy. Go out to the movies with friends. Come home late. Be mysterious.
8. Reclaim you manhood. Strength, honor, virtue, courage, leadership. Stop acting like a miserable, p*ssy-whipped, loser. Your wife will be more attracted to you if you start standing straight and hold your shoulders up. Your wife is crazy right now, she's unstable. YOU need to be the rock. YOU need to be the adult. I know that sounds harsh, but you sound so beaten down right now, I think you need a kick in the a$$.
9. When you talk to her. Listen, validate her feelings, and don't judge. Ask questions. Be curious about her.