Yesterday was my 38th birthday, and that gives me a good opportunity to take stock of our financial position and to talk a bit about my birthday financial wish list. So where are we financially? Well, our financial position is sound. Nothing spectacular, but we are certainly on the right track:
Income: Our primary source of income is my job as an executive at a venture backed start-up. Until last week my wife had a part time marketing job with a different tech-company, but that is now over, and she is looking for the next opportunity. My job is secure for the most part, however my company is not itself a very stable organization. It will need to raise more money by the end of the year in order to survive. I am very optimistic that this will happen, but there are no guarantees.
Spending: Every month we make more than we spend, although with my wife's part time contract coming to an end last week, that may be tough to stick to for the next few month, until she finds a new position. For the time being we are not going to cut down on our expenses, although if things really get bad, we can always pull our three kids out of day care. This will reduce our expenses by 30% at a stroke... we live a very modest lifestyle, living in a rented townhouse and driving modest (read: old) cars. Our spending level is sustainable.
Savings: our savings are in surprisingly good shape. The stock market meltdown hurt like a bitch, but as of last week our net worth was down only 13% or so from its peak. Put that down to a well diversified portfolio which did not exceed our risk tolerance. This allowed me to stand my ground in the face of market losses and to increase our stock positions again starting last summer. Many of these purchases are still under water, but some are already showing impressive gains. Over the long run, I think that the market positions we have taken over the last 12 months will be some of the best investments we will ever make.
Debt: we have none. Nor do we ever plan to have any, unless we decide to buy a house and need a mortgage. I believe in self-financing anything you want to buy. "If you can't pay for it, don't buy it" is my motto.
I think we are in good shape financially.
My birthday personal finance wishes:
Retirement: I hope to retire in about 20 years - that will make me 58 years young. I can see a couple of scenarios for achieving this goal, although I will be honest and say that these are not fully baked. The most likely option is that my wife and I both work for the next couple of decades, we diligently save as much money as we can, we invest our savings and at the end of that period have enough to at least semi retire - i.e. hopefully I will be able to work a couple of days a week in consulting or advisory roles. The other possibility is the "Lottery" option. My wife and I both work in the high-tech industry. All it would take is for one of the companies we work for to go public or to be acquired for a substantial amount, and our stock options would be worth a sizable amount of money. It's possible, but we're not counting on it.
Career: my career is by far our biggest financial asset right now. Since my wife has been working part time (6 months or so) my salary has accounted for about 75% of our gross income. Hopefully, this will come back into balance as my wife finds a full time job. Regardless, I am an ambitious guy - for me it's not just about the salary - it's about getting to the top and about being the best at what I do. One day, I would like to be CEO of a tech firm - call it 5 to 10 years from today.
Stability: as my 38th birthday comes to a close, one of my biggest financial wishes is for... boredom. I hope our financial lives move forward without too much drama. I hope I never have to report any major upheavals in our economic condition on this blog. Let there just be a slow, steady and diligent progression towards financial independence.
Happy birthday to me...
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