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Saturday, January 30, 2016

The Third Domino Falls: Risk

About 20 years ago, I used to work for a company that handled absolutely huge projects.  Because the projects were so large, there were all sorts of status reports and metrics to track our progress.

One day, my boss's boss's boss's boss (yes, 4 levels up) called me into his office.  As we never had any interaction with that level of management, I could only assume I was being fired or promoted.  To my surprise, he only wanted a status report from me.  I was totally confused.  Was everyone in my management chain on vacation at the same time?  I began to regurgitate the weekly status report for my group.  "No, no, no,"  he said, "I don't care about the numbers and spreadsheets. I want to know where the project really is right now.  How do you feel about it?  This is off the record."

I told him we were on track.  We had been really behind (although the official schedule had not shown that), but we had also caught back up.  Then I ask him why he was asking me this question.  He said, "Sometimes you need to throw out all the metrics and get a gut check.  Today, you are my gut check."

To this day, I still don't know why he came to me.  I asked around and he apparently did not come to anyone else in my immediate group.  Maybe he saw honesty or intuition, or maybe I was just a random sample of the whole project for that week.  I will never know.

Over time, I've also developed an aversion to an overreliance on numbers.  It's certainly true: sometimes you just need a gut check.  During the past weekend, I did that with my finances.  Setting aside all the numbers and all the targets, I asked myself how I felt deep down about our household financial situation.  Was I ready to move on to the next phase?  Was I finally ready to take new risks?  There was no hesitation in my mental response: the answer was yes.

Thursday, January 14, 2016

The Second Domino Falls: Income

With debt out of the way, it was only a short amount of time until enough productive assets were accumulated to reach my desired passive income floor: $40,000 per year.  This breaks down into $36K of dividend income and $4K of interest income per year.  Also, I have never disclosed this fact on this blog before, but I have an additional $10K per year of income that is reasonably consistent and completely unrelated to my employment, but is not strictly passive in nature.  This means I have not only $40K/year in passive income, but also $50K/year in total income unrelated to my job.

And no debt of any kind.

Clearly 2016 is going to get interesting...