As I shared in last week’s post, E and I have outlined 3 options we’re considering for our target number – the level of financial security needed before we quit our corp careers and start making our time our own. To recap the options:
- #1 – Target Number = 2 x Current Net Worth + Zero Debt
- #2 – Target Number = 2.5 x Current Net Worth + Zero Debt
- #3 – Target Number = 1.2 x Current Net Worth + Zero Debt
As we consider these options, I’ve found it helpful (and therapeutic) to understand how my underlying beliefs and desires have shaped these options and are at play in deciding our final target number. Here goes..
Options #1 and #2 reflect my deep-seated (and false) belief that I will never earn as much money working as an independent professional as I currently do working for a Fortune 500 company.
I know this belief is a load of crap. But it’s so very difficult to change. If anyone has ideas on how to change deeply ingrained beliefs, I’m all ears! The truth is working for myself offers me unlimited earning potential; whereas my corporate job limits my income to the amount my boss is willing to pay me.
However, I also know that I am in my prime earning years in my corporate career. I never thought I would earn as much as I do today, and it’s very tough to walk away from it. Especially when I believe, right or wrong, I’ll never be able to make this much money again.
Option #3 reflects my long-held desire to work for myself as soon as possible. (And it represents my growing dissatisfaction with my corporate career, which in turn lowers the level of financial security I think I need before I quit). I’ve always wanted to be my own boss, but an ever-increasing paycheck has kept me on a corporate path.
In fact, early in my career I was offered a big promotion, and it came with a hefty pay increase and retention bonus. I vividly recall saying to myself, “This is it. If I take this promotion, I will become accustomed to the money and lifestyle. If I don’t walk away now, I never will.”
I knew it then, and I was right, yet I still chose to take the promotion. And the rest is history. Except now, many years wiser and financially more secure, my desire to make my time my own and work for myself will soon be within reach!
So after all the number crunching and “what if” analysis, what is our target number?
Target Number: We Choose Option…
My personal favorite is Option #3. But, I’ll need more financial security to quit my corp job than the amount we’ll be able to accumulate over the next year. The “subject to change” factor here is I am building my business on the side. If it happens to take off earlier than expected, Option #3 may get the green light.
And Option #2 – financial security AND mountain retreat – will just take too long to attain. Even though I don’t want the pressure of earning income to survive after I quit my corp job, I like the idea of having to earn income to afford our mountain retreat. The mountain retreat becomes my carrot. It will help motivate me to work hard and create value.
The “subject to change” factor here is if the price of homes takes a dive (e.g. the great recession), then we will jump on the opportunity to buy our dream home in the mountains! So, as of today…
We are committed to Option #1 and achieving a
Target Number = 2 x Current Net Worth in 5 years (2022) or sooner.
Subject to Change 😉
What about you – What factors do YOU think should be considered when setting a target number? Should it be a locked, static goal, or can it be subject to change? Why?