My Financial Fears

We recently put our house up for sale and, believe it or not, we were lucky enough to find a buyer on the second visit, after only 2 weeks. The transaction is going pretty smooth so far and we will have to leave by mid June.

So, now is the time to look for another property. We made quite the substantial profit on our previous house so we are now shopping with $90,000 cash in pocket. While looking around, jumping from one house to another on the internet, there are several “financial fears” that came to mind. We are about to make a very important decision regarding our lifestyle. We need to decide whether to significantly increase the size of our house or if we will simply move to a similar house without changing our payments or financial situation much. This is the kind of situation that got me thinking about my financial fears:

Will I be able to maintain my income this high for the long haul?

As a financial planner, an important part of my income is variable. Last year, I made about 40% of my total income with my end of year bonus. It seems that I am heading for the same this year too. In fact, I am a little bit ahead in my results compared to last year. Therefore, if I push a little further, I should be able to maintain my income that way.

On the other hand, since my wife stays home, I am the only bread winner in the household. Between my job as a financial planner and my online company, I am able to generate a very nice income that supports my lifestyle. This is why I sometimes think about buying bigger since I feel that I can maintain my income level. However, if I have a bad year (i.e. less bonus), I am not sure how I would manage to pay for everything should I buy a bigger property.

Will my wife be able to continue to stay home?

Another point that came to mind is the fear of seeing my wife go back to work. We really enjoy our “traditional family” lifestyle right now and I don’t want to lose that. What if my calculations are wrong? I may be a financial planner and a supreme excel guru, yet anybody can make a mistake…

Will I be wrong at one point?

While I am still pretty young (28), I’ve spent the last 5 years leveraging every single penny I could. I really like the principle of making money with other people’s money. So far, it has always worked… I guess this is what concerns me the most. This is when you realize you can make a mistake that could be the biggest error of your life…

I’ve always borrowed a lot of money and always for the right reason; creating/buying assets. My “worst” asset would be my house as it is a source of expense too. However, I would never regret borrowing money to invest in the stock market or to start my online company. Those were among the best financial moves I have ever made. But even leverage has its limits and I could hit a wall if I don’t calculate my financial plan properly.

The funny thing is, every time that I think I am playing with fire, I end up with a nice shot… I guess I will have to determine which lifestyle I want:

#1 buy the house of my dreams, establish myself there for the next 10 years and spend the first 2-3 years in a more fragile financial position.

Or

#2 buy a reasonable house, do some home renovations to adjust it to my taste, wait a few years, and buy the house of my dreams with my additional cash down…