Friday, May 14, 2010

Twelve Month Milestone

This week I finally did a calculation that I had not done in some time: worst case scenario. This is a calculation that I do in order to give me some confidence that things are in a good state if the worst case scenario that I am interested in protecting against happened. Simply put, if there was no income because of a job loss, how long could the household be operated without any additional income.

In this scenario, my goal is to determine this kind of scenario under realistic conditions. Put simply, I wouldn't be accelerating my debt repayments, continuing my savings plans, or doing anything other than the base payments on all of my fixed expenses.

Given these parameters, without additional income, we have over 12 months of running room. This is a good feeling and is the first time that there have been that kind of savings. It is a really nice feeling. Does anyone else track this kind of figure, I wonder? Personally, after net worth and saving's rates, this is one of the biggest things that gives me a sense of security.

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