Should I exercise my stock options?

Question

I am a new hire at a large private company that is undergoing some rapid growth. I hope to stay with this company for at least the next few years. At my hire, I was offered stock options equivalent to one year's salary--fully vested after five years--and the first batch of those is now available for purchase.

Please forgive any incorrect vocabulary or lack of pertinent details, but that brings me to my question: I am fairly financially illiterate. I have looked up what "stock options" and "vesting" and so forth mean, and I more or less understand it, but I have no idea whether it's a good idea or not. I understand there are no guarantees with the stock market, but I'm wondering if anyone can tell me things I should consider when making this decision.

My company is growing and I believe the stock is currently increasing in value. Our company is very large and I believe in its business model, which seems poised to do very well. I suppose we're technically a startup, but we have 8000 employees and locations across the world.

Not sure which of this is pertinent but:

• I am married, and we have a combined income of approximately 200K.
• We live in the US
• We have the majority of our $450K mortgage outstanding (we've owned our home for just two years).
• We have approximately 35K in credit card debt which we are rapidly paying down.
• We have about 100K in student loan debt (mostly my husband's) which we know we will be paying down for quite a while.

Answer 1

The suggested duplicate gives some great information, but here's some questions/points that pertain to your specific situation:

• Do you know what the shares in the private company are worth? Selling private equity can be tricky, both financially and socially (your employers may see it as a lack of faith in the company)
• Is there a way to sell the options directly? This may be "cleaner" than exercising and selling the stock, plus the options should be worth more than the difference between the stock price and the strike.
• I treat stock and options received as compensation as if they were cash. Meaning, if you were given the equivalent compensation in cash, would you buy stock or options with it? I am guessing not. I would instead use it to accelerate your debt payments. Your gain should be calculated from the time the options vested, so unless there's bee a large change in price from that date there should be minimal tax consequences.