Very paranoid

The news media tends to scare people about hackers, there are not a lot of people who can really hack stuff most are just script kiddies that can only exploit the well known things that are easily protected against.

If you have good security practice you are safe from people in and outside your house. Software firewall, virus protection will stop most things, hard drive encryption if you worry about the protection of the physical device.

Yes your friend could record your wireless traffic knowing the password but the software that does this will not run under windows you pretty much must have a linux system running. So do they even have the skills to install and run the tools. Still all they could see is what sites you access, most sites that have privacy concerns use HTTPS to encrypt the traffic so all you can see is the site not what is being sent.