Surely there can be circumstances in which we end up having emergencies that might end up going beyond the size of our various back up funds and our emergency funds that end up causing us to have to dip into our bitcoin stash, so we cannot necessarily predict or prevent all negative contingencies that might befall us that end up diverting or destroying our bitcoin accumulation progress... and yeah, there are age and health situations that might come up that we might not have had anticipated.
You are right about emergencies. We cannot prevent them from happening or predict the exact date it might occur but at least we know what's is at stake when we don't have strong backups fund. When we don't have emergency fund, our bitcoin investment would be at stake as we might be tempted or end up tampering with it. Some emergencies might exceeds what our various emergency fund can handle. Regarding that,we should seek financial assistance from friends and families, maybe it would help instead of tampering with our bitcoin. Our bitcoin should be the last option except when every other options failed .
Yep. If guys have other funds in various forms, then he has options, and yeah, he might have some social options too.. that he might build over the years, so he knows that he might be able to get funds from other people, up to a certain point.. so then he might have to weigh from which one to spend first.. and the fewer options that he has, then he might end up having to resort to his bitcoin.. which he is attempting to avoid.,. and surely even when the various back up funds are getting close to being exhausted, he might be able to finds some less preferable and inconvenient ways to increase his income and/or cut some of his expenses. .so sometimes even having certain talents or a certain set of connections might help to generate some temporary income or an ability to cut some expenses based on people who are known or social relations that are in place.
Very true, and that’s why I started out lately to not be using all my discretionary income to accumulate and invest in bitcoin, even though I still make sure I sorted out my primary basic needs. As a matter of fact I tend to put a higher percentage of my discretionary income into my emergency funds and then use a lesser percentage for my bitcoin accumulation because I believe that bitcoin investment is a gradual process since I’m not in for a short quick profit, it doesn’t matter how little I buy but what matters most is my consistency in those my little buy and holding for the long term goal knowing fully well that my emergency funds is there to always shield my investments so I won’t sell when is not of my own choosing even if I’m in some sort of a profit.
Investing higher percentage of your discretionary income into Bitcoin makes your investment journey stressful because you wouldn't have that freedom financially to stack up a tangible emergency and reserve funds very quick.
Additionally, you wouldn't have more of that freedom of having discretionary income for consumption which I sees as unavoidable since at some point in our investment journey, we will want to gamble, buy some cigarettes, tip a friend or a waiter, so not investing higher percentage of your discretionary income is very necessary for freedom, at least 60% is fair if you ask me.
Surely keeping some money for optional consumption can serve a lot of purposes, including psychological well-being, so for example, there might be some opportunity to go on a weekend trip, and the trip might cost $200, and maybe there are funds that are being held for flexible reasons.. and choices may well have to be made, since the $200 might be well spent on such consumption, and there could be lifetime regrets in having had missed the opportunity when it was available...
and like you suggest Futurexxx, the nature of discretionary spending might have a lot of subjective element involved in terms of how high of a priority to give such extra optional spending, in which some guys might consider the spending to be completely wasteful and other guys might decide that they want to have the option to spend money on the thing that they want and to control and/or balance their choices in ways that they personally prioritize and no one else might agree with certain parts of their choices... and even if guys have some of these kinds of spending pieces that seem completely irrational, they also might know that they also have put in place certain limits for themselves in regards to how much of their income they are going to allow themselves to spend on such seemingly whimsical spending matters.
By the way, if we know that we have desires to be whimsical with our money, we might still allow ourselves to partake in such whimsicalities, while at the same time trying to put some kind of a strict limitation on the amount that we dedicate for such, so maybe we tell ourselves that no more than 10% of our discretionary money can be used for our whimsical spending.. so we still have those freedoms to be whimsical, but we also have put systems in place (that are an amount that we specifically chose for ourselves) to control how much we partake in such whimsicalities an potentially limit the amount of damage that such whimsical behaviors will end up doing to our investment systems and practices that we have decided to put in place and to prioritize for what we believe to be for our own good and for our own future self.
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But the moment we realized this kind of thing, it’s better to start considering to allocate funds for emergencies as soon as possible. Even if it’s just a small amount from our income, it will be a great help when the day comes we will be needing it. And
it’s also to prevent having to sell our other investments just because we are prepared for such emergencies.
Well. If we have a variety of investments, we likely need to figure out priorities, and surely some investments are more volatile and some are more liquid than others. So sometimes we might need to reallocate some of our other investments so that we are not forced to sell some (or all) of our bitcoin merely because it happens to be the most liquid asset that we happen to have available... so surely if we prioritize our bitcoin investment, we may well have to take various preventative measures in terms of other assets (investments) that we hold, and surely we might realize that certain of our investments are not very liquid, yet we value those assets less than our bitcoin investment, so we may well have to proactively take measures to liquidate some of our illiquid assets (and either put them in bitcoin or put them in some other liquid kind of a holdings) so that we do not end up having to touch our bitcoin when we would have had preferred to take it from the less liquid asset first...
So for example, let's say that we hold an index fund, and that index fund is mostly available Monday through Friday during normal business days, and we also know that it would take around 2 weeks before we could sell and convert such asset to dollars or whatever is our local currency. We might know that our bitcoin can be available within 1 calendar day or perhaps even faster than that... so we might realize that we need to act in advance. We also might own some property or even share ownership in property or in a business, and we know that it would take several months to liquidate that value... so we might need to take that into account too in regards what we are holding and what proportion of value we are holding in various assets. A few years ago, I had decided to begin to withdraw from an index fund because I wanted it to generate cash (or an cash income) for me on a monthly basis, so then having that extra cash coming in from that index fund, I have been given an additional cushion of money that causes me to have less worry about selling any of my bitcoin and even potentially to use some or that money to buy more bitcoin from time to time.. even though I consider myself to not be accumulating bitcoin as I had been doing more than 10-ish years ago...so sometimes we can take actions in regards to some of the other investments assets that we have in order to reinforce our prioritization of holding and maintaining and perhaps even building our bitcoin holdings.
Well, I understand what you mean, and is that how you do it yourself by investing in bitcoin? So you prepare your emergency fund alongside your investments.
I had previously made an investment, but it didn't go well because I didn't prepare an emergency fund. Although I thought I could take out a loan to deal with urgent situations, I didn't do it because I didn't want to get involved in borrowing or lending money, even to people I know. So, I sold the Bitcoin investment I had made.
This is actually an interesting situation to be in, I wonder what if you never invested in bitcoin but still spent your discretionary income on other not so relevant things, how would you have handled the urgent situations that came up for you to deal with because the idea is always that if you don't have an emergency fund ready you might end up having to sell your bitcoin but if you didn't have bitcoin available to you then get yourself out of that bind? This concept just came to my mind and it has really got me wondering.
Even though I don't have any Bitcoin investments and I do encounter problems, such as urgent situations, that can be handled with an emergency fund. In my opinion, whether you have Bitcoin investments or not, you still need an emergency fund. That's what you should pay attention to in life. Moreover, if you want to invest, you must really consider other factors, such as an emergency fund.
Maybe we are distracting people with the idea of emergency fund.
Fuck emergency funds for whatever random purpose.. it does not matter..
We are specifically talking about protecting our bitcoin investment, and so the extent that you keep other emergency funds and blah blah blah.. The main context that we are talking about is making sure that we are able to both build up our bitcoin investment and to minimize the chances that we might have to tap into our bitcoin at a time that is not of our choosing... so if we end up screwing things up and then we have to tap into our bitcoin, then in some sense we have failed.
Sure, if an Emergency is big enough then we may well have no choice but to tap into our bitcoin to save our life or perhaps the life of some other person(s) in which we feel some financial obligation to save.
And with Bitcoin's current price decline, I personally don't think it's wrong to start investing again, but you should really pay attention to other things, such as an emergency fund.
You have already screwed up in your own prior failure/refusal to sufficiently protect your bitcoin, and so now you want to tell us that we need to establish an emergency fund first, merely because you fucked up. You are surely not a good role model on either the bitcoin investment or the cashflow management topic..
There are lessons I've learned from my previous experiences, and I will evaluate and improve them.
Hopefully, you can learn for yourself and not end up screwing up in the opposite direction because you end up over compensating for your prior screw up.
No mate, you must not prepare an emergency funds before you can get started with bitcoin accumulation and investment, once you’re able to figure out a discretionary income to use and invest in bitcoin it is advisable you get started immediately with your bitcoin accumulation and along the line you can be preparing some funds for your emergency funds as you’re already ongoing accumulating bitcoin. Emergency funds requires you to have at least 3-4 months of your expenses which is something you can not just be able to build in a day or months, and besides that keeping an emergency funds aside for bitcoin investment whereas you don’t have any bitcoin stash or portfolio to protect doesn’t make real sense, so the most important thing to do first is to be able to get started with your bitcoin accumulation immediately your discretionary income is ready and as time goes on while you’re investment is ongoing, you can be building your emergency funds along side while accumulating and investing in bitcoin. You must not wait to build your emergency funds first before getting started with your bitcoin accumulation and holding for the long term goal.
Well, I understand what you mean, and is that how you do it yourself by investing in bitcoin? So you prepare your emergency fund alongside your investments.
I had previously made an investment, but it didn't go well because I didn't prepare an emergency fund. Although I thought I could take out a loan to deal with urgent situations, I didn't do it because I didn't want to get involved in borrowing or lending money, even to people I know. So, I sold the Bitcoin investment I had made.
I know I likely already responded to your situation, which is that you likely need to figure out some reasonable amount to invest in bitcoin so that you are not depleting any back up funds that you have, and if you are getting into situations where you need to take out loans, then you are not sufficiently living within your means and you are likely not generating enough discretionary income to be investing into bitcoin. You should be trying to work up to higher level of investments in bitcoin, so you might well need to start out with smaller amounts so that you never have to sell your bitcoin, and of course, you can build up both your emergency funds and your bitcoin at the same time, yet it sounds as if you already have problems managing your money so you need to figure out ways to not over do things so that you don't put yourself into similar situations in the future so that you dont' have to end up selling any of your bitcoin for 10 years or longer. ..and surely some people might need to take close to 20 years before they might have had been able to build up a large enough bitcoin stash.
It seems I really need to pay attention to the funds I allocate to Bitcoin. Previously, I was a bit overzealous, allocating more to Bitcoin than to my emergency fund.
There is nothing wrong with allocating more to bitcoin, yet there still needs to be some kind of funds to cover various cashflow situations that might come up that relate to loss of income and/or increases in expenses.. and so each of us have to figure out how to make such balances, without putting ourselves into a place that we have to tap into our bitcoin at a time that is not completely of our own choosing.
Many times normal people might come to bitcoin, and they might already have a practice in place that they have 2-6 weeks of various back up funds available for irregularities that might occur in regards to their income and/or their expenses. Many folks have a certain level of pride in which they don't want to put themselves into a position in which they have to ask others for a bailout.. so they have systems in place to bail themselves out from any shortages in cash that they might end up experiencing.
So if a person comes to bitcoin and they already have some back up funds in place, then they are off to a good start, yet if people come to bitcoin and they do not hae those systems and/or practices in place, then they likely have to figure out how to get into better cashflow management practices... and surely with something like bitcoin, p;art of the eason that we have to build greater back up funds is because bitcoin tends to be very volatile and very liquid, so we have to have systems in place where we are not tempted to touch our bitcoin for 4-10 years or longer.. perhaps even greater than 10 years would be our goal since less than 10years would ONLY apply to folks who have health and/or age reasons for not being able to commit to longer periods such as greater than 10 years.
In the future, I'll try reversing this, allocating less to Bitcoin than to my needs and emergency fund. This has been a valuable lesson for me, and thank you for the advice. Hopefully, I can improve in the future and avoid making the same mistake again.
Hopefully you can get some kind of a reasonable balance without overreacting or overcompensating and/or failing/refusing to learn the right kind of a lesson. It can take a long time to build a bitcoin investment and also to strengthen existing cashflow management systems/practices - including that there are some special peculiarities in regards to protecting our bitcoin - even though surely in a worse case situation, we may well not have any choice but to tap into our bitcoin and/or potentially to completely use our bitcoin to respond to such emergency situation, yet at the same time, there tends to be quite a bit of high importance to try to not put ourselves into any emergency situation due to our own sloppiness and/or lack of preparedness.. and yeah, it can take a while and even sometimes we might have to do work or engage in some kinds of employment that we would prefer not to do.. but we are at the same time trying to make sure that we are both investing into bitcoin from our discretionary income and also that we are making sure that we are building and/or maintaining strong cashflow management systems/practices.
Most times no one is going to be available to hold our hand and/or to make sure that we are allocating correctly into each of the categories, so hopefully we can figure out ways to learn and to continue to build at the same time so that we are not faced with situations where we have to start over.
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Indirectly this means referring to our readiness whether we are able to survive in that period or not and this condition that must be the focus is how our mental readiness and how we still manage emotions because sometimes when we see a few percent profit our greedy soul to take advantage quickly always happens and it happens for most especially those fomo who always say that what he does is the truth by taking quick profits.
I don't really understand the meaning of excess accumulation here? Is it about how we continue to accumulate directly and turn aggressive or is it just a figure of speech where we don't really care about the price conditions and don't sell (just hodl) and continue to accumulate?I use the term overaccumulation to describe a situation in which a person has accumulated enough or more than enough bitcoin, so then options open up in terms of being able to start to sustainably withdraw based on price and/or based on time.
For example, in the beginning of 2016, a person had a $30k per year income and over the past 10 years he had been accumulating bitcoin at $100 per week, and his income had gone up to $50k now. He would like to quit his job and start to live off of his bitcoin, yet he does not want to quit his job until he is sure that he can withdraw at $80k per year from his bitcoin.
He looks at his bitcoin and he sees that over the past 10-ish years, he had invested about $52k, and he had accumulated 15.26 BTC. He also looks at the
current amount of BTC that he would need to start to withdraw at $80k per year, and he sees that it is 14.0757, so he sees that he has enough BTC to start his $80k per year withdrawal rate and to meet the minimum threshold level to be able to start to withdraw at his target of $80k per year, and he sees that he also has nearly 1.1 BTC extra.. so he feels even more comfortable that he more than meets the minimal level of BTC for his desire start to the process of withdrawing at $80k per year and he has a bit of an overaccumulation cushion of nearly 1.1 BTC so that he can continue to monitor his withdrawal rate once he gets started and to continue to make sure that he does not deplete the dollar value of his current BTC holdings faster than his holdings would be growing in value in spite of his plan to start to withdraw $6,666 per month and at the same time, he considers that it is going to be quite likely that he is going to be able to increase his dollar withdrawal rate by 7% each subsequent year, so in year 2, he will withdraw $85.6k, year 3 he will withdraw $91.6k, year 4 he will withdraw $98k - etc etc etc.. and he will continue to monitor to make sure that his bitcoin is growing in its dollar value faster than the rate that he is withdrawing from his holdings.
Each of us is responsible to figure out how many bitcoin we need, and if we have determined that we have reached overaccumulation status, we should put systems in place that don't cause us to get knocked out of overaccumulation status, once we are in such status.. and for the hypothetical guy I describe, he is starting with nearly a 1.1 BTC cushion, which surely likely gives him a decent amount of cushion that he will not easily get knocked out of overaccumulation status unless he screws something up in relation to the rate of what he considers to be a sustainable withdrawal level.
