I was just talking to my wife about the state of our economy and how this time if Bitcoin hits back down around the five mark, I am going to be buying - regardless of what her fears might be. Last time in 2020, she vetoed my decision, something that likely cost us around 150K. However, I do understand her fears with this, as she is not only very risk averse, but also spends far too much time reading the news and all she ever picks up about crypto is, scam.
But, while she worries about the rising costs of living, what she doesn't dig into is how she can affect her own purchasing power by increasing incoming cash flows. Like most people, this all comes down to "getting a raise" at work, but especially at times like this, the chances of that raise being enough to beat inflation is very, very iffy - because the rate is so high. In Finland at the moment, it is 5.7% and like everywhere, on the rise.
Sure, that is still lower than many places, but the consumer buying power in Finland has never been that great and Finns tend not to spend that frivolously because of it, so even these level of rises has impact on daily living standards, because there is not that much fat to trim.
Luckily, over the last 5 years I have built up my own crypto portfolio and through various (highly volatile and unreliable) processes, I do have some incoming trickles that allow me to keep investing, even if the amount is quite low. This means I can increase my crypto stacks through a bear market, to take some advantage in the bull peaks.
What it also does is, push come to shove, it would provide an additional income in the real world, if needed, which is somewhat of a safety net. For example, Hive curation, Splinterlands rentals or Cub DeFi earnings can all be leveraged and at least currently, it beats the inflation rate.
If for example our households monthly income is 5000€ and the inflation rate is 10%, it means that a year from now, to maintain our current spending power, we would need to increase our monthly income by 500€. That is highly unlikely through wage increases, so it would have to be through other sources of income. Dividends, tax deductions, second jobs and crypto ventures all add into the fray.
However, maintaining purchasing power is one thing, but that doesn't mean spending on maintaining lifestyle. Instead and as I was discussing with my wife, we are looking to cut back on non-essentials like many people, whilst looking for ways to use any "additional" resources we have to put into value-adding activities. Of course ideally, I would have cashed out a large amount "at the top" (the top is always unknown at the time) and had a lot more to invest now, but, that is the past, we have what we have and have to act accordingly.
For example, I know that a lot of people feel that they deserve a holiday after two years of Covid nonsense and are therefore booking their summer trips abroad in response. However, what they don't seem to factor in is the true cost of the trip, which includes opportunity cost also. For example, a trip for my family to Rhodes for a week will cost somewhere in the vicinity of 4-5000 euros, all said and done. However, that money is a tool that can purchase "anything" including a generative investment, where even if I bought BTC today at 19K with it and it dropped to 10K - if I hold and sell at 60 in 2 years time, that is a 3x gain for 15K total. However, the one week holiday in two years from now would be worth zero.
But the experience is priceless!
Is it?
The Rhodes holiday in two years from now will still in all likelihood still be available to take and even with a 10% inflation rate, will only increase in price to a max of 6000. That means that holding off for two years gives me the opportunity of a holiday, plus 9K in my pocket. But people heavily overweigh the value of the moment, rather than the potential value of the next, which is why most people will go on the holiday, even going into debt to do so.
Then, what people also omit is the value of other opportunities in experience, where they assume that Rhodes (in this example) is the only experience available because that is what they are focusing on. However, that is never the case, so while we might want to be somewhere warm by the pool, we will also be able to do other things in its place, where for example, we spend a few days at the beaches in Finland. It might not be Facebook worthy, but we will still have a good time and as long as we accept the current conditions, we won't miss going to Greece that much - and we know it is just postponed anyway.
We could have some fantastic experiences in Finland throughout the summer for 1000€ total, meaning that rather than the week away, the surplus we would have spent would be injected into investments in the coming months. Two years down the track, it would be 80% investment volume at potentially 300% for not going on holiday, meaning that the total gain will still be around 12K - which still gets a 6K holiday to Rhodes or similar and leaves another 6K in pocket.
Opportunity cost is something that we aren't very good at applying to our experiences, because our mind tends to overvalue what it is currently focusing on, rather than doing the work to look at alternatives. Yes, this saves energy resources used for brain power, but it also misses understanding the alternatives and making a more qualified decision on what to do. And, factor in that we live in a society driven by consumer activity and we are encouraged to spend regardless of the value of the purchase, and we start to make some very poor decision in regard to our financial futures, whilst being blinded by the concept of "valuable experience" from consumptive activity.
I believe that in order for us to improve our real quality of life, we need to better understand what is of value to us, including the alternatives that have potential value, but are outside of our awareness, as we focus on what we have been told to focus on.
While not everything is about money, it is good to note that pretty much everything we are encouraged to experience in life through society, culture and our peer networks - takes money. Ignoring this is going to lead to hardship on to major fronts - our additional experiences in life and, our quality of daily life.
Experience depends on our attention, the most valuable resource we have at our disposal, but where we spend that attention is going to determine what experiences are available to us in the future. Are we "paying attention" on generating rich experiences, or wasting our attention on things that lessen our quality of life? It might depend on what we value, but what we value "right now" might cost us what we value down the road, but is "now" out of reach.
Taraz
[ Gen1: Hive ]
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Running off that definition it seems like "calculating opportunity cost" will be regarded as "indecision" by some/a lot of people XD
I have thought about this before, and I came to the conclusion that balance is key.
Opportunity cost is not just monetary, it is everything else as well. We argue $5000 is really $15000, when you have $15000, the same opportunity cost will present in front of you to roll it over and get to $45000, and so on.
Now, we have health, time, energy, the loved ones, and we take it for granted. By the time we are finally ready to take the plunge, do we still have the health to enjoy it and loved one to share it with?
We will never have enough money, it is a moving goal post.
Life is funny in a way, we can work hard and save while we are young, full of energy, have a lot of time, and are very healthy. By the time we have accumulated all the wealth, we no longer have the health and energy, and just sit on a pile of money, for whom? This is the trap we need to get out.
Is the value of a holiday on a beach in Greece, that much more than the value of a holiday o a beach in Finland? Is the "experience" factor worth it? This depends on the type of holiday for sure - but not all are created equal.
I am with you on that :) I'd rather invest $5k and go to a local beach.
People value things differently, and Greece beach could be more valuable to them. (A new beach to visit, favorite beach, childhood beach, miss Greece, want to visit Greece for the first time, warmer, or whatever the reason is)
I know people who would book a room at a hotel locally for the family, just to "get away". (To me it would be a waste of money)
Just buy the Bitcoin, don't tell your wife if she doesn't agree, lol. She'll forgive you when you pay off the house.
:D
Finland is in the euro, isn't it?
Tell your wife that the markets are going to be testing the ECB, so diversifying into non-euro assets makes sense. If bitcoin is too risky, then Hive Dollars are the way to go. HBD will maintain it's peg with the US dollar, but it should rise against the euro.
It is going to be interesting to see what happens in the EU over the next 6 months.
Is the title a subtle message to pick up some BCH?
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Does anyone buy BCH?
I think exploring your own backyard, especially since it is less expensive than an overseas trip, is a good idea. To many people ignore their own countries wonders to go to the hot overseas locations.
We haven't travelled that much internally, as it has always been a bit of a challenge with Smallsteps. Now though, I think we have far more freedom to travel, so may as well see what we can see. Finland isn't that large, so even daytrips get us pretty far.
Well, you have invested in HIVE and HIVE blockchain within this period. I think that a significant increase on the price of HIVE might cover your that 150K cost.
Eventually :)
I have been on vacation with my family just 3-4 times. And I cherish those memories.
We don't plan a vacation every year. We have a vacation when someone in my family gets a yearly bonus(and there are no big expenses) or makes a killing in stocks/crypto(the big score for us is 5-10k😂)
Poor me. Waiting for money to enjoy life a little😅
I have been very very lucky a few times in my life and got a taste of what being rich feels like. Glad that I travelled solo during that time.
Maybe if I had put all that money into an investment, I would have more money today. But being in crypto for five years, I highly doubt my investment decisions.
I am sure that if I have $100k in my bank account, I would end up spending all that money. Maybe in one year, or five years, or seven.
But if I travel with that money, those memories will always stay with me😅
Don't know. I feel like whatever amount of money I will make, I will eventually spend it.
I have never really travelled with family and holidays were spent just bumming around the house for the most part :)
Keep thinking a little ahead and there will always be some coming in :)
It is a funny thing - but they actually don't. I have travelled a fair bit and other than the very strange events, most of it all blurs into each other.
THIS. I can't tell you how much I regret not giving Steem Monsters (aka Splinterlands) a chance back in the old Steem days. I had never played a battling card game before and thought I wouldn't enjoy it. It was only years later that I discovered I was wrong. I had missed the golden alpha, beta cards era, and half of the untamed era too. sob.
I came in at Dice! :D
I think this is essential. Many, particularly when we are young, have no idea what we truly want out of life. Socrates said that "the unexamined life is not worth living".
We romanticize these priceless experiences in our minds forgetting how long it takes us to pay for it, forgetting the logistical troubles, and forgetting the dread of it all ending and having to head home soon. Holidays are often more exhausting than working.
We make up ideas of why an expense is worthwhile when it is obviously not needed.
I think people who spend their time "in the now" at the expense of the future, are not actually in the now anymore than anyone else. You can experience the now without being a hedonist that only values the given moment.
Yeah I'm not one to spend of ton of money on travelling. I prefer spending on tangibles. Today it's shoes! Obsessed with Camper shoes at the moment. I've also been buying bitcoin in regular small amounts since it went under 22k. I'm kind of hoping it goes to 5. I'm finally getting into cryptos! Why not? Why not is because I live in New York State, which is called "the worst place in the world to buy crypto" which is probably good, because it has slowed me down considerably.
Camper shoes? Never heard!
Remember, there are always ways to buy assets, no matter how convoluted! :D
Not in New York! It's bizarre. I spent four days trying every which way. I tried Gemini, localcrypto, kucoin, metamask and ledger, and those are just the ones I remember trying - there were others. All the services that process payments (are those called API's?) to all of those exchanges told me their services are "not supported" in New York. I am able to use coinbase, but am limited to $1000 a day. Now that I have some purchased, I can move it into Ledger and trade from there. But unless I can find someone to buy crypto for me and send it to a wallet of mine, I have to go slowly. Which turns out to have been good in this particular case, really. I am the ONLY person I know in the flesh who is remotely interested in crypto, and my friends and family all think I am insane for wanting to get in at all. Very interesting times!!!
I am not sure if it is still the case, but try Mandala.
This is what I get right up front. At least I haven't wasted time on kyc requirements, as I did for all the others. Any exchange that boasts it follows all legal requirements, as mandala does, is not going to work in NY except in small amounts. Very interesting! New York is at the forefront of not allowing people to reduce reliance on fiat. I suppose I shouldn't be surprised - everything is illegal in NYS.
Except on Wall Street.
hahahaha! Other places too, all upper echelons of fiat finance structures. I'm one of the rats, and I am expected to do as told or starve.
congratulations 🎉 on taking the “bear” 🐻 by the “bull-horns”! bully on you and i am sending the best of positive income, and experiences, energies intentions to you and your family!
Thanks - I might be a bear bull!
Life is full of maybe's, never straight forward in security or savings.
Best try always live debt free, invest what you feel is a safe option going forward. At the moment world economics almost dictates a recession after the last two years of crazy lockdowns.
Holidaying away on hold, smart investing now may make sense in the next couple of months. No crystal ball to predict the future, best is to be ready with what your inner feeling tells you.
!LUV to the family!
As much as I like to travel on holiday, I can't help but feel a lot of the perceived value of it is actually just cultural narrative, where we are told that it is valuable. Is there that much though?
Travel is educational, expensive as well.
Perceived value would depend if one could go camping closer to enjoy a break from humdrum daily life, escaping noise mainly is why any escape is enough for me no matter how far or near.
The 500 is required per year with 10% inflation, 43,66 per month.
On a small amount it's probably doable, but finding an extra 10k on a 100k salary may be harder.
As an alternative, are you able to travel to Rhodes cheaper? Not so pricey accommodation, less fancy restaurants and stuff? The flights are probably the priciest part though.
No, the inflation rate at 10% means that if expenses are 5000 a month today, they will be 5500 a month next year. It will increase by 44 per month for 12 months.
Flights and accommodation are expensive, plus there are all the other factors involved and travelling with a child changes things too. All to just "be away" it seems very expensive.
Thanks for clarifying. I see now, huge jump in monthly expenses.
I know what you mean. Traveling with kids is very expensive, plus going during school terms etc is something that drives prices up.
It's a good point; the opportunity for gain is there - but the chance of loss is also there. The same can be said for holidays; there is gain from spending time with your family and a chance of financial loss. No one ever gets to their final days and wishes they bought more Bitcoin. There is a balance to be struck for everyone, perhaps splitting the difference - half on family and half on crypto. Thanks for posting your thoughts; they are very provoking - I hope you find a good balance.
I don't think anyone gets to their final days and says, "glad I went on holidays" either. Spending time with family can be done anywhere.
Valid point; I know we as a family value our holidays highly - as it generally means escaping the distractions of home. Our holidays are pretty frugal, which leaves more to invest in our long-term future rather than short-term experience.
The best way to live a life is while planning for tomorrow, focus on what you have today, and live everyday to the fullest like it is your last day and leave no regrets.
Life to the fullest in the moment is where most people seem to think, spending everything one has in the moment is living to the fullest. I don't believe it is.
Don't need to spend money to live life to the fullest.
People often misunderstood the meaning and default to materials, and forget about innerself, skills, people around them, and spirituality.
Very True thoughts. 👍🏻
Investing is at the current levels within crypto market better than just spending the money.
Women are like guiding angels and they are the best special adviser a president would ever ask for. They act in the interest of the family because of the position.
Planning is very essential
The patience one will enjoy crypto when it rise
It is very important to appreciate every thing that comes our way no matter how little it may be is worth something.
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STOPWell, by that trend of thought. You could also make easily 3k euros if you just stay in home during the entire summer instead of going after some fantastic experiences in Finland spending 1000€ in the trips to the beaches right? };)
That is probably what we are going to do. We have a lake beach 100 meters from us.
Oh! that's great. Then maybe you still will be able to make those €3k in two years after all. If you simply decide to go walking to those beaches of the lake carrying only one of those cheap coolboxes with a good supply of homemade bread and cheese sandwiches and plenty bottles of fresh water filled at home. Am I right? :D
oh, this hurts, I was told by my wife that we can afford 4 holidays between July and September, as the portfolio is down a lot and I need to build. the burn.
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