3 questions you have to answer before you invest in Crypto Currencies

Yes, today is another finance piece. As with all financial information given on this blog I want to stress that these are my opinions only. You should do as much research as you need to make sure you are educated and comfortable before making any financial decisions. I have been working in finance for nearly 30 years, I have a lot of experience and knowledge but I am one person, and I don’t know you.

Now disclaimer out of the way let’s talk a minute about crypto currencies. Unless you have been living under a rock you know generally what these are. Let’s get the formal definition out of the way first.

  What Is Cryptocurrency?

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. Source:

What does that mean in actual application? It means simply that groups of people agree that a virtual currency is worth “X” that group can be you and I, or you, me and your friend Rachel, or the 3 of us and 8 million other people. We can then exchange this currency for goods and services like you would any other currency (like dollars or pesos). It is virtual though, you don’t carry it in your wallet and it is not backed by a government.

Is this guy serious?

That’s how crypto is used, as an investible commodity though should we begin to entertain the notion of investing in crypto’s to diversify our portfolios? The answer is yes, with caveats, three questions need to be answered first.

  1. Are you risk averse? Simply put, does the risk of losing money scare you? Cryptos are a new asset class, unregulated and highly volatile. Yes, you can make a lot of money, you can also lose a lot.
  2. Do you already have a diverse portfolio? Are you just starting to invest, or have you been investing for years with a good spread of mutual funds, cash, other assets?
  3. Do you understand what Crypto is and how it works? Beyond my article have you used it yourself and understand its current application and can logically think about its future application?

These three questions are critical. If you answered yes to question 1, you should not invest in crypto. If you answered no to question 1 move on the question 2. If you answer no to question 2, you should not invest in crypto build up your other asset classes first. If you answer yes to question 2, go to question 3. If you answer no to question 3, do not invest in crypto. If you answer yes, green light go for it.

Summary:

Question 1: Yes Answer = Do not invest in Crypto. No Answer = Move to Question 2

Question 2: Yes Answer = Move to Question 3, No Answer = Do not invest in Crypto.

Question 3: Yes Answer = Go ahead and invest in Crypto. No Answer = Do not invest in crypto.

This is a very simple formula/questions that should provide you with very basic guidance to whether or not you are ready to invest in crypto. Like any financial advice, do as much research as you can and always trust your instincts.

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Finance Lesson: Many of you are going to see this for the first time

What is “this”? It’s called inflation. Many of you have never seen it and don’t really know what it is. You will begin to, if you haven’t already, hear more about inflation. As your Gen X friends will tell you, in the 70’s and early 80’s inflation was high. Mortgage interest rates at 15%+, yes that’s right you know those rates that are 3% or less now? Goods and services, in proportion to income was very expensive. Gallon of gas in 1980? $1.19 a gallon. I know doesn’t seem like much does it?

Not a lot of corollas back then, hybrids? Didn’t exist yet. You had gas guzzlers that were getting horrible gas mileage. Median income for a family in 1980? 21,000.00 Annual. However, the consumer price index from 1977-1980 increased 13.5%. That means, basically (not precisely) that the item you bought in 1977 was 13.5% more expensive just 3 years later. Now this wasn’t everything of course but it was inflation that was out of control.

Enter 2021. Notice the housing market is hot? Have you been to Home Depot to buy some plants or fencing for your yard? Prices are on average 6.5% higher than 2 years ago (for many goods and services not all). Now this is a result of covid, plus people going back to work plus government stimulus. So we have the trifecta of an inflationary period, increased government subsidy (more money in the market) more people working (more money in the market) and industries shut down for extended periods.

Am I contagious?
High amount of money and less goods and services = costs rise.

That in essence is inflation. Inflation is a good monetary solution to one or both problems. Meaning if prices are going up, demand is high (or goods are in shortage) that induces economic activity in those areas. A deep freeze in Florida kills the orange crop, oranges go up in price. Everyone gets 1000 in cash from the government, you are willing to spend more for the oranges now because someone gave you more money to spend. That gives the person producing the oranges more money to reinvest in orange production, increasing the supply and driving the cost down, overtime.

The issue here is time. The simple examples I have given are all in the abstract of time meaning the end game, increased production of oranges as I exampled, could take years. Now if the money supply decreases (the gov stops sending stimulus) you still have to pay the higher price for the oranges. This ushers in the inflationary period. The other lever that mitigates this scenario is increased wages, this is likely to happen as more and more of the world opens up.

In the short term you should expect to pay more for goods and services. It is a sellers’ market so to speak and if you have a skill or service that is in demand (construction, physical labor, lawn care etc.) this is an opportunity for you to make a lot of money. On the flip side, things you want are going to start costing more. That coffee you love every morning? The trucking company delivering to your shoppe is paying more in gas now, it’s likely that cost will transfer to how much your coffee costs.

Inflation is the reality of a good economy going through a natural ebb and flow. It’s not fun when things go up in price, unless you’re the one selling the item and making more money. I believe we are entering into an inflationary period, many of you have never seen it and will wonder what the hell is going on. $3.00 a gallon for gas? Very likely. Remember to keep an eye on your spending and keep an eye on wages for your chosen profession. It’s likely that as costs go up, so will wages but you must be willing to leverage your skill set (and possibly move jobs) to make more to mitigate the costs.

I think we are heading for a good period for workers, things are opening up and there will be good jobs to be had. The down side is inflation is starting to creep in and it’s been so low for so long I don’t think we can escape it this time.

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Do this to ensure your financial success in 2021

2020 is over its time to move on from it and get back on track and become more disciplined. We are in January, and it’s likely that you will have a credit card bills coming in from the holidays. Did you overspend? You aren’t alone if you did, many people who were at home found it easy to shop online and spend. Even if you didn’t overspend below is how you can ensure financial success in 2021.

Step 1: List all your debt’s smallest to largest. (total owed)

Step 2: Next to each debt, if you know it, list the minimum payment for each.

Step 3: Next to each Minimum payment, list the type of debt. (credit card, Auto loan, house payment.

Step 4: next to each debt, if you know it, list the minimum payment for each.

You should now have a matrix of 4 columns, if you did it in Excel even better, paper is fine too. You now have a list of the all the items that are crippling you financially and holding you back from obtaining wealth and freedom. It’s at this point you should take a break from this task. To this point it likely took you from 15-30 minutes to organize but emotionally you might be exhausted.

Now we start on ensuring your financial success in 2021.

Come back to your list when you are ready, but no longer than a week. (you should work on this for at least ½ hour a week, you can do that). Add the column of minimum payments, this is how much you are spending a month on debt. This is IN ADDITION TO your rent, food, utilities, travel. Calculating those are a separate exercise. For now, stick to the total number in column “minimum payment”.

Total DebtMinimum PaymentType of DebtInterest Rate
1$128,000.00($1,500.00)Mortgage4.25%
2$97,000.00$0.00Student loans8.00%
3$17,500.00($585.00)Car Payments5.50%
4$2,500.00($50.00)Discover21.00%
5$800.00($25.00)Master Card17.50%
6$750.00($25.00)Visa18.00%
Total Debt($2,185.00)
Total Fixed($1,815.00)
Grand Total($4,000.00)
Income$4,250.00
Net$250.00
A simple spreadsheet is enough

For my example it is $2185.00. Now add to this your other fixed expenses for the month. Rent, food, utilities all the things you have to have to live, not the things you want. Let’s say that number is $1815, add those two together = $4,000.00 below the 4000.00 put your monthly take home pay.

Your half hour is up, take a break and come back when you are emotionally ready. You now have the blue print to ensure you financial success in 2021. If your monthly take home pay is less than your total expenses your pay has to increase or your expenses have to decrease. You can increase your take home pay by working more, reducing your retirement contributions as an example. Expenses can be reduced by moving to a cheaper apt, less food as an example.

We now start the methodical work of eliminating debt smallest to largest. In my example I have a surplus of $250.00 per month. I am going to take that surplus and ADD IT TO the minimum payment of the smallest debt, my $750.00 visa. In 3 months that card should be paid off. At that point I would then have a surplus of $275.00 a month, which I ADD TO the minimum payment of the next smallest debt the $800 master card which would be $300.00 a month payment. In 3 months that should be paid off.

You rinse repeat for every debt. Eliminating credit cards along the way (you only need one) and revisiting this matrix for ½ hour a week, every week through 2021. You will begin eliminating debt and increasing your net surplus every month. THAT is financial success. You have more money every month to live on, imagine when there is no debt? You have a surplus of 2K plus a month?

Vacations, retirement, new clothes, vehicle upgrades are all on the table at that point. The key to ensuring your financial success in 2021 is becoming debt free ASAP. Then instead of working to send your money to someone else, you get to keep it. ½ hour a week is all it takes. Focus on it, make it a ritual and really invest in your personal economy.

Any questions along the way ask and if I can I will help you.  

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Finance and Anxiety: Back to basics

So with 2021 right around the corner it’s a great time to review some basics for finance. If you are a regular reader of my blog you know I have been a finance professional for nearly 30 years. I give finance advice on this blog from time to time specifically for people with anxiety. You should always get as much information you can before making financial decisions, hopefully this blog and post is one data point you use.

There are basics everyone has to take care of, regardless of your financial situation. This year has been tough, maybe you lost a job, maybe you are out of income, maybe you are working but living paycheck to paycheck and just need direction. Below are ALWAYS the things you do first financially.

  1. Buy food: If you don’t eat and drink water, you die. Food is number 1. This doesn’t mean $50 dinners, it means you get paid, you go get huge bags of rice cheap, but you get food first.
  2. Pay Rent: You need shelter, even if it’s a rat hole its better than being out in the elements or sleeping in your car.
  3. Utilities: You need heat, you need electric, you need water. All of these things cost money and they should be top priorities for you.
  4. Clothing: You need clothes. Now you don’t need designer clothes but you need basics to be warm, basics to be presentable so you can obtain a job (if you don’t have one).
  5. Transportation: You have to have a means to get around. It can be public transportation BTW (yes this costs money too) and it can be a cheap vehicle but you have to be able to get to and from work.
The Sun will come out again.

The five things above are basics, I know they seem obvious but when you are on the ropes financially it’s hard to put things in order mentally. Maybe you are out of work and or out in the cold. What do you do first? Follow this list, even if you only get to say item 3, you are fed, you have 4 walls, you have heat.

Again this is very basic info but these are the things you take care of first every month when you are in financial straits. If you have money left over after these 5 items? Start banking it to build up an emergency fund. Many people who have anxiety and mental health issues find themselves in serious financial distress especially on or around the holidays.

Take a deep breath and get back to basics. If you have these 5 things covered you are okay, and you will make it. Take it one month at a time, and as time goes on the 5 basics above happen and you can start to build a vibrant financial future.

Thank you for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.

Finance and Anxiety: Back to basics

So with 2021 right around the corner it’s a great time to review some basics for finance. If you are a regular reader of my blog you know I have been a finance professional for nearly 30 years. I give finance advice on this blog from time to time specifically for people with anxiety. You should always get as much information you can before making financial decisions, hopefully this blog and post is one data point you use.

There are basics everyone has to take care of, regardless of your financial situation. This year has been tough, maybe you lost a job, maybe you are out of income, maybe you are working but living paycheck to paycheck and just need direction. Below are ALWAYS the things you do first financially.

  1. Buy food: If you don’t eat and drink water, you die. Food is number 1. This doesn’t mean $50 dinners, it means you get paid, you go get huge bags of rice cheap, but you get food first.
  2. Pay Rent: You need shelter, even if it’s a rat hole its better than being out in the elements or sleeping in your car.
  3. Utilities: You need heat, you need electric, you need water. All of these things cost money and they should be top priorities for you.
  4. Clothing: You need clothes. Now you don’t need designer clothes but you need basics to be warm, basics to be presentable so you can obtain a job (if you don’t have one).
  5. Transportation: You have to have a means to get around. It can be public transportation BTW (yes this costs money too) and it can be a cheap vehicle but you have to be able to get to and from work.
The Sun will come out again.

The five things above are basics, I know they seem obvious but when you are on the ropes financially it’s hard to put things in order mentally. Maybe you are out of work and or out in the cold. What do you do first? Follow this list, even if you only get to say item 3, you are fed, you have 4 walls, you have heat.

Again this is very basic info but these are the things you take care of first every month when you are in financial straits. If you have money left over after these 5 items? Start banking it to build up an emergency fund. Many people who have anxiety and mental health issues find themselves in serious financial distress especially on or around the holidays.

Take a deep breath and get back to basics. If you have these 5 things covered you are okay, and you will make it. Take it one month at a time, and as time goes on the 5 basics above happen and you can start to build a vibrant financial future.

Thank you for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.

Another financial tip for people with Anxiety

So if you have frequented this blog you know that from time to time I give financial tips for people with Anxiety. I have been working in finance for nearly 30 years now (yes I am ancient). This is by no means a financial blog, you should take any advice you see on my blog as my opinion only.

This will be a very quick post. Why? Because many articles/posts on financial advice are very long and unnecessary. Simply put, it doesn’t take several paragraphs or a short novel to impart financial advice. We are in uncertain times, the market still marches on. The underlying economic foundations, are still pretty strong. Supply and demand is still there it has been bottle necked for months, it will come back.

That said, the financial cycle has many ups and downs. Timing is critical when investing. What about when you have anxiety? How do you navigate this atmosphere? Protests, pandemics, Presidential Elections…. What do you do?

Answer: You don’t invest.

*Gasp* I know crazy talk right? The finance industry will always tell you to invest, its how they make money. IF you are unsure what to do, you pile up cash in your checking and savings account. It’s better to stockpile cash then move into a risk position when you are risk adverse. Basically, if you are not comfortable investing and it is giving you anxiety, you pile up cash, and you can invest later.

Now you will not get rich this way, but you certainly will not go broke either. “Ya but those accounts get ..5% interest” yes that’s true but there is nearly no chance of you losing your money. The last thing you want to do as someone with anxiety is enter into new endeavors that increase your anxiety. Take your time, educate yourself and when you are ready you can invest.

The market will be there when you’re ready. Hang in there you are doing great.

Interested in more finance tips for people with anxiety? Check out my post here

5 things I have learned in my 30+ years of working

We all have work experiences, right? I started working when I was 14, I am now 50. I have seen a lot and been through a lot at work. I have picked up a lot along the way, here are 5 things I have learned while working that I feel are super important:

  1. Advocating for yourself: If you are lucky, you have a great boss who will go to the wall for you. If you are like most of us, you don’t have that luxury. When its your review, when you have completed a project and when the company is going through transitions, you have to advocate for yourself. Ask for good raises, point out you did project “X”, affirm why you are an asset.
  2. Keeping the boss happy: This will be very unpopular but its an important lesson to learn. It requires a pretty large degree of humility but if you can keep your boss happy you will be happy at work. I mean this of course within reasonable context, but the bottom line is when my boss at work asks me to do something I try and do it as quickly and efficiently as I can. This simple thing, while challenging at times, has resulted in my getting good raises and bonus’s over the years.
  3. Keep showing up: Excessive absences create negative conditions as work still has to get done. If you are out a lot, someone else has to pick up your slack. If you show up everyday chances are, you’re picking up slack for others. This is extremely valuable, at the end of the day companies want work done they are less concerned with how you feel about it. If you show up everyday this enables the first item, advocating for yourself to be an easier sell.
  4. Deal with issues early: When you put a group of people together inevitably something happens, or people don’t get along. The last thing you want is someone bad mouthing you behind your back. If you have a problem with someone at work, even if its not your fault get it resolved. I’ve seen several examples of people being undermined at work but unhappy people. Deal with it quickly.
  5. Its about the money: You are 1 of 2 people in my opinion when it comes to work. You love what you do and are thrilled to do it, or you go to work to get money to do the things you love. Know your value, at all times. Every quarter you should be looking up online what someone with your degree and experience is being paid in your area. Don’t be lulled into benefits packages (they are nice, don’t get me wrong) or “corporate culture” memes from HR. Money is why you are working, the more you have the more things you can do with it.

I’ve got another 10-15 years left of work, how long do you have and what are your biggest take away’ s from working?

How to become a money farmer

Anyone can become a money farmer. That’s right, you, you can be a money farmer. “But Karac, I am here because your blog is about anxiety, stress and depression”. Indeed, all of us can be money farmers. How?

By using compound interest

What is compound interest? Here is the technical definition:

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

Here is a simple example:

Total Interest rate Interest earned New Total Interest rate Interest earned New Total
100 10% 10 110 10% 11 121

In the example, you gained interest of 10%, you added your interest to your beginning total and then gained interest again on that total. You are farming money but using compound interest. The example above shows you two seasons of your farm. If you stop after two farming sessions, you gained 21 dollars and kept your 100 so technically you gained 21%.

Becoming a money farmer takes time, and patience to cultivate your crop. Imagine for a moment that you sowed your crops for 30 years, accumulating many seasons. This is how you become a money farmer, and this is how you become very rich over time. You compound your interest and you continue to add to your total thus each season produces more and more money crops.

Some seasons are wrought with disease, plague, drought. Some seasons are bountiful, bumper crops. Like all good farmers, sow your seeds, care for your crop, reap your harvest. Money is not the answer to all your ills, it can create remarkable stress for you. Money can also be the means by which you lower your stress, now and in the future. More resources managed well allows you freedom. Freedom allows you to manage your mental health more effectively.

You are doing great, one day at a time.

Anxiety and your money – Income

Anxiety takes on many different forms in the way it manifests itself within us. Often times we are unable to think clearly, so things are overlooked. A bill is due, the laundry hasn’t been done. We curl up in our safe spaces and wait it out. These times don’t often lead to productive outcomes, its essentially just holding on until the mood passes, sometimes it can take days. For some people it can take years. Regardless if we have anxiety or not, we all have to deal with money.

Money or your income is the basis in which you can survive in modern society. The degree to which you understand your income often leads to the quality of the survival. In simple terms, the more income you have the more resources you can muster to “weather the storm” we talked about in the first paragraph.

Let’s be clear on income first, Gross Income is the sum of all sources of income you have before deductions or expenses. Net income is the income you have left after all of your deductions or expenses. I know this is basic information but finance, for those of us with anxiety is often easiest when we establish the basics. The goal is to figure out how much gross income you need to pay all of your expenses, so you don’t end up with negative net income or a loss.

Many people get preoccupied with the amount of money they make or have. What’s critical is you make enough money to provide your necessities. More and more traditional income sources are falling by the wayside. There was a time where you worked for one company for decades and they were your primary income source. Today there are side hustles everywhere and you may be deriving income from multiple sources.

The important thing to remember is all sources of income have to be looked at carefully. What I mean here is if for instance you live in the U.S. and you are contracting, or you get ad revenue, or you sell items on eBay. In these examples the income is “true gross” meaning nothing has been deducted. You sell your marketing services for 1000, you get 1000. You then have “salary income” you work at a job, they take out taxes, you receive the net.

Its critical to understand your sources of income and where they come from. Most important here is to understand if you need to pay taxes on this income. The government will always get their money, its not a matter of if, it’s a matter of when. So, for those of us with Anxiety we need to be acutely aware of our income source. If for example you received 1000 and spent a 1000 but at the end of the year were required to pay 250 taxes on the 1000, you would have to get it somewhere else.

Income is the most important financial gauge you have to determining your future outcomes with money. Debt is often a choice, income is a reward for something you provided. If you have multiple sources of income and suffer from anxiety remember to keep it as organized as you can. Spend 15-30 a week focused on your finances, understand where your income is coming from and what kind of income it was. This can save you a lot of pain later on, as often we get money and we spend it. Understanding your income portfolio is extremely important don’t ignore it !

If you need help or have questions, feel free to email me directly and I will do my best to help you.

The five things you can do with money. Simple Budget Exercise

Many of us with Anxiety worry about money. There is no way around it, money is a necessity. On top of that we are immersed in consumerism. There are ads everywhere, there are awesome things to buy as well. Clothes, cars, coffee (those are just the C’s) on and on. Thinking about money with Anxiety doesn’t have to be dreaded.

There are 5 things you can do with money:

  1. Earn it
  2. Save it
  3. Spend it
  4. Lose it
  5. Give it away

When you have anxiety, money and money problems can be overwhelming particularly when something goes wrong. Sometimes having things broken down into 5 simple categories can make the difference between a panic attack and a reprieve. Notice the order in which the 5 items are listed. They are listed in order of importance.

The first 3 are absolutes, nearly everyone participates in these. You earn money, you save some of it, you spend the rest on items you need to live. Items 2-5 are predicated on item 1, if you participate in items 2-5 beyond item 1 you will eventually go bankrupt.

The list is very simple to use. Next to item 1, put a number that represents all the money you earn. EVERYTHING. If your grandmother still sends you 20 bucks on your birthday list it. Then list the values next to 2-5 and subtract them from 1.

You’ve just completed your first basic budget. This is a critical process that we all must do to ensure our ongoing mental health and positive relationship with money. The simple exercise is to encourage you to spend less then you make. So, when you add 2-5 if you have anything left over you add it to item 2.

Item 2 then becomes a whole other discussion as this is your savings. However, if you conduct this list every month you should be able to, over time, expand each item to give you a better understanding of where your money is going. Item 3 is critical as many of us are unsure of where all our money goes. Items 4-5 may seem silly “I don’t lose money and I don’t give it away”.

Item 4 can be explained simply as money you don’t know where its going. So, if 2-5 leaves you with a surplus, where is it? Why didn’t it appear in item 2 or 3. Item 4 is a “trick” category to force you to itemize more carefully where you spend. Item 5 is money you may give to people, you buy them a coffee, or you pay a tithing at your place of worship.

I know this was wordy, but in the end think of those 5 items. Money doesn’t have to be stressful, you can exercise control over it. You are doing awesome, one day at a time……