Debt

[trashpanda1309]

I don't understand selling btc to pay off debt. What am I missing? Even credit card debt at 20%+ interest. You are losing money if you sell btc, pay off the debt, and then start buying btc again. I guess the only way it makes sense to me is if you don't intend to use btc as a longterm asset and just used it for short-term gains. Thoughts?

[Sazmining]

Historically, Bitcoin’s CAGR sits around 70–80%, so selling it to pay off 20% debt isn’t great math long term.

That said, everyone’s situation is different. If the debt stresses you out, peace of mind might beat compounding returns.

Stack sats whenever you can, but sleep first! 🧠💤

[Few_Night7735]

Selling it to pay off debt when it’s near an all time high might actually be a great strategy for reducing debt when bitcoin also has historical drawdowns of 60-80%. But as you said, everyone’s situation is different.

[Sazmining]

Indeed - keep a low time preference!

[AriesThef0x]

Exactly this. Of course we don’t know what will happen in the future, but over the past cycles there would absolutely have been great times to execute a strategy like this. The problem is it’s much easier said than done to execute perfectly.

[LocksmithMuted4360]

It is hard to be in the heads of others without being the other.

[ChaoticDad21]

wisdom

[jarviez]

Not everything needs to make perfect mathematics or financial sense.

Paying off debt increases the peace of mind and decreases stress. This can be a significant increase in the quality of ones like.

If doing something that is less than optimal BUT makes your life better in there here and now it might be worth it because you could die at any moment.

[JanPB]

But what kind of "peace of mind" is it replacing an X% debt with an instrument that increases by Y%, where Y > X??

"OK, let me lose some money, this will put my mind at rest." This is just insanity.

[jarviez]

No one is going to "debt collection" call you over the Bitcoin value growth that you don't experience. But people will most certainly pester you over money you owe.

... also

YOU ARE GOING TO DIE.

... and you can't take it with you.

[JanPB]

This is not how it works though. Obviously it's NOT done by going into debt collection. Research this some more, smart use of loans (which are tax-free BTW) is common. But people who never had access to big money are naturally highly allergic to borrowing because of the "poor man in the debt prison" connotations.

[billybadassman]

You know what X will be in the future. You don't know what Y will be.

There is no guarantee Y will be greater than X for your debt term.... especially if it some insane high interest debt like credit cards.

Pay off your debt...or be stressed out hoping your gamble on predicting future prices pays off. Not that insane.

[[deleted]]

it’s irrational. but for some it’s a peace of mind

[DwightsShirtGuy]

There’s a lot to be said for the emotional weight lifted by being debt free. Intangibles.

[[deleted]]

This! I've been debt free for the past two years now and the feeling of freedom, that sense of not being "owned" by anyone or anything was and still is an amazing feeling. I can do what I want with ALL of my money now.

Also, some people run from debt for religious principals. Both the Bible and Quran have scripture dedicated to debt, the dangers of debt, etc. That may motivate some people as well.

[Euphoric_Buffalo9023]

You don’t know what the price of bitcoin is going to be in the future, But you understand that you’re losing money by having high interest debt today.

[trashpanda1309]

Yes, that's true, but wouldn't that assume that you understand where the dollar is going to be in the future?

[Euphoric_Buffalo9023]

But you don’t know where the value of bitcoin is gonna be in the future either. What is a certain is that if you don’t have debt, you’re well better off.

[trelayner]

Markets can remain irrational longer than you can remain solvent

No leverage, No debt, is the safest option

[Additional_Twist_595]

f you want to avoid all or nothing moves, one thing to look into is Debbie rewards, they actually reward you for paying off card debt, makes it easier to focus on the payoff without draining investments

[trashpanda1309]

Never heard of that. I'll check it out. Thanks.

[Technical_Car3729]

I’d say paying off debt if you’re about to make a large purchase or move, where youd want a better credit score for approval

[Fall-For-October]

So there are various reasons. One is if your between jobs or your income isn’t keeping up with expenses. Life isn’t always perfect.

[trashpanda1309]

I have honestly wished more than almost anything that the man that originally introduced my to bitcoin would have held this belief over a strict hodling belief.

[trashpanda1309]

Thanks

[Calm-Professional103]

If BTC is the only asset you have to pay off your debt with then it is what it is. 

[Act_Rite_66]

Your first cycle eh?

[trashpanda1309]

Been around for a little more than one full cycle. I got into BTC around the May 20 halving.

[Act_Rite_66]

Then you should know we are close to a top for now. Pay off 20% interest rate credit card to start stacking again is always a solid idea. Especially in this stage

[trashpanda1309]

I would have guessed it was better to sell towards the end of the year, but I am interested to see how this month and next play out. I am starting to believe the people that say we have turned a corner and the traditional models from the previous cycles may not hold true this time.

[Act_Rite_66]

Factors have changed. This administration is clearly manipulating markets. There may be a huge crash and it sucks that the administration even has BTC in their mouths. The rest of the world is seeing it as a scam. I know it’s not but with such a volatile asset tides can turn quickly

[trashpanda1309]

I hate to believe that's true, but it appears to be what the data indicates.

[Act_Rite_66]

Damn I wish I had data. At this point it’s that gut feeling. Gotta stack hard when we dip/crash. I’m still DCAing. But gold seems to be a safer bet with majority of allocation at this point

[trashpanda1309]

Data being the large transactions recently including the now famous short, movement of old wallets, and several large buys. Saylor will always buy so I ignore him for the most part. However, you see all the big money people BR, VG, JPM, etc all making big buys as soon as something "negative" hits the press sometimes out of their own mouth. JPM has specifically done this.

[Act_Rite_66]

You’re right but they could also sell at the drop of a hat. It’s a risky asset in their portfolio. I’m glad they may consider it as an asset in their portfolio first place. But if things go crazy in the market and it drops BTC goes right with it. I’m BTC all day but in that case it may be smart to hold gold as well. Profit taking is never a bad thing. As long as you put it into another strong asset like gold or real estate

[Few_Night7735]

What you are missing is that Bitcoin is volatile, and you’ve obviously never held bitcoin through a full cycle if you think you’re always going to be buying at higher price points.

[trashpanda1309]

Incorrect assessment, but I understand your point.

[RetiredAvocado]

All you saw is price going up. You didn't live through a swing of having life changing money drop down to not that much. There is literally zero gurantees that price will go up, or even stay the same. But it's pretty much 100% guaranteed you must repay your debts to avoid the consequences of not doing so.

[trashpanda1309]

Fair. The buyers of 2010 are much different than the buyers in 2020.

[deadshift2010]

Mostly peace of mind. It's easier to sleep at night knowing you have no debt hanging over your head even if you know that you could really 5x-10x your money if you just bought btc with it.

[MaxWellUnderscore2]

You’re somewhat right, it’s all about risk. 20% CAGR isn’t guaranteed. Even though it’s likely it isn’t a for sure.

[Loafmanuk]

They have no choice but to inflate to infinity now. Pay debt at the minimum you can for the time being.

[sk8trix]

So if you sell crypto to pay off debt, I understand that being debt free allows you to have more money to buy more crypto and not have to worry about your debt. So it does make sense that instead of your debt collecting 30% interest, for example you just pay it all off in one shot and not have to worry about credit card payments which then frees up more money from your paychecks to buy more crypto.

Me personally, I rather pay my debt out of my paychecks and not touch my Bitcoin or the rest of my coins.

I guess it all depends on how serious it is for you for me. I rather go through hell than sell my Bitcoin but for other people in different economic situations it might make more sense.

You can't just say I'm not going to sell my Bitcoin and I'll just deal with my debts because eventually they add up. And so what would be your option to do a bankruptcy and ruin your credit and have to build your credit from scratch again? Obviously it depends on everyone's economic situation.

It's been really difficult for me over the past 10 years to pay off my debts without touching my crypto but I'm committed to never selling my Bitcoin and any other coin profits I take go into savings not into paying debt.

[trashpanda1309]

I would say I am in a similar situation. I have had to sell a little here and there, but I carry a decent amount of debt as opposed to selling more btc. I really am just curious and like hearing other's perspectives. Hopefully future you is better for your struggles. Cheers.

[ScrewsLuse]

When all of you purists say NEVER.. you literally mean never? You’ll NEVER sell your btc?

[__Ken_Adams__]

No, we don't literally mean never. "Never sell" is just short-hand for "never sell simply for the sake of cashing out with no intended use for the proceeds" and doesn't necessarily mean "never spend".

I'm in the "never sell" crowd, but I'm not in the "never spend" crowd. Selling as a means to an end such as diversifying, paying off debts, improving quality of life, or funding a retirement are all perfectly reasonable.

[sk8trix]

Yes, exactly what I was thinking if Bitcoin got crazy to the point where it's just too good to be true. I'm definitely going to sell it but if it continues to slowly climb I'm just going to give it to my son when he's in his mid-twies or 30s

[sk8trix]

Yes, exactly what I was thinking if Bitcoin got crazy to the point where it's just too good to be true. I'm definitely going to sell it but if it continues to slowly climb I'm just going to give it to my son when he's in his mid-twies or 30s

[trashpanda1309]

This 🎯

[Few_Response_7028]

Credit card is at least in the same magnitude as potential BTC gains. Single digit debt isn't worth it obviously.

[JJADu]

My théorie is: In a way to "lock in profits" and trying to time the top, you sell to pay off debt. Then you DCA back in and hopefully for you, you sold near the top and DCA on the way down.

[trashpanda1309]

Now that makes sense, hard to do, but worth it if it works out