Is Debt Your Addiction?

The reality is that most people are indifferent to your personal debt situation, and few take the initiative to guide you out of it. Perhaps you're a young adult between 18 and 30, settling into a steady job and navigating the realm of credit cards and loans. The allure of owning luxury vehicles or high-end electronics might seem irresistible. Alternatively, you might be in the age bracket of 30 to 50, already entangled in debt before you could understand its long-term implications. This debt has lingered for several years, if not decades. You've been making minimum payments, hoping it will eventually dissipate. The burden of this debt weighs heavily on your mind, possibly causing tension in your marital life and dictating your career choices. You find yourself shackled by your financial obligations. Given these circumstances, you should seriously contemplate if investing is the right move for you. More often than not, you might find yourself liquidating your investments to meet your debt obligations.

First Steps

I want to strongly recommend The Total Money Makeover by Dave Ramsey. There are actionable, and practical instructions to start your debt free journey now. This book was by far the most important book I read as a young adult. remember, no one teaches us how to manage our money, and theres a reason for that! The corporate world and financial world make money off of you! its easier for them when you are ignorant to the realities of finance! After you read that book, I would strongly encourage you to read Rich Dad Poor Dad by Robert Kiyosaki. This will give you a strong sense of how the money game is played, and how you can win by understanding the game!

Reasons why Crypto and Debt Don’t Mix Well

• High Volatility: Cryptocurrencies are highly volatile. Their value can fluctuate drastically within very short periods of time, meaning you can potentially lose a substantial portion or all of your investment. If you're already in debt, you may not be able to afford this risk.

• Debt Interest: Debts often come with interest. The longer you stay in debt, the more interest you pay. It's often a better financial decision to pay off high-interest debt rather than investing in something as risky as cryptocurrencies. The guaranteed return from saving on interest payments can often be more beneficial than the potential return on a risky investment.

• Lack of Emergency Funds: If you're in debt, it's likely that you don't have an adequate emergency fund. In the case of an unexpected expense (like a car repair or medical bill), you may need to liquidate your investment, potentially at a loss, to cover these costs.

• Stress and Emotional Investing: Being in debt can cause a lot of stress, which can lead to poor decision-making. People may be tempted to "get rich quick" through risky investments like cryptocurrencies, but the odds are not in their favor. Good investing requires patience, a clear mind, and rational decision-making.

• Potential for Further Debt: If you invest in cryptocurrency and the value of your investment decreases, you could end up further in debt. Additionally, if you're using borrowed money to invest (like a credit card or a loan), you're increasing your financial risk significantly.

How to play the crypto game right

Crypto is the easiest, hardest game in the world. All you have to do is be patient. Easier said that done! Imagine how much more difficult it is when youve put too much money in, and price is tanking! Most people panic. However If you use a reasonable dollar cost averaging strategy, it can take 95% of the bad emotions from the equation. Volatility IS this price that you pay for performance in cryptocurrency. Make no mistake, crypto is a game against yourself, at least for now as this new asset class is exploding onto the scene. Check out this video that shows how bullish crypto is moving into 2024 and 2025.

Conclusion

In conclusion, while cryptocurrency investment can seem enticing due to its potential for high returns, it's generally not advisable for individuals already in debt. Cryptocurrencies exhibit high volatility, leading to substantial financial risk, and debt compounds over time due to interest. The stress of being in debt can also negatively impact your investment decisions. Instead, a wiser approach typically involves paying off high-interest debt first, building an emergency fund, and making any investments with a clear and informed strategy. Each individual's financial situation varies, so consulting with a financial advisor before making such decisions is recommended.