Walking to Wealth: Debts and Promotions

craft-crypto (43)in #financial • 6 years ago (edited)

Paying Off Debt is a Major Promotion

My primary goal is to pay off all my debts in 5 years using crypto. I had a rough learning curve (I pre-bought tax deductions for next year ), but now I know (I hope) what I am doing. To reach my goal, I need to make 1 good trade every 23 days. More than enough time to do the research and wait for the perfect opportunity.

Regardless, I want to invest more into crypto without breaking the bank. The first way I thought of (besides the typical “I’ll only eat potatoes and water from here on out” reaction) was to work extra hours and hope for a promotion at my day job. But then I realized, in paying off my debts, I am promoting myself!

What Debt Does to Fun Money

Consider an average family of 4. I am an engineer by trade, so let’s say the main breadwinner is a ‘Median Mechanical Engineer.’ He brings in roughly $91,500 a year (see below for all references). Deducting federal, state, and property taxes leaves this engineer making roughly $63,000 in take home pay.

Now, you can do a lot with $63,000 a year. That is a pretty crazy vacation. If this family really wants to show their kids the world, having $63k in discretionary spending is a pretty good start.

But this poor soul is saddled with the early career professional amount of debt (averaged from across the states):

$1000 per month of mortgage
$2,000 per year of utilities
$150 per month for TV, internet, phone
$12,000 per year for healthcare (premiums, use, etc)
$9,150 savings for retirement (10%)
$500 car payment per month
$400 student loan payment per month
$250 in groceries per week (Super important)
$20 for crypto tax and trading apps (Most Important =) )

This leaves about $1,500 in Fun Money. About 2% of his salary.

Can’t buy 4 tickets to Prague for $1,500….

How a Promotion Helps

Our engineer puts in some really hard work and becomes ‘Above Median Mechanical Engineer’. His bosses realize and give him a promotion (Whoo!). Let’s make it a really good one and call it 10%. (Nice!)

Assuming that all the other costs/percentages stay constant. This is increases yearly Fun Budget to $7,000 (almost enough for that new iphone!).

What Paying Off Debt Can Do

While also maintaining his performance level at work (don’t want to lose the job), let’s say this engineer becomes ace at trading. Technical Analysis, fundamentals, cool trading tools. This guy is a pro.

He saves coffee money, brings in his own lunch to work, and collects enough to start investing. Blam! Bought GVT at ICO for $0.70 and sold it for $44 two months later!

Now the engineer retires….

Oh wait, this is about paying off debt a little at a time….

So the engineer instead just pays off the car =) (let’s not break the example, shall we?)

No more car payment results in an extra $6,000 a year. This increases the Fun Budget to $7,000 a year (the same as a 10% raise!).

Paying Off More Debt

Engineer repeats his success a few more times and pays off the student loans and the mortgage. This increases the Median Mechanical Engineer’s Fun Budget to $25,000 (28% of salary) per year.