“Everyone’s got paper hands when they run out of toilet paper” - Overheard in the employee restroom of a popular fast food chain.

Just a heads up: This post is just for education. This post is not financial nor life advice, although it’s pretty solid in the author’s biased opinion.

Performance depends on life stability

Here’s the take home message of the article right off the bat.

Never become a forced seller.

This is important when you don’t have a lot of financial cushioning. Your performance in the market is not isolated from your life. Life has a way to slap you with unexpected expenses, and you might have to liquidate your assets at the most inopportune times.

Here are a few thoughts of mine on how to stabilize one’s life.

Stable savings

One dollar saved is greater than one dollar earned

Eventually, money is meant to be spent. But the longer you can suppress your living costs, the faster you can build your net worth. Zero judgment if you wanna buy a Rolex to flex though.

When in doubt, ask yourself, “would I rather buy this now, or retire earlier.”

A popular crypto investor trope is surviving on only ramen noodles. But do that long enough, and you’ll gonna end up with malnutrition. So instead of telling that you that the best ramen is the “Samyang 2x Spicy Hot Chicken Flavour Ramen”, here’s a link to some cheap foods with better nutritional content:

But since this isn’t a food blog, my point is that researching creative ways to cut costs in life should be considered a “profitable” activity.

Stable income for living expenses

We all have recurring expenses to pay, and it’d be a shame to have to sell our bags at losses just to pay bills.

Thankfully, it has never been easier to earn a good yield on stablecoins in DeFi.

Below is an example calculation with Anchor Protocol’s relatively stable (hehe) ~20% APY. I’ll just mention that there might be higher yield strategies such as one-sided LP-ing (e.g. Impermax Finance), or recursively borrowing and depositing (“folding”) on a money market app (e.g. aUST folding on Abracadabra, or using an autocompounder like YieldYak on Benqi).

First thing in a budget is knowing roughly what your expenses are. Easiest way is to just look at your credit/debit card summary for the past few months. If those details are hard to access, just add up the usual big expenses: rent/mortgage, car/gas, groceries, utilities, phone/internet, insurance, student loans, child support, boobahub subscription, etc

Let’s say my expenses come to $2000 per month (24K per year), and I want to pay it exclusively through yield from Anchor:

(Monthly budget) x 12 = (Amount Required in Anchor Protocol) x 20%

Let’s rearrange the terms using high-school algebra:

(Monthly budget) x 5 x 12 = (Amount Required in Anchor Protocol)

Crunching the numbers and we get:

$2,000 x 5 x 12 = $120,000

This means, if I put $120K of stablecoins into Anchor, then each month I would receive enough yield to cover my expenses.

Note: having enough yield for living expenses is the definition of “retirement”.

Contrast the above against the traditional financial advice on retirement. Tradfi would recommend saving up $600K dollars to earn a conservative 4% APY, and I would be able to afford the same $24K annual budget lifestyle.

A few questions to ponder, Anon:

• Is retirement a lot closer than you thought?
• How much do you need to be able to live on and retire in comfort?
• Have you already made enough to retire but haven’t cashed out yet?

If you’re not ready/able/willing to fully cash out yet, consider the following plan. Set aside enough funds to cover expenses for 6 months, and putting that into Anchor. In case the market becomes Goblin Town, you will always have some runway to figure things out.

Or perhaps you find fully cashing out too painful and worry you’d FOMO back into the market, then consider taking a small fraction (say 10%) of all future profits into a stablecoin stack. Then over time, you will build up a stable stack.

And if you think being in stables is weak, consider @DegenSpartan, one of the best investors of our generation. The man goes to bed COMFY each night, knowing that every second he spends dreaming of a hentai starring ScarJo, his stack grows bigger.

Just food for thought (NFA!), one can make DegenSpartan proud by cashing out 50% in stables and going 2x leverage LP farming on the other 50%. One would end up with roughly the same market exposure, less downside, and higher capital efficiency.

Working a stable job

If you have a job/gig that provides enough stable income to sustain living expenses, this will also help you endure tough market conditions.

Another point to consider is that, we are all accustomed to hearing 100x gains in 6 months stories, but few of us will achieve that. If we put things into perspective, stablecoin yield in DeFi has a much better Risk/Reward ratio than your tradfi market-wide index fund. Even if you just worked a normie job and the only crypto you touch is stablecoins, in the long term, you will still end up outperforming 95% of Wall Street Hedgies and 99% of normies.

A secret, for those who made it to the end

A little known secret, is that this article only contains half the magic. The other half of the magic needs to come from you, dear reader! I just know that we would have a blast when our ideas collide!