What are some things to consider when weighing the pros/cons of selling Bitcoin to payoff low interest(less than 6 percent a year) debt? I find myself being able to make really good arguments to both options and am curious if anybody has any things to consider that I have not thought of.
23 sats \ 2 replies \ @grayruby 22 Dec 2023
Depends on your income, how secure you are in it, and your ability to meet your debt obligations. If you can easily make debt payments I wouldn't sell bitcoin to pay off debt but if you are struggling to make ends meet and missing payments maybe you need to consider it.
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60 sats \ 0 replies \ @boisechampion 22 Dec 2023
Well said.
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20 sats \ 0 replies \ @ChrisS OP 22 Dec 2023
The scenario I am considering is all income and savings are in Bitcoin and there is no struggle to make ends meet. And from a strictly best financial decision point of view I agree holding the Bitcoin for as long as possible is the best strategy. But to avoid an admittedly small change of worst case scenario where Bitcoin stays lower longer and now I am struggling with the debt, It might be prudent to pay the debt of quicker if given the chance even if it is the “wrong” economical decision. Basically lose some upside gain but avoid any worst case scenario situation.
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100 sats \ 2 replies \ @boisechampion 22 Dec 2023
I think the way I think about it is in terms of guarantees
There is no guarantees that Bitcoin will moon. Sure, Bitcoiners can parrot all of the influencers and say it’s going up forever. But the reality is that no one actually knows.
Bitcoiners as a whole have this fantasy the Bitcoin can succeed in any environment. Sure the network can. But do you think people will give a shit about it if times get really really bad? I don’t think so.
Paying off debt is a guarantee. It’s a guarantee that your family will be stronger and more secure in the future. You’ll have less burdens to make better decisions.
Nobody knows what the right answer is for you personally. For me, I’m doing both. Stacking the same USD amount and paying off the same amount of debt. For my family, it makes sense. If Bitcoin does start to 5x or 10x I’ll stop purchasing and put all USD towards debt until there is a cool down. I watch the MVRV-Z score like a hawk. Helps me decide when it comes to this kinda stuff
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0 sats \ 1 reply \ @ChrisS OP 22 Dec 2023
Never heard of the Mvrv-z score. Looks interesting. Maybe a good strategy would be to pay the debt slower at a lower score and faster as a higher score.
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0 sats \ 0 replies \ @boisechampion 22 Dec 2023
https://www.lookintobitcoin.com/charts/mvrv-zscore/
Its become a catalyst for me. Ultimately, I am always buying BTC. But the amount changes. When it was hitting 0 I was dumping money in like crazy. Between 1 and 2 I'm still aggressive. As soon as it gets close to 4 I'll probably pull back to 5-10% of my income.
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1 sat \ 1 reply \ @kytt 22 Dec 2023
It is literally as simple as this: if Bitcoin's compound interest YOY is higher than that of the debt, then it would be economically smart NOT to sell your Bitcoin to pay off that debt.
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10 sats \ 0 replies \ @ChrisS OP 22 Dec 2023
Sounds so easy! My belief is there’s a very high chance Bitcoin increases in value by more than 6 percent every year but in reality there’s no way to know for sure. At some point it becomes more of a freedom from debt regardless of the circumstances versus strictly the best economical decision. Sure Bitcoin continues the bull run in the next few years I would regret selling some “early”, but in reality it’s not gonna change my lifestyle that much as long as I am able to keep a certain percentage of my stack. And the downside risk, however small, of Bitcoin staying lower for longer and me not being able to pay off the debt would severely change my lifestyle.
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0 sats \ 0 replies \ @hodlpleb 8 Jan
My general suggestion in this moment, would be to not do it. Bitcoin is hopefully going to appreciate at a rate that is faster than 6%, so you gain more wealth by holding the bitcoin and making the monthly debt payment.
If the monthly payments are hurting your daily life, then that makes it more difficult.
But if bitcoin goes to $100k this year or $250k in 4 years, or whatever, then you'd have to sell much less bitcoin to pay off the remaining debt.
Any bitcoin you sell now, you will likely never get back.
See my post here #380081
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0 sats \ 0 replies \ @boisechampion 22 Dec 2023
About to grab dinner but I’ll def respond. What a phenomenal question!
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0 sats \ 0 replies \ @byzantine 21 Dec 2023
pay it off.
are you increasing your wages more than 6% a year...probably not.
you are losing purchasing power by 10% inflation and losing your 6% debt.
you are not the government inflating your way out of debt.. get free of those chains and then you can hodl in peace.
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0 sats \ 0 replies \ @c3b8daa471 21 Dec 2023 freebie
Debt causes stress, stress lowers quality of life. Lower your debt to a point where you can sleep soundly at night. Having bitcoin is great but it's better to have a slightly smaller stack with a stress-free financial life. Debt = slavery. Eliminate your debt as quickly as possible while stacking.
0 sats \ 6 replies \ @Eobard 21 Dec 2023
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10 sats \ 5 replies \ @ChrisS OP 21 Dec 2023
Great points and I agree with everything you say. Does your opinion change at all in based on what percentage of a Bitcoin stack would need to be sold in order to pay off the debt? I would never sell 80 percent of a stack to pay off all the debt but as the percentage needed to sell to pay off gets lower I think it makes more and more sense. If Bitcoin pumps a lot and I had to sell only 5 percent and could pay it all of it, I think it makes a lot more sense. My logic would be if Bitcoin does what we all think it will in the coming decades the missing 5 percent would not affect my lifestyle at all. But in the very very small chance Bitcoin does not turn out like we all think, it’s a big strain on me and I sure would like to be debt free in that event.
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0 sats \ 4 replies \ @Eobard 21 Dec 2023
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0 sats \ 3 replies \ @boisechampion 22 Dec 2023
Hey @Thawne are you married and do you have kids?
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0 sats \ 2 replies \ @Eobard 22 Dec 2023
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0 sats \ 1 reply \ @boisechampion 22 Dec 2023
No worries. If I had to guess you are a single bachelor without kids and little responsibilities. No responsible husband and father would ever say take on more credit and delay credit so willy nilly without actually hearing someone entire life circumstance.
Sure if you have a big income, minimal debts and life insurance I could see a strategy of taking on a small HELOC a maximize returns.
But your level of thinking is akin to thinking like a fiat maximalist "Debt is wealth".
No, no it is not. And those with families would not put extra burdens on their family if they were to unexpectedly pass away.
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0 sats \ 0 replies \ @Eobard 22 Dec 2023
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