Weekend Reading (May 13-14) 2022
Crypto gets routed—stocks continue to tumble—are we headed for a recession? Nobody knows, but one thing is certain: life moves forward.
It was a big week in markets as tech stocks and digital assets (crypto) took a tumble.
The sell-off in crypto was largely the result of a single protocol’s misfortune. Terra, the settlement layer for Luna, a “stablecoin” (or not-so-stablecoin) had taken some excessive risk.
Long story short, an unknown attacker spotted an opportunity and was able to undermine the entire protocol (with close to a billion dollar war chest), de-pegging the stable coin from the dollar. There will be a full article below from the Bankless Media group explaining the entire situation, but here are some key takeaways:
Crypto is risky—only put in what you’re willing to lose.
Don’t risk what you have and need for what you don’t have and don’t need.
It’s sad to hear some of the stories coming out of the back-end of the Luna-Terra collapse.
Unfortunately, many people had been using the Luna token as a safe haven for their cash reserves, earning close to 20% APY. Now, close to $50 Billion in assets has been completely erased, seemingly overnight. There have been stories of suicidal posts within the Terra community as some people’s entire net-worths have been destroyed.
This story will continue to unfold, but overall—not a great look for crypto. Please DYOR folks, it’s risky business out there.
And for everything else this week:
I want to convince you to pursue financial independence, but likely not for the reasons you think.
My opinion: A recession is looking more and more likely as the federal reserve increases interest rates in an attempt to slow down inflation and cool this hot economy. Time will tell whether they can facilitate a soft-landing or if we end up in reverse. But, in the meantime, I share 3 steps you can take to financially prepare for a recession.
The full story on the Luna/Terra crypto collapse.
A sweet reminder from the Daily Dad to slow down and appreciate these tiny moments we have with our kids.
One of my favorite articles of all time—The Tail End—a sobering look at the average human lifespan, measured in a handful of different ways.
On Money
1. New to FIRE? Here Are The First 2 Levels of Financial Freedom from Grant Sabatier — The Millennial Money Man
By Anders Skagerberg, CFP®
You know that saying—shoot for the moon. Even if you miss you’ll land among the stars.
That’s why I think everyone should pursue FIRE: Best case, you end up financially independent, worst case, you improve your financial situation. The steps you go through to achieve financial independence could be a game-changer for your financial life. To that end, read on to hear about how to get started and understand the first 2 levels of financial freedom.
The Millennial Money Man—Grant Sabatier—believes that money is infinite, but time is not.
Instead of viewing money as a way to buy things, Grant believes money gives you choices about how you can live your life. And as a prominent member of the FIRE (financial independence retire early) community, Grant is on a mission to help millennials achieve financial freedom in their lives. His view is simple: master your money to master your time.
Here are Grant’s First 2 Levels of Financial Freedom:
Clarity: You figure out where you are financially and where you want to go.
Self-Sufficiency: You’ve moved out of mom and dad’s and can cover your expenses.
Remember, every journey begins with a single step — so get started on your financial independence journey today. And don’t worry if you never make it to FI, you’ll still land among the stars.
2. 3 Steps You Can Take to Financially Prepare for a Recession
By Anders Skagerberg, CFP®
A recession is coming, but no one knows when.
Whether we like it or not, a recession is coming. It could be next month, next year, next five years—nobody knows. But most people agree that it’s coming. So, rather than panic, let’s simply focus on what you can control.
Here are 3 steps you can take to financially prepare for a recession.
1 - Top off your emergency fund.
2 - Know your barebones budget.
3 - Make peace with investment volatility.
In the end, remember that recessions are a normal part of our economic cycle in the US. Markets go up, and markets go down.
And although nobody knows exactly when the next recession will come, you can use the 3 simple steps outlined in this article to remain confident and secure in your financial situation, no matter which way the economy is headed.
On Crypto
3. UST Luna Meltdown: What Happened?
By Ben Giove
If you’re interested or involved in crypto, this is a must-read. Here is the bottom line: the crypto economy is still the wild west. It does not behave like traditional markets and the reason the potential gains are so high is because the risk is through the roof.
As an investor, it’s critical to invest with a plan. You should know:
How much you are willing to put in (and potentially lose).
What the absolute limit is that you are willing to invest.
Crypto can be so dangerous because it’s really hard to stop yourself from going all-in once you’ve experienced significant gains.
So go in with a plan, and stick to your plan.
“This week will go down in crypto history.
We are in the midst of the biggest collapse in crypto's history.
UST, the third-largest stablecoin (largest not issued by a centralized entity) has de-pegged, trading at $0.35 at the time of writing.
Its seigniorage token, LUNA, has collapsed in value, falling 99.9% from its all-time high, eviscerating more than $41 billion in value in one of the largest, single-asset wealth destruction events in history.”
On Parenting & Life
4. Begin anew, while you can.
By The Daily Dad
Each haircut, each new pair of shoes, and each start of a new sports season is telling us something—time continues to pass.
Our kids are growing up, and before we know it, they’ll be moving on to the next phase of life. Use this change of seasons as a subtle reminder to set our phones down, appreciate the small moments, and enjoy the time we have with our kids right now.
“The past is past. The last year gone forever. The length of the future remains, as ever, uncertain. But now is now. The new season is here. Let us put our mistakes behind us. Let us stop being distracted or addicted or too busy. Let us rededicate ourselves to the reason we are here—to parenting, our most important job. Let us begin afresh, afresh, afresh.”
5. The Tail End
By Tim Urban
This article simultaneously scared the shit out of me while inspiring me to live a more intentional life.
I hope it can do the same for you.
Long story short: Tim takes readers through a sobering look at the average human lifespan using a variety of different measuring sticks.
Tim was 34 when he wrote the article, and he realized that at the rate he’s going, he’ll probably:
Only go into the ocean 60 more times
Only have time to read about 300 more books
And is likely enjoying the final 5% of the time he has with his parents.
This article can be a wake-up call so I recommend reading it a few times and bookmarking it for future review.
In the end, Tim’s goal isn’t to scare you, just to offer this: You may not have as much time as you tell yourself you do. Seize the moment—there’s no time to waste.
And lastly, Tim offers readers these three takeaways:
Living in the same place as the people you love matters. I probably have 10X the time left with the people who live in my city as I do with the people who live somewhere else.
Priorities matter. Your remaining face time with any person depends largely on where that person falls on your list of life priorities. Make sure this list is set by you—not by unconscious inertia.
Quality time matters. If you’re in your last 10% of time with someone you love, keep that fact in the front of your mind when you’re with them and treat that time as what it actually is: precious.