During a recession, we must be on our best financial behavior. We will not have the resources to waste money all over town on things we “want.”
Even better, we must have our money working for us and avoid working for money as our only source of income.
Many of us have children, families, or jobs that require our full attention. I am a fan of building a business in my free time—what I call becoming a Passive Income Hero.
Choose Your Passive Income Adventure 2
There are other ways to keep our money from sitting still and keep it earning its keep. I previously wrote about bonds and dividends, but I want to focus on today’s favorite way.
USDC for the Win!! Will the economy plunge into a recession in 2022 or 2023? The economic markers point towards some form of a downturn coming shortly.
The Federal Reserve has two mission sets: keep inflation under control and keep unemployment low. Currently, unemployment is low, and inflation is high. To curb inflation, the Federal Reserve increases interest rates.
However, as interest rates creep higher, corporate profits decrease. When these profits disappear, companies may look towards mass layoffs as a solution.
Financial Independence through Real Estate 2
Thus we are in a precarious situation. Will the Federal Reserve destroy the economy to combat inflation? No one knows, but we can prepare for the unknown by holding our favorite cryptocurrency, the United States Dollar Coin (or USDC).
Many ways to invest. I use only one way to invest in USDC, and that is through the Voyager App (affiliate), where I earn 9% interest. However, just because I hold my USDC in one way doesn’t mean I use it in one fashion.
There are many ways to use USDC, making it one of the most versatile investment products on the market. Here are the ways I want to talk about today:
- As an emergency fund
- As a nest egg
- As an income stream
To beat a recession, you have to have a game plan. Your money cannot sit idle as inflation, unemployment, or emergencies chip away at your savings. Let’s look at how we can leverage these methods to shield ourselves from world events.
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As an emergency fund. You quickly set an amount you want to save into your emergency fund in this method. You can then divide your fund into different access times—quick, short, and long.
We can then put our money into various accounts to keep it growing while retaining fast access to cash. For quick access, we would use a high-yield savings account, short access is savings bonds, and long access is USDC stablecoins.
We can earn a high yield by stacking our emergency fund and keeping ourselves safe during unknown situations.
We can access USDC stablecoins in 1-2 days, but I consider it a long duration to acquire. I say this because it earns the highest interest rate of all the investment ideas. Thus, we want to break into USDC last on the list.
Passive Income for the Average Person
How much should you have in your emergency fund? Most people say you should have 3-6 months of expenses (not income) in your emergency fund. I can agree with this statement.
It’s good to understand what emergency is most likely to occur during the next few years. It will most likely be a bad air conditioner if you own a home. If you own an older vehicle, plan for a new engine.
Once you determine this amount, double it and keep that much money handy. So, if my air conditioner costs $7,000, I would save at least $14,000 on hand in my emergency fund.
I can keep $2,000 in a high-yield savings account, $6,000 in savings bonds, and $6,000 in USDC. That would keep my money earning interest while I wait for the unexpected.
Passive Income for Advanced
As a nest egg. There are many ways to build a nest egg. Earlier this year, I wrote about building a dividend growth portfolio and using it as your nest egg.
You can also use USDC for a portion of your nest egg. I don’t recommend putting all of your eggs in one basket (pun intended). I like to diversify my nest eggs so I can’t get caught in a scandal.
To use USDC as a nest egg, you simply keep investing past the point of your emergency fund amount. For example, if I held $6,000 in my emergency USDC account, I would keep adding $200/month to this stash.
The USDC money would continue to compound, allowing my nest egg to combat inflation. We create nest eggs for the future, so the plan wouldn’t be to withdraw anything.
Passive Income for Intermediates
You would understand that a portion of your nest egg is your emergency fund (in this case, $6,000), and the rest would be your nest egg. We must distinguish our pots of money.
As an income stream. Finally, we can build ourselves a paycheck by USDC investing. I like to talk about building income streams in my “I Live Paycheck to Paycheck” series.
The premise is the same here. You aim for an amount you want to earn monthly from USDC, say $500/month.
We then do the quick math and determine we need $67,000 in USDC to earn $500/month. It sounds like a lot, but you can do it with the right mindset.
The cool part of this income stream is that it can keep growing by itself. Once you have your income stream, you can reinvest whatever you don’t spend. This will boost your income every single month.
Passive Income for Beginners
As I wrote in “Living Overseas Passively on Cryptocurrencies,” you can plan to live on 5% interest while reinvesting the other 4%. You’ll become rich and have more money every month if you do this.
I know it sounds tough to save and invest $67,000 during a recession, but this is what separates the strong from the weak in life. Set your goal and move towards it at full force.
Conclusion. No matter how you use USDC, it will help you weather a recession. I know that my wife uses her dividends to help her beat high gas prices.
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I currently earn $14/month from USDC interest every month. I wanted to invest more in USDC this year, but the stock market has had some fantastic sales over the last few months. I am buying yields much greater than 9%.
I like to look at my USDC as an income stream. Thus, if I earn $14/month from USDC, I can safely spend $7 and keep my income growing. Hey, $7 buys me some Peanut Butter M&Ms.
I would like to get that number up to around $30/month by year-end. It’s essential to set goals like this on your journey and reward yourself when you achieve them.
A recession is coming, and only those who prepare can weather the storm. But we don’t just want to survive; we want to come out in a better financial position. USDC can assist in your mission towards building wealth, no matter the condition of the economy around you. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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