Welcome to the inaugural edition of Jungle Money – where our mission is to educate degens about personal finance, investing, and navigating the quickly evolving world of cryptocurrency.
Thank you to @BowTiedEthernaut, who was kind enough to answer our questions.
How do you generate income?
My main source of income is my day job. Without getting too detailed I am an Aerospace Engineer who works for a defense contractor in a salaried position. Due to covid, I now work 80% remotely which has been nice to work on other ventures and spend time at home with my family.
Talk about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?
I went the traditional route.I went to college straight out of high school then graduate school right after I got my undergraduate degree to get my Master’s of Science in Aerospace Engineering. During my time in grad school I worked on research projects which ended up translating to my job offer after I graduated. Since I was able to count my time in grad school as work I was able to land a mid-level engineering position right after I graduated which was right at $80k a year (plus attractive benefits such as 401k matching, stock options, etc.) I graduated back in 2016 and have had a fairly linear increase in salary each year of about $5k. This past year my salary was $102k. Where I live the average salary is mid $40k’s so the cost of living is very cheap here as well.
Do you have any sources of income besides your career? If so, can you list them, give a feel for how much you earn with each, and offer some insight into how you developed them?
One venture I am currently working on is a Crypto Mining LLC I started up about 6 months ago. We currently have 17 GPUs and generate 1GH/s Hash Power which nets out to about 0.02ETH a day. Recently we added an ASIC machine that mines BTC directly at about 0.001BTC a day. So far we have reinvested all of the mining revenue into more equipment/operating expenses. The goal is to now HODL the ETH since once 2.0 comes online it will not be minable as ETH moves from Proof of Work (PoW) to Proof of Stake (PoS). Because of this we are shifting from ETH mining to BTC (ASIC) mining.
What tips do you have for others who want to grow their income?
The largest factor I have experienced in growing my income is starting up multiple income streams. It sounds cliche but the biggest part holding me back initially was actually getting off the starting line. I kept convincing myself that my sole source of income from my job would be sufficient down the line and as I started to expand my thinking I realized that it was a huge risk to be limited to just one large source of income. This is when I started to look into other income streams and since I was an engineer (aka a huge nerd!) I gravitated to the idea of building a GPU crypto mining rig as more of a project than something I thought would be as successful as it has been.
What’s your work-life balance look like?
One of the greatest benefits to my job is I am able to basically work my own schedule and also work mostly remote. So I am able to spend all important family moments in person which has been invaluable. I can’t imagine going back to a traditional 9-5 every day in the office and working 50-60 hour weeks. Remaining in a position I can work remotely for is a priority to me for my work/life balance.
Do you have a budget? If so, how do you implement it?
Yes and boy does life make it hard to stick to it! Since I got my first job I have tracked every single penny that has came through my hands with Excel and always project out a minimum of two years for expected expenses, income, etc. but if there’s one thing I’ve learned it's that no matter how detailed, those projections will always change and you must be diligent in budgeting and saving to account for the unexpected. We recently had a baby boy and that was a big shock wave in the budget so one thing I always recommend is to be conservative with your numbers and leave a nice margin to be safe. At the end of each month my wife and I will track down where every penny went and adjust our budget for the next month to try and limit unnecessary spending and reallocate to areas where we may have underestimated how much we needed.
What percentage of your gross income do you save/invest and how has that changed over time?
We save on average about 15% of our income currently. Fresh out of college with no wife and kids I was able to be really aggressive and was putting away 40-50% of my paycheck (also no student loans). But as we got married, bought a house, my wife cut back on working once we had our son, etc. this had to change to be realistic.
What is your investment philosophy/plan?
One of my first “business” books I read was “What It Takes” by Stephen Schwarzman who went on to Co-found and run Blackstone. His biggest mantra was to never lose money.. Ever. And that resonated with me at the time because I was chasing a side profession in day trading (stocks, futures, options, crypto, etc. you name it and I probably dabbled in trading it.
I still have a Python based trading algorithm I developed a few years back). But the trading style was too volatile for me. Way too many losses to go with the wins and more than anything I was spending too much time trying to chase this profession and the work/life balance didn’t work for me. So this is when I decided to take his advice and “never lose money”.
Now in reality is this possible? Absolutely not, we are all going to have losers to go with our winners. But if we can change our philosophy to be able to control when we have these losses then we give ourselves a much larger chance for success. For me this meant to quit the day trading where I was cutting losers that dropped 1% in stocks like Apple and Tesla just to see them explode the next week and just become more of an investor, focusing on Dollar Cost Averaging (DCA) into positions I wanted to own for at least a 5 year time horizon.
Options were extremely costly for me in the long term since not only did I have the price to worry about but also the expiration of the option that was working against me. But luckily I was able to learn this lesson early on in stocks and didn’t carry this over into crypto. The volatility of the crypto market is incredible and yes I see people all the time who have made a decent living trading it. But for every success story there seems to be at least 100 stories of margin calls and leveraged liquidations just to see the price of BTC, ETH, etc. be right back to where it was, if not even higher, just a week later. DCA has been very successful for me in crypto and is the only way I will play it.
Can you give a general breakdown of your investment portfolio (high-level percentages)?
My personal (after payroll deduction) investments are all in crypto currently. Pre-tax I put 10% (including company matching) of my paycheck into my 401k and another 5% goes into my post tax Roth so that I max out my Roth contributions each year. Below is a very rough breakdown of my portfolio allocation:
401k Equities 35%
401k Bonds 5%
401k Cash 5%
Roth Equities 10%
Roth Bonds 0%
Roth Cash 5%
Crypto 20%
Crypto Mining LLC 30%
What has been your best investment?
My best investment has to be my investment into our Crypto Mining LLC. Completely repaid for all equipment and my initial investment in 6 months (I should note I started mining with just 6 GPUs 18 months ago and didn’t turn it into an LLC in May when I expanded so it had a head start to cover all expenses). The only expense I have is electricity and everything else is profit. The best part is it is directly paid in crypto too so I don’t have to worry about exchanges etc. to get more ETH or BTC.
What has been your worst investment?
My worst investment would be into my trading (equities) brokerage portfolio. I lost about $10k over the course of 3 years while trying to figure out the options/trading world. The knowledge I learned throughout the process was worth the endeavour, I just wish I wasn’t so naive that I used real money instead of a paper account in the beginning.
How often do you monitor/review your portfolio?
I’ll usually check daily in the mornings unless I am traveling or preoccupied with meetings. When trading I was watching markets 12 hours a day (no exaggeration) and it was draining on me hard. Another reason why trading wasn't for me.
What money mistakes have you made along the way that others can learn from?
Take your time. Avoid the rush of “trading” (gambling). Look at the bigger picture and focus on accumulation and DCAing into stocks, coins that you can hold for a while and be able to sleep at night. Instead of focusing on trying to “make money” through investments, focus on building up sources of income and growing those sources. Income sources first, investments later. I tried the other way and used investments as income sources and it hurt me in the long run.
What are your plans for the future regarding lifestyle?
Laying low and becoming even more cognizant of all spending. Inflation is going to make it even harder for the average person to save/invest so it is imperative that we take a close look at everything we buy since it's costing ~10+% more than previously. All excess cash is being added into crypto at a pretty aggressive pace for me.
You can follow @BowTiedEthernaut on Twitter to keep up with his journey to Degen Island.