I'm bad with money. I've always been bad with money. Not "two maxed-out credit cards and a $40,000 car loan" bad, but bad enough that at 25 I don't have enough in savings to buy another MacBook if mine goes to computer heaven.
In 2018, however, I'm already being much more responsible with my finances. And it's not because of some flimsy New Year's resolution. It's because of bitcoin.
Cryptocurrency is not, as I first thought, sentient money that will one day enslave humanity. Instead, it's essentially virtual money that runs on transaction-tracking blockchain technology, which has ambitions to decentralize the world's money. No big deal. Most famous is bitcoin, though , most easily described as "cryptocurrencies that are not called bitcoin."
Bitcoin to me was just the weird thing people used to buy drugs with on the internet -- until around December. That month followed a recurring pattern: News would break of bitcoin's price reaching new, unlikely heights, and I would say to myself, "Damn, I should have gotten into that, but it's too late now." The price would rise dramatically the next day, and the circle of life spun on.
This cycle hit a peak in mid-December, when the price of a bitcoin, fueled almost entirely by speculation, became more than $19,000. This happened about six years after you could buy one bitcoin for a dollar, and it made many minds, including mine, reel with possibilities. (Even if the truth is that, had I bought 10 bitcoins for $10 in 2011, I wouldn't have had the restraint to hold them until they hit $19,000 apiece. Or even $1,000.)
In the last working week of 2017, after nonstop stories on the rising price of bitcoin, I started to seriously think about putting money into crypto. I, like 60 percent of 18- to 35-year-olds surveyed by Australian bank Westpac, am not saving for a house, so why not invest in magic internet dollars?
The first thing I learned: Someone like me, with no actual assets other than a selfie stick, or any tangible skills to speak of, other than a God-given talent to use that selfie stick, really shouldn't invest in crypto. Or even look at it.
Most financial experts I consulted -- and by experts I of course mean "articles that resulted from a 'how to bitcoin' Google search" -- said you really don't want to have more than 10 percent of your portfolio in cryptocurrency. Which seems to contradict the "burn it down and don't look back at the explosion" vibe of the whole enterprise.
Your portfolio -- according to the DIY, mostly YouTube crash course I did -- should be made up of reliable, steady-growth mutual or index fund stocks, as well as an emergency fund of three to six months worth of expenses. OK. Slight issue with that one. My portfolio didn't have any of those things. My portfolio didn't exist.
Like I said, I wouldn't call myself dangerously bad with money. But I've saved way too little of the money that appears in my account each month, apparently making me like 80 percent of Americans. So that made an emergency fund hard.
Then there's the issue of reliable assets. Cryptocurrency is arcane, but the stock market was equally mysterious to me. I didn't know what was reliable and what was volatile -- all I knew was stocks can make you a lot of money if you already have a lot of money, and if you play your cards right, Leonardo DiCaprio will play you in a movie.
Bitcoin seems fun, but I was beginning to think it might be better to actually get more responsible rather than try to take a shortcut to financial freedom.
Because, with the exception of those down-since-day-one types who are actually hoping to change the world with blockchain, crypto is looked at as just that: a financial shortcut. Many traditional finance types jeer at it, calling it a speculative bubble (how else does something called DogeCoin become worth $2 billion?). JPMorgan Chase CEO Jamie Dimon, for instance, said he'd fire any trader in his company who invested in it.
But it's made some people obscenely rich, like the co-founder of altcoin Ripple, who briefly became more valuable than Mark Zuckerberg. That's enough to make dopes like me try to Google their way into a few bucks. Luckily though, I got rerouted.
My Christmas break was essentially like a montage from "The Wolf of Wall Street," except instead of quaalude parties with Jonah Hill it was a YouTube party with Warren Buffet, and other folks who had mastered the ever esoteric market.
At the end of that montage, I was a new man. Weekly budgets drawn up in Google Sheets, $500 in an exchange-trust fund with plans to add more each month, starting an emergency fund, consolidating my retirement funds from different jobs and so on.
Nothing crazy, just baby steps -- and I can only hope they actually make a difference long term. But it's a relief to have made some order out of the monthly paycheck-to-paycheck chaos, and ironic that this was brought on by the capricious world of cryptocurrency.
It was a fortuitous rerouting, too, as January was a bad month for cryptocurrency. Bitcoin entered the new year at $13,440 and on Tuesday dropped below $7,000 for the first time since last November, according to Bloomberg, though it has rebounded above that line. Lucky I didn't do something crazy, like take a loan out to buy bitcoin, or worse, sell my collection of MiniDisc players. I bought those babies in the '90s and have been waiting for them to explode ever since.
If I follow the conventional wisdom, once this new portfolio of mine hits $5,000 I can put some of that into crypto. But of course, I as a person have not matured, so I'm not following that conventional wisdom. I congratulated my newfound financial responsibility by throwing $500 into crypto.
I'm not too worried by the. If all goes according to plan, I'll be writing my next column from a yacht. Made of gold.
First published Jan. 25, 5 a.m. PT.
Update, Feb. 7 at 5 a.m.: To add video, and information about the bitcoin downturn.
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