I got this bug in my brain this morning about how I mostly opt out of fiat.
This presupposes you already understand how the fractional reserve monetary system creates mass evil in the world and that you don't want to be part of it. If you aren't at that point, feel free to continue your education into how fiat works.
So what I do is keep minimal amounts in the banking system, which minimizes the amount I participate in the fraudulent system.
Step 1: Do your books. Know what kind of expenses you have. Make sure you have spread. You need to be increasing your assets, not consuming them.
Step 2: Understand your spread. How much variance does it have? How reliable is your income? If things went to hell, what expenses can you cut? That's going to come up here in a second.
Step 3: Create a cash emergency fund. Use that spread to build up at least 3, and preferably more, months of savings. In cash. Like actual bills of currency that you own.
Step 4: You'll probably notice at this point that your spread is increasing. That's because when you do your books you are paying attention to both your income and your expenses. When that happens, you tend to spend less. OK, time to get a good credit card if you don't already have one. All possible spending should go on the credit card. Pay it off each month in full. This helps control your cash flow. At this point, income comes in, builds up, and goes down in one large shot. Self-discipline is key here. If you go nuts and run up a balance AND keep high cash balances you are shooting yourself in the foot!
Step 5: Now that your basic cash flow pattern is set, it's time to start opting out. Evaluate your burn rate (expenses) and your base line projection of income. Then start learning about infinite banking. This is a process of using insurance contracts to hold your capital. The downside of doing this is that while your capital is very strongly guaranteed, you lose liquidity in the first few years. Again, this is where the spread comes in. Infinite banking does essentially two things at the same time: it gets your capital out of the banking system and it inflation-proofs your capital. Nelson Nash is the guy who came up with this, so read his book on it.
Step 6: Once you have sufficient balance in your infinite bank (this should happen quickly), now your cash flow pattern changes:
- Charge your expenses on your credit card.
- Bill comes due.
- Take a loan from your infinite bank, which is deposited into your checking account.
- Pay the credit card from your checking account.
- As income comes in, it goes back into the infinite bank.
Boom. Now your fiat banking account is only holding balances for the time it takes to process deposits and withdrawals - maybe 5 days because of the archaic system it runs on.
More importantly, you are taking control of your capital and cash flow. When you deem it appropriate, you can further diversify away from fiat by legging into crypto.
For most people, this whole process will take 2 or so years. If you are aggressive about it, you can do it in one.