🤩 Tax Free FIRE FIRE BTC Issue #18 - A zero-tax FIRE strategy 👇👇 I hate taxes. All of them. Don’t give me your “Who will build the roads?” or “What if your house catches on fire?” or “They protect us from evil people in the world.” excuses…I don’t buy them. That said, taxes are a reality we have to deal with. Like living in a credit-based fiat financial system, there are ways to use the rules of the tax system to your advantage. Today’s issue of FIRE BTC is inspired by a reader who recently achieved FIRE and turned me on to an interesting post on X by The Money Cruncher:

X (formerly Twitter)

The Money Cruncher, CPA (@money_cruncher) on X

You could make $150,000/year and pay $0 in taxes. This is because the tax code is built for investors, not W-2 employees. Let me explain how it w...

“The tax code is built for investors, not W-2 employees.” This line caught my eye. Pursuing FIRE means building a savings portfolio to fund your lifestyle once you retire. If the tax code is built for people like us FIRE practitioners, then understanding it can help us reach our goals faster and leave us in a wealthier position. Money Cruncher’s thread lays out a way to live tax-free up to a certain point, assuming you have stopped working. It leverages the rules around long-term capital gains (LTCG) and the available tax deductions to minimize or even eliminate your federal tax bill. I’m by no means an expert on tax optimization (or licensed to give tax advice), so make sure you consult with a tax professional on this kind of stuff. OK, here’s how it works… ----------------------------- 🧐 Leveraging the LTCG rules The tax code encourages long-term investment by providing lower tax rates on long-term gains relative to short-term investments. Short‑term capital gains are taxed as ordinary income, which means that they follow the regular federal income tax brackets. In other words, if you sell an asset held for one year or less, the profit you make will be added to your other income and taxed at your marginal ordinary income tax rate. The 2025 federal income tax brackets range from 10% to 37% in a graduated manner — highway robbery!! Luckily, by the time you reach FIRE, your savings portfolio will consist of investments held for more than one year, which benefit from a more favorable tax treatment. When you sell an investment that you’ve held for more than one year, the gains are taxed at special long-term capital gains rates of 0%, 15%, or 20% depending on your taxable income. That last bit is important. You may have built your savings portfolio through W-2 wages, which are subject to ordinary income tax rates (10% - 37%) like short-term capital gains highlighted above, plus payroll taxes for Social Security and Medicare. However, if you reach your FIRE goal and stop working, that W-2 income goes away, and you’ll be living off your savings portfolio that is filled with investments that are only subject to long-term capital gains. When those long-term investments are sold, their realized gains contribute to your income. This is where the special tax brackets for LTCG kick in. For 2025, the 0% LTCG tax bracket applies to taxable incomes up to approximately $48,350 (single filers) and $96,700 (married filing jointly). Even better, you can subtract the standard deduction ($15,000 for singles and $30,000 for joint filers) before taxable income is calculated. This means you could realize up to $125,000 in capital gains and still owe zero federal tax after deductions. This doesn’t include income you may also have from Roth tax-advantaged accounts, which are not subject to taxes upon qualified withdrawal. BONUS: If you live in a no-income-tax state such as Florida, Texas, or Wyoming, you could potentially pay zero in both federal and state taxes on your investment income! 📝 Things to Keep in Mind 🔸Dividends count as income – If you hold stock index funds or other investments that throw off dividends, those dividend payments are included in your income calculation. Of course, bitcoin doesn’t produce dividends. 🔸Beware of tax law changes – Some provisions, such as those from the 2017 Tax Cuts and Jobs Act, expire after 2025, potentially altering tax brackets and deductions. The tax laws can change over time, so it’s important to stay abreast of how the landscape shifts. 🔸Consider state taxes – If you live in a state with income taxes, this strategy may still save you money, but it won’t be completely tax-free. 🔸$125k may not be enough for you – Those of us who take a “fat FIRE” view of the world may plan to spend more than $125k each year. In that case, the 15% or 20% LTCG tax brackets may apply to excess income above $125k. This type of in-the-weeds, technical approach to managing finances is not something I normally focus on. I’m a big-picture kind of guy, and I prefer to focus on letting an excess of wealth enable the lifestyle I want instead of operating in a perfectly optimal manner. A lot of FIRE practitioners take a different view, and they love finding loopholes and optimizations with this kind of stuff, whether it’s related to taxes, credit card points, etc. Regardless, the ability to live off capital gains instead of wages is right down the middle for those pursuing FIRE, so we should understand it and take advantage of the rules. ----------------------------- Thanks for reading! 🙏 If you enjoyed this content, make sure to subscribe to the FIRE BTC newsletter so you'll get each new issue delivered to your inbox. firebtc.substack.com/p/tax-free-fire

And there it is 🇺🇸

Two years and 4x later, Bitcoin is FIRE Friendly is still relevant. cc @Tom Honzik https://x.com/tom_honzik/status/1889020856422302134?s=46&t=NhTpMz9GUSmLDKahAny3BQ

Who's using cash.me? What mints do you trust?

FIRE BTC, Issue 17: Going Global 🌎 Getting exposure to the world economy through bitcoin 👇👇👇 Traditional approaches to investing hail the virtues of diversification within a portfolio. Beyond seeking diversification across asset types, many people advocate for seeking exposure to international markets, in addition to US-based markets. The idea is to mitigate country-specific risks, since no single economy, even one as strong as the United States, is immune to challenges. Political instability, economic downturns, or regulatory changes can impact markets. Global exposure reduces reliance on a single country’s performance, so they say. Other arguments to investing globally sound compelling as well: 🔸Countries in Asia, Latin America, and Africa experience rapid growth at times. Investing internationally allows you to capture opportunities in industries flourishing outside the U.S. 🔸What if the dollar loses value relative to foreign currencies? A globally diversified portfolio could provide a hedge to dollar weakness. The FIRE approach typically rejects these arguments. Financial independence advocates like John C. Bogle, JL Collins, and Mr. Money Mustache claim that US-only investments are sufficient for a FIRE portfolio. While I agree with their assessment, there’s an even better option. (You’ll never guess… 😉) Let’s dig in! ------------------------- 🇺🇸 ‘Murica! The reach and success of the companies that make up the US stock market indices like VTI and SPX go beyond America’s borders. A large portion of their revenue is generated from assets and businesses that operate overseas. Apple is a prime example. As of the fourth quarter of fiscal year 2024, Apple's revenue distribution by region was as follows: 🔸Americas: $52.65 billion 🔸Europe: $33.86 billion 🔸Greater China: $18.5 billion 🔸Japan: $8.99 billion 🔸Rest of Asia Pacific: $10.29 billion

MacroMicro

Apple - Revenue by Region | Apple Inc. | Collection | MacroMicro

Geographically, North America, Europe, and Greater China are the top three revenue generators for Apple.

This distribution implies that more than half of Apple’s revenue was generated outside of the US. That being the case, buying Apple stock means you are getting exposure to the world economy by proxy. Both the growth prospects and risks associated with the international markets that Apple operates in are transmuted into the company’s earnings and are reflected in the performance of the stock. The same applies to other major stocks in the indices that FIRE practitioners buy. NVIDIA, Pfizer, Intel, Google, Meta, Coca Cola, etc all have significant exposure to foreign regions of the world. When you buy VTI, that exposure is captured in your portfolio. JL Collins sums it up nicely in The Simple Path to Wealth: "With VTSAX you own ~3600 companies, virtually every publicly traded company in the USA. More to the point, the largest of these are all international businesses, many of which generate 50% or more of their sales and profits overseas…Since these companies provide solid access to the growth of world markets, while filtering out most of the additional risk, I don’t feel the need to invest further in international specific funds."

JLCollinsnh

Stocks — Part XI: International Funds

In Part VI of this series we looked at some portfolio ideas to build and keep your wealth. Last time, in The Smoother Path to Wealth, we did much t...

Another solid principle of the FIRE approach is to keep things simple. By keeping a simple structure to your savings portfolio, you guard yourself against overthinking and trying to pick winners and losers. In this case, getting global exposure through a single fund is a better way to pursue your FIRE goal. Better results, less complexity. 😓 The downsides of stocks While the FIRE community has found the most effective vehicle in traditional finance for saving, there are a few downsides to be aware of. I covered them in the post that inspired this newsletter: Bitcoin is FIRE Friendly. treysellers.com/bitcoin-fire/ 🔸Index funds have counterparty risk — If you’re using stock market index funds as a savings vehicle, there’s a slight risk that your funds may not be accessible when you need them. This counterparty risk means you’re dependent on a third party that might not be able to meet its obligations. Make no mistake — you’re operating in a world of IOUs. 🔸Taxes and fees are a drag on your returns — VTI has a 0.03% annual management fee (aka expense ratio), which is low compared to other funds that can charge 1-2% or more. This means the absolute amount of the fee grows as your portfolio grows, which adds up significantly over time. Additionally, dividends are taxed as income, further reducing your net returns. These costs act as a drag on your wealth, meaning your investments need to grow even faster just to maintain your purchasing power. 🔸You might not have access to US stocks — The FIRE approach has been a US-led phenomenon, but who’s to say Americans are the only people who care about financial independence? If you live outside the US, your access to the preferred stock market index funds may be limited, and your alternative choices are likely to underperform. 🔸You might not have access to stocks at all — The point above assumes that alternative vehicles for savings and investment exist where you live, which is certainly not true in many parts of the world. Some people are forced to try saving in assets or property that are inferior to stocks, like gold, real estate, or even fiat currencies that their governments print into oblivion. 🗺️ A better global alternative If global exposure is important, we can look to a truly global alternative to US stocks. Bitcoin transcends borders. It’s not tied to any one country or economy, making it one of the few inherently global assets. This means it will benefit naturally from economic expansion across the world over time, and its perfectly fixed supply prevents value leakage. Not to mention the asymmetric opportunity presented from the fact that it’s undergoing rapid adoption…I cover that in a previous issue of this newsletter:

🚀 Supercharge Your FIRE Journey

FIRE BTC Issue #4 - How bitcoin can help you reach FIRE faster

Bitcoin also shines where stocks are weak: 🔸You can hold it directly, without counterparty risk. No governments or financial institutions can control access to your money. 🔸Holding it directly can be done without fees or taxes. 🔸The access problem highlighted above does not exist with bitcoin. It is available virtually everywhere in the world and trades 24/7/365. 🔸Bitcoin can also be used directly as money, instead of incurring the friction of liquidating stocks to fund lifestyle purchases. Sure, adoption as a medium of exchange is still in its infancy, but I expect that to change over time. In the meantime, the fiat system is a great scaling mechanism for bitcoin on the payments front. So for the FIRE folks who follow the advice of JL Collins and John Bogle, who think that US stocks provide adequate global exposure, it’s time to consider a better alternative. ---------------------------- Thanks for reading! Below is the direct link to this post: firebtc.substack.com/p/going-global If you are interested in the overlap of bitcoin and the pursuit of financial independence, be sure to subscribe so you'll be notified when new issues drop.

A short story...

Hot take (I assume): A sovereign wealth fund is v bad for free market capitalism.

Remember in April 2020 when the government gave everyone $1,200 to buy bitcoin at $6,800? That was fun.

Crypto has devolved to nothing more than memecoins and tokenized dollars. Bullish for bitcoin.

This is the chart of NVDA / BTC. Tell me what you see?

Gold's scarcity is physical. Fiat's scarcity is political. Bitcoin's scarcity is mathematical.

Alright @Bitcoin Golf Pro my friend, help me out. Sats will follow as a thank you!

The latest issue of FIRE BTC is out today: Exploring El Salvador 🇸🇻 The Central American country of El Salvador was once considered the murder capital of the world. In 2019, however, a new sheriff came to town. President Nayib Bukele rose to power and immediately cracked down on the gangs. And in 2021, El Salvador adopted bitcoin as legal tender. The story of my recent trip to El Salvador began in June of 2024, when my colleagues and I wrote a short piece on the synergies between golf and bitcoin. Golf brought me to bitcoin country, and this week's FIRE BTC covers what I saw at Bitcoin Beach and how El Salvador may be a window to the future of bitcoin. Here's the link to the full piece. As always, don't forget to subscribe for my weekly(ish) views helping bitcoiners achieve FIRE and teaching FIRE practitioners about bitcoin.

🇸🇻 Exploring El Salvador

FIRE BTC Issue #16 - Observations from a trip to bitcoin country

21 Bitcoin + FIRE resolutions for 2025, from this week's issue of FIRE BTC: 1⃣ Review last year’s expenses 2⃣ Cut out wasted expenditures 3⃣ Increase your savings rate 4⃣ Increase your bitcoin allocation to savings 5⃣ Automate your savings through DCA 6⃣ Sell old stuff to stack more sats 7⃣ Get bitcoin rewards 8⃣ Get BTC-paid yield on cash 9⃣ Create a speculative attack 🔟 Learn to self-custody your bitcoin (if you haven’t already) 1⃣1⃣ Upgrade to multisig (if your bitcoin stack is big enough) 1⃣2⃣ Set up your estate plan 1⃣3⃣ Set up your bitcoin succession plan. 1⃣4⃣ Play with lightning 1⃣5⃣ Pay with lightning 1⃣6⃣ Model your aspirational lifestyle 1⃣7⃣ Exercise your spending muscles 1⃣8⃣ Get smart with credit cards 1⃣9⃣ Get off zero 2⃣0⃣ Get on zero 2⃣1⃣ Stack sats with your kids You can read the full issue with explainers for each item here:

2️⃣1️⃣ Resolutions for 2025

FIRE BTC Issue #15 - Bitcoin + FIRE goals for the new year

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Love this simple expected value calculation for the threat of quantum computing taking bitcoin to zero overnight from @TEN31 Suffice it to say: $100k is CHEAP. Here's the link to their post: https://ten31.vc/insights/quantum

Steepener intensifying

Time zones are crazy. Need Zealand is in 2025. The United States is in 2024. And gold holders are in 1898.

The dividend bros sacrifice total wealth for income. Don't be like the dividend bros. It may cost you years of financial independence. View quoted note →

FIRE BTC Issue 13 just dropped. Here's a short summary 👇 Many personal finance bros on X swear by dividend-paying stocks, claiming they offer hassle-free cash flow for financial independence. But while dividends can seem appealing, they may actually hinder your progress toward FIRE. Here’s why: Dividends don’t create new wealth—they simply shift value from the company to you. When a dividend is paid, the stock price drops by the same amount, leaving your total investment value unchanged. Worse, dividends in taxable accounts come with a tax burden, reducing the compounding power of your portfolio. This inefficiency often means dividend-focused strategies yield lower total returns compared to growth-oriented investments. For example, over the last five years, $SCHD (a dividend ETF) returned 69% compared to $VTI's 93%. That difference translates to years of additional saving needed to reach your FIRE number. And for those who criticize Bitcoin for not paying dividends: they’re missing the point. Bitcoin isn’t designed to throw off dividends—it’s like "cash money," offering returns through increased purchasing power over time. Whether through Bitcoin or growth-focused ETFs, you can create income by strategically selling small portions, benefiting from greater compounding and tax efficiency. The key to reaching FIRE isn’t how your returns are delivered but how they compound. Dividends may feel like an easy win, but they can come at the cost of longer timelines to financial independence. Focus on assets with higher total returns during the accumulation phase and let compounding do the heavy lifting. And, of course, for that purpose, bitcoin is the best. You can read the post at the link below, and don't forget to subscribe!

🧦 Coal in Your Stocking?

FIRE BTC Issue #13: Why dividends don't matter

🤑 Borrowing against your bitcoin? From today's issue of FIRE BTC, here are my abbreviated thoughts on leveraging your BTC stack 👇 When pursuing FIRE, we spend years stacking assets like stocks and bitcoin to reach a savings portfolio goal to sustain our ongoing expenses. Once obtained, the standard and most simple way to live off your portfolio is to sell these assets slowly, at about 4% per year (the 4% rule). Is there another option? Maybe. An exciting and interesting idea is to borrow against your bitcoin instead. Borrowing against the assets you own to buy more assets enables you to take advantage of unavoidable dollar debasement. Doing so allows you to access dollars now, while delaying the sale until the end of the loan term. The hope is that bitcoin’s value continues its relentless march higher, above and beyond the rate of fees and interest needed to service the loan. A few thoughts and best practices: 🔸 Before taking on any debt, make sure you have a plan for the interest payments. This could be from other income sources, selling a small portion of the bitcoin, or paying interest from the loan proceeds. 🔸 Just as important as paying the interest is being able to maintain the margin requirements for the loan. You don’t want to be a forced seller at a low price, so it’s imperative that you have a plan to maintain the collateral position of the loan during price drawdowns. 🔸 Look for fiat financing first. The fiat world is built on debt, and there are plenty of other options available for loans that will likely have better terms than a bitcoin-backed alternative. 🔸 Be conservative. Consider borrowing against your bitcoin only after its value is large enough where you only need to leverage a small portion of your overall stack to meet your needs. 🔸 Understand your counterparty risk. Borrowing against your bitcoin means giving up full control over it. Whether from malicious intent or mismanagement-turned-bankruptcy, many people have been burned because they did not understand the counterparty risk they were exposed to. 🔸 The banks are (probably) coming. When the banking industry comes to play, they will bring massive amounts of capital for lending against bitcoin, which should drive down rates and make loan terms more competitive. I’m an advocate for leveraging the fiat financial system to get wealthier more quickly. I believe bitcoin will usher in a world less reliant on debt. Until then, we might as well embrace it. Want to read the full post? You can find it here 👇

🤑 Borrowing Against Your Bitcoin

FIRE BTC Issue #12 - My thoughts on leveraging your BTC stack

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