Note: this guide assumes you have completed all steps in the How to Onboard to Lava Vault guide and are familiar with the process of borrowing against your bitcoin using Lava.

Table of Contents

Step 1: Calculate your monthly expenses

Step 2: Create Your Loan

Step 3: Spend borrowed dollars

Step 4: Manage your loan

Step 1: Calculate your monthly expenses

1. Calculate the sum of your total monthly expenses, including:
   1. Housing (mortgage/rent, utilities, maintenance)
   2. Living expenses (food, transportation, healthcare)
   3. Insurance premiums
   4. Regular bills and subscriptions
   5. Entertainment and discretionary spending

Step 2: Create Your Loan

1. Loans must be initiated with 50% LTV, so ensure your Lava Vault contains bitcoin worth at least twice the dollar amount you plan to borrow.
2. Create a loan by borrowing dollars against your bitcoin collateral through the app.

Step 3: Spend borrowed dollars

1. Transfer your borrowed dollars from Lava Vault directly to your bank account.
   1. Soon you'll be able to use your Lava Card to spend dollars directly from your Lava Vault.

Step 4: Manage your loan

1. Monitor your active loan by regularly checking the Bitcoin price relative to the liquidation price.
2. Keep track of your loan expiration date. Before your loan expires, choose between two options:
   1. Option A: Let the loan expire and repay the lender with your BTC appreciation. Your BTC (minus what's owed to the lender) will be sent back to you.
   2. Option B: Rollover your loan by initiating a new loan before the current one expires, adjusting the amount based on your current needs, and taking Bitcoin price movements into consideration.

Check out this Retirement Calculator for KY Bitcoiners to get an idea of who this strategy may be useful for!