Freedom vs Liquidity

Summary

Jill on Money – “Freedom vs Liquidity”

Host: Jill Schlesinger, CFP®
Date: July 2, 2026
Guest: Listener Mike, from Washington state

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Episode Overview

In this episode, Jill Schlesinger and co-host Mark provide practical, jargon-free financial advice during a listener call-in segment. The main theme centers on a classic financial debate: Is it smarter to pay off your mortgage early for psychological freedom, or should you maintain liquidity for long-term financial flexibility? Listener Mike and his wife are at odds on this very question, and Jill helps them—while offering insightful guidance valuable to any listener struggling with the same decision.

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Key Discussion Points & Insights

1. Listener Situation: Should We Pay Off the Mortgage?

• Mike’s Profile:
  • 53 years old, retired two years ago
  • Wife, also 53, working full-time, plans to retire at 58
  • Two kids, both mostly independent, but receiving some rent assistance ($800/month each)
• Financial Snapshot:
  • Mike’s pension: $6,800/month, lifetime COLA with max 3%
  • Wife’s salary: $3,400/month
  • Retirement savings:
    • 457 account ($545k), IRA ($740k), fixed annuity ($150k)
  • Cash & Savings: $90k across savings, high-yield account, and checking
  • Home value: $670,000; Mortgage: $55,000 at 4.375% interest
  • Expenses: ~$10,000/month (including support for kids)
  • Mike brings in $20-30k/year from side jobs during retirement

2. The Freedom vs. Liquidity Debate

• Mike’s Perspective:
  • Wants the “freedom” and psychological relief of being debt-free
  • Views paying off the mortgage as a marker of success
• Wife’s Perspective:
  • Prefers liquidity—having cash on hand as an emergency reserve
• Jill & Mark’s Take:
  • Immediate recommendation: Don’t pay off the mortgage with current savings
  • Value of liquidity, flexibility, and emergency funds outweighs the small interest cost on a low mortgage balance
  • Recognize the emotional pull of being “debt-free,” but caution against depleting savings for it

3. Actionable Advice

• Build Up Liquidity First:
  • “If you get $100,000 in your high-yield savings account, everything above that you can use to pay down the mortgage.” —Mark (12:24)
• No Extra Mortgage Payments Now:
  • Make regular payments; redirect any extra cash flow (especially once rent support for kids stops) toward savings
• Emergency Fund is Non-Negotiable:
  • Use high-yield savings as emergency reserve; checking is just for operating expenses
• If You Must Prepay, Use Only Surplus:
  • Once high-yield savings exceed $100,000, pay extra toward the mortgage—but maintain flexibility
• Emphasize Emotional Component:
  • “You have an emotional pull towards being debt free… But for me, [success] is different. Mine is more like your wife’s, which is: I want to have access to my money.” —Mark (12:50)
• Estate Planning Check-in:
  • Mike and wife have their estate docs in order; model behavior for other listeners

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Notable Quotes & Memorable Moments

• On “Success”:
  • “You already have success. You have two kids who are basically launched.” —Mark (10:13)
• On Reframing Debt-Free as Success:
  • “[The] romantic view of what is the definition of financial success... mine is more like your wife's, which is, ‘I want to have access to my money.’” —Mark (12:50)
• On Emergency Reserves:
  • “Having that extra emergency reserve fund will prevent Mike and his wife from having to pull money out of retirement accounts, pay taxes when they're not really ready, and, like, there has to be a game plan around this.” —Jill (15:25)
• Resolution for Callers:
  • “If you’ve got a question, if you’re wondering about paying off a mortgage, if you and your spouse are having a slight disagreement about something going on in your financial life, Mark and I would love to be the unbiased third party and love to weigh in.” —Jill (15:52)
• Listener Acceptance:
  • “Okay, I think I could stomach that. See, she wins the argument.” —Mike (12:46)
• Host’s Encouragement:
  • “You guys are in amazing shape again. Two kids who have jobs, lots of money saved in retirement accounts, a beautiful pension, still making money. This is going to be done. This mortgage is going to be done in five seconds.” —Jill (13:52)

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Important Timestamps for Key Segments

• 03:48 — Mike introduces his main question about paying off the mortgage
• 05:09 — Mike explains his pension and income setup
• 07:14 — Details on wife’s annuity and future medical coverage plans
• 08:03 — Discussion of mortgage balance and interest rate
• 09:40 — Freedom vs. liquidity debate begins
• 12:19 — Establishing $100k benchmark for emergency savings before paying down mortgage
• 13:52 — Jill summarizes Mike’s household’s financial strengths
• 15:25 — Importance of not raiding retirement savings for emergencies
• 15:49 — Quick estate planning check-in

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Tone, Language, and Listener Engagement

Jill and Mark are conversational, approachable, and clear—never shaming, always supportive. They invite listeners to “chill out,” recognize their successes, and remind them that every financial situation is unique, but that the fundamentals of sound planning apply to all.

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Takeaways & Guidance for Listeners

• Don’t sacrifice financial flexibility just for the emotional relief of being debt-free.
• A well-funded emergency reserve is critical—especially in early retirement.
• Couples may have different money values; compromise is possible (and often, prudent).
• Seek unbiased advice if you and your partner disagree—your answer may not be “either/or.”
• Stay proactive with estate planning and adjust your strategy as your circumstances change.

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For further advice or to be a guest caller, visit jillonmoney.com.

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“Having access to your money is really important. It really is.” —Jill Schlesinger (15:27)

Transcript

[Jill Schlesinger]

You know, I always say to make smart financial decisions. So let me ask you this. What exactly is that old car in

[Mark]

your driveway doing for you right now?

[Jill Schlesinger]

Seriously, is it an extra car? Nobody drives anymore. Maybe it doesn't run. Do you keep saying you'll sell it one weekend and suddenly it's been two years? Meanwhile, it's taking up space, costing you money, and slowly becoming part of the landscape. Here's the easy solution. Donate it to Cars for Kids.

[Mark]

And yes, it's that Cars for Kids.

[Jill Schlesinger]

The the one with the jingle you absolutely know already. 1877 cars for kids. Here's why people love to donate to Cars for Kids. It's ridiculously simple. You go to carsforkids.org Jill that's cars with a K. Answer a few simple questions and you're done.

[Mark]

They'll come pick up the vehicle for

[Jill Schlesinger]

free, tow it away, handle the paperwork, and you'll receive a tax deductible receipt. Done.

[Mark]

Cars4Kids has been doing this for over

[Jill Schlesinger]

30 years and has accepted more than a million vehicle donations. So if you've got a car you're not using, turn it into something meaningful. Go to carsforkids.org Jill that's cars with

[Mark]

a K. And fair warning.

[Jill Schlesinger]

Now that jingle's going to be stuck in your head for the rest of the day. Hey gang, remember those resolutions you put together at the beginning of the year? Maybe it was estate planning, maybe it was life insurance. Check in. Well, I know it's summer, but how about if we get one of these items checked off your to do list in just minutes? Policygenius can help. Policygenius does all of the heavy lifting of searching for the best plan for you, giving you the peace of mind to enjoy a much more carefree season with your loved ones. I know that you value financial planning for the future. It should be a huge priority. Policygenius makes it incredibly straightforward with their online marketplace where you can compare quotes from America's top insurers side by side for free. I trust them because their licensed team works for you, not the insurance companies. So there's no guesswork, just clarity. With Policygenius you can see if you can find a 20 year life insurance policy starting at just $276 a year for $1 million in coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you could save. That's policygenius.com

[Mark]

welcome to the Jill on Money Show. It's Thursday, July, and we are here helping you make better More informed, less goofy financial decisions. And sometimes you just need a little bit of guidance. That's what Marc and I are here for. We are both certified financial planners. We love hearing from you. We love talking to you. And we just want you to know that whatever it is that is going on doesn't have to be a huge issue. Doesn't have to be like, oh, when can I retire? It could just be a smaller thing. Like, I'm not sure whether or not I can afford to make a decision around this house. Or, gosh, I'm having a struggle around my job. Or maybe you got something new that happened to you, something that is strange or a little bit peculiar. Anything that is going on, we're here for you. All you need to do is go to our website, jillonmoney.com, click the contact us button, write us a note. And if you'd like to join us

[Jill Schlesinger]

on the air live, you can check

[Mark]

the box for audio or video. Don't forget, we've got another show. It's called Money Moves. Comes out on Tuesdays and Thursdays. It's a YouTube show, it's a podcast. It's a little bit of everything that show, a little bit slightly different audience. I like to say that that's our under 45 show, and this is our over 45 show. Although we like to have listeners of all types join in. And so just know that you can

[Jill Schlesinger]

subscribe to us wherever you get your

[Mark]

podcasts or just go to our website, jillonmoney.com okay. Today we are chatting with Mike, who joins us from Washington state. Hello, Mike. What can we do for you?

[Jill Schlesinger]

Hello.

[Mike]

Thanks for having me on the show, guys.

[Mark]

Sure. What's up?

[Mike]

Here's the question. My wife and I are trying to determine on if we should pay off our mortgage or not.

[Mark]

Let me just say this right now. I'm gonna start with no, and then we'll go from there. No. Mike, how old are you?

[Mike]

I am 53 years old.

[Mark]

How old is your wife?

[Mike]

She is 53 as well.

[Mark]

Do you have kids?

[Mike]

Two kids. Kind of pseudo launched.

[Mark]

Tell me what pseudo launch means.

[Mike]

Okay. One has got about a year left in college.

[Mark]

Okay.

[Mike]

And the other one graduated a year ago. They're both living on their own, both working full time, and we subsidized their rent a little bit, but other than that, college is paid for. We paid as we went, and so they had zero debt.

[Mark]

That's amazing. But they both are working full time.

[Jill Schlesinger]

That's great.

[Mark]

So congratulations. Okay, so tell us, are you guys both Working full time still?

[Mike]

My wife is still working full time. And no, no retirement in her near future. I retired about two years ago.

[Mark]

Oh, at 51?

[Mike]

That's right.

[Mark]

Do you have a pension?

[Mike]

I do have a pension. My pension is Gross is 6800amonth. It has a built in Cola of 3% is the Max Cola, but it's a, it's a COLA with banking. So if the, the cost of living is below that, it'll catch up to 3% or if it's over that, it maxes at 3% but it's a lifetime cola.

[Jill Schlesinger]

Great.

[Mark]

That's awesome. How much does your wife earn full time?

[Mike]

She brings in $3,400 a month.

[Mark]

And are you on her health insurance or do you get health insurance through your previous employer?

[Mike]

I am currently on her health insurance.

[Mark]

Okay, got it. And will she be entitled to a pension?

[Mike]

A very small pension, about $200 a month also with a cola.

[Mark]

Okay, tell us how you guys have saved for retirement so far besides your pensions.

[Mike]

Sure. I have a 457 account that has 545,000 in it.

[Mark]

Great.

[Mike]

That is mostly a broad Vanguard index funds, 70 stock, 30 bonds. I have a advisory IRA that has 740,000 in it and that is also about a 7030 split. Professionally managed with individual stocks and bonds that's managed with a 1% fee.

[Mark]

Okay. And these are both pre tax or traditional accounts.

[Mike]

Correct.

[Mark]

Got it. Okay.

[Mike]

She has a IRA from a previous employer that's now into a secure growth fixed annuity that has 5% guaranteed for the next five years. Our intention with that was to use that as a bucket to pick up medical insurance when she does retire.

[Mark]

And you think it's five years from now or do you think, okay, so she'll be. So at 58 she's going to be done.

[Mike]

You think that's, that's what we're looking at.

[Mark]

How much is in that fixed annuity?

[Mike]

150,000.

[Mark]

What about non retirement money?

[Mike]

Yeah, we've got a high interest savings account money market with 50,000 in it.

[Mark]

Okay.

[Mike]

We also have, in our saving and checking account we have about 40,000.

[Mark]

Okay. Now let's talk about the house. What do you, what do you estimate the house is worth?

[Mike]

The value of the house is around 670,000.

[Mark]

And you're going to stay there? This is like the house?

[Mike]

Yeah, yeah, we're going to stay here. We did. The first year I retired, I did a full interior remodel on it.

[Mark]

Oh, oh, so you were busy that first year? Very Nice. What is the outstanding mortgage amount, Mike?

[Mike]

It's 55,000.

[Mark]

Okay. What's the interest rate?

[Mike]

4.375.

[Mark]

Okay. And is the idea that you would pay this off with the High Yield savings Account?

[Mike]

That's what I'm looking at. I figured that bucket could be used for that. The regular monthly payment on it is $933. 700 is principal, a couple hundred is interest, but we've been paying it down. We pay about 1,200amonth on it.

[Mark]

Okay. How much do you figure you guys spend on a monthly basis? Approximately? Don't go crazy here.

[Mike]

Realistically, we spend $10,000 a month.

[Mark]

Your 6800. Her 3400 kind of covers your, your basic needs.

[Mike]

Yes.

[Mark]

Okay. And do you feel like that a number is going to rise? Do you feel like, I mean, you are helping the kids out? I understand that. But, you know, essentially the 10 that you're bringing, 10, two that you're bringing in, you pay your taxes and then you, you've got to pay your bills and then you're basically not adding to anything and just meaning your cash flow. Right now she's putting money into her retirement account still.

[Mike]

She is not.

[Mark]

She's not. She stopped. Okay. So right now what's coming in is paying to go what goes out. Right, Right. Okay. So except for the nuisance factor or that the idea in your head is, which is like, I'm only making 3% on my high yield savings account. I'm getting charged 4.375% on the mortgage. That looks negative. So why shouldn't I just pay that off? Is that kind of the general question?

[Mike]

Yeah, I've got this feeling of just freedom, wanting that gone. It's kind of how I define success. She struggles with wanting the liquidity.

[Mark]

Yeah, I, I'm, I'm kind of more with her. I like liquidity. I mean, listen, is there anything in your life that you think could change cash flow wise in the near term besides, like, the kids? Whatever the money you're giving the kids, how much could it be? A few hundred, $500 a month?

[Mike]

Yeah. They both get about 800amonth, which is going to be temporary till they're fully launched.

[Mark]

Okay, so 800 each or 800 total?

[Mike]

800 each.

[Mark]

Okay. So once they're launched, first of all, I would not make any extra payments on your mortgage right now. I would do this. You know, what is success? You already have success. You have two kids who are basically launched. That's success. Okay. And you have enough income to cover your needs, that is success. You can you just chill out and build up some of that cash and your high yield savings just in the time being right now, like no extra payments and you'll be done with this thing in two minutes. You have a long life ahead of you. There is no reason for you to burn up this $90,000 of liquidity on the mortgage right this second. Because as soon as the kids are really launched, even if like you could, I would say that if one like the older one, if you're like, you know what, the older one doesn't need the 800amonth anymore, I would even be okay with like saying okay, then whatever you're not giving to the kids, you can put down extra on your mortgage. That's, that's my concession. But your wife is right because you're young and you're going to live a long life and liquidity is important. I mean, think of it this way. Let me make it even more stark.

[Mike]

Okay.

[Mark]

If something really bad happened to your kids, like they lost a job or

[Jill Schlesinger]

they needed more money or something happened,

[Mark]

you would want access to your money, wouldn't you?

[Mike]

Yes, absolutely.

[Jill Schlesinger]

So you asked your own question.

[Mike]

Yeah, I do work part time in retirement. I've also had side hustles, which brings in about 20 to 30,000 a year.

[Mark]

Okay, well then if you. Okay, put it this way. If right now, let's say that net. Net. If you could. Mark, let me tell you how I'm thinking about this. He wants to pay this off, right. I don't want him to do it in one fell swoop. Right now you're 1200 down.

[Jill Schlesinger]

Right?

[Mike]

Right.

[Mark]

Why don't you build up. How much money do you think, Mark? How much money should they have in their high yield savings in cash together before I can start paying off the mortgage, I'm going to give them a, I'm going to give them a benchmark. So right now they have 90. And basically what's coming in covers what goes out. So they probably need, they probably need

[Jill Schlesinger]

100 grand in safe money at least.

[Mark]

Yeah, I'm not even looking at the 40 and like the everyday checking account

I know at the 50.

So yeah, I would like to, I would not want to deplete that right now because I kind of see that as an emergency reserve. So I want that at least to be doubled.

Okay. If you. So forgetting about the cash account, the 40, if you get a hundred grand in your high yield savings account, everything above that. So if that gets to be a hundred, everything above that you can use to pay down the mortgage. How do you feel about that, Mike?

[Mike]

Okay, I think I could stomach that. See, she wins the argument.

[Mark]

No, it's not that she wins. It's just that you have an emotional pull towards being debt free. And somehow someone gave you the message or, you know, life gave you the mess. It's sort of like saying, oh, you know what the definition of a successful relationship is? When Harry Met Sally. Like a romance movie. You've been given this, like, romantic view of, like, what is the definition of financial success? And for me, that definition is different. Mine is more like your wife's, which is like, oh, I want to have access to my money because we probably feel more anxious than you do. But for you, it's like, no, no, no. Like, I want the romance of the having. Being debt free in retirement. Like, you already have great success. You guys are in amazing shape again. Two kids who have jobs, lots of money saved in retirement accounts, a beautiful pension, still making money. This is going to be done. This mortgage is going to be done in five seconds.

It's basically done.

It's done. It's done. But I think Mark's right that you need 100 grand in that. Because we look at the High Yield Savings account as an emergency reserve fund, and the cash account is just an operating account because we never would want that to be zero. So if the High Yield Savings gets to be over, if you're like, I am kicking butt, my 20 to 30 grand of extra money from my side hustles coming in. And now I'm just gonna build that High Yield Savings Account. Watch this Mark. He's gonna have $100,000 in that high Yield Savings account. Before you know it, he's gonna say to his wife, we're not going on vacation. I need that High Yield Savings account to be 100 so I can pay off my mortgage. I know you're gonna have that conversation, but I think that you're in great shape, so I wouldn't worry about it at all. At all. And the fixed annuity, Just out of curiosity, did your investment advisor sell you that fixed annuity?

[Mike]

Yes.

[Mark]

And you pay this guy or gal 1% a year, right?

[Mike]

On the advisory IRA, correct?

[Mark]

Yeah. Is there any reason why they have to use individual stocks? It seems like a little overkill, but that's just me.

[Mike]

Yeah, I don't. I don't know the answer.

[Mark]

Yeah, you don't know. You happy with them? I'm not going to talk to you.

[Mike]

Yeah, all right.

[Mark]

I'm not talking you out of it.

[Mike]

They've been helping us through.

[Mark]

All right. I think you're in great shape.

[Mike]

Would your thought be to just pay on the regular monthly payment, not do an overpayment on the mortgage?

[Mark]

Correct. I would if you. If I could bear. If you could bear it. If I could. If I could convince you. Just, like, make your regular payment, let the money flow into the high yield Savings account, get 100 grand in there, and everybody listening. Like, having that extra emergency reserve fund

[Jill Schlesinger]

will prevent Mike and his wife from

[Mark]

having to pull money out of retirement accounts, pay taxes when they're not really ready, and, like, there has to be a game plan around this. And I think having access to your money is really important. It really is. And so I think you would be. I think it would be prudent to do that. Can I ask you one last question before I let you go? Do you guys have your estate documents done?

[Mike]

Yes. Everything has all been done.

[Mark]

You're so good. So good. Except for that mortgage. Otherwise, I'd say you were a success. I'm just kidding. You're a great success. So we wish you all the best. And please let us know if there's anything else that happens. And you can screenshot the zero balance of your mortgage when that's done next week, which I presume you. You know, he's going to work hard to get there, Mark. I can tell. Hey, gang, if you've got a question, if you're wondering about paying off a mortgage, if you and your spouse are having a slight disagreement about something going on in your financial life, Mark and I would love to be the unbiased third party and love to weigh in. Give us a holler. Go to Jill on money dot com. Click the contact us button. It's always in the upper right hand corner. Write us a note and of course, let us know if you'd be willing to come on the air live. Don't forget to subscribe to the free weekly newsletter which comes out tomorrow Fridays. And we've got resources and we've got videos and there's blogs and there's podcasts. There's so much going on. Everything lives. All of our content lives on the jillonmoney.com website. You can subscribe to us on the Odysee app or wherever you find your favorite podcast. Please try to lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow. Hey there, it's Jill Schlesinger. I'm launching a new show it's called Money Moves. And your money is going to move. We're going to help you make better financial decisions. We're going to call out the B.S. you're finding all over social media. We're going to give you actionable guidance to make your financial life clearer, less stressful. We're going to answer your financial questions and take the mystery out of your financial life. Follow and listen to Money Moves with Jill Schlesinger wherever you get your podcasts.