B (3:31)

I was writing in because my husband and I, we recently purchased a new home and we have the proceeds from the sale of our prior and kind of maybe needed your gut check or cheerleading, as you mentioned, to let me know if we're crazy for investing the money or if kind of putting some dollars towards the principal. Kind of like, you know, is this just a math problem?

A (3:54)

Oh, no, it sometimes is an emotional problem because you know why? When people have this big chunk of money and there's a house that with an outstanding mortgage, the emotional is. I don't like having that debt there. So what can I do to actually. So what? Whether that emotional pull is a smart financial decision, that's what we're going to try to figure out with you. So, Katie, how old are you?

B (4:16)

I am soon to be 44.

A (4:18)

Okay. And your husband is how old? 50. 50. Okay, so you sold one house and you bought another. So what is the value of the new house and what is the mortgage amount and rate of the new house?

B (4:34)

The value is about 645.

A (4:37)

Okay.

B (4:38)

Mortgage outstanding is 508.

A (4:41)

Okay. Rate.

B (4:42)

And our glorious rate is six and a half percent.

A (4:45)

Oh. She says disheartening. Did you downsize? Like, is that what happened here?

B (4:51)

We actually went the other way. We have been looking for quite some time and kind of found our dream house that we're going to be staying in for a long time.

A (4:59)

Okay, and then you did that before you sold your house. Now you have the proceeds from the sale of the previous house, right? Correct.

B (5:06)

Yeah, we had cash for.

A (5:07)

And how much is the. How much were the proceeds?

B (5:13)

265,000.

A (5:15)

Okay. And besides this mortgage debt, any other debt that's outstanding, that is all. Okay. You guys have kids?

B (5:24)

We do not.

A (5:25)

You do not. Okay. Interesting. This always makes Planning a lot more fun. Let's make it about you. Are you both working full time?

B (5:33)

Correct.

A (5:34)

Yes. How much do you guys earn together?

B (5:38)

We're about 290,000 together.

A (5:40)

Okay. And cash flow's good. Even with that fat new mortgage at six and a half, that's a little.

B (5:46)

Tighter, but we're making a buy.

A (5:48)

Okay. You just. Yeah, it's a lot. I get it. Have you guys been saving in retirement accounts?

B (5:55)

Yes. Kind of maxing out everything the last few.

A (5:58)

Okay. How much money do you have in your retirement accounts?

B (6:03)

Do you just want like a full.

A (6:05)

Yeah, you could give me like a traditional versus Roth. Like what you guys have squirreled away approximately. It doesn't have to be exact.

B (6:12)

Traditional. We have 437, Roth 245. And then I have some inherited accounts. Like an inherited IRA, 817,000.

A (6:27)

Okay. And when did that person pass away where you inherited the IRA in 2023. So you are held to the 10 year rule that you have to get the money out within 10 years, right? Yep. Yeah. Okay. All right. So that's a big chunk of moolah. Do you have any other assets, like a brokerage account or. And, or did you empty it out to buy the house?

B (6:51)

No, we have that too.

A (6:53)

What do you have?

B (6:53)

So we have an inherited Roth at 345. And then in our managed account is 577,000.

A (7:04)

Wow. Okay.

C (7:06)

Just keeps on coming.

A (7:07)

I know. It's just like she's like them.

B (7:09)

And then, and then, and then our proceeds. We currently like, we have a financial planner and so we currently have 94,000 invested.

A (7:20)

Okay.

B (7:21)

And then another, the 152 just sitting in a money market that we're gonna.

A (7:26)

That's the cash. That's the cash. Okay, I gotcha. And what about savings? Boring. Savings account. 100,000 with the new mortgage, with everything. Do you have an idea of how much you spend on a monthly basis?

B (7:39)

We are between like 10 and 11,000, including the mortgage.

A (7:43)

Okay. And do you guys. Will either of you guys have a pension?

B (7:48)

I think I'll have like some very measly little pension.

A (7:51)

Okay.

B (7:51)

That I'm not even depending on.

A (7:53)

We don't. Okay, I gotcha. So the question that, the main question is we make a lot of money, we max out our retirement accounts and you guys plan to work till your 60s. What do you think?

B (8:06)

We were kind of toying with the idea of kind of putting in, you know, a few more three to five years of like this corporate world and then maybe doing a next endeavor into something, you know, more fun.

A (8:18)

I know a girl who wrote a book about that. You should get that. Oh, that's me.

C (8:22)

She just answered her own question with that answer.

A (8:25)

Exactly right. So, okay, so three to five more years. Let's just say five. So I have that. Okay, five years, he's 55, you're 49. And then you would downshift to something else, which would. I know that you don't have to. You don't. But you would work. You wouldn't do nothing at that point, right? Correct. Yeah.

B (8:48)

I can't imagine just sitting around. So yeah, we'll do something.

A (8:51)

Do you think you would make enough to just cover your expenses that by the. In other words, between the two of you, that you could make, let's say instead of 290, like half that. Yeah.

B (9:01)

We haven't like explored. I don't even know, kind of what. What.

A (9:04)

Yeah, you know, gotcha.

B (9:05)

What you bring in in a part time gig these days, so.

A (9:08)

Yeah. Okay, well, so we'll see about that. You know, the thing that's interesting here is it is, I guess, possible that you could take this 150 grand in cash because you have plenty of cash and you could apply it to your principal or you could kind of wait and see if you get a shot at a refi and maybe then you could recast the mortgage and pay down some of it. But with everything as is right now and going just fine, the real question is whether you're better off investing that money over the long term or would you be better off making that a smaller note, getting it paid off faster eventually. And since you did say, I think you said it was like, this is the house, this is the one. You're going to keep it for a while. You know, what would be the upside and downside? So, okay, Mark, you're going to offer the here's why you shouldn't pay down your mortgage. And I'm going to offer the why you should pay down your mortgage. So you go first, mark. We got 100. Just to be clear, everybody, this is for Katie and her husband. They have a lot of money. They've inherited a lot of money. They have no kids. You know, there's a lot of stuff going on here. So there's a lot of liquidity already. There's going to be money coming out of this inherited IRA that has to come out. So there's just a lot going on. There's choice here. Normally we'd be like, don't do it. But so Mark, why shouldn't Katie pay down 150 grand of her mortgage?

C (10:42)

Well, I think for me, the biggest reason is based on what they plan on doing in the future, their possible next endeavor, next chapter. I would rather have that money on hand to provide some sort of Runway for when that time comes. Also, you know, she knows this. If she puts down all this money right now on the house, it's not going to change the payment. The payment's going to stay the same. So I would keep it on the sidelines. You're going to refinance. Maybe down the road, you know, you do a cash in refinance or, you know, you can always pay this mortgage off later on, but for the time being, I would keep the money liquid.

A (11:16)

Okay. The only thing I have to say is the only reason to pay it down is that emotionally it will feel better instead of having a $500,000 mortgage, to have a $350,000 mortgage. That's it. There's not like a financial benefit necessarily, I guess, if the market crashed over the next 20 years and never came back, you know, if it went down. Because otherwise. I agree with Mark. Having access to your money is kind of. It feels to me better. And maybe even like he said, you know, you could always pay it down faster. You know, five years from now, you might say, oh, you know what, now we have a chance to refi. Or three years from now, it actually creates a little bit more optionality to not pay it down, kind of suck it up for a few years. That said, I also believe that if it really was driving you crazy, that paying it down would not be a harmful decision. So I lean towards don't pay it down. But if you say, I can't sleep at night, I need that paid down, then I'm okay with that too. So where do you think you land?

B (12:18)

I'm definitely in the emotional court and talk myself into, like, you know, the math problem is it's better to invest it. You know, sure, there's a little bit of risk, but I think we have a safe cushion to see. See our way through it. And I think I just need to stay off the mortgage calculator because the dollars going towards interest is insane. But I think we'll be able to.

A (12:38)

Refinance down the road, step away from the mortgage calculator.

C (12:43)

At least it's not 14%, you know.

A (12:45)

Yeah. And also, I mean, it is funny, like, if you look forward, we really will not know whether or not you made the right decision or not based on what happens in the next 10 years for the investment account. Because if the investment account, you say, like, oh, look at all the money I'm throwing away in interest. But then if the investment account earns you a lot of money over that same five or 10 years, you'll look back and say, oh, it was smart not to actually pay it down. So that's the rub. We won't know. It's, again, not a slam dunk. Either way, a 6.5% note is a real number. It really is. You know, you do get to deduct your mortgage interest, so that is good. I'm sure that you guys are. You are itemizing, right?

B (13:30)

Yeah, we're right on the cusp. We're meeting with the tax guy in.

A (13:33)

A month or so. All right, so let's see how things go. You can always pay it down. It's just a question of hanging on to the options that are available. So that is what I think. That's what I think it argues for. Just a couple of other questions for you guys. Do you have your estate documents done, Katie?

B (13:53)

No, we don't.

A (13:54)

Oh, you see, there was this pause, and I was like, oh, that sounds like a no. The biggest reason I say that is that, you know, listen, you don't have kids, so you have to affirmatively say where you want your money to go. Do you guys have siblings? Yeah.

B (14:10)

Yeah, we do.

A (14:11)

Do you like some more than others?

B (14:13)

They're all equal.

A (14:14)

They're all lovely. No, you're such. That is so not true. That is just not the case. That never is the case. More to the point, maybe one sibling has some kids and you think they really could use the help, and the other one is really rich and doesn't need the help. So I would love for you to articulate that. And so maybe after tax season, the very best time to do that estate planning is right after tax season. You gathered up all your documents. You've looked things over. Please, can we make a pinky swear over the airwaves?

B (14:46)

It's been on our to do list for two years.

A (14:48)

So how do I get it up? How do I get it higher on the list? What can I do?

B (14:51)

Oh, my husband. We can't do any fun things until it's done. So I'll draw a line on the sand on that.

A (14:56)

I love that Mark. She's going to be withholding on fun until we get it done. That's good. I like it. Katie, any other questions for us?

B (15:04)

No, I think you guys kind of just helped help me, you know, see my kind of what what I was thinking all along.

A (15:12)

Right.

B (15:12)

We could go either way.

A (15:14)

Exactly. Again, a lot of you folks who call in about paying down mortgages, it's a slam dunk. This is not a slam dunk. This time it again for everyone listening. Emotionally, we all would like to be relieved of debt, but it's not always the greatest thing. And you can, you can slide for a couple years and see how things go. Sometimes people pay off mortgages, but for convenience. But I just would love to know more about what's going to happen with Katie and her husband in the future and how they, how they kind of make that transition to a different career, a reset, if you will. It's probably best to just let it breathe a little bit. So if you are like Katie and her husband, you want to know should we pay down our mortgage or not? Get in touch with us. Go to jillonmoney.com, click the contact us button, write us that note and please let us know if you would be willing to come on the air. We'd love to have you live. It's so much better. Better. Don't forget to check out all the content that lives on the website at jill and money.com and you could subscribe to us on the Odyssey app or wherever you find your favorite podcast. Please try to do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow. Hey gang. I just made a first time ever purchase on behalf of the pod. I was so psyched because Marc and I don't do a lot of promotional materials, but I was able to create a branded sweatshirt. Yep, a Jill on Money branded sweatshirt with Vistaprint. Now I'm not usually good at these things, but Vistaprint made it simple to bring this idea like, oh, wouldn't it be cool if Mark and I could create some sweatshirts that we'll try out and maybe the listeners would want to get them as well. They've got these great design tools, they have fast shipping, human support. If you need a little guidance along the way because the sweatshirts were so easy to execute. Now I'm thinking about doing some other stuff. Maybe there's some baseball caps or, I don't know, other fun stuff that you guys would want, you'll let us know. There's a reason that over a million people trust Vistaprint for their small business print needs. Vistaprint print your possible right now, new customers get 20% off with code new20@vistaprint.com.

D (17:30)

I'm Emma Grade, host of Aspire with Emma Green, a podcast where I sit down with people who don't just dream big, they build big. From culture shaping voices like Mel Robbins to leaders redefining success like Tracee Ellis Ross, to game changing entrepreneurs like Mark Cuban, Aspire is about mindset, ambition and doing the work that actually moves the needle. If you're ready to raise your standards and take charge about the life and career you're building, Aspire is where you start, follow and listen to Aspire with me, Emma Greed, an audacy podcast available wherever you get your podcasts.