Money Guy Show: Episode Summary – "Brian Paid Off His Mortgage - Here’s What He Learned"

Release Date: July 23, 2025

Hosts: Brian Preston and Bo Hanson

Introduction: The Mortgage Payoff vs. Investment Dilemma

In this episode of the Money Guy Show, hosts Brian Preston and Bo Hanson delve into the classic financial debate: Should you pay off your mortgage early or invest your extra funds? This age-old question frequently surfaces among their audience, prompting the hosts to explore various strategies and outcomes to provide clarity.

Brian Preston opens the discussion with a succinct framing of the dilemma:

"[00:05] Brian Preston: Age old question, should you pay off your mortgage earlier? Invest."

Bo Hanson echoes the sentiment, highlighting the diverse opinions within the financial community:

"[00:10] Bo Hanson: ...people get asked this question all the time... Should I pay off my mortgage as quickly as possible or should I get my money working for me?"

Case Study: Debt Free Dave vs. Manny the Mutant

To address this dilemma, Brian and Bo present a case study comparing two hypothetical individuals: Debt Free Dave and Manny the Mutant. Both are 30 years old with identical mortgages of $500,000 at a 30-year fixed rate of 5.3%.

• Debt Free Dave opts to pay an extra $1,000 monthly toward his mortgage, totaling $3,768 each month. Once his mortgage is cleared in approximately 16.5 years ([02:44] Brian Preston), he redirects the entire $3,768 into investments for the remaining 13.5 years.

• Manny the Mutant, conversely, chooses to invest the additional $1,000 monthly instead of accelerating mortgage payments. Assuming a 9% annual return, Manny’s portfolio grows substantially over 30 years.

Key Findings:

• By the end of 30 years, Debt Free Dave accumulates a $1 million portfolio.

• Manny the Mutant, benefiting from the power of compounding and a higher return rate, amasses a $1.8 million portfolio—a significant $800,000 difference ([04:45] Bo Hanson).

Brian highlights the importance of time and compounding:

"[02:59] Brian Preston: ...people often underestimate the power of time and the compounding growth of deferred gratification."

Brian Preston Becomes Mortgage Free

In a personal revelation, Brian Preston announces that he has paid off his mortgage:

"[08:19] Bo Hanson: So you are officially mortgage free. Look at that, look at that."

Brian shares the motivation behind this achievement, primarily triggered by an insurance claim that became cumbersome due to his outstanding mortgage:

"[08:56] Brian Preston: ...I just need to have this debt paid off."

However, he clarifies that while his personal residence is mortgage-free, he still maintains commercial debts from multiple properties, demonstrating leverage as a financial tool:

"[10:06] Brian Preston: ...we use debt as a tool and understand what debt is as a tool."

Listener Q&A Highlights

The episode transitions into a Q&A segment, where Brian and Bo address various listener questions, offering personalized financial advice.

1. Emergency Funds for a 23-Year-Old Student

Question from Go Lucky Monkey:

"I'm 23, working and in college. I'm living with my parents. My monthly spend is only about $300. So my six-month emergency fund is only $1,800, which feels low for stuff like car repair. Should I still go by the six-month rule or should I save more?"

Brian Preston advises maintaining an emergency fund of three to six months' worth of expenses, considering future living costs:

"[15:56] Brian Preston: ...you are heavily subsidized by the parentals... aim for where you're going and build up cash."

Bo Hanson emphasizes understanding upcoming expenses and adjusting the emergency fund accordingly:

"[16:13] Bo Hanson: ...your lifestyle is artificially lower than it will likely be 12, 18, 24 months in the future."

2. Evaluating Umbrella Insurance Needs

Question from Jason Zach:

"Can you explain how to think about and evaluate umbrella insurance needs? I bought a $1 million policy a few years ago and now my net worth is just above that. Do I bump it up to $2 million now or wait?"

Bo Hanson suggests matching umbrella coverage to net worth, with flexibility for future increases:

"[19:27] Bo Hanson: ...carry roughly equal to your net worth in coverage... when your net worth increases, consider increasing coverage."

Brian Preston adds the importance of the cost-effectiveness of umbrella policies:

"[20:31] Brian Preston: ...it's only a few hundred dollars to protect your net worth from large liabilities."

3. Mega Backdoor Roth Conversions

Question from Nita:

"Walking through setting up a mega backdoor Roth conversions. Employer allows after-tax contributions and in-service rollovers. Is there a benefit to reducing after-tax funds to do a $7k Roth?"

Brian Preston explains the mechanics and benefits of Mega Backdoor Roths, cautioning against oversaturation of contributions:

"[26:03] Brian Preston: ...you can do what's called the mega backdoor. ...ensure you don't squeeze out your employer's matching funds."

Bo Hanson emphasizes following a structured financial order before engaging in advanced strategies:

"[27:24] Bo Hanson: ...make sure you understand your plan's intricacies and consult a second set of eyes if needed."

4. Incorporating Pensions into Retirement Planning

Question from Brandon M.:

"How should a pension factor into your retirement investment mix? Does this fixed income reduce the needs for bonds? Assume pension is about 30% of my retirement spend. What do you think?"

Brian Preston discusses the complexities of pensions, including the reliability of employer promises:

"[39:30] Brian Preston: ...pensions are promises that may not be fully funded."

Bo Hanson highlights the dependency on individual circumstances and overall financial goals:

"[42:04] Bo Hanson: ...it depends on whether you're still building wealth or approaching retirement."

5. Roth Account Allocation for Early Retirement

Question from Keith:

"My wife and I are in our mid-30s and looking to add an early retirement in our mid-50s. Can I be putting too much into Roth? Currently 65% in Roth out of $440k in investment accounts. What do you think?"

Bo Hanson reassures that a high allocation to Roth accounts is not inherently bad, especially with long-term planning:

"[46:23] Bo Hanson: ...Roth accounts provide tax-free growth valuable for retirement."

Brian Preston advises considering tax arbitrage and future tax scenarios when determining Roth allocations:

"[46:35] Brian Preston: ...consider if your tax rates will be lower in retirement."

6. Differentiating Between Bedazzling Basic Life and Lifestyle Creep

Question from Connor:

"Can you talk more about bedazzling your current life vs. lifestyle creep? I'm 29 with a 50%+ savings rate and wondering about the balance between the two."

Brian Preston defines "bedazzle your basic life" as enhancing everyday experiences without financial strain:

"[52:04] Brian Preston: ...make memories without overextending financially."

Bo Hanson counters the negative perception of lifestyle creep, advocating for balanced spending aligned with increased income:

"[58:26] Bo Hanson: ...lifestyle creep isn't bad if it matches your saving and earning growth."

Personal Stories and Host Insights

Throughout the episode, Brian and Bo interweave personal anecdotes to illustrate their financial philosophies:

• Bo Hanson shares his experience paying off his mortgage through disciplined saving and strategic investments, emphasizing the balance between debt management and wealth accumulation.

• Brian Preston candidly discusses his recent achievement of becoming mortgage-free, highlighting the emotional relief and practical benefits, while also acknowledging ongoing commercial debts as part of his financial strategy.

• The hosts also touch on physical fitness and personal health, with Bo recounting an injury from performing muscle-ups, underscoring the importance of balancing physical pursuits with long-term well-being.

Conclusion: Striking the Right Financial Balance

The episode wraps up with key takeaways on managing mortgages versus investing, the importance of strategic financial planning, and maintaining a balanced lifestyle that fosters both financial security and personal fulfillment.

Brian Preston concludes by reaffirming their commitment to guiding listeners toward financial confidence:

"[38:46] Bo Hanson: Love it."

Bo Hanson emphasizes the show's mission to provide actionable financial insights tailored to individual circumstances:

"[39:30] Bo Hanson: ...focus on your unique financial journey."

Listeners are encouraged to engage with the Money Guy Show’s extensive resources available at moneyguy.com for further financial guidance and tools.

Notable Quotes with Timestamps

• Brian Preston [00:05]: "Age old question, should you pay off your mortgage earlier? Invest."

• Bo Hanson [04:45]: "Manny the Mutant... his portfolio was actually able to grow to $1.8 million. That's an $800,000 difference from what Dave was able to do."

• Bo Hanson [58:26]: "Lifestyle creep isn't bad if it matches your saving and earning growth."

• Brian Preston [08:19]: "So you are officially mortgage free."

• Brian Preston [46:35]: "Consider if your tax rates will be lower in retirement."

Final Thoughts

This episode of the Money Guy Show offers a deep dive into the strategic decision-making process surrounding mortgage repayment and investment prioritization. Through real-life case studies, personal experiences, and interactive Q&A, hosts Brian Preston and Bo Hanson equip listeners with the knowledge and tools to make informed financial decisions tailored to their unique situations. Whether you’re contemplating paying off your mortgage early or maximizing your investment portfolio, this episode provides valuable insights to help you achieve your financial goals while maintaining a balanced and fulfilling lifestyle.