In short
Q&A focused on the emotional difficulty of “right” financial decisions near early retirement, plus practical answers on rental-property cash flow tradeoffs and whether to use the Rule of 72 in planning.
Guests/callers
- Cameron (anonymous caller; called in Feb 2025, returns with updates). Early-retirement planner; net worth grew from ~$1.6M to nearly $2M; spending target ~$60k/yr; has paid-off house, cash/T-bills, taxable brokerage, HSA, Roth and traditional retirement accounts; still ~2.5 years from target date.
- Kate (rental property + mortgage decision). Parent at 45 with childcare-driven cash-flow strain; has 3% rental mortgage (2.99%), would net ~$200k after taxes if sold; retirement ~$860k; 529s ~$200k total; brokerage ~$50k.
- Rebecca (Rule of 72). 47/48 couple; Rebecca has ~$1.1M 401k plus backdoor Roth IRA ~$77k and HSA brokerage ~$73k; profit-sharing minimum ~$15k/yr into traditional 401k; multiple loans and 529s for four kids; ~4.5–5 month emergency fund.
Key claims + examples
- Emotional bridge: cognitive math isn’t enough; model a “2008-style” first-year decline and “test drive” reduced spending for 2–4 weeks; use tiptoeing/part-time transition to reduce anxiety; preserve a cash/T-bills floor (one-year expenses) via a two-bucket approach.
- Buffer beats razor-edge spending: sequence-of-returns risk worsens when living near the “safe withdrawal rate”; widen the gap to reduce worry.
- Rental vs mortgage: childcare cash crunch is short-term; don’t assume 7% beats a 3% mortgage unless cash-flow mechanics (recast/refi) and what you do with freed cash are addressed; rates likely improve before 2055.
- Rule of 72: it’s a mental-math shortcut, not a planning tool; use full projections and account for inflation (nominal vs real dollars); don’t stop retirement saving solely based on Rule-of-72 outputs.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOUnderstanding the Caller’s Situation
1:30 to 2:26
Discussion about a caller's previous episode and their financial situation update.
“I trained in economic reporting at Columbia.”
The Emotional Challenges of Retirement Planning
2:26 to 4:42
Exploring the psychological aspects and anxieties related to approaching retirement.
“We are now about two and a half years away from our target date.”
Recognizing the Disconnect Between Logic and Emotion
4:42 to 7:11
Analysis of the difference between cognitive understanding and emotional readiness for retirement.
“Cameron, first, thank you for the question.”
Economic Context and Its Impact on Retirement
7:11 to 9:19
Discussion on the current economic climate and how it affects perceptions of retirement.
“Before we go to the solutions, I want to talk for just a couple more minutes to expand this out to the rest of the audience.”
Practical Solutions for Managing Retirement Anxiety
9:19 to 14:00
Offering actionable strategies to navigate financial anxiety and prepare for retirement.
“And this time of life, even without the economic backdrop, this time of life is such an uncertain place anyway.”
Navigating Financial Uncertainty
14:00 to 14:39
Explore how lifestyle choices impact financial planning and emotional well-being.
“I guess my point is, Paul, you said you'll be surprised you think it's going to come back positive, even if it comes back negative.”
Transitioning to Retirement
14:39 to 17:00
Learn how easing into retirement can provide emotional stability and economic certainty.
“And the bad news, this was in the Wall Street Journal recently, too many Americans, almost half of us, retirement comes faster than we thought that it was going to.”
Establishing a Cash Buffer
17:00 to 20:35
Understand the importance of maintaining a cash reserve for financial security during retirement.
“I'm going to, and again, this gets back to the experiment, Paula.”
Understanding Sequence of Returns Risk
20:35 to 23:19
Delve into the implications of sequence of returns risk on retirement spending.
“leading the charge on how much money you're going to spend in your retirement with safe withdrawal rate gives me hives.”
Creating a Two-Bucket Approach
23:19 to 26:15
Learn how to implement a two-bucket strategy for managing retirement withdrawals.
“The problem isn't what we're solving for.”
Show all 21 chapters
Maintaining Employability in Retirement
26:15 to 28:01
Discover strategies for staying employable and managing income during retirement.
“we're going to commit to not touching this.”
Building Supportive Communities
28:01 to 29:51
Learn the importance of forming supportive offline communities during challenging times.
“And if you don't, then I think that's another way to handle this.”
Building Supportive Communities
29:52 to 31:08
Learn the importance of forming supportive offline communities during challenging times.
“We're going to take a moment to hear from the sponsors who allow us to bring you all of this at no cost to you.”
Navigating Financial Decisions
32:04 to 42:00
Explore the complexities of financial decision-making regarding mortgage and cash flow.
“Whether you DIY or want the pros to handle it all, you'll have the confidence of knowing it's done right.”
Understanding Financial Pinches for High Earners
42:00 to 45:30
Explore why high earners may feel financial stress despite high cash flow.
“The flip side of this, which is why do people with huge cashflow still feel this pinch?”
Transition to the Rule of 72 Discussion
45:30 to 45:52
Introduction to the next question about the rule of 72 in financial planning.
“And when we return, we're going to address a question about the rule of 72.”
Incorporating the Rule of 72 in Retirement Planning
45:52 to 50:29
Discuss whether the rule of 72 should be a part of effective retirement planning.
“Our final question today comes from Rebecca.”
Balancing Debt and Retirement Contributions
50:29 to 56:00
Evaluate the decision to reduce retirement contributions for debt repayment versus saving.
“Well, because about every 18 years, again, using the rule of 72, about every 18 years, prices double.”
Understanding Coast FI and Retirement Contributions
56:00 to 58:32
Learn about the concept of Coast FI and how it affects retirement contributions.
“So in practice, my answer would be yes, actually, even though in principle, I'm not a fan of it.”
The Emotional Side of Financial Decisions
58:32 to 58:59
Explore the emotional factors that influence financial decisions beyond just numbers.
“But I want you to use something more rigorous than the rule of 72 to arrive at the answer.”
Introducing Financial Basics Videos
58:59 to 1:00:06
Discover the new financial basics videos and their unique approach to emergency funds.
“And the different ways that we handle that.”
Transcript
Automatic transcript. May contain errors.0:00Joe, you sold your company when you were 40.
0:02Paula Pant:Before you did that, did you go through just one more year syndrome? I did not because it came at me out of the blue. I mean, the idea sounds ridiculous. You're entering your peak earning years and now I'm going to sell my company? Like, what are you doing? Why would you do that? But then I realized because of the reasons why this mentor of mine had done this, he was 39, why he had done this at that age, I realized I wasn't chasing purpose or I was chasing it the wrong way. And there was probably a better way to do that. There was a lot of angst, but pulled the trigger on what many might think looked like a dumb move at the time.
0:39Yeah. And the end can sometimes be scarier than the start, right? The finish line is scarier than the starting line. Starting line is full of possibility. Finish line is like, oh, really?
0:51Paula Pant:Yeah, do I close this door? Exactly. And so we are going to talk today to a caller who has that conundrum. How about that? Weird. In fact, this particular caller initially called us back in February of 2025 and is now calling back with an update. So we're going to hear from her. We're also going to hear from somebody who wants to know about the rule of 72 and how that should be used in planning. and we're going to hear from someone who's got a question about rental properties. Welcome to the Afford Anything podcast, the show that knows you can afford anything, not everything. This show covers five pillars, financial psychology, increasing your income, investing, real estate, and entrepreneurship, acronym, double I FIRE.
1:33I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode-ish, I answer questions from you, and I do so with my buddy, the former financial planner, Joe Salcihai. What's up, Joe?
1:44Paula Pant:I had a really cool morning today, Paula. What'd you do? It was awesome. Somebody complimented me on my parking. Oh. In fact, they left me this cool note on my windshield. It said, parking, fine.
2:00And with that, we go to our first question, which comes from Cameron. Hey, Paula and Joe. I'm the anonymous caller you named Cameron back in February of 2025. First, thank you again for answering my question. Your discussion around sequence of returns risk, bucket strategies, and the psychology of early retirement was incredibly helpful. I wanted to give an update and ask a follow-up question because I'm realizing that the emotional side of approaching work optional is very different from the accumulation phase. We are now about two and a half years away from our target date. Since my original call, our net worth has grown from about$1.6 million to nearly$2 million, thanks largely to the continued bull market.
2:37Our breakdown roughly now is$400 ,000 in the paid-off house,$85 ,000 in cash and T-bills,$300 ,000 in taxable brokerage,$44 ,000 in HSA,$415 ,000 in Roth accounts,$720 ,000 in traditional retirement accounts. We did take Paula's advice and we switched back to maxing out our Roth IRAs rather than prioritizing taxable investing as heavily. We do still contribute a little to taxable each month, but it's pretty small. Our combined pre-tax income is still around$150 ,000. My wife continues to heavily contribute to her$457 ,000, and I contribute enough to my 401k to get the full employer match. We are also finishing the last big home renovations that we want completed before stepping away from work, which is why we still want another couple of years before pulling the trigger.
3:24We estimate about$50 ,000 remain in projects, and we would like to rebuild our cash reserves to about$100 ,000 afterwards. Our annual spending target still looks like it will settle around$60 ,000 per year, assuming inflation doesn't go bananas. We also followed your earlier discussion about maintaining our efficient frontier allocations. We still rebalance mostly by directing new contributions rather than selling existing investments because that approach is psychologically easier for me. But here's the part that I didn't expect. I'm starting to really understand the one more year syndrome. Ironically, the closer we get and the larger the accounts become, the harder that it feels to emotionally trust the plan.
4:02The market's been so strong for so long that I almost feel like the current numbers can't possibly be real. I keep worrying that a major correction will happen immediately after we step away from work. Logically, I know our withdrawal rate appears conservative. Intellectually, I understand sequence risk is something that we have already partly mitigated with our$100 ,000 in cash and a 5 % bonds position and flexibility around potential part-time or consulting work. But emotionally, the finish line feels much scarier than the starting line ever did. So my question is, how do you psychologically know when you have enough?
4:35And how do you avoid endlessly moving the goalposts when markets are unusually strong and future returns feel uncertain? Thanks again for all that you do. Cameron, first, thank you for the question. Thank you for calling back. Thank you for the updates. And congratulations. You have done an incredible job and you know, and this is really the crux of your question, you know, as well as I do, as well as Joe does, you know what you've built and you know that you are ready. But there's a difference between cognitively knowing something and emotionally experiencing something. And so how do we cross that bridge?
5:16Because it is one of the hardest bridges to cross. And if you don't do it adequately prior to making the leap, then what you will discover is that once you make that leap and once you switch from asset accumulation to asset decumulation, if you're not emotionally ready for that, it feels really icky and it triggers a lot of anxiety. Sometimes that anxiety can lead you to do irrational things, to penny pinch way more than you should, to save money on the wrong things, to forego dollars to pick up dimes to, you know, operating from a place of financial anxiety. And that is not a function of how much is in your bank account.
6:02It's not a function of how many assets you hold. It's a purely emotional function that's independent of the numbers on a spreadsheet. But operating from a place of financial anxiety is a horrible way to spend an early retirement or a sabbatical or any phase of life. So let's talk about how to bridge that.
6:21Paula Pant:Well, and this isn't just camera and this is in the zeitgeist right now. I mean, this is so many people. It's funny this, you know, I give a lot of keynote talks and this is the exact topic that I cover in my keynote talk. And what's incredible, Paula, is that I speak to packed rooms of people who are far more attentive than any other financial talk that I've given in the past five years. Like people are in this and they're feeling the emotions. As I walk people through this emotional roller coaster that so many people, not just Cameron, feel the head nods. The, yep, that's exactly where I am is big.
7:04Paula Pant:So Cameron, I'm glad that we can help you with this because I feel like there's probably a lot of afforders who are in the same boat. Exactly. Before we go to the solutions, I want to talk for just a couple more minutes to expand this out to the rest of the audience. Joe, to what you were just saying, the why now, we are in a really unusual position in our economy in which the price of basics has doubled over the last five years. If you add up an increase in home prices, and when I say home prices in this context, I mean not just the cost of purchasing a home now as compared to what it was in 2020, but also the mortgage interest rate.
7:44So homes are more expensive. Gas has risen by about$2 a gallon since January. Of course, I don't know what gas prices are going to be by the time this episode airs, but it either is still high or we all remember it being high. We're all cheering because it finally is not high. That's what I'm hoping for. I realized I was like, I guess I shouldn't talk about such a volatile commodity. But gas prices at the beginning of the year were in the$2 per gallon handle for most places nationwide. And as of beginning of June, they're in the above$4 per gallon handle. Right. So we've seen home prices go up.
8:25We've seen gas prices go up. We've seen grocery prices go up. We've seen all of the basics of life go up, property taxes, health insurance, all of it has gone up significantly. Now, the stock market is going gangbusters, and that's great for people who own assets. Home prices have gone gangbusters, and that's great for people who own real estate. But for people who rely on income rather than assets, it can feel as though everything is a lot tighter. And I think that's a big part of why even though people's, especially asset holders, people's net worths might be higher, but their income doesn't stretch as far.
9:07And that leads to a lot of financial pessimism. And so I think that's a big part of why we're simultaneously seeing terrible consumer sentiment and record high stock prices.
9:19Paula Pant:It is this weird place. And this time of life, even without the economic backdrop, this time of life is such an uncertain place anyway. In any normal economy, you're going to feel like you're on uncertain footing because you're going to this brave new world where everything that I did from nine to five is something different now. And so you're getting used to all that already. Nothing feels exactly right. You're not sure what the next step is. It feels foggier than ever. and then lay that economic backdrop on top of it. And I think that's why the rooms are packed. Right, exactly. Okay, so let's talk solutions.
9:57We've elaborated on the problem for long enough. Solutions, Cameron, number one, I want you to model out exactly what would happen if there was some big sequence of returns risk in that first year. And then just for two weeks or maybe a month at most, actually live that lifestyle. So for example, if your model says, all right, if we assume that we take the leap and then the next thing that happens is a 2008 style decline, and 2008 is notable for both severity and duration, as opposed to 2020, which had high severity, but short duration, right? If you make this leap and there's a 2008 style decline, what does that mean for your actual cost of living?
10:54I want you to actually, to the greatest extent possible, test drive that. If that means a reduction in variable discretionary expenses, such as restaurants, et cetera, okay, live that way for two weeks or live that way for one month just to see what it feels like. If it means a reduction in fixed costs, like downsizing to a smaller place, you know what? Heck, Airbnb one for a month. Rent out your main place and downsize to a smaller place and actually see what that feels like. There are going to be, of course, some limitations to this, right? So maybe part of the plan is, I don't know, selling a car or picking up extra work, which you might not be able to do right now, right?
11:40There are going to be some limitations to this modeling, but to the extent possible, actually live the lifestyle that you would live if a 2008 collapse were to happen. If you do that, even just for two to four weeks, you'll experience what that lifestyle feels like. And my guess is you'll find that it's not that bad.
12:05Paula Pant:That was number three on my list, Paula, because I think having an exit plan, having, you know, when we were kids, I grew up in the Midwest, we had tornadoes. And so in school, we would have this tornado drill, right? What would happen if there's a tornado? We would have fire drills. I'm sure around the country, everyone at their school had fire drills. I think running this type of a fire drill ahead of time or tornado drill, whatever, I think is an important piece of getting it right. Like try to get as many of the feelings that you can get by running a simulation that has far less permanence attached to it is important.
12:47Paula Pant:And I also like there's even, you know, an overarching thing that I like even better, which is just this idea of treating it all like it's a science experiment. I think too often we think that this coming retirement is going to be unicorns and rainbows. And this is where a lot of discontent and disillusionment hits people is they get there and I'm there with the same emotions, the same feelings. I show up just like I was yesterday in this place where I was supposed to be happier and different and everything was awesome. And I think it's because we put too much pressure on it. If we instead live this lifestyle going, you know what?
13:30Paula Pant:I wonder if I like this and going in with much more of an open-minded, let's just run an experiment. Let's see if I even like pickleball. Is pickleball something I want to do? Turns out I don't really like it. Do I want to be in an RV for a month at a time? Nope. Turns out I don't like that either. You could do those things. And if you thought that was going to be unicorns and rainbows, you'll have huge disillusionment. But if you look at those like science experiments, let's go try it. And it turns out you don't like it. It's great data. And now when you come out of this quote failed time, it's no longer failure.
14:05Paula Pant:It's a cool thing. Now I know that I don't love it. Now it's on to the next thing. I guess my point is, Paul, you said you'll be surprised you think it's going to come back positive, even if it comes back negative. That's cool because now you know what you need to do between now and then. Right. So that's one piece of advice is actually feel the lifestyle that you would be living if you had to shrink down as a result of some great financial collapse. Want me to give my first one? Yeah, go for it, Joe. Retirement finds us in different ways. And the bad news, this was in the Wall Street Journal recently, too many Americans, almost half of us, retirement comes faster than we thought that it was going to.
14:54Paula Pant:So I feel like, Cameron, you're in this really cool place where you get to do this on your terms. So I think taking advantage of that is important. And one thing that study after study has shown is if there is at all a way to, instead of take the cold plunge, right, it is January 1st, you jump in the ice cold water to celebrate the new year and you get this whole shock to the system. It's better if you don't do that. Instead, what studies have shown is if you're able to tiptoe into retirement, it's going to make a lot of the emotion change for the positive so that now maybe half a day, you're able to go out and find what the new purpose is, what the new lifestyle looks like, what the new things are that you're going to do.
15:45Paula Pant:And the other half time, you're still doing what you're doing nine to five today. If there's any way to be able to do this tiptoe for a year, two years, three years, it's going to give you more economic certainty because you're still bringing money in. Number two is it gets rid of a big problem that we see a lot, which is this idea of mattering. From nine to five, I mattered in this organization and now I don't matter anymore. And sometimes what you are calling economic uncertainty, Cameron, truly is at the heart of it, much more emotional because it's actually emotional. What am I going to do?
16:24Paula Pant:It doesn't present itself that way, but it's back there. When you get to the bottom, deep, dark recess of all the stuff going on in your brain, it's hiding back there going, no, no, no, I matter from nine to five now. What am I going to do to matter anymore? And so it gets rid of that emotional component as well. So I think if you're able to, and I understand that most people can't, but Cameron, it sounds like you might be able to, if you can tiptoe into it versus the cold plunge, that's the first thing I do to get rid of some of this one year more syndrome. So don't cold turkey basically. Yes.
17:04Paula Pant:Yeah. Go, you know what? I'm going to, and again, this gets back to the experiment, Paula. now half of my day is an experiment or half of my week is an experiment. Sometimes people, a good friend of mine was able to go part-time where he'll work two weeks and then the third week he doesn't work. Then he works another two weeks and then the third week he doesn't work. And during that week off initially, man, he was like a guy without a rudder calling me every 50 minutes. I love, I love you, Mike, but I also love doing what I do normally during the day. Now he doesn't call me at all. He's busy doing other stuff, which is great because at five o 'clock when I'm doing my stuff, then I can go hang out with Mike and he's had a fun day full of stuff where he matters in a different way than he did before.
17:50Paula Pant:So for him, tiptoeing has been a great answer. Yes, and I agree. And that's also a great way to smooth the transition. Okay, so that's two tips. Tip number three, I guess, Joe, you and I will take turns. Yes, because I got one more as well. Oh, perfect. Okay. So tip number three, Cameron, you mentioned your cost of living is going to be about$60 ,000 annually, your expected retirement spending, and you've got more than that already in cash and T-bills. But here's the thing I'd say. As you're modeling this plan, commit to keeping a minimum of$60 ,000 in cash and T-bills at all times. So one year's worth of expenses.
18:37And so as you are drawing down, if that 85 ,000 shrinks down to 60, the 60 should be that like, do not cross go line. You maintain that unless things truly, truly become an emergency. Again, unless we hit another 2008. By virtue of knowing that you always have at least one year saved, then you still have some margin. You still have some buffer so that if there's a down month, you can draw from cash and T-bills rather than selling off investments. I suppose what I'm talking about is a bucket approach. So instead of seeing that $85 ,000 as one bucket of$85 ,000 cash and T-bills, I would see it as two separate buckets.
19:25bucket number one is 60 ,000 that stays preserved unless it's a real black swan scenario. And the other bucket currently has 25 ,000 of cash that you can draw from that's a bit more flexible, and it doesn't really have to be an emergency, and you can tap that 25 ,000 bucket at more of a sequence of returns day-to-day level.
19:51Paula Pant:Well, and that chains nicely into my last piece, which is different, but very congruent because this idea of sequence of returns risk, certainly keeping cash mitigates that, but there's something else that mitigates that, Paula, which is sequence of returns risk is not a primary risk. It's a secondary risk. What do I mean by that? I mean, And sequence of returns risk is caused because you are living too close to the safe withdrawal rate. It presents itself no matter what the safe withdrawal rate is, right? Sequence of return risk could present its ugly head. But generally, we get really worried about sequence of returns because we're very close to what that safe withdrawal rate is.
20:41Paula Pant:leading the charge on how much money you're going to spend in your retirement with safe withdrawal rate gives me hives. It's absolutely horrible because of the fact that if you begin your retirement analysis with how much money can I spend, and then you decide to bleed all that money, anytime there's, let's get crazy here. Gas prices go up. You're going to worry. anytime grocery price of X goes up, you're going to worry. Not like that would happen. Tariffs present themselves. You're going to worry. There might be Middle East conflicts, you know, never happen again. Never happens. You're going to worry.
21:20Paula Pant:You're going to become that old person that we all know that sits in front of TV yelling at it all day long because all these events they can't control are now consuming their life because of the fact that they're so dependent on this razor's edge when it comes to their spending. There's a reason why people get very worried about this stuff. And it's because their money depends on lower inflation. Stock price is continuing to go up. And when I heard your question, Cameron, this was the first thing I thought. If you back away from the, quote, safe withdrawal rate number, then your sequence of returns risk goes down because you're not as dependent on that.
22:07Paula Pant:So I believe that for any of us, it's important to look at sequence of return risk and it's important to know what that top amount is that I can spend, but don't start there. Start with almost, Paul, like you were talking about modeling out the what if. let's start off with modeling how much money you see yourself spending per year and then compare that to the safe withdrawal rate. 60 ,000. Yeah. And then compare that to your safe withdrawal rate, what the safe withdrawal rate would be. They've got a portfolio of 2 million. I think even there, I'm looking at a number that is significantly far enough away from any of the numbers that people use for safe withdrawal rate, Paula.
22:52Right. Because on a portfolio of 2 million, that's a 3 % withdrawal rate. to produce 60 ,000 a year.
22:58Paula Pant:It is far enough away that I don't think you have to worry a ton about sequence of return risk. But that really, really bothers me when I see people just flogging themselves to try to eke out another penny so that they can get a safe beyond that razor's edge of safe withdrawal. The problem isn't what we're solving for. We begin as money nerds by solving for more money. Let's erase that. Let's solve for more happiness. If we're going to be happy, if Cameron's going to be happy, it's not going to be being worried all the time. She called in because she's worried, right? Eliminating worry from retirement makes me pretty damn happy.
23:42Paula Pant:So I believe that building a buffer between you and safe withdrawal rate increases your happiness factor. And I'm not talking about what some of the money nerds talk about online where they're like, well, these people on podcasts, they're just going to work forever. So they want you to over save. That's not at all what I'm talking about. I'm talking about the fact that I see too many unhappy people out there, especially money nerds, and they're unhappy because of the fact that they're living this razor's edge. Right. Well, but in her case, again, portfolio of 2 million, living expenses of 60 ,000.
Read the full transcript
24:21So we're talking about a 3 % withdrawal rate. It's great.
24:24Paula Pant:It's great. Which was not a piece of advice, Paula, as much as it was kind of, for me, to wrap around all of this. This modeling, this scientific mathematical modeling of what if I continue the way that I am? What if things go bad? For a lot of us, especially in this community, doing that math helps calm our nerves a lot too. Right. But I think part of the nerves that she's experiencing is, okay, currently the portfolio is$2 million, but what happens if there is a market pullback and the$2 million portfolio drops to$1.5 million? Because in order to maintain that same$60 ,000, right, now you're pulling from a portfolio that has a valuation of only$1.5 million, and so suddenly that withdrawal rate proportionately is a lot higher.
25:18Paula Pant:But you're still safe. That's the cool thing. At one and a half, you're still safe. Well, at one and a half, you're at exactly 4%, which if you've gotten accustomed to being at 3%, it does feel uncomfortable to move from 3 % to 4%. Sure. But you were able to maintain your lifestyle and take a 25 % hit. Let's go through an Ibbotson chart of historical timeframes and look at how many times we've had to endure that with a retirement portfolio. There have been a couple, but those have been pretty extreme times. The last piece of it, though, you've endured a 25 % hit. And, Paula, go back to your first piece of advice.
25:59Paula Pant:You're still maintaining a cash buffer so you can continue for even longer. Right. Yeah, and that's where I think with the cash and T-bills that they have, the two-bucket approach paired with what you're saying, Joe, comes in handy. because if 60 ,000 of that 85 ,000 is just set aside as we're just not going to touch, we're going to commit to not touching this. And the other 25 ,000 is like, all right, if there is a month that's like, what was that? Liberation date in April when the markets tanked briefly. Jackknife. Right. Exactly. But then they recovered quickly. That's what that$25 ,000 is for.
26:42It's for these jackknife moments. Again, we talk about the vectors of severity and duration. For these moments where you have market volatility with regard to severity, but not with regard to duration, that's what the$25 ,000 bucket is for.
26:59Paula Pant:It strikes me too that there's also another way to solve this worry, which is a parachute that we have not thought about. We did think about it in one way, which was tiptoeing into retirement means you keep income streams. But I think a good habit to keep, especially during the early years of retirement, is to keep your LinkedIn profile solid, to keep your ability to make money solid, to know that if you have to go back into the workforce, maybe you don't go back with the same level of income coming in. but the fact that you maintain your ability to be employable or to bring in cash. So the next question I'd ask you, Cameron, if you were sitting right across from me would be during your retirement years, what would be your, what avenues would you have to bring in money?
28:01Paula Pant:Do you, do you have any of those? And if you don't, then I think that's another way to handle this. You know, much of the advice, even though it's a psychological question, much of the advice that we've given her has been tactical. And I think probably, Joe, you and I both come from the bias of doing more things that improve the reality of the situation has necessarily a spillover psychological effect. But to the extent, Cameron, that no matter what the spreadsheet says, this is really like a psychology question, psychology question. I would say form a group of friends who are in your same boat.
28:41So go to Camp Fi, Camp Mustache, if that's still happening. Hang out in communities like the Afford Anything community. Find communities both online and most importantly, offline. because the internet is full of who knows what. But when you actually meet these people face-to-face, everything changes. So form offline communities, travel if you must. In fact, that is what most people have to do in order to meet these communities. But form offline communities, IRL communities with a bunch of people who are also going through the same thing because that companionship and that friendship and that ability to maintain a WhatsApp group thread of a bunch of people who just get it, right?
29:37That is so critical. That might be the most important thing from the psychological level. Yeah. So thank you, Cameron, for the question and congratulations on everything you've built. Okay. We're going to take a moment to hear from the sponsors who allow us to bring you all of this at no cost to you. When we return, we're going to tackle a question about rental properties. And then after that, we're going to address a question on the rule of 72. Both of those are coming up next. If you want this to be a summer where you feel radiant and energized, don't just think skin deep, think cell deep. Prolon's five-day fasting mimicking diet is clinically shown to help stimulate autophagy, which is the body's own process of cellular cleanup, which helps you reset your metabolism, helps you lose fat, protect lead muscle mass, and more.
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32:40Welcome back. Our next question comes from Kate.
33:11that we pay in child care for our two kids. Our paychecks feel like they're gone before they even hit the bank. We do have a potential escape hatch, a rented property with a golden 2.99 % interest rate. If we sold it today, we'd net about$200 ,000 after taxes, and we're debating using that to pay our primary mortgage down to$100 ,000 to reclaim our monthly cash flow. Our stats show that our retirement is at about$860 ,000 across 401k, 403b, and IRAs. We have 529s for both kids at about $100 ,000 for each child, and our brokerage is at$50 ,000. My question is that, is it a massive financial blunder to trade a subsidized 3 % mortgage for a 7 % win to solve our temporary cash flow crisis.
34:09At 45, I'm looking at being 74 years old before this primary home is paid off. Does the math of avoiding 29 years of high interest justify losing a low rate rental, or do we just white knuckle it through these expensive childcare years and hope for a 15-year refi down the road sooner rather than later? Thank you for listening. Kate, thank you for the question. I'm just going to jump right in with the answer. And Joe, you know, I don't often do this because usually I'm like, here's how to, here's one way of looking at it. Here's the other way of looking at it. I'm not going to do that this time.
34:47I'm just going to jump straight in.
34:49Paula Pant:Oh, are you? Yeah. After taxes, if you sold the property, you'd net 200 ,000, but you owe 300 ,000. Your cashflow would not change unless you make up that$100 ,000 difference. No, it would. I think what she's talking about doing, Paula, is then recasting the mortgage somehow. Solving at this point for cashflow, not for term. Right. Without some change to the original mortgage, you would simply have the original mortgage with a lower balance. So yeah, you would have to either refinance that mortgage or recast that mortgage. You'd have to do something to that original mortgage. Yeah. I think she knows that, but I'm sure that a lot of our afforders are like, wait a minute, how does that change the game?
35:27Right. The other thing is you're likely going to do that anyway. You say you're 45 and you're looking at being 74 before the house is paid off. That's not going to happen because at some point in the next 29 years, interest rates are going to come back down. I don't know when it's likely not, it's almost certainly not going to be this year or next year, but maybe 20, 28, 20, 29, 20, 30, at some point, rates will come back down.
35:53Paula Pant:I don't know that though, Paula. 7 % interest rate when you look historically over long periods of time. Like, I don't, I don't know that. Like, I'm not gonna hang my hat on that one. Yeah. I think there's a decent likelihood. I think there's a good likelihood that rates at some point in the next 29 years. Come down to what? Six? Oh, we'll come down to below five. No. Oh no. Below five. Yeah. Yeah. Nope. In the next 29 years, You want to place a 29-year bet right now, Joe? I think over the next 29 years, that was a black swan that we had. That was a once-in-a-lifetime dealio. No, I'm not talking about rates going down to the two handles or even the three handles.
36:40I'm saying below 5%.
36:42Paula Pant:We're talking about like a 30-year fixed mortgage rate. Yeah, yeah, exactly. A 30-year fixed mortgage rate below 5%, so 4.99%. I would put the odds of that at a 10 % chance, 10 % chance. You want to make a bet? You want to, you want to place a bet right now and we'll find out who's right in 29 years. Yes. Dinner at a peasant. Oh yeah. Peasant is one of our favorite Italian restaurants in New York. Yeah. But, but are, I mean, me and Joe actually, because Joe comes to New York often enough that, that Joe and I have a favorite Italian place. Paula told me one time, you've got to go to this. The night before we were having our meetup last year, we went, then I tried to go again when Cheryl and I came and they'll let you make reservations for a date that is closed.
37:32Paula Pant:So I didn't get to go again. So I'm excited to go back and I'm excited for you to pay 29 years from now. I'm excited for you to pay. That'd be great. In the year 2055. I do agree with the fact that that mortgage term isn't the way it's going to end up. You're going to do something with that between now and then, like something's going to change. Yeah, exactly. It's very rare for anybody to hold onto a 30-year mortgage for 30 years. Well, then can I jump in right away then? Yeah, go for it. I've got twins. And I remember this phase of life where I felt like, oh my God, my money is all going out the back door.
38:10Paula Pant:And by the way, I can't tell you how much richer I felt when just potty training ended. Diapers alone, all of a sudden this money appears in my checking account. I'm like, what is going on? And I realized it was diapers. And then again, when childcare went away, oh my goodness. When my kids started kindergarten and we went to part-time childcare, I felt like I was the wealthiest person on earth. Like it was just amazing. And then again, when they started first grade. So I do think this is a short-term problem. I think this is a short-term issue. And I also look at, I don't know the details on the rental property, but I hear 2.9 % interest rate.
38:54Paula Pant:And I don't know what the cashflow situation is, Paula, but I am wondering, are we trying to take long-term assets to solve what is a short-term cashflow crunch? And I think the answer might be yes. Yeah, I agree. We're taking long-term assets to solve a short-term crunch. And again, unless that mortgage is refied or recast, it doesn't even solve it. Well, yes. And here's what I want to know. This is what I want to know because A, they are recasting the mortgage. So let's say they do that. They somehow create cashflow. Here's my next question. What are you going to do with it? Right. Yeah. What do you do with the added cash flow?
39:39Yeah. Yeah.
39:39Paula Pant:Don't get me wrong. It makes that nerve pinching. I get that. Like it makes that hopefully feel like it goes away, but, but here's the problem, Paula. I know people with millions and millions and millions of dollars. And if you ask them, do they feel cash crunched? The answer is often yes. Obviously. Yeah. I look at my net worth on paper. It looks huge. It looks great. I look at my month to month money and I'm like, I just don't have enough liquidity. Like, I don't know that they're, I don't know that I've met many people that on a month to month basis feel like they're rolling in it. Right. Everybody goes to the gas pump, no matter what your net worth statement says and goes, what the F's going on now?
40:26Yeah.
40:27Paula Pant:Like, are you kidding me? How is this happening? So when I hear the word feels, it feels like it is tight. I don't know that it's, that that's going to go away. Yeah. Cause, cause of what I'm not hearing from her is I'm not hearing it's so tight that we're starting to rack up a credit card balance. I'm not hearing it's so tight that we have gone into debt in order to buy groceries. Like I'm not hearing that. And I am looking at a net worth on paper at 45 years old that if you just do, I know we're going to do the rule 72 coming up here. So stay tuned everybody. It's going to get very exciting foreshadowing.
41:08Paula Pant:I know we're going to cover that in our next question, But just looking at where they're sitting now, they're sitting in a nice spot. Yeah. Yeah, exactly. They're sitting in a really nice spot. Exactly. I was just talking to a friend about this the other day, actually, about the distinction between net worth and free cash flow. because you can absolutely have a high net worth and still be shuffling money between accounts in order to make sure that you can pay the renter mortgage and the credit card balance and the electric bill and the storage unit, right? And then you're like, oh no, I didn't properly shuffle money between accounts at the right time.
41:48And then you get an insufficient funds notice. And like that stuff happens Even if you've got a super high net worth, that stuff still happens.
41:57Paula Pant:We talked about this on Monday, Paula, you and I on our live Stacky Benjamins recording. The flip side of this, which is why do people with huge cashflow still feel this pinch? People that are high earners, why do they feel like life is not great right now? So kind of the - Yeah, the flip side, the Henry, right? High earner, not rich yet. Right. Right. Well, and I think a point you might've made was there was a difference between having high cashflow and actually being wealthy. Now the cool thing is, is that they truly have a nice amount of wealth, which means you've been using your cashflow phenomenally well.
42:36Paula Pant:I think that part of the equation is going really well. But I think the squeeze that they're feeling might be also much more than childcare, Paula. It might be childcare plus the cost of everything else feeling higher. So Joe, it sounds like you and I are in the same boat. And Kate, again, the red flags in your question that I hear as far as like your mindset around this, you know, you talk about being 74 when the house is paid off. You talk about the math of avoiding three decades of high interest payments. You're not going to be 74 and you're not going to pay high interest payments for three decades.
43:13So I want you to eliminate both of those from your mindset, because no matter what, regardless of who wins the bet between me and Joe,
43:24Paula Pant:as to when I win it, when I win it, we'll find out in 2055. But regardless of who wins that bet, there will be some improvement to your current mortgage rate that will happen prior to 2055. Or she just starts putting extra money towards the mortgage. Right. Something's going to change. The other thing that strikes me too, Paula, is you're saying that about paying the mortgage off earlier than that. That's great. I think she should do it. You definitely don't want to have that cash flow crunch hanging over your head at that age. but that money is going into an asset that a lot of money nerds argue about whether you even included on your net worth statement or not because of the fact that you're putting money into an asset that if things go well you don't want to have to sell you want to sell because a lifestyle changes but you don't want to have to sell it for economic reasons taking a rental property and an asset that purely exists there to be on the net worth statement and to be a driver of economic security to move it into paying off an asset that people argue about whether you should even include it or not because you don't want to have to sell it also strikes me as not a phenomenal move.
44:53Paula Pant:Yeah. And the good news is I've been there. It gets better. The cash flow gets better. You You won't even believe how much better. Like I was, I was Paul for a while. I just, I remember it was a solid three or four months. I was like, oh my God, I can't believe how phenomenal my economic situation has been overnight just because my kids went to kindergarten. Hmm. Awesome. So Kate, hang in there. And thank you for the question. We're going to take one final break to hear from the sponsors who make the show possible. And when we return, we're going to address a question about the rule of 72. How do we use the rule of 72 as part of financial planning?
45:38Or do we? We're going to hear that question from Rebecca coming up next.
45:52Welcome back. Our final question today comes from Rebecca. Hi, Paul and Joe. My question is whether to incorporate the rule of 72 into our financial planning. If I were to apply the rule to our current retirement savings, it seems we wouldn't need to contribute any more to my 401k. And maybe we should just pay down debt. I'm not sure what is the best approach. We have$1.1 million in my 401k and$77 ,000 in a backdoor vault IRA. We also have$73 ,000 in our HSA brokerage account. I'm 47. My husband's 48. His work does not offer retirement benefits, but my company has a mandatory profit sharing plan that requires me to save at a minimum around$15 ,000 a year that gets deposited into my traditional 401k.
46:37So we treat this basically as if it was his 401k and have slowly increased our contributions to that plan. The last three or four years, we've contributed$20 ,000 a year. A few years ago, my company offered a Roth 401k option, which I switched to. Still, most of our retirement savings is in the traditional tax deferred bucket. Currently, only$125 ,000 of the$1.1 million is in the Roth 401k bucket. If we were to apply the rule of 72 and assume a 7 % rate of return, my 401k would grow to over 4 million in 20 years. We have a 2.75 % interest rate on our primary home. I know$183 ,000. We owe$436 ,000 on a vacation home at 6 % and two car loans,$14 ,500 left on one car at 4%, which will be paid off by next March.
47:24We also owe$44 ,500 on a new car at a 4.5 % interest. We owe four kids. Undergraduate school is covered for the oldest two. Our youngest two are 15 and each have$55 ,000 in their 529 plans. I'm still saving$3 ,000 a year for the twins. My company does not match any retirement contributions, and I would keep maxing out the backdoor Roth IRA and the HSA. We currently have about a four and a half to five month emergency fund. But if I were to lose my job, it would be financially devastating as I'm the primary breadwinner by a significant amount. Or should I continue to max out my Roth 401k to beef up the Roth leg of the retirement stool and just keep chipping away at the debt every month?
48:04Rebecca, thank you for the question. I'm a little bit torn, Joe, because here's what's going through my head. First of all, Rebecca, when you talk about rule of 72, it's a nice rule of thumb for actual retirement planning. I would want to model out something a little bit more specific. So I would go to a tool like Bolden or Projection Lab or any, there are a huge number of retirement planning tools out there, but I would use a much more comprehensive retirement planning tool. Rule of 72 is nice as a mental math shortcut, a back of the napkin mental math shortcut when you're in the shower and thinking about it or driving and thinking about it, but it's not an actual planning tool.
48:48Yeah.
48:49Paula Pant:I look at the wonderful amount of assets that she's built up and just committing this to a much more reasoned out financial plan versus the back of the envelope number, I think is just a great insurance policy. It's a huge insurance policy for really in the big scheme of things, not a lot of money based on the amount that is at risk if she makes the wrong decision. Right. If you use a tool and I'll use Bolden as an example, you can actually model out how the state that you're living in would impact all of your retirement projections. And if you were to move to a different state in retirement, how would that impact it?
49:33And you can actually model out how different variables impact this plan. So something like that, something where you're actually creating inputs around how you believe that you're going to live, that is much more effective than a simple back of the napkin calculation. That's the first thing I'll say. The second thing I'll say, remember that when we talk about return expectations, we're talking in nominal dollars, but your actual purchase price, a purchasing price parity is going to be inflation adjusted. So, for example, OK, you've got one point one million in 20 years. That doubles twice. So it doubles to two point two and then it doubles to four point four.
50:22That is back of the napkin rule of 72. But remember that 4.4 million 20 years from now does not buy what 4.4 million today would buy. Those are nominal dollars. They're not real dollars.
50:39Paula Pant:Well, because about every 18 years, again, using the rule of 72, about every 18 years, prices double. Right. Exactly. It would be more like the functional equivalent of having$2.2 million today rather than the functional equivalent of having$4.4 million today. That said, that still is a nice sum of money and there's a good chance that she is COSFI. But it does mean, I think, what you said earlier about using either a more rigorous tool, hiring a fee-only hourly financial advisor to do it for you. if you'd rather have somebody who uses those tools all the time and also has an opinion. I think both of those would be warranted.
51:18Paula Pant:Speaking of back of the envelope, Paula, I think there are some back of the envelope pieces of advice we can give her. Assuming that she's right, let's assume that she's right. My gut says that she's not wrong. I think she probably is what we call coast-fi. So she can coast in, not save as much money. I feel like her long-term, her family's long-term trajectory is bright. And yet there are things that she could shore up on the foundational side that I think would just make life easier. Number one, let's start with the long-term assets. She's worried about the fact that they don't have a ton of money in the Roth bucket, right?
52:00Paula Pant:We don't need every dollar in the Roth bucket. What we truly need is just enough that we can manipulate tax brackets in the future. So the way this works is you'll take out X amount of money up to the tax bracket line and then every dollar in the highest tax bracket, take that out of the Roth bucket. If we're just going to do that, we don't need every dollar in the Roth bucket. So I'm not as worried about that as I think she is. I think she probably has enough. If she wants to continue that in the future to some degree, do it because it can only make it better. But it's not a horrible situation, Paula.
52:35But on the short run, she's coast fi.
52:39Paula Pant:Her kids have nice sums of money toward their education plans, which clearly sounds like something that's important to her and her family that they do that. And she has car loans. Yeah. The car loans got me. I was like, okay, I don't know about paying off this car loan, but what I might do would be make sure these are the last car loans she ever has. Right. Yeah. The car loans got me too. And that's actually the reason that I said I was torn at the top of the answer. Because I don't know how I feel about robbing a retirement account. By robbing, I mean ceasing contributions to a retirement account in order to pay for a discretionary purchase that depreciates.
53:26And I don't mean that cars are discretionary, but a new car with a$44 ,000 loan is more car than you need, than you strictly speaking need. And that's where I get uncomfortable with the question because I understand the need for something safe and reliable that gets you from point A to point B. To that extent, a car that matches that criteria is a necessity. But the delta between the cost of that versus anything else, that is purely discretionary. And when we make a discretionary purchase, particularly one that depreciates, I don't like taking money out of retirement to do it.
54:09Paula Pant:No, what I think is great about having this car fund is, A, I found in my own life, I know that in my clients' lives, it becomes a game. And instead of this thought process that everybody has a car loan, the second my car loan's gone, I just go get another one. now the game becomes how long can I go like Cheryl and I have a lot of fun with how long can I go before I have to replace this car Paula I think when you were in town you rode in the Equinox like that thing that thing's gonna die any second yeah but every month I don't have to buy another one it's awesome like it is it is great that car cost me nothing cost me nothing and I laugh like I just did every time I even think about it.
54:59Paula Pant:So the gamification of this becomes interesting. Instead of being on this spinning wheel of, I always have a car loan, now playing the game of how much money can I accumulate in this fund makes everything else easier. Emergency fund, she talked about how they're so dependent on her income. A bigger emergency fund might be nice. Well, that car fund truly becomes a de facto extra emergency fund, like a second tier emergency fund. Because just because we have it earmarked for a car, there's no car fund police that are going to come after you if the situation changes. So I like that. Yeah, exactly.
55:40I've always thought of it as making a car payment to yourself. If you have the car payment mindset, cool. You just keep making a car payment, but you make it to yourself. But again, to the question of do we decrease retirement contributions? I mean, and I guess this is where I'm torn because in principle, I don't like it, but in practice, it does seem, and I want to see some actual modeling, but it does, at least on the surface, seem as though they have enough in retirement accounts that they could do that, that they could back down on their retirement contributions and redirect that to more discretionary expenses like a car.
56:16Yeah. So in practice, my answer would be yes, actually, even though in principle, I'm not a fan of it.
56:24Paula Pant:But once you have that foundation built and that motor's running, then who knows what's next? That motor's running. Yeah. Good stuff. We concur again. What's up with that? Wow. I always hate it when we agree. It is annoying. It is so annoying. Thank you, Rebecca, for the question. And congratulations on what you've built. I'm betting once you run this through some more rigorous financial software, I'm betting you'll see that you're Coast Fi. Yeah, I think so too. And if you're not, you're really close. I think your gut is right on. Yeah, exactly. And Coast Fi, by the way, for people who don't know that term, just means you have maxed out all of your retirement accounts and you can now coast.
57:08Joe, you and I are our mutual friend, Andy, Andy Hill. He was a guest on this podcast. He talked about the fact that he and his wife, they're in their early forties. They have, what did he say? 500 ,000 or so, but also a fully paid off house. And so with 500 ,000 plus a fully paid off house, they're kind of done making retirement contributions and now focused on other things.
57:33Paula Pant:Keeps his overhead really low. Right, right. You know, if you think about, and I'm saying this, Rebecca, not for you, but for the sake of everyone who's listening, if you conceptualize that the amount that you contribute to retirement every month is essentially a bill, and it's probably your biggest or one of your biggest bills, right? If you're maxing out a 401k, I mean, that's nearly two grand a month if you're completely maxing it out. So to have to come up with two grand a month on top of your mortgage and child care and everything else, it's a lot. And so if you can eliminate the retirement bill, it frees up a lot of cash for other things.
58:16This goes back to our earlier conversation about the difference between net worth and free cash flow. So that's the beauty of being Coast Fi. And Rebecca, I'm betting you're Coast Fi. And that does mean that you can back off of retirement contributions. But I want you to use something more rigorous than the rule of 72 to arrive at the answer. Oh, Joe, I think we've done it.
58:41Paula Pant:What great questions. I love these financial planning questions. They were also questions that showed how much the emotional game plays a part in our decision making, in our fears, in our ability to sometimes move forward. Right. And the different ways that we handle that. The longer I do this, the more I think that truly is the important part. And while science may lead you one way, handling it in a way that acknowledges that you know yourself and you know what you're going to do and what you're not going to do may beat science. Right. Well, Joe, where can people find you if they would like to learn more?
59:23Paula Pant:Well, you know what? Let's not talk about me. Me, me, me, me, me. Let's talk about my co-host OG and our frequent contributor CFP Anna Allum. They have made these financial basics videos on our YouTube channel, but one of them, Paula, they get really scientific about how to build your emergency fund. What's interesting is it's a point system based on how stable your work is, how stable your life is, what's the chances that you, so you begin assigning some point values. So OG begins my co-host in his very OG typical way that the way we all do it is stupid. That is OG terminology. That sounds like him.
1:00:02That totally sounds like him.
1:00:04Paula Pant:Yes. And here is a better way. So go to the Stucky Benjamins YouTube page and you'll see the second line down our financial basics series and look for the emergency fund, how to build your emergency fund in a more scientific way. It's a five minute video and I think you'll really enjoy it. That sounds awesome. I can't wait to watch it. It is fun. If you like people being salty, you'll enjoy my co-host OG. Excellent. Well, thank you, Joe. And thanks to all of you. If you have a question that you'd like to ask us, affordanything.com slash voicemail. That's affordanything.com slash voicemail to ask your question.
1:00:38If you want to chat with other members of the community, affordanything.com slash community. If you want to check out Bolden, go.bolden.com slash affordanything. We chatted about that in Rebecca's answer. Uh, we, well, you know, I'll, I'll leave it there. That's three URLs. That's enough.
1:00:56Paula Pant:More in the show notes. More in the show notes. Well, thank you so much to all of you for being afforders. If you enjoyed today's episode, please share it with friends, family, neighbors, colleagues, your retirement software creator, and your friends from camp five who you're about to neat when you go hang out with five people. Oh, or when you go to affordanything.com slash community. Yeah. Duh. Just because we can't have enough URLs. Yeah. No, that was one of the original three. Oh, good. Yes. Forwarded to your favorite URL creator. And share it with the people who help you recast your mortgage.
1:01:37Paula Pant:Oh yeah. Yeah. That's a good one. Share it with the person who sells you diapers. and the person who runs your child care and the other parents who are there as well yeah because they're feeling the same pitch yeah exactly that is a universal share it with all of those people and more because that is the single most important way that you spread the message of f double i r e if you enjoyed today's episode and i hope you did open your favorite podcast playing app. Make sure you've hit the follow button so you don't miss any of our amazing upcoming episodes. And while you're there, please leave us up to a five-star review.
1:02:16Write a few words. Tell us what you enjoy about the show. Thank you so much for being part of this community. I'm Paula Pant. I'm Joe Salcihai. And we'll meet you in the next episode.
1:02:30Paula Pant:I'm going to use the restroom and get an Apple. You're going to buy a laptop? up. Yeah, just she's here all week after show. It's all that comedic training.
From the publisher
#720: At what point does making the “right” financial decision start to feel emotionally harder than the math itself?
Rebecca: is wondering whether the Rule of 72 means she can ease up on retirement contributions—or whether continuing to max out her Roth 401(k) is still the smarter move despite multiple mortgages, car loans, and college savings goals.
Kate: feels trapped between the math and psychology of homeownership. A low-interest rental property could be sold to dramatically reduce a much larger 7 percent mortgage, but she’s struggling with whether giving up that “golden” loan would be a long-term mistake.
Emily: is now just a few years away from early retirement, but after watching his net worth grow rapidly during the bull market, he’s finding that the closer he gets to financial independence, the harder it becomes to emotionally trust that he finally has enough.
Resources mentioned:
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