Mortgage Rates Jumping from 4% to 8%: What Should This Investor Do?

25:11But it's something that if it would allow us to go, then I would take it. And it would just be a lot of prep work to get the place ready. I guess if I look out, let's forget the primary residence. If you do not grant out your primary residence. And you just took, you said, can I go on a sabbatical today? We've got a hundred grand in cash. We've got 30 grand in rental income. And that's going to go down by about$5 ,000, $6 ,000 a year after the interest rate spikes. So you could do the sabbatical right now, presuming you could return at the end of it to work. I'm trying to find ways to feel better about the sabbatical because I think that's really what the problem here is you're not feeling great about it, even though the numbers clearly suggest that you can take it.

25:52What's your thoughts there? Well, some of the money that we have there are our reserves. So I feel nervous about counting those, you know, in the$100 ,000, you know, there's reserves for rental properties and for life. And I was raised very middle class with a frugal mindset. And so I have more of a scarcity mindset than an abundance. I feel like that number could be 200 ,000. And I might say the same thing. Also, like with paying off the college rental that we've been talking about, would I take all my reserves to pay that off? So you've said that you have a lot of reserves. What is, and I don't need this answer right now, this is more of a think for yourself thing, but what is the lowest amount in reserves that you could still sleep at night?

26:40If you went from $100 ,000 to$50 ,000. Is that too much? And think about your rental properties. What's the condition of the roof on each of the rental properties and the furnace and the air conditioner and the appliances and the water heater? If everything is super old and needs to be replaced very soon, then maybe that$100 ,000 is exactly what you need. But if everything is brand new and got replaced last year, then maybe the$100 ,000 is unnecessary. So start to think about the condition of the house. And do you know of any repairs that are coming up? And subtract those. I don't know the cost of a roof in your area, but the cost of a roof in my area is$15 ,000 to$20 ,000 if you're paying it yourself and like$30 ,000 or$40 ,000 if you're going through insurance.

27:32Thank you, roofing companies for having the two prices. But a water heater is like$600. I can find somebody to install it to you for a cool$3 ,000. But you could also DIY it. So it sounds like your husband could be handy. You could be handy. These are things that you could do yourself. But back to the original question, how much of these reserves could you throw at that house? Or could you put towards your sabbatical? That's definitely something I need to sit down and think about some more. The houses are older and we've slowly been replacing little pieces, but I do anticipate some bigger expenses like some heating units in the next five-ish years, which could be pretty big.

28:14Yeah. Get lots of quotes. Talk to people that you know in the area and see who they are using. You can get a quote for$5 ,000. You can get a quote for$25 ,000. Don't go with the$25 ,000 guy. Heather, tell me about what these reserves mean. We see on your assets tab,$124 ,000 in cash. Does that include your reserves or your reserves tracked separately from that cash position? That does include my reserves. Okay. And is$100 ,000 roughly the number that makes you feel pretty comfortable with your position for your household and your rentals in a general sense? Yeah, it could probably be less. I mean, we have some like frugality muscles that we can flex if we need to.

28:57We might not want to, but we definitely could. But yeah, it could be a little bit less than that probably. I like to keep at least 15-ish thousand per property. And that's a great amount, but 15-ish thousand per property is 45 ,000, leaving you with an extra, there's no such thing as extra money, but leaving you with an extra 55 ,000. If you paid off the rental, your annual cash flow would be about$30 ,000 from the rentals, and you're spending$64 ,000. If your sabbatical's in Alaska, Alaska's not cheap. How expensive is Alaska? How much is a sabbatical going to cost you? Well, I don't exactly know that yet.

29:35We're definitely thinking about flying there and then renting a camper, you know, going out into the bush and doing kind of some camping and whatnot. But I don't know. So I've said in my head thought like maybe 10 grand. Okay. I don't think that's nearly as expensive as what Mindy was thinking. Maybe it'll be more. Yeah. So I think you should price out the travel for that. But a$10 ,000 sabbatical is not going to be a challenge for you in this situation. The issue is going to be how long do you want to do that for and how much income are you going to give up in the meantime? Yeah, that a lot of it will be dependent on what my work decides if they let me take more than a month or not?

30:17Yes, you can do your sabbatical. You're going to miss one month of income. Certainly you can do one month. Certainly you can do two months. If you're going to take a year off, then we maybe have to just be a little smart about our position, but you could even do that based on what you're talking about here. Your expenses may be lower on the sabbatical, what you just described this, than your current life, aside from the plane ride out there and maybe that rental in there. And you could offset a big chunk of that if you decided to rent out your primary. I was thinking sabbatical meant six months.

30:49And at six months, now we're having a big income offset. And that's where I would consider renting the house. But for a month, you can do that right now if you want it because your position is so strong, even if you have that interest rate jack up. Let's unpack that position because it's not a financial problem that we're running into. I can tell that immediately from the numbers here. It's something else that's that's giving you some challenges about taking the sabbatical. What do you think is underneath that? Like I said, I think I just have a scarcity mindset. Even though on paper, it looks good.

31:17I still feel like we don't have enough. I'm not quite sure where it's coming from, to be honest. I think it's really hard in personal finance. And I find this problem with myself too. I do this podcast all the time and talk to people about their money and I can look at the numbers and find patterns all day. And then I have the same problem you're having with my own personal wealth and personal spending and portfolio. It's just so personal. And there's so many ways to doomsday it, how things could go wrong or how things could go poorly. Maybe a way to flip this problem for you is to say, how will I feel in 10 years if I don't go on this sabbatical for the way that I want during that period?

31:52And how will I feel if I do and our wealth drops 50 grand or whatever it is? But it sounds like you really want to do this. And everything points to, of course you can do this and it's no problem. And regardless of what you do with this interest rate in this property, there's nothing really stopping you. You could do it this summer and next summer if you wanted because you're only gonna miss a month of income. I would imagine, and look, these are things to talk with your employer, but with your part-time work, I have a hard time believing that there wouldn't be more shifts or opportunities for you upon returning from that.

32:23Your husband seems like he controls his time and his business almost entirely with great flexibility. And I imagine that even in a worst case scenario where you need to build it up, there's an opportunity to do more hours for a month before or after to make up big chunks of that income. But like those there's so many levers here for this. That makes me feel really confident that you guys can be able to do this. I don't know. Are you seeing the same thing, Mindy, from your view or am I being too optimistic? Well, I think it's funny that the tables have flipped. I'm usually the one that's more optimistic.

32:54I just really think that Alaska is very expensive. But yeah, I like what you're saying, Scott, about if you're taking off the month of June, work a little bit more in May and work a little bit more in July to kind of make that up. I mean, I'm not talking smack about your work life. You're doing awesome with it, but you're only making up eight to 10 days. It's not like you've got to make up, you know, 30 days in two months when there's only 30 days in a month, you know, especially if you were willing to kind of buffer it on either side. You're only adding four or five days per month on either side of a month-long sabbatical.

33:29I did run a really quick, how much does it cost to rent an RV in Alaska? And it looks like it's$270 a night or about$10 ,000 a month if you're going for an entire month. So I would start shopping around. I just grabbed the first site that came up and ran the numbers really quickly. But where are you going to stay? if a RV isn't going to be the right choice. Like, do you have an RV? Could you drive up there? I don't know how long it takes to drive up there. I'm not outdoorsy anymore, but food is expensive up in Alaska because everything has to be shipped in. You know, I just, I want to make sure that you do enough research so you don't get up there and be like, oh, we can only stay two weeks now.

34:11Get the whole experience that you want. I do think that it's possible, especially if you're going to add some time before and after you come back. Like if you could do this without losing any income from your job, how awesome would that be? Here's, I think, the homework order of operations I would suggest for you, since this seems like the big goal. Is this the big goal? Is this what you wanted us to go over today? Can we do the sabbatical and be fine despite this rental property balloon come and do? Yeah. I think I'm wondering what I should do about this rental property and looking for some reassurance that maybe we can take a sabbatical or I don't know, should I sell this rental and do something else with the money?

34:49The hypothesis I'm now settling on for the two of these and subject to yours and Mindy's input is for the sabbatical, define what the ideal trip looks like, price it out, see if there's tweaks you can make to the schedule or the shopping of that to bring that price down. And then you'll know how much it costs. Then talk to your employer and say, what does this look like? Can I take on extra shifts in the months before and after from other folks or whatever to ramp up to this? Will this be okay? What's the situation going to look like on my return? How can I do that? And get a realistic answer for them.

35:22That's a totally normal thing for someone to want to take a big trip like this. And your employer hopefully give you a straight answer. Hopefully it's the one you want. Yeah, go ahead. Take two months. No problem. We'll be here when you get back. If you want a couple extra shifts, so-and-so will want them at that point. Maybe they'll take a vacation two weeks before and so-and-so will take them to it. I don't know. There's a best case scenario where that works out pretty well. And then you'll know those two numbers. On the rental property, I think it's what would you do with the proceeds? If there's another investment you can make with this$115 ,000 in equity, let's call it$95 ,000 after transaction costs and some depreciation recapture, you're in a relatively low tax bracket.

36:01So that hopefully won't be too big of a deal. But what would you do with that 90 grand that you'd clear on selling the property. And if you have a good use case for that, then you should sell it. But if you don't have a good use case for that, then you can make it a two or three year project to pay off the mortgage. You don't have to use all your reserves in the near term, but you can begin applying those proceeds in there if you feel like that's the highest and best use of your money to pay off a seven and a half or 8 % mortgage, which I think is very defensible. Some people will argue with it.

36:29There's going to be camps on both sides, but it's not an irresponsible decision in my view to pay off a mortgage at that rate after it gets in there. I'm going to try to refinance it if I can get 100 basis points lower than the rate it will jump to. But those would be my two hypotheses for you for this. Do any of those register or how are you feeling about them? Going back to the paying off the rental property, it's just not something that I even considered. So it's an interesting path that I'm going down. Obviously, I still have to refinance it at this coming up this summer. And so would it be worth it to look into a 30-year fixed dropping a point or whatever and refinancing it and then still paying it off with the cost of that?

37:10Or should I just let it in the DSCR kind of go through that process? Because there won't be the extra fees and let it go to the 7 % or 8 % and then start paying it off if that's the thought. I think it's a shopping process. I imagine you're going to get a rate that's very close to six and a half. You think that's right, Mindy? Six and a half for a 30-year? On a DSCR loan? No, no, no. If she were to refinance it with a 30-year fixed Fannie mortgage. If I qualified, I don't know. She might not qualify for that. Do you have a relationship with a local bank? Not a big chain, but like a little small bank or a small chain in your area.

37:50And if you don't, I would start one. They will frequently keep a loan in-house or they have different loan properties, different loan products that they can work with you on. And every little bank is different, but we're talking about$180 ,000 that you can refinance into something else. Maybe if you bring all of your mortgages to them or you bring in all of your bank accounts with them, maybe they have a different product. I would start talking to local banks first. You don't have to refinance until fall of 2026, or that's when the loan changes. I would start talking to everybody right now. Don't wait until fall and then start talking.

38:33Talk to people and see what the options are. Maybe there is nothing and maybe 7.5%, 8 % is the best you're going to get, but you won't know until you talk to people. So I would start shopping around frequently and see what it would cost. Like, what is my all-in cost to refinance this loan? Like, do I have to buy down points and all of this other stuff? But if you could get a 30-year fix, that's way better. I think you're looking at six and three quarters, 6.75 %-ish, if you have excellent credit for a rental loan of this type, which is modestly better. And to your point, you're going to have a hard decision, I believe.

39:06It might be fairly close on a loan of this size, whether you should just keep the DSCR loan in place at the higher interest rate or refinance because of the cost to refinance. My guess is it will be slightly favorable over 30 years to refinance to the 30-year. but if you decide to pay it off quickly either way, the fees of refinancing may eat into some of that. So that'll be like a pretty close call or reasonably close. You have to turn on your brain and do some number crunching to figure that one out. But I think your instincts are right there. But I also think you should shop it. There's no reason not to, to see what that could look like.

39:39Maybe it's much better. Maybe it's a clear win for you and it changes the math on paying it off early. If you decide to sell it, then you're gonna have depreciation recapture, which is gonna be ordinary income on the property plus a capital gain. on the property as well. So you want to factor those into your taxes, and that may change how you save in the next year in terms of your 401k, your HSA, if you have one, other pre-tax considerations in there. So you're very tax efficient with the way you've structured your life and income. So it may not even be that big of a deal when you go to sell this property, but it might be worth checking it out with an AI or a CPA to figure out what the consequences there could be on this property.

40:17Yeah. My accountant, we already talked to him about it, And he did suggest that if we do take a sabbatical and 27 to wait and sell the property next year, just because it's mostly my husband's income that will be the biggest impact. My income, like we're going back to the time for me, I can definitely pick up shifts before and after, but it'll be my husband's income that'll be the main piece that'll be going down quite a bit because he'll be gone during the busy season. And he said, and my accountant said in 2027 would be the best time to sell the property if we decide to sell, which makes sense.

40:55That makes sense to me. If we did decide to sell, my thought was with the proceeds with that was to apply that to the short-term rental loan, mostly because that is the biggest headache of a property for me. And if I could make a little more money from it and then take that money to offload some of my mental load is the thought. We live in a rural area, so finding someone to help manage the property would be a challenge, but it would be doable. Right now, that property just barely breaks even. Oftentimes, the other properties are subsidizing it. I think there's a strong case for doing exactly what you say if you sell the property and paying off a short-term rental.

41:33People are going to hear the headline number of 5.5 % for the interest rate on that mortgage. But the 10-year term is probably causing you a lot of stress. It's a big burden on your cash flow. it's the single biggest expense line in your whole life right now, from what we can tell. And so that's what's really the problem there. And I think there's a strong case for that, for removing those large fixed expenses that are going to recur for a while. If we pay that off, now we've got this property generating$1 ,000 to$1 ,200 a month. If there's no mortgage payment on that property, is that right? That sounds about right, yeah.

42:08One thing that stood out to me on the short-term rental is the$2 ,100 in monthly expenses. Is that right? Is that the real number for this? Yeah. Just operating expenses in a short-term rental are crazy high. Here's my problem with your short-term rental here. The Collegetown rental is worth$300 ,000, has$2 ,600 in long-term monthly rent, and$600 in expenses that you estimate for$2 ,000 a month in cash flow or$24 ,000 a year. The short-term rental, if I remove the mortgage entirely, brings in$3 ,300, which I assume is seasonal and lumpy in the first place, and then has$2 ,100 in monthly expenses for a total of$14 ,000.

42:46So this is a much, much poorer investment than your long-term rental. What would you get for long-term rents if you were to do this as a traditional rental to a neighbor that you liked, if you were cautious and careful about it? Not enough, I don't think. I don't know. Maybe$2 ,000, maybe. It's not really set up for long-term living either. We would have to do quite a few upgrades. It's a bit of a cabin in the woods, so there's no washer and dryer. Yeah. Okay. But let's say we got$2 ,000 a month. Your expenses would presumably go much lower, like three, 400, 500 bucks a month, because you're going to be self-managing this thing because it's right next door.

43:25If you got 2 ,000 bucks a month for this property, and then your expenses dropped from 2 ,100 to 500 or 600 bucks a month, now all of a sudden we're much closer to your college town rental and you actually increase your cash flow because your expenses in the short-term rental are killing you. And you might have a more pleasant existence as well because you're not having to have folks coming in and losing the key or getting lost in the dark, checking in. I don't know if that ever happens to you at this place, but you should run that analysis, I think, and do that work because maybe this is just not really meant to be a short-term rental and you can make more money with less stress.

43:57Yeah. It's a thought. Someone would be living there all the time. And so We kind of bought the place in interest of privacy, but maybe for the right tenant, I should look into that. When spring hits, some people suddenly just want to declutter the garage, clean out the closets, and get everything all organized. Whether or not that hits you, Monarch will do your financial spring cleaning for you. One dashboard gets your entire financial life organized. No more clutter, no more mess, no more scattered logins, just accounts, investments, property, and more all in one place. One of my favorite parts is the Sankey diagram.

44:32Every month I open it up and literally watch the flow of money. It shows exactly where every dollar is going from income to all of my spending categories. It makes it so much easier to spot what's working and what needs tweaking. Get your first year of Monarch for half off just$50 with the promo code POCKETS. Use the code POCKETS at Monarch.com to get your first year half off at just$50. That's 50 % off your first year at Monarch.com with the code P-O-C-K-E-T-S. If you've been putting off life insurance, I get it. The old process was miserable. Phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you'd pay for.

45:09That friction is exactly why so many people who should have coverage don't. Here's what I believe. Most BP money listeners need term life, and the right move is to build a ladder. A few term policies of different lengths stack together so your coverage steps down as your mortgage shrinks and your kids get closer to being financially independent or you get closer to hitting your financial independence number. The thing that makes that practical now is Ethos, a platform that helps you find life insurance all 100 % online. Same-day coverage, no medical exam. You just answer a few health questions online.

45:40Up to$3 million in coverage, some policies as low as$30 a month. So building a two - or three-layer ladder that used to take a month of appointments is something you can knock out before your coffee gets cold. Get your free quote at ethos.com slash bpmoney. That is E-T-H-O-S dot com slash bpmoney. Application times may vary and rates may vary. This property says it's a cabin on 40 acres. Is there a way to kind of carve off some of those acres that are like on the other side of your house so that you like maybe you could sell a little bit of it and keep the part that's close to you to offset some of this expense?

46:21And since this is a contract for deed or like seller financing, does your seller allow you to pay down the mortgage early? They do allow us to pay it off early and we're in good relations with them, but I wouldn't be able to sell off a part of it until we paid it off. We don't technically, it's a contract for deeds. We don't technically have it in our, we don't have the deed to sell. It's something that we've thought about before. We do really like the land. We have trails on there, and my husband goes hunting, and my son trompses around in there. We've sort of thought about that and also set that aside.

46:57I don't think that works. Okay. Okay. I do think there's something here. We have a non-financial reason for buying this. And this is your situation, so I'm still trying to process it. But to me, being a long-term landlord, somebody that you like and set clear rules about the use of those 40 acres with beats having a smattering of seasonal short-term guests every day of the week. and the numbers may justify it because your expenses may come down substantially. There's no cleaning fees for a long-term tenant except for when they move in and move out. To me, it seems like something to consider, but I'm not in your position.

47:34It seems like there's something else underneath there that in the realities of this situation are not congruent with what the numbers seem to say. I definitely am interested in looking into the long-term tenant thought. If I could get$2 ,000, then the expenses are less. I just, a lot less mental load on me would be great. The short-term rental is just a lot to deal with. The next question I'd have is you have a$139 ,000 contract with the seller here. That's basically a 10-year mortgage, right? 10-year loan on this property. You can pay this off anytime, it sounds like. So if you were to refinance it, let's go back to our refinancing question here and get a six or 7 % mortgage.

48:14Your payment would come down considerably, even as your interest rate comes up. Or you could even maybe do a 15-year mortgage and still come out way ahead. So a 15-year, I'm seeing 585 for interest rates right now at 760 for a primary residence. So that might come up a little bit to 6%. But going from 5.5 % to 6 % and moving from a 10-year to a 15-year mortgage might change the calculus a little bit. So something else to look around with is what can I get for mortgage rates for this property if I wanted to refinance it? And how would that change my cashflow situation at 15, 20 or 30 years? That's another consideration for you to think through.

48:52I like that, Scott. And also, if you got this as a primary residence loan, you'd have to move into the cabin for a year, but then you could rent out your current house while you're living in the cabin for a year and then move back to your current house and either rent out the cabin or not. You've satisfied the primary residence requirement of living there for a year. All options. Then you got to change addresses there. So that's a real, that's another, all your mail goes there, change it back. So you got to really like your neighbor that you select on the long-term rental side if you want to do it.

49:24But I think you've got really good options. And I think at the highest level, I would just zoom out and say, man, you guys have a wonder, what that seems to me from my suburban home near Denver, just an awesome, unique, wonderful life situation. You guys are millionaires. You have multiple properties. You've got multiple cashflow streams. You've got work that can flex up and down. Your worst case scenario is something goes wrong and you have to get like a full-time job. One of you, one of you has to, you know, in there, you can, you definitely can take this, this sabbatical. I think that a lot of the problems are stemming from homework that you just need to do.

50:06When you do your homework, it's going to feel way better because you're going to have your Alaska trip priced out. Maybe you can get credit card points to get those flights, you know, over the next year. and bring that cost. Or maybe that actually funds your RV as well. Or maybe there's something you can do there for the camper. You've got refinancing options that you just haven't explored yet. So you don't know what those options are. They may be way less scary than what we've talked about today when you actually go and do that homework. And I think you've got the cash flow. If you take your $100 ,000 to$125 ,000 in cash that you've got right now, I know it's moving from day to day.

50:36And then you've got your$45 ,000 to$50 ,000 you accumulate when you're not on sabbatical. That's a serious amount of cash over the next three years that you can deploy to solve some of these problems here. And if you think about that$250 ,000, the next three years of cash flow, plus what you've got now, if you think about it in that sense, the strategic level, that will help you, I think, really decide how to deploy it and will make a lot of these problems less scary. That's my overarching thought process on your situation. And I think the punchline is you can absolutely do this sabbatical, assuming that your employer will take you back once you get back from it.

51:08That's the big, big question mark. I can't imagine that the answer is no for a reasonably length one. Four weeks of PTO is the short end of it. And that's still probably a really nice trip. But I imagine you can get longer with the way you've got this set up. So I think it's homework. I think you've got a checklist of homework and designing that experience. I won't repeat myself, but I think it's a checklist of homework. And I think you've got all these options. And it's just a reframing to an abundance mindset. Which is hard to do when you have lived a frugal life. I can attest to this. I'm trying.

51:36As we go through it more, I think there's just a lot of different options. Talk to local lenders and see what sort of refinancing you could do if you could get out of that 10-year term. I really like that, Scott. I didn't even think about changing that out. It's easy to get locked into that, oh, well, I've got a 5.5 % rate. Therefore, this is the only option for me. And a higher rate for a much longer term is still going to bring your price down to the point that maybe you don't have to rent it out all the time. time maybe you can rent it out once a month or an average of once a month and that would still generate enough that you're okay with the hassle because it's not so much hassle it's not all these people all the time.

52:18Scott brought up a lot of different ideas that you might not have thought about so now you have to go think about those. Yeah I definitely have some homework to do and like you said just contacting and finding these about refinancing and just getting the numbers on paper so that it doesn't feel as scary. I absolutely know that I can take a month off from work already, like right now, and just trying to convince them to give me a little bit more would be nice. And having the actual numbers for the Alaska trip written down would be helpful. Because, I mean, you've got a year, essentially, till your Alaska trip.

52:51You could pick up a couple of extra days every single month from now until then and completely cover all of the missing money without really making your life that much different. Yeah, that's true. Yeah, I think you got multiple ways to go about it. I don't know your employer and your relationship there. You do. But I imagine that you can work that out with your employer directly. That might be the easiest answer. It might be, sure, you might as well have that conversation. It might be, sure, but, you know, and then maybe there's a conversation with coworkers and you plan that out with, you know, folks you like and say, hey, can I cover some shifts for you at various points?

53:25You know, I want to do this. This is really special. Could I, or something. I imagine that that's going to be something that's a possible conversation to some degree as part of that. Another one is, is there competition? Can you get another job in the worst case scenario? Like, is there an alternative? Yeah. I mean, worst case scenario, I for sure am very employable, but I have such a great setup with my part time work and working in a wonderful unit, labor and delivery. me. So, well, yeah, those are all questions to explore. And, and I think that as you do your homework, a reasonable solution is extremely likely to emerge here.

53:59It gives you a very close to what you, what you want here. And I think you're going to stay rich and get richer either way, because you've, you know, designed something very, very effective here with your portfolio, you're spending your overall life and just congratulations. There's not going to be a lot of millionaires in the country that have your day-to-day lifestyle, the week you just described in terms from a workload perspective. It's really smart strategy that you've brought to your life to get to this point and have this wealth and this optionality. We got one of you guys working a six-figure job.

54:28So congratulations on that. And it's really impressive and admirable. Thank you. I think a lot of people are gonna be jealous. Yeah, you're in a great position financially. And how old are you? I don't even think I asked. I'm 44. Wow, okay. I didn't get that when I looked at your face. Oh, thanks. I'm thinking 35. I get to spend a lot of time outdoors in working on my health with all my free time. And so, and I have very good genetics. Fit five. Fit five. Well, Heather, hopefully this was helpful here. I know we just basically gave you more homework here, but hopefully there was a couple of options and we look forward to hearing about your sabbatical a year from now, the wonderful pictures and memories you have there and that your wealth grew throughout your sabbatical.

55:08I think it's going to be the base case there. Unless the market, you know, takes a dive, but you're not even heavily invested in the market. So I think you're going to be in great shape. And it's a planning exercise and you can well, well within your capabilities to pull this off and not have it even be a dent in your financial position. All right, Heather, thank you so much for your time today. This was a lot of fun. I appreciate you sharing all of your numbers with us. And I want to hear what your homework says. So don't forget to check back in. I definitely will. Okay, Heather, thank you so much.

55:36And we will talk to you soon. Thank you. All right, Scott, that was Heather. And that was a really interesting situation. I really loved how you gave her some ideas that she clearly wasn't thinking about. Oh, you've got this seller finance loan. Why don't you see if you can refinance that into a 30 year? You might go up in interest payments, but you're still going to have a lower payment monthly. So that's less cash coming out of her pocket and maybe even making that a break even or positive cash flow property than the one that's currently losing money. I really like how you think outside side of the box.

56:12And now Heather has a lot of homework to do. Yeah. I mean, look, like a longer term mortgage reduces your risk, right? Because the payment is lower than the short term mortgage. So every single person who has ever taken out a 30 year fixed rate mortgage has made that same decision. It's just harder when you already have a mortgage in place to the mental gymnastics to go up in interest rate from that current rate to the longer duration. But it's the same thing as if you're buying a property with a 30-year fixed instead of the 15-year fixed, right? I mean, these are the decisions that real estate investors make all the time.

56:46And I think it's what reduces my risk? What drives my returns? How am I going to balance those two things? And in this case, it's pretty tough to have a big fixed expense hitting monthly. That is the biggest line item in your budget when you can refinance out of that or potentially pay it off. And so I find this endlessly fascinating. There's the mathematically pure and optimal approach to building wealth. And then there's what actually makes you feel good about living a lifestyle that involves a little bit of part time work and a job that you enjoy with people you like. And most days of the week, hanging out, doing exactly what you want in the woods.

57:20That thing, there's a difference between those two things. And that's what I think is so endlessly fascinating. And why I love doing this at BiggerPocketsMoney so much. Yeah. Heather and her husband have set themselves up in a really great position. They're living intentionally. They're essentially doing what they want to do. And I think that they just needed a separate set of eyes on the situation, which you provided. I really liked your solution, Scott. I am super curious to hear what she comes up with. I love it. Okay. If you want Scott and my eyes on your finances, we are always looking for Finance Friday guests.

57:55You can email Mindy at BiggerPocketsMoney.com. You can email scott at biggerpocketsmoney.com or you can email our producer Blake at blake at biggerpocketsmoney.com. And we have even more financial independence information on our website. Visit us at biggerpocketsmoney.com. Scott has been frantically creating new spreadsheets and new resources for you. He's got a couple of new calculators out. Scott, you're really quite the busy little bee over there. I'm having so much fun. The AI just gets so much better. So it allows me to vibe code these apps. I built this income tax projection. You can go there in the resources tab at BiggerPocketsMoney.

58:33You go to 2026 tax projection app, and you'll be able to enter in all your different types of income and get a full calculation showing how it all stacks, long-term capital gains stack, whether you go over the ACA subsidy cliff, all that kind of stuff. So please give me feedback on there if there's an error. I try to show all the work. So there could still be errors there. But if you find one, let me know and I can easily make an update to it. But that's free, no login or anything required. There's no ads or anything on it. There's no data stored. It's just all local. That's how crazy AI is right now.

59:02Oh, and another thing that we're working on is we brought on two bigger interns this summer. And they're building some cool stuff. So in the next couple of days, maybe already by the time this episode drops, expect two new things that they're working on to go live. One is a mobile app. You can download it. It'll have the podcast and those kinds of things. We'll have playlists that we think are good for, you know, if you want to go and learn about a certain topic. We'll begin creating those over the course of the summer and happy to get feedback and, you know, update those from listeners if we have if we have any suggestions.

59:33And the second thing that's going to be pretty cool is we're going to introduce a little forum. This is going to be a closed forum. You can ask a question anonymously in the forum, but only real people will be able to answer you, starting with me and Mindy. So I don't know when, you know, this will be live in the next couple of weeks. And I think that'll be pretty fun. That way you can we can actually post some real numbers or real situations, but also know that we're not getting trolls responding to you unless you view Mindy and I, the people that join the community with the real names as trolls.

59:59So I think that'll be fun and helpful. And we'll have some good discussions there. So feel free to do that. That's at biggerpocketsmoney.com slash forums will be the URL for that. I am so excited for that, Scott. That is going to be a lot of fun. If anybody has any suggestions for things you would like to see on our website, again, Mindy at biggerpocketsmoney.com, Scott at biggerpocketsmoney.com. We love to hear from you. All right, Scott, should we get out of here? Let's do it. That wraps up this episode of the BiggerPocketsMoney podcast. He is Scott Trench. I am Mindy Jensen saying hop hop, pork chop.

1:00:29I'm skeptical of a lot of financial products, but life insurance isn't one of them, at least not term life. For the vast majority of you listening, term life is simply the right answer. And the smartest way to buy it isn't one big policy, it's a ladder. Your need for coverage isn't flat. It declines over time. You've got a 30-year mortgage, a couple of young kids, maybe a spouse mid-career. in 15 years, the mortgage is going to be smaller and the kids are almost launched. So instead of buying one giant 30-year policy you'll overpay for, you stack a few, say a 10-year, a 20-year, and a 30-year layer.

1:00:58So your total coverage steps down as your actual obligations step down. You only pay for what you actually need when you need it. Ethos is a platform that helps you find life insurance 100 % online. You can get a quote in seconds and apply in minutes. There's no medical exam. You just answer a few health questions online. You can get up to 3 million in coverage. Some policies are as low as$30 a month. That makes building a ladder genuinely fast. Get your free quote at ethos.com slash bpmoney. That's E-T-H-O-S dot com slash bpmoney. Application times may vary and rates may vary. Finding a financial professional who truly understands financial independence isn't easy.

1:01:33That's why Scott and I created the Fi Friendly Professionals List. This is a curated network of CXPs and tax professionals who understand the FIRE mindset, early retirement, and wealth building. We're adding more vetted experts all the time. Find someone who speaks your FI language at biggerpocketsmoney.com slash FI Pro. That's biggerpocketsmoney.com slash F-I-P-R-O.