One Decision Can Change Everything

**Rachel Cruze** (0:32)
So we're here to answer your questions about life and money. So give us a call at 888-825-5225.
Up first, we have May in Oklahoma City. Hi, May. Welcome to the show.

**SPEAKER_2** (0:45)
Hello. Thanks.

**Rachel Cruze** (0:47)
Yes, absolutely. How can we help today?

**SPEAKER_2** (0:50)
So I'm getting a little bit of conflicting advice. A couple years ago, me and my husband set up like a set kind of budget plan, and our goal is to pay down our mortgage as quick as we can as part of that. We don't have any other debt and we've been paying basically double payments on our mortgage instead of $1,500 a month, $3,000 a month for the last two years. I have $195,000 left on my mortgage with no other debt. But last year when I went back to work full time, we met with a financial advisor because with both of our combined incomes, I didn't qualify for a Roth and I finally had a 401k to contribute to. He was looking at my savings and the amount of retirement we had already saved up at age 45 where we are now and he was like, your interest rate is 2.9 percent. You shouldn't be making payments on your mortgage extra. You should be putting that towards your retirement because in the long term, you're going to make 8 percent or more off of that by the time you retire. And that's more important at this time in life.
So I was just wondering which is correct. Like should I be putting money towards my mortgage extra or should I be focusing on retirement and like more savings for my kids like they're 529s and stuff like that?

**Rachel Cruze** (2:12)
Says every financial, most financial advisors out there.

**George Kamel** (2:15)
That's the hard part is there's.
Yeah, they're not terrible people. This person sounds like a level headed person who's just doing math.
And as you know, money is way more than math. It's about your piece, your options, your margin. And paying off your house leads you towards freedom. Now investing can lead you toward a different kind of freedom. That's also true. But they have a vested interest in you giving them more money because that's how they make money. Do you understand?

**SPEAKER_2** (2:40)
Right. Yeah, they are the investment.

**SPEAKER_4** (2:44)
Their judgment is clouded.

**SPEAKER_2** (2:45)
This might be a little sus.

**Rachel Cruze** (2:46)
Yeah. I mean, and I'll say this too. From a mathematical perspective, yes, you're going to make more in the market if the returns are 11, 12%, right? Then paying off a 2%.
The math of it makes sense. Just like when you have debts, a lot of people want to pay off the highest interest rate first because mathematically that's all correct. But what George was saying is so true. I'm like, well, we have found is that money is so much more than math. I mean, we say personal finance is 80% behavior. It's only 20% head knowledge. So your behavior is not factored in to his financial calculator, if you will, your peace of mind, your sleep at night, your autonomy when you own everything, including your home, which is unheard of these days. When these things start to play in and you have no debt, you have complete say over everything in your life.
There's just something we have found from a psychological, emotional, spiritual perspective. It just changes. And what I tell people all the time, Mae, is listen, because I get the math argument. I understand it. So I would tell you, pay off your house. And if you hate it, go get a second mortgage and you can invest the, you know, go go back to your best.

**George Kamel** (4:01)
It'll be at a higher rate, unfortunately. And that's what, like hanging on to this mortgage.

**SPEAKER_4** (4:06)
Sure. Yes.

**George Kamel** (4:07)
But to me, it's golden handcuffs. They'll tell you what my mortgage rate is.
It's 0% for the rest of my life with no payments. And so I'm optimizing for something different. I'm going to be okay in retirement. And the truth is, May, you guys are going to be just fine in retirement. You'll be multi-millionaires. Am I wrong?

**SPEAKER_2** (4:24)
I have no idea. Cause I, I mean, my husband's military. We, we were not very good at doing, we did the bare minimum for retirement a long time. And I just started working a few years ago.

**George Kamel** (4:34)
Well, how old are you guys?

**SPEAKER_2** (4:35)
I'm really 45

**George Kamel** (4:38)
Okay. How much do you currently have in investments?

**SPEAKER_2** (4:41)
70,000 contributed.

**George Kamel** (4:43)