Afford Anything - Q&A: My Dream Job Won't Wait If I Take a Family Gap Year — Do I Quit Anyway?

Episode Date: September 8, 2026

#748: The real question behind quitting a job you love or paying off debt anyway? Your money mindset. Take our free quiz to find yours: https://affordanything.com/fiire A listener with $686,000 saved and a job she loves wants to take her family on a year-long trip — but Paula says her real question isn't about money at all. Later: a dad chooses to stop maxing his IRA to pay off a mortgage, even though the math says otherwise. Joe joins from the road to help answer three listener questions: a family weighing a year off against a job she loves, a dad debating whether to stop maxing his IRA to pay off a house, and a longtime listener with a smarter way to save for college. In this episode, we discuss: How to decide whether a job you love is worth walking away from for a family gap year The three factors that actually predict whether you'll love your next job Why "retiring early" might be the wrong goal — and what to aim for instead How to know if you're financially ready for a career break, and what to prep first Why paying off your mortgage can beat investing, even when the math says otherwise How to structure your mortgage term like a finance pro (and why the 30-year can win) Why saving in separate, labeled accounts makes it easier to actually hit your goals Whether you're weighing a big life pivot, deciding what to do with extra cash, or just trying to make saving feel less abstract, this episode offers frameworks — not just formulas — for making the call. ⏱️ TIMESTAMPS Note: Timestamps may vary slightly depending on dynamic ad placements. (07:12) Can you afford to quit a job you love? (11:09) Three things that actually predict job satisfaction (17:05) Why this window with your kids won't come twice (22:20) Why retiring often beats retiring early (30:14) Why bad trip experiences count as good data (34:18) Why paying off debt can beat the math (36:49) Why coasting on your current savings pace is risky (44:26) How to think like a CFO about your mortgage (51:09) Why one bucket per goal makes saving easier (53:46) Why your 401k isn't really about retirement 🔗 OTHER RESOURCES 👉 The real question behind quitting a job you love or paying off debt anyway? Your money mindset. Take our free quiz to find yours: https://affordanything.com/fiire 👉 Camp Fi, the financial independence retreats Paula and Joe swap stories about this episode: https://campfi.org 👉 Heavy Metal Money, Chris Luger's personal-finance podcast (Joe recorded this episode from his place): https://heavymetal.money 👉 Got a question of your own? Leave a voicemail for Paula: https://affordanything.com/voicemail Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, have you ever walked away from a job that you loved? No, never. All right. Well, we are going to answer a question today from a listener who really wants to take a family gap here, but in order to do so, has to walk away from a job that she loves that she will not be able to come back to. Tough choice. I mean, you're choosing between two good choices, but tough choices. We're going to address that.

we're also going to address some more, that's a life question. We're also going to address a couple of like finance, finance questions, some money questions. Oh my goodness, all in one episode. All in one episode. Joe, where are you right now? Your voice is a little different. I know. I am in Minneapolis, St. Paul, getting ready to go to an event called Camp Five, which you've gone to Camp Fies before.

Many, yeah. I absolutely love this. Recommend people go to these events. I don't know about you, Paula, but the creator of it, a wonderful gentleman named Stephen Boyle. lawyer really had to convince me to come to the first one. He's like, hey, come to a retreat center that's made for middle school kids to sleep on a little tiny mattress. One of those flimsy mattresses and like a not a bunk bed, but like may as well be a bunk bed. That's right. I'm too old and too bougie. So it took him like three years of telling me, please come, please come. So finally I went

and I talked at a at a campfire outside of San Diego, the first one I went to. And as you know, Paula, it's wonderful. 40 people, you don't know any of them generally. And by the end of the weekend, they're all your best friends. Yeah. Just a great group of people. Yeah. So I'm here for this, but I'm on a different microphone.

I'm in Chris Lugar's house, who has a wonderful podcast called Heavy Metal Money. So thanks for Chris for letting me invade his face. Yeah. And by the way, for anybody who's new who's listening for the first time, who's wondering what is Camp Phi. Phi FI stands for financial independence. It's a gathering of people who are interested in the concept of financial independence, interested in having enough residual income, typically through investments, that work becomes optional. So it's a great community. I've been to many, many Camp Fies across, back in Joshua Tree, when they used to hold them in

Joshua Tree. They don't anymore. I went to Joshua Tree. I went to Rocky Mountain. And then this year, For the first time ever, I went international. I've been to the Chautauqua's internationally. I've been to five of those. That's a different financial event. But this year, I went to Campify Italy. Italy, yeah. And that was amazing.

I've been very close to the one in Italy. I've been to the one in Minnesota. That's international. And I've been to the one in Texas a couple times. And I've been to the one that I mentioned earlier, which is West, the one that's outside San Diego. Very nice. So to people who are listening who want to hang out with other, the types of people who listen to personal finance shows, right?

The types of people who really think with intention about how they want to direct, you think with intention about how you want to direct your most limited resources, which are your money, your time, your focus, and your attention. And those are the things that you have in common. And what that really means is intentional living, right? Money is a physical manifestation of choices, values, intentionality. It is a physical manifestation of what you find most important. That's why we talk about this all day. It's not about dollars and cents. It's about the allocation of limited resources, which is ultimately, like in a world

where you can do anything but not everything, what do you choose? I've heard that before somewhere. Somewhere. So this is a good time for me to intro the show. Welcome to the Afford Anything podcast. This is the show that knows you can afford anything, but not everything. This show covers five pillars, financial psychology, increasing your income, investing, real estate and entrepreneurship. So the acronym is Fire with Two Eyes, Double I Fire.

I'm your host, Paula Pant. I traded in Economic Reporting at Columbia. Every other episode-ish, I answer questions that come directly from this community. And I do so with my buddy, the former financial planner, Joe Sal C-high. What's up, Joe? You know, I think Stephen should do like Hawaii. Wouldn't that be fun? We should convince him to do Camp Fly Hawaii.

I'm happy with Italy. Italy was amazing. Yeah, but I think Hawaii would be special. In Hawaii, do they allow loud laughing, or is it just an aloha? Wait, wait for it. Wait for it. I have some sound effects. I don't think I have a wot-want.

Oh, no. I have clapping. There you go. Thank you. That is not what. Aloha. Wait, there's a laughing. There you go. Okay. All right. We can go laugh track. What is this? Is that farting? No. We need, anyway. Now Paula's down the rabbit hole. I am down the laugh track rabbit hole. Let's go to our first caller. Our first call comes from Jamie. Hi, Paula and Joe. This is Jamie from Wisconsin. I love listening to your thoughts and would love you to weigh in on my question. I'd like to know if it would be

financially reasonable to take a sabbatical for a family gap year and how close you think we are to Coast FI since I would feel better about the sabbatical if our retirement is mostly secured. Here are the details. I'm 42 and I make 140,000 as a PA. I've occasionally worked as a locum provider at $160 an hour as an independent contractor. It's brought in a lot of extra cash, but it does increase stress for our family because it requires travel. My husband is a stay-at-home dad to our kids, ages 7 and 8. He has several flexible part-time wage. He has several flexible part-time wage, to bring in some extra money. Here's how our 686,000 in savings is split up. We have 180,000 in a target retirement fund in my 403B, 110,000 in Roth accounts, and 216,000 in traditional IRAs, most of which is in

Vanguard low-index funds, though some is still managed in mutual funds with a financial advisor. 33,000 and 28,000 in our children's 529 accounts, 57,000 in a market fund, and 62,000 in a high-yield savings account. Our home is valued at 425,000 and we have 95,000 left to pay down over the next 14 years with an interest rate of around 3%. We would not be selling it as it's on family land, but we could consider renting it if we had to. Our vehicles are old and paid off. We currently spend approximately $96,000 a year, which includes some pretty generous vacations. I know Joe will ask what matters most to us. While I used to love the idea of early retirement, I'm starting to think it may be better to work less now in exchange for working longer later.

I decreased to 36 hours a week a few years ago, and I love it. Right now, my kids still want to spend every minute with me, which I know will not last. Plus, my husband and I are still healthy enough to pursue all sorts of adventures, which won't be true forever. Now that I know there are people out there who do family gap years, I'm obsessed with the idea. My husband was slower to get excited, as travel is a bit more stressful for him, but he's now mostly on board for the shenanigans. He's drawn to the more expensive countries such as Japan and New Zealand, but willing to balance these out with more affordable destinations.

I love to travel and would be happy going anywhere. At the kids' current ages, I feel confident I could continue their education for now, so I'm not too worried about that. My biggest hang up is that I love my job, and I don't think it'll be available when I return. So what do you think? Are we financially ready to pull the trigger? What should we focus on in the next year to put us in a better place? If I love my job, should I try to work in shorter trips, say three to four weeks a year, even if that means spending more on plane tickets? Or should I quit, experience my big trip, and then just keep an open mind for future job opportunities. Thank you so much for your thoughts.

Jamie, I love the question and I love the intentionality that you bring to this. I have a question back to you. Looking at your numbers, your numbers look good, you've got healthy retirement savings, you've got healthy savings, savings, savings, like emergency fund savings, you've got healthy balances in your kids, 529 accounts. I have no concerns about the numbers that you've laid out. So to me, this is not a money management question. It is a, what do you want the next year or two of your life to look like question? Yeah, she can easily do this. And to me, the crux of the question is, if you were to take this family gap year, you know, you love your job and you don't think it'll be available when you come back.

So do you walk away from a job that you love in order to take this family gap year? As usual, I don't like to tell people what to do. I like to give people frameworks on how to think through this. So my first question back to you is specifically, what is it about the job that you love? And I'll talk through what we know from the data. Number one, we know that there are three qualities that highly correlate to a person's job satisfaction, four really, but these are separate studies. So in one study found three qualities, and those qualities are autonomy, mastery, and purpose. And of course, you can think through those concepts, autonomy, mastery, purpose. You can think through those in terms of career selection. It sounds fairly clear

to me that you love the career that you've chosen. It's also clear that it's a career that it's not only purposeful, but where you can also develop a lot of mastery and then depending on how management is organized can also have a lot of autonomy. Career selection sounds good. And then inside of that, the specifics of the organization that you work for, you know, like what is company culture? Joe, as you often say, company culture are the five people that you spend the most time with at work. That's the local culture of your company. And so that points to the second study. So there's one study that shows autonomy, mastery, purpose, those three things highly correlate to job satisfaction. There's a second study that shows that your feelings about your boss, whomever it is that you

directly report to, that has a huge impact on job satisfaction. If you love the person that you directly report to, if you love your supervisor or your boss or your manager, whoever is to whom you are the direct report. If you respect that person, if you think that they're wise and fair and good, you are highly likely to enjoy your job. That's the type of thing that prior to going into a new work environment, it's hard to predict what that relationship is going to be like. Anyway, I state all of that as some background to then ask you the question, does any of that resonate in terms of why you enjoy your job so much? Or are there different qualities that I have not talked about that explain why you love your job so much? And then where I'm ultimately going with that

is what is the likelihood, because we always have to think in probabilities, what is the probabilistic likelihood that you can recreate that or refine that in an alternate job? Yeah, it reminds me a lot of when I spoke with organizational researcher Laura Vandercam about why people succeed at work, she talks about how the most successful people on a Sunday night will lay out all of their stuff. Their work week actually begins on Sunday night. And they lay out all their stuff for Monday. So when they come into Monday, they're not beginning the day on Monday, Paula, getting organized, figuring out what the priorities are. They roar into Monday.

They're fresh. their battery is completely full. And with a full battery, they attack the biggest things. And so they're able to get a nice running start to the week. And I know we're not talking about that specifically. So people are wondering, Joe, what does that do with anything? I think that before you go on a sabbatical, you kind of want to do a lot of that legwork that you're talking about here, Paul. You want to have laid out as much of the legwork because I feel like the sabbatical will be a little fraught with what if and am I going to get a job? And you don't want to have any of that. That takes away from the sabbatical. It's hard to get into the moment and experience whatever you're

experiencing when you're not sure what you're returning to. I think some of that is okay. It definitely is okay to be a little ambiguous, but to have your plan of attack for when you decide to return to the workforce in place before you go, I think is an important step to do it as well. Yeah. I agree with that because oftentimes, you know, and I think, found this from the sabbaticals that I've taken. I spent two years outside of the workforce just living out of a backpack and traveling. At that time, I was plagued with anxiety about what's next, right? And so that anxiety about like, okay, I'm doing this awesome once in a lifetime or twice in a lifetime trip, but I don't know what I'm returning to. That doesn't mean

have a job lined up necessarily. No. But it might just mean keep your contact. fresh, stay in touch with people, you know, like the best way to get a job is by knowing people. Keep the contacts fresh. Keep the relationships healthy. Stay in touch with people. Know what's going on. Like if while you're on this trip, you're hearing about opportunities, that's a really good sign. When opportunities come to you and you're like, oh, that sounds great, I can't do it because I'm in month two of a 12 month trip, but that sounds awesome. Right. If those, opportunities are coming to you throughout the trip and you're saying, oh, timing is wrong, but otherwise that sounds great. That's a really good sign. Yeah. Because it means that when you

return, you're likely to also get those opportunities again. A couple of other things that I want to highlight. So number one, what I love about your question, and I want to highlight this for the sake of everyone who's listening, because I think this is something we can all learn from. you talked about two things, two concepts that I think are really important. Number one, your kids right now are seven and eight. That means you have an opportunity right now that you are not going to have when they are 17 and 18 or 27 and 28. Because the chance to do something like this and to have it affect them at this age, it is a very, very unique window. Again, I don't want to tell you what, to do, but like, I guess I am letting my bias show a little bit here, like my very pro-gapier bias, in that the opportunity to do something like this when your kids are seven and eight is so precious. Value derives from scarcity. The more scarce something is, the more valuable it is. And this window of time in your kid's life, this window of time when they're seven and eight, that only happens

once and therefore it's scarce and therefore it's valuable. It's a whole different education that they would be able to get that other people don't have. Yeah. It's a perspective that they'll have that other people don't have. Yeah. Whereas you and your husband, you know, because you're 42, assuming you stay in good health, assuming no major medical issues, at 52 or at 62, like, you're still going to be healthy enough to travel. I saw my parents, even in their 70s, could still travel. It was really once they

hit their 80s that things... 80s is a real game changer. Yeah, 80s is a big game changer. Yeah. It feels like once you reach your 80s, aging happens not linearly, but exponentially. So in terms of that window of opportunity, and I say this for everybody who's listening, because I don't want anyone who's listening who is currently in their 60s to think, like, ah, well, I don't have the, I don't have the energy that I had when I was in my early 40s. So maybe it's too late for me. Like, I don't want another listener who's in their 60s to hear this and have that thought. Assuming you're in good health, there's a big window in adulthood where you can do some awesome stuff.

But the window of kids being seven and eight, that is really precious. You know, I know, Paula, at the end of every one of these, you asked me like what, what's going on at Stacky Benjamin's? Where can people find me? I want to talk about that actually right now because we are interviewing next week a woman named Linda Grattan. And Linda is a psychologist. You know, I love this idea of thinking through every step. And I know you do too. And she has worked with lots of longevity experts. there's a great chance we'll live to be 100. She pushed me to think about if we're going to live 100 years old, and a lot of people that are listening think, man, it'd be nice to retire at 50 or 55. Let's say you retire at 50. You've another 50 years of your life then.

And she's like the idea of a 50 year retirement, and she walks into retirement and how retirement, And for a lot of people, ends up equaling atrophy if we're not careful. And that we're born to be productive. We like to be productive. We thrive and we're productive. We thrive and we're part of a community. What if we rethought the entire idea of our career where instead of thinking of a 20, 25, 30-year

career, we thought of our entire life could be a career. But we take these sabbaticals that are maybe two or three years during those. sabbaticals, by the way, we think about the things that lit us up about the last 10 years that we were working and we take the piece that we love and we go stronger in that piece. So we use those years, Paula, for more education. We go back to school. We find the mentors. We find the teachers that teach the part that we like. And we morph our career, almost like Madonna has her entire life, right? Thinking yourself as Madonna, you change your career. And then the next 10 to 15 years, you're doing an offshoot of what you were doing before,

but you're doing the part that now interest you and lights you up, which, by the way, you and I know between you and I, that could be two totally different parts of the career that light us up. And then so we spend our life following our curiosity. We're continuing our career into our Linda Grattan, by the way, if you listen to this interview, she's in her late 70s and she's lovely. And by the way, Paula, she has no plans of retiring. Retiring for her doesn't make any sense because she's so lit up by this entire idea. And so I think that if we take Jamie's question here and we start thinking about a hundred year lifestyle, like even during these years of this sabbatical, is there an offshoot of her career

that she likes? Can she take that time to maybe retool? Think about a portion of her career that she likes and go back stronger and different than she was during the last phase of her career. Yeah. You know, and I think that, I guess, to widen this conversation out, oftentimes when people talk about early retirement, the retire early part of fire, it's very binary. It's an on-off switch of you're working, working, working, working, working, and then boom, you suddenly flip a switch and you're not, like zeros and ones. Yeah. Which I understand, like in the context of a W-2 full-time employment, There are some employment structures where it is binary. You either work 50 hours a week or you work zero.

And there are certain employers that just won't take anything in between. So I understand why the discussion tends to go that way. But there is a lot to be said for the model of what I call interval training, where you sprint and then you rest, and then you sprint and then you rest. Yeah. It's retiring often. rather than retiring early, it's retiring often, meaning you interspers periods of work with periods of gap years. If you do that, I mean, you really, you have two options. There's no reason that you can't do

both in combination with one another. Like perhaps you have a working career that includes a number of sabbaticals or a number of gap years. And then ultimately that culminates in retiring early. That is one route. The other route, you know, I look at the actor, the comedian and actor, Steve Martin. He is 81 years old. He was born in 1945. I just looked it up. He's 81 years old. I was like, wow, that's good.

It doesn't follow pop culture. I'm like, who are you? I know. Well, I don't follow pop culture, but I am a huge fan of the show only murders in the building. Oh, yeah. I mean, it's a show about podcasters in New York City. It really fits the bill, except, you know, the only difference is everybody in their, all their neighbors get murdered. We'll leave that part out.

Well, yeah, exactly. But 81 years old, and he is starring in a television show, that is a lot of work. That is an enormous amount of work. And so to be 81, and he certainly looks like he's enjoying it, he looks like he's having fun. Did he have a couple of gap years somewhere in the 60 or something? seven, I don't know how old he was when he started, but let's say he started in his teens. He may have had a 70 year career or a nearly 70 year career. Has he had a few gap years in there? I don't know, maybe. But if he has, that's probably increased his stamina in terms of being

able to work into his 80s. Yeah. It's interesting. The financial planning implications of that type of a lifestyle, living that type of a lifestyle. Like on number one, if I'm going to take a gap year every, let's say, eight to 10 years, or take a sabbatical every eight to 10 years, my ability to get high rate to return goes down. However, I think I mitigate that quite a bit with career longevity and bringing in income and parts of my life when other people are done. Other people are no longer bringing income. I'm bringing an income because I'm working now in a field in my 70s that light me up or 80s that light me up and I'm still bringing in money. So I don't know. It's funny as Linda was challenging me to think differently about this whole

idea of your career, it changes the planning game completely, Paula. It does. It's pretty fun. Jamie, there's one other point that I want to address. You asked, well, first, are you financially ready to pull the trigger? Absolutely yes. What should you focus on over the next year? When you take a gap year, there are some psychological elements of taking a gap year that you'll want to be ready for. I mentioned earlier the anxiety about what's next. That's one piece of it. You mentioned in your question that your husband was like, it took him a little longer to come around to the idea, slower to get excited about it and travel is a bit more stressful for him. what I would focus on in the next year is what specifically, be as specific as possible,

what specifically is stressful to him about travel and how can that be mitigated? So how can travel be made more comfortable? One thing that I did when I was on my two-year sabbatical, my two years of just living out of a backpack and traveling, number one, I was a slow traveler. So I would go to one location and spend one to two months in each location. I went to a total of 17 countries across the span of 27 months. I was spending on average one to two months in every location. It allowed me to temporarily put down roots in a given place.

Also, even inside of that, when I say a given location, I don't mean I'm in one country, but I'm bopping around the country. I mean like I'm in a spot. I've basically just recreated home life. home in a new spot. I've just recreated home life but in Vientien Liao. It gave me a sense of being grounded. It allowed me to unpack within a month you start developing routines. A couple of other things that I did, like, I would go to a handful of the same spots. So if there's like maybe a lunch place that I go to, like typically I would go to just the same spot every day. So,

having that kind of routine and having that kind of consistency and predictability, there can be a certain level of just psychological comfort with that. Even here, I was doing an interview, this was a few months ago, but somebody, I did an interview where people were asking me about the cost of living in New York City. And they were like, but there's Broadway and there's this and there's that and there's Michelin-starred restaurants. And I was like, dude, I rarely leave like a two-blot radius of my apartment. Like, I've got one dive bar that I just go to all the time. And that is, that is my dive bar because I know that Andy, the bartender, he works there like Tuesdays through Fridays. It kind of like takes this big, crazy world of possibilities and like shrinks it down

to something that feels cozier. Yeah. Yeah. No, I think that's important. when we were nomads, we would stay four to six weeks in a location, Paula. And that made it much closer to home. People that haven't heard this before may not know that I did not love being a nomad. But what I did love was I did get somewhat of a feeling of home in these different places in Stowe, Vermont, or in Palm Springs, where, you know, I knew the neighbor's dog. In Palm Springs, I remember the swimming pool we were going to go to every afternoon at three o'clock in the afternoon. It was like 104 degrees at the end of September still. Just brutal, but very fun. Nice. Well, thank you, Jamie, for the question. And I'm very excited for you.

This is going to be a, okay, I will simultaneously say this is going to be an incredible trip, but also don't make your expectations too high because happiness is that gap between What is it? Sadness is the gap between expectations and reality? Or happiness is when reality exceeds your expectation? I don't know. It's that Delta expectations, reality. If reality exceeds your expectations, you're happy. And if reality is worse than expectations, you're sad. Well, can we stop on that point for a second?

Because I think that's a really important one. Part of while I'm here in Minnesota, I've been meeting up with people in our meetup groups. And we have a great southern Minnesota meetup group in Mancato. And during the meeting last night, we were talking about, you know, we get so obsessed with this, what our friend Doc G calls Big P purpose. And we think we got to do these big, big things, right? And this is a big epic adventure that she's on with her family. And my friend Benjamin Brandt, who's a certified financial planner in North Dakota, a wonderful guy,

Ben says, you have to remember that bad data is good data, meaning that if you do part of this adventure and it's some. That's fantastic to know because you know that you never have to do that again. And it also, when you have that framework that I'm just collecting data and you look at life as like it's a science experiment, you get more playful. And you get less up in your, you know, up in, oh my goodness, everything's got to be perfect. Everything's not going to be perfect. So if you, I think, retool your imagination around I'm gathering data. here. This is this this this gap year while my kids are eight years old, we're figuring out what we might want to do as a family next time, you know, and you walk out of a restaurant that sucks or you,

you know, stay a month in a community that you don't like. You get done. Everybody's high-fiving themselves going, that sucked. I never could do that again, you know? And all of a sudden, instead of being bad, it's good. It's good. So I love Ben's take on that. bad data is good data. Yeah. Amazing. Well, thank you, Jamie. We're going to take a break to hear from the sponsors who make this show possible.

And when we return, we are going to hear from Kevin, who wants to know if he and a spouse should stop maxing out their IRAs while they pay down a house. You've got to try breakfast at you got to try prayer. And what better way than with a delicious pre-organic coffee? starting with just $1 all day, every day, now until December 31st. You gotta try breakfast at participating A&W locations in Ontario. Welcome back. Our next question comes from Kevin. Hi, Paula and Joe.

Should we suspend maxing our IRAs while we pay down a house? I know mathematically it might make more sense to invest, but I would just feel less anxious if I buried the debt. We're expecting to pay for a $4 to $500,000 home in the near future. We have about 130K set aside for down payment. I will tell you a little bit about my family's financial situation, but won't go into too many details. Our family is a net worth of $1.1 million. We are a single-income family with a $96K salary.

We have a lot of random side hustles like selling my wife's sourdough at our window that bring in approximately $2,000 to $6K per year. We probably spend about $55 to $60K per year to support our family with four children. I think we are Coast FI now. I'm aiming to have an worth between 2 and 3 million to close the gap with our term policy and also to fund college expenses. We got here by aggressively investing and cutting costs in the last decade. We live in a large American city that is relatively affordable and has great walkability in public transit. We were able to save and invest a lot of money by staying car free until our third child was born. We now only have one car that we maybe drive 10 miles in a week. My goal is to maximize the time that my wife and I can spend with our children.

She isn't interested in taking any full-time work at this time. I live a 15-minute walk from work and I'm not interested in different job opportunities. We love our neighborhood and don't want to move even if it is a tad expensive. I'm still getting my 6% employer match and maxing our HSA comp. I'm finding it harder and harder to also max our IRAs at the same time. I'd like to continue maxing out my IRA because it feels good, but I also think it might be better put towards a house, especially with these high interest rates.

Paul and Joe, what would you do? Kevin, I love the question, and I think you said it all. There was one sentence that you said that I think contained the answer, in which you said, I know mathematically it might make more sense to invest, but I would just feel less anxious if I buried the debt. What is the purpose of, not to get too esoteric, but what is the purpose of money? At its most basic level, it is survival, safety and survival. You've got that covered. Check.

Then as you go up Maslow's hierarchy of needs, now that your physical safety and survival is, taken care of. Next, you need that psychological and that emotional sense of safety. Getting rid of anxiety, bearing, knowing that you're debt-free, there is tremendous mental relief that comes with that. If it helps, you can think of the mathematical delta as, like, that is the cost of buying that relief, but I wouldn't even necessarily think of it like that. Like, you You've run the numbers, you know the math, and having this debt hanging over your head, it's like a shadow that will impact your quality of life. And so I would focus on paying off that debt and stop making IRA contributions,

especially given that you're getting your employer match and you're maxing out your HSAs. So you're still making contributions into these long-term tax-advantaged accounts. It's not like you're halting all retirement contributions. You're just refraining from one specific account. Before I dive into what my thoughts are, can we just acknowledge something? Yeah. How far he got ahead with a family with four kids. Right.

And not high income. Right. Yeah. He has done, they have done really, really well. And this, this what blew me away, Paula, when I was a financial planner, was seeing people like Kevin and Kevin's family and their ability to save, their ability to prioritize what the things are that would make their life, that would make them happy without going into too much debt, without giving up savings, like actually continuing to save and max stuff out.

Right. You've got a family of six. That blew me away. Yeah. I thought that was fantastic. I was thinking that too when he said that they spend between $55,000 to $60,000 per year with four children. Yeah, yeah. Six people collectively spending between $55,000 to $60,000 per year. That's incredible. You know, Kevin, I always worry about the concept of coast five, only because of the fact that coastfi comes to the assumption that things in the past are going to continue the way that they were into the future and we're just going to coast into it based on the past. I'm pretty comfortable with it. Before you make this move, I want to know what the cost is.

I always want to know what the cost is beforehand. So in other words, if I funnel money that is for this future into instead this new home and avoiding debt, I want to know what the cost is. That said, I think my bias, Paula, is a lot like yours. And, you know, when we evaluate individual stocks, what do we look at? One of the primary things we look at is free cash flow. and we already know that a family of six, and this is another reason I wanted to high-five Kevin immediately, is that cash flow, there cannot be a lot of free cash flow in Kevin's life. There can't be.

So to me, preserving free cash flow as much as you possibly can, when you're moving into a house that might be a little bit over your head, I think is a valuable, valuable tool. I think we fall in love with the interest rate thing and, you know, okay, leave money invested as much as possible. I think free cash flow is going to be really important to his future success. Stuff's going to come up. We don't know what that is. So I'm on board with funneling money into a lower mortgage on this house

as long as I know what the cost is ahead of time. I just don't want it to be a surprise. I don't want to go, man, should I have, would I have? I like having the options right in front of me. you know, if I'm pulling money out of my 401k to pay off a high interest rate debt, and I know I'm going to pay the 10% penalty, I know I'm going to take the tax hit. Sometimes if the debt is egregious enough, if it's like a loan shark debt, sometimes that actually makes sense, Paula, but I still want to do the math to know if I would have left this alone and left it for retirement, what would it have been? Right. And then I make the decision with my eyes open. This is not that. case, but in any case, I want to know what the opportunity cost is before I make the move. I mean, just, you know, things that jump out at me. Like, you make $96,000 a year.

You spend between $55,000 to $60,000 a year. You have a very, very strong savings rate. And you've been able to set aside $130,000 as the down payment for your next home. You've been able to build a net worth of $1.1 million. I mean, the financial management that you have done is just so, so superb. And, I mean, with a net worth of $1.1 million, 4% of that is $40,000 a year. He's already almost of his lifestyle. Yeah, exactly.

And that's not too far away from what you currently spend. And so you are so very, very on track that to redirect some money to a towards paying off a mortgage, something that's going to really decrease your anxiety and Joe, to your point, that will also improve your monthly bills, improve your cash flow. That sounds like a very worthwhile goal. I know I started this podcast by saying I like to not tell people what to do, but give them a framework for thinking. But it's hard for me, I'll just admit it's hard for me to even try to steal man the opposite argument. Yeah. Yeah, to your point, I mean, let's just say it out loud so we know how it feels, Paula. Having a bigger mortgage that makes things feel really tight

every time he comes home and he's, you know, maybe not wondering how he's going to make the mortgage payment, but it certainly would affect my brain, which ends up making, showing up at your job different, I think, every day. Yeah. When you go into your job and you could hear how much it sounded like he loves his job. He's not looking for other opportunities. He likes going into work every day. He gets to walk, you know, 15 minutes to his work. How great is that? Yeah. And then he's a job that he likes.

So all of these cool lifestyle things that he has in his corner, now he's going there on the 15-minute walk and he's thinking, I have to go today because this mortgage is so damn high. Yeah. And that could affect whether you like it or not. And I've seen it affect people and how they like it. So I'm with you. I don't think the other side makes it. sense at all. Yeah. I don't know what the outstanding mortgage balance is on your home. I don't think he, you know what's funny, Paula? As I mentioned, I'm here with Chris Lugar's house.

So Chris helped me prep for today. And I thought originally that he already had a house. And Chris goes, no, that's just the way that he phrased the question is pay down debt. I don't think he owns the house yet. I think he's talking about the future house. I don't think he's talking about the future house. I don't think he's buying a second home. Oh, I thought, oh, okay, I interpreted this to mean he currently owns a home, but he's planning on buying a different home in the future that will be between 400,000 to 500,000. Maybe it is a little confusing, but when I think about it, his goal is not to have two homes, his goal is only to have one. So I think the question is how do I get into this house? I see, I see. I see. Okay, yes, I see. All right. I interpreted the way you,

did it first too and Chris is like no and then we went back and listened to it like three times. All right. In my head, I was thinking he currently is living in a home with a mortgage and he also has $130,000 set aside for a down payment for his next home. Yeah. And so in my head, I was thinking, okay, once his current home is fully paid off free and clear, then he's going to have choices. He can either sell it and just have a big lump sum that he then uses to be. buy the next home or he can hold it and use it as a rental for some supplemental income. He's got choices. Yeah, which is still, by the way, there are people in that situation. And I think that still is great. I think there's still this flexibility for people that are in that situation. Right. I don't think that's the case here. But that is, that is something, how many calls have we answered like that?

Where somebody, you know, they're moving out and what do I do with the proceeds? I think we did that an offshoot of that kind of last week, didn't we? $130,000 set aside for the down payment. The homes. going to cost between 400 to 500,000. We'll just take the middle number and say it'll be $450,000. $320,000 would be the mortgage. Accelerating that payoff. Yeah, yeah, that'll be a number, it's a big enough mortgage that it will take many, many years to pay it down. Yeah. But putting more money toward it to make that payment smaller. Yeah. I think is a good thing. I agree. By the way, this brings up something else, Paula, while you're on that point, I also think that looking at a 30-year and a 15-year mortgage here, a lot of people that want to pay off debt early will go with the 15-year.

This may be a case, which we're talking about the big thing in my head is free cash flow. Yeah. I would look at the 30, but I would try to pay it off at an accelerated rate. Yeah, exactly. Take the 30, but pay it off in 10. Yeah. And this is CFO thinking. People in their everyday lives think that whatever the bank gives me, I have to take that. Like, okay, they said 15-year loan.

I'm paying off in 15 years. 30-year loan. I'm paying off in 30 years. A CFO will take the best loan option they can get for the company that preserves cash flow. And then they'll create their own amortization schedule to pay it off however the hell they want. That really fits what's going on in their life. So yeah, yeah, paid off in 10 years, paid off in 12. Who cares what the bank asks for? Give them what fits you. Exactly. But take the 30 because it gives you a smaller monthly payment. So then you have flexibility. So that way,

if there's an emergency, if there's something unexpected happens, you still have that cash flow flexibility. Especially with the needs of a six person household. Yeah, exactly. You never know if there's going to be a, someone gets sick or anything. Plus, they, I assume both have parents who might be getting up there in age. So, you know, you just, you never know. So it's good to have that flexibility. Yeah. It's an exciting spot for you, Kevin. But yes, yes, we're both on board the pay off the mortgage train. Thank you, Kevin, for the question. We're going to take one final break to hear from the sponsors who make the show possible. When we return, we are going to hear from Joe. What?

Yeah. Oh, best name ever. Joe has a question about sinking funds, using sinking funds for paying for college. You gotta try breakfast at A-W. You gotta try breakfast at A-A-W. And what better way than with a delicious pre-organic coffee, starting with just $1 all day, every day now until December 31st. at participating A&W locations in Ontario. Welcome back.

Our final question today comes from Joe. Hey, Paula and Joe. This is Joe. I have been listening since the J. Money Days long, long time ago. I am catching back up on the last several weeks' worth of recordings. And podcast 736, you had answered a caller Mike, who was looking to retire early in 12. years with a daughter hitting college roughly about the same time. I'm kind of surprised

I didn't mention sinking funds, which is something I had done for my kids as they were entering and coming out through college. This meant that I had far less capital that I needed. So, for instance, I figured I needed several hundred thousand dollars to take care of my daughters and niece as they were going through college and setting themselves up. If I wanted to cash flow it, I would have needed like five to six times more capital, and then I would have had several thousand dollars a month more than I needed for my household after they finished all of their college stuff. So just a quick thought of why not suggest sinking funds? If the college funds needed are going to be $100,000, $120,000, it's going to be much easier to set aside $120,000

than to set aside the four to six times more capital needed to be able to cash flow $120,000 over the course of four years. So just wanted to put that two cents in, it worked incredibly well for me to set up sinking funds for each of the daughters for their college, for their launch, and now starting for their weddings. So thanks much. And looking forward to another 10 years plus of afford anything or whatever else it is that is next. Thanks. Wow, Joe, first of all, great names. name, thank you for being a listener since the J Money Days. Longtime listener, first time caller. Yeah, exactly. Thank you for being part of this community for so long. For people who are wondering what that's a reference to, when this podcast first started, episode number one,

I had a co-host by the name of J Money, and this was not actually called the Afford Anything podcast at the time. This was called the Money Show, money show.com. So I think we just got rid of that URL actually, maybe a year or two ago. Wow. So a blast from the past. Thank you for being part of this community for so long. Joe, what's interesting is there was a piece of that question when it was originally asked, which really lit me up personally, which was the fact, Paula, that when it comes to the timeline of your goals, because we don't do that, we often don't look at how two things intersect at the same time. And while, while answering that question, I believe we got so focused on the fact that we really need to look at there's going to be friction. And even with

the sinking fund, and we'll get to this part there, there's still going to be friction. Having had two kids go through college, and it sounds like, Joe, you did too, that, you know, my kids, we did a great job of saving for college. I can still, we're expensive as all get out during their college years. And there were always times when it would disrupt whatever other things Cheryl and I had going on. So the emphasis for me was on the piece I thought that people did not know or didn't think about enough, which was goals often overlap. And when we put them out visually, which we often don't do, we just write out our goals. People say, don't write out your goals. Don't write out your goals. Draw out your goals. Put the eight.

so that you know how this goal is going to fight against this goal because that happens all the time. And then you can have these value-based conversations. In the heat of the moment, what it sounds like we missed, though, was the obvious thing, which is, of course, when your kids three start saving for their college. I don't use the term sinking fun only because as a guy that wasn't originally a money guy, you know, my degree in college was in English. I came at money from this outside world. And when I heard the term sinking fun, I swear to God, Paul, it took me 18 months to figure out what the hell that even meant. Yeah.

Like I didn't know idea. What sinking fund means is putting a separate fund aside, like a 529 plan, and saving for it so that the interest can do the hard lifting. So I don't use terminology like Sinking Fund because for me it obfuscates what we're just trying to do, which is put money aside. Let's put money aside, put it off in its own little silo, take care of it that way. Clearly, when we can do that with college, then it gets rid of some of the friction of having those two goals together. but my point that maybe I made too much of and didn't make enough of, yes, save for this separately so that there's money there, was that even with money there on the side, there's still going to be friction. Yeah, I think the benefit of both the 529 plan as well as the newly formed 530A plan is in addition to the tax

advantages. Tax advantages are, of course, the dangling carrot that gets people there. But the behavioral benefit and the psychological benefit is that when you put money into either a 529 or a 530A, you know you are mentally bucketing that money. Money in a 529 is just mentally bucketed as college savings. Money in a 530A is mentally bucketed as money for that. kid. And that kind of bucketing is behaviorally the best way to manage money, particularly when you have a wide variety of goals. That's actually also one of the benefits of retirement accounts. It's like you really just have these buckets of money that are, you know, like fundamentally, what is a 401k or an IRA? At its core, it is a deal between you and the government in which the government

agrees to give you a tax break in exchange for you agreeing not to tap those funds until you reach a certain age. So we call them a retirement accounts. That's actually not fully accurate because the word retirement references an occupation or a lack of having an occupation, right? It references a career status or an occupational status. But in fact, a 401k. or an IRA is unrelated to your occupational status. It's just an age-based account. Yeah, exactly. It's an age-restricted account.

It is purely an account that says, we're going to give you a tax break in exchange for you not being able to touch this money until you reach a certain age. And that's all there, regardless of your occupational status. And that's all there is to it. And so that kind of mental bucketing becomes very valuable in, financial planning. And fundamentally, that's what a sinking fund is. A sinking fund is just money that is bucketed for a given purpose. And you can do that in a variety of ways. You can do it

through the various tax-advantaged accounts. You could also do that just by opening the type of savings account. There are a few financial institutions that do this. A savings account that lets you create multiple sub-accounts, and then you just put a label on every single sub-account. And people will typically do this for shorter term goals. You know, maybe you have a vacation goal or a travel goal. So, like, if you've got a vacation coming up in a year and you want to save $100 a month towards that vacation over the span of the next year, some labeled sub-account inside of a savings account is a way of creating that mental bucketing.

And it's especially great for people who, you know, they don't want to dip into the emergency fund, although I often look at it as emergencies and opportunities, right? Having that vacation fund is a separate thing where I now am taking the vacation, not coming out of my retirement money, which really isn't retirement money, not coming out of my college money, which are these other buckets. I've got it separated. That is the definition of what Joe's talking about, sinking fund. Good stuff, Joe. Glad you pointed that out because I feel like I won't speak for Paula, but sometimes I get so excited about the piece that people don't think about that I feel like Paula, maybe sometimes I don't emphasize enough the obvious one that's right

in front of me. Say for that goal. Put it in a bucket. Yeah, put it in a bucket. Yeah. What I like about the analogy of a bucket is that it's so visual. Rather than having this big amorphous pile of money, you have, you can almost imagine a bunch of buckets. But you can imagine, like, when you're a kid, mason jars filled with allowance money. Right, right. It's visually the same concept. Right. Thank you, Joe.

And thank you for being such a longtime part of this community. You're welcome, but you're not talking to me. Well, Joe, Joe Saul C-high. Oh. Joseph Andrew. Oh, no. Only mom does that one. Joseph Andrew, I think we've done it again.

We have three great questions. And just exciting opportunities. People are, you know, these things that people are doing, making sure that they're able to live this lifestyle that they want, in case of Kevin, and in the case of Jamie, you know, having this great opportunity for her family. Absolutely. Joe, where can people find you if they'd like to learn more?

Oh, next week, Linda Grattan is going to blow up your world. But thinking about we're going to live 100 years, Paula. It's really cool. It's actually something. It's actually the whole time I'm talking to Linda, I'm like, Paula would love this conversation. Oh, wow.

It's a Paula Pan conversation, isn't it? Like, just blow up the whole 30 and out or my career's here, my retirement's here. What if we envision 100 years of actually many retirements all the way along? It's kind of like when you were a kid and you were looking into the future, how cool it was when I would watch the Jetsons and they talk to each other with video playing instead of just on a corded phone. Like, oh, my God, the future. And now it's a Zoom call and we hate it. Yeah. Yeah. Or didn't they have a cleaning robot, which was basically like the precursor to the Roomba? That's right. That's right. Yeah. Except the Roomba doesn't wear a little

made outfit like Thursday. So one star Roomba. I want the made outfit on my Roomba. Yeah, but anyway, so it is a look into the future a little bit. And really, this, I love it when we get so broad that we blow it up. We blow it all up and go, what if all the constructs were using are wrong? What if we took a sabbatical next year? And then another one, seven or eight years from now. What if I went back to college when I'm 50? And that was normal, Paula. It was normal to go back to college when I'm 50 because I need to think about my next career between 55 and 70, right? Yeah. Pretty cool thinking. So whether you agree or not, I think Linda Grattan is a great thing, and that's going to be next Wednesday on stacking measurements. Amaze. And by the way, one more shot off, if you don't mind. Chris Lugar's got a great podcast called Heavy Metal Money.

Big thanks to him for letting me hang out in his mom's basement instead of my own. Awesome. Well, thank you to all of you for being part of this community. If you enjoyed today's episode, please share it with friends, family, neighbors, colleagues. share it with the people that you meet on your family sabbatical. Share it with the people you meet on your 15-minute walk to work. Share it with the people that you meet at parents' weekend at college. Oh, share it with Joe's daughters.

Sounds like Joe's got a couple daughters. Yeah, yeah. Share it with the real estate agent and the housing inspector and your loan officer, like all of the people involved. The housing inspector. I can't know what up here in the attic, but I got a show for you. Yeah, exactly. As you're in the crawl space, like inspecting the foundation.

Hey, hey, that person's going to need something to listen to, like something in their earbuds as they're inspecting the house. 100%. Why not? So share it with all of these people and more because that is the single most important way that you spread the message of F, I, I, R.E. Also, make sure that you're following us in your favorite. absolute favorite podcast player, whether that's Apple Podcasts or Spotify or Pandora, on YouTube, where we live stream this, so you get to see the raw, unedited version. If you haven't joined us on YouTube yet, YouTube.com slash afford anything, please go there,

hit the follow button, hit the notification bell, all of the above, come say hello, comment on one of our videos. We love our YouTube community. So yes, please join us on YouTube. We've got a free workbook, afford anything.com slash F-DoubleI-R-E. It's filloutable and interactive and you can use it as a guide to figure out where, you know, your relationship with the five pillars of double-I-fire. So download it for free at afford-anything.com slash F-W-I-R-E, F-I-I-I-R-E. Thank you so much for tuning in. This is the Afford- Anything podcast. I'm Paula Pat. I'm Joe Sol-C-I.

And we'll meet you in the next episode.