Author Topic: 51 years old-can I retire next year…or now?  (Read 1649 times)

MamaMinou

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51 years old-can I retire next year…or now?
« on: November 19, 2022, 04:04:20 PM »
Life Situation:
Me: 51 year old female, married filing jointly, work in healthcare (government RN). Partner:  60, solo self-employed. We live in the PNW region of the US and have 2 adult kids, one still living at home & on my health insurance.

I am burned out! Tired, and so tired of routines. Tired of office politics, grumpy coworkers, sitting in a cubicle, inflexible rules, workplace stress.

But: ongoing work positives are kind colleagues, being well compensated with good health insurance for self & family, meaningful work, and patient interactions.

Gross Salary/Wages:
Self: 100k; Partner: 60 k

Individual amounts of each Pre-tax deductions
Self: 457b 26k (30k in 2023), HSA 6k;
Partner: Traditional IRA, 6k
Total: 38k
AGI: 122k

Rental Income, Actual Expenses, and Depreciation:

2022 will be our first full year of owning a rental property
Income: 4k/mo; 48k/yr
Expenses: 3,600/mo, 43,200/yr
(Mortgage, taxes, repairs funds, property management, landscaping, water/garbage bills)
Rental Income: 400/mo; 4,800/yr

Current expenses:
Semi-fixed Expenses:
Home Mortgage 850/mo; 10,200/yr
Current health spending: 650/mo; 7800/yr
Property taxes on home: 400/mo; 4800/yr
Gas for car: 125/mo; 1,500/yr
Car maintenance: 100/mo; 1,200/yr
Groceries & Household items: 500/mo; 6,000/yr
Life Insurance: 150/mo; 1,800/yr
Home & Auto Insurance: 100/mo; 1,200/yr
Home Repair: 100/mo; 1,200/yr
Misc: 50/mo; 600/yr
Utilities:
Water & Electric: 125/mo; 1,500/yr
Garbage: 25/mo; 300/yr
Phone: 80/mo; 1000/yr
Internet: 75/mo; 900/yr
Total “Needs” Expenses: 3,330/mo; 39,960/yr

Non-fixed Expenses:
Clothing: 25/mo; 300/yr
Streaming/online news services: 100/mo;1,200/yr
Entertainment/eating out: 25/mo; 300/yr
Gifts: 100/mo; 1,200 yr
Charitable Giving: 100/mo; 1,200 yr
Travel: 500/mo; 6,000/yr
Yarn/art/craft supplies: 25/mo; 300/yr
Home/garden beautification: 25/mo; 300/yr
Total “Wants” Expenses: 900/mo; 10,800/yr
Total “Needs” + “Wants” Expenses: 4,230/mo; 50,760/yr

Expected ER expenses:
About the same, except healthcare, the big scary unknown
Assets:
Self: Asset allocation in low cost index funds: 85 % stocks;15% bonds   

Taxable: 125k
457b:300k
403b: 22k
Roth IRA: 155k
Trad IRA: 52k
HSA: 27k
State retirement fund:88k
Cash/emergency fund: 8k
Self total assets: 777k

Partner:
   Traditional IRA: 68k
   Roth IRA:11k
   SEP IRA: 16k
   Cash/emergency fund: 34k   
Partner total assets: 129k

Self+ partner total assets: 906k

Possible Future Additional Income:
Self:       State pension 2k/mo; 24k/yr beginning at age 65 if I stopped working now
      SS: 1,500/mo; 18k/yr beginning at age 70 if I stopped working now
Partner:   SS: 1,500/mo;18 k/yr beginning at 67 if he stops working now

Liabilities/Debt:

Mortgage on Home: 186k (30 yr fixed, 3%) (valued at 450k)
Mortgage on rental duplex: 364k (30 yr fixed, 3.625%) (valued at 550k)
Total Mortgage Debt: 550k
 
Specific Question(s):
Please, bristly and bearded Mustachians, if you have made it this far in my case study, share your honest thoughts, advice, and opinions.
I want to quit by 12/31/23.
1)   Is it realistic to walk away?
2)   Would you recommend a bigger cushion?
3)   What about the unknown health insurance conundrum?
4)   Should I be planning to cover all expenses (not just half) in case something happens to my partner or our relationship?

Thank you…




« Last Edit: November 19, 2022, 07:30:03 PM by MamaMinou »

zolotiyeruki

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Re: 51 years old-can I retire next year…or now?
« Reply #1 on: November 19, 2022, 07:52:53 PM »
Well, the 4% rule would say that you need $1.25 million in order to cover your desired $50k/year spend, but that $50k doesn't include healthcare.

Is your $900k enough?  Without modeling it out, it's hard to say.  It sounds like you need to build yourself a spreadsheet, listing amounts and sources of income for each year, as well as expenses and expected returns for each year moving forward.  That way you can forecast that you'll need to budget $X for health insurance until you're old enough for Medicare, and that your SS and/or pension will start providing income of $Y/year in year Z.  How good are your Excel skills?

I suspect that because you won't be relying solely on your own funds in perpetuity, it's fine to be less conservative than a 4% withdrawal rate.

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #2 on: November 19, 2022, 10:41:53 PM »
Zolotikeryuki, thank you for your reply! My Excel skills are basic at best, but my partner offered to help build that out. One thing I didn’t include in net worth, since I wasn’t sure how to account for it, is mortgage equity. We currently have 186k in the rental duplex. I won’t count home equity since we have to live somewhere. Our current budget includes 650/mo for health spending, since I use the HSA for investment. I am guessing that without job insurance we might spend another $500/month or more. But then I wonder about ACA subsidies if our income dropped.

I think my partner wants to work a few more years.

I was secretly hoping someone would say Go for it! You’re in a good place! But I also want to be prudent.

Ladychips

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Re: 51 years old-can I retire next year…or now?
« Reply #3 on: November 19, 2022, 10:44:27 PM »
I have no answers but I do have some questions:

Are you SURE about your spending? Have you tracked (over a significant amount of time)  what you actually spend? When I see round numbers, I think general calculations, not actual spend...

You list 88k in state retirement funds and $2,000 in future pension. Is that the same pot of money or different pots? I'd want you to be sure you aren't double dipping when you count it.

What would your spending be without your partner? If your relationship would end, what would your assets and liabilities be then?

Have you looked at ACA plan costs? What will your adult child do for insurance ? Does your child know they will need to provide their own insurance next year?

Have you made a plan how to withdraw your money (how much from which pots at which age)?

Is your partner going to continue working? If so how long (and at what contribution to the stash)? If not, is your partner prepared to live on the stash? Is your partner supportive of you FIREing?

I don't need to know the answers to these questions, but you do.

I don't know if you have enough to FIRE, but I do know you are in excellent shape and you at the very least have FU money and therefore lots and lots of choices.  Well done!

former player

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Re: 51 years old-can I retire next year…or now?
« Reply #4 on: November 20, 2022, 02:20:06 AM »
Looking your figures, on the income side if you worked another year full-time as planned you would have another $38k to add to your current $900k, plus reinvested dividends plus any market increase.  You also have $4.8k in rental income which at 4% is another notional $120k.  Together, barring a big drop in the market, they would put you at the 4% rule.  Adding to that the likelihood of your partner continuing to work and you are fine to retire at the end of another year's full time work.


I am burned out! Tired, and so tired of routines. Tired of office politics, grumpy coworkers, sitting in a cubicle, inflexible rules, workplace stress.

But: ongoing work positives are kind colleagues, being well compensated with good health insurance for self & family, meaningful work, and patient interactions.

You have asked for financial advice but the above is what really sticks out to me - the 4% rule works but doesn't take account of emotions.  In fact, it is designed not to, it is designed to make people stop relying on their emotions and think logically and rationally based on a very useful piece of information they may not come across otherwise.  But your feelings come across so strongly in those two sentences that they are what I noticed most about your case study.

I see that you are a nurse in government health care.  Is there a possibility of reducing the hours you work?  Before I FIREd I worked a four day week for a number of years and it did wonders for keeping the good things about work and limiting the impact of the bad.  The beneficial effect of working 4 days with 3 days off as against 5 days with only 2 days off is significant.  Other part time working options may be available.  Or indeed other part-time jobs.  The thing to do is to consider alternatives to the cliff edge of working full time and then nothing.  If work can be made more congenial to you than it is at the moment then you could live just as well on a part-time income, putting less into your pension but letting it grow rather than taking money out.

You do have some big expenditures that could be reduced or cut out if things got tight:  travel, charity and gifts.  I agree with Ladychips that if you are going to retire you need to be sure of your expenses, you would need to keep a complete record for the next year to see how they pan out in detail before taking the plunge.  I would also note on expenses that you have not accounted for major expenses such as car replacements, replacement appliances, and property updates and improvements.  I also note you have an adult child still at home: are they a net financial contributor or expense and how long are you expecting them to stay?

Overall, I agree with other posters: you have put yourself into an excellent position and have the freedom to make some big choices.


Omy

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Re: 51 years old-can I retire next year…or now?
« Reply #5 on: November 20, 2022, 07:21:34 AM »
This scenario would be too lean for me, but it's definitely workable - especially if you are open to part time work and/or tightening the belt as needed. Full disclosure: I'm super conservative, so I needed a stash that would allow me not to worry ever about money....so I'm at the other end of the spectrum.

However, we have spent much less than expected in our 3+years of being FIREd. The ACA has been a huge help in keeping premiums manageable. We use way less gas than before, our dining out is a fraction of what it was prior to FIRE, and travel expenses have been low thanks to the pandemic.

If you are resourceful and frugal, you will find ways to optimize your expenses and make money when you need to cover a shortfall. This was something I didn't fully understand when I was oversaving for FIRE.
« Last Edit: November 20, 2022, 12:50:56 PM by Omy »

snic

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Re: 51 years old-can I retire next year…or now?
« Reply #6 on: November 20, 2022, 09:25:56 AM »
I see that you are a nurse in government health care.  Is there a possibility of reducing the hours you work?  Before I FIREd I worked a four day week for a number of years and it did wonders for keeping the good things about work and limiting the impact of the bad.  The beneficial effect of working 4 days with 3 days off as against 5 days with only 2 days off is significant.

My wife works in health care and I can absolutely second this. Especially when our kid was in elementary and middle school and she had a high-stress job, working 4 days/week did wonders for her mental health. (She's since lucked into a full-time job that is a lot less stressful than her previous jobs, so she's happy working full time for now, probably until we retire.)

Dicey

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Re: 51 years old-can I retire next year…or now?
« Reply #7 on: November 20, 2022, 09:48:23 AM »
I see a couple of red flags: you say you think your partner wants to continue working...

As others have pointed out, this is something both partners need to be in sync on. One doesn't have to look far for tales of post-FIRE divorces.

Of more concern is your partner's lack of savings.  It's one thing if they were the SAHP, but the reason for this is an important consideration,. Are they spendy? You have enough (or close to enough) to support yourself, but your partner's situation could torpedo your plans.
« Last Edit: November 20, 2022, 05:57:15 PM by Dicey »

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #8 on: November 20, 2022, 11:22:25 AM »
Thank you all so much for your thoughtful and thought-provoking replies.

@Ladychips , you are correct, this are rounded-up numbers and not actual amounts. I'm pretty sure that actual spending is below what's here. It's a little hard to account for because of the way my partner and I divide expenses; I pay for some and he for others, and we don't sit down and compare at the end of month. I know that monthly average for groceries AND HH sundries is closer to $400; we are both fairly frugal, but myself more so.

My partner isn't exactly spendy (he does like tech upgrades but those seem to be paid for by his business...) and he is supportive of FIRE for me. He can see that I'm not happy and wants me to be. It took him a long time to come around to the idea that he would ever want to retire one day, but he's there now! However, he really likes what he does, just would like to slow down and take on fewer clients.

The 88k in a state target-date plan is separate from the monthly pension. In my state 3% of each paycheck goes into this account. some organizations have employees pay it but other employers contribute on behalf of employees (my situation).

@Omy , I am conservative too, just feeling so urgent some weeks. For a long time I thought that I should have our family expenses x 25 to be able to cover it all, and just recently realized that I might be able to look at it a different way and be closer to FI than I thought.

@former player , you're right, it's the emotional side that is the key. I am feeling so frustrated with my current situation. If I could go down to 4 days a week (or 3! The dream!) in my current position it would be much better. Government isn't known for its flexibility...my employer is no exception. For the last 6 months, I have been trying various ways to get to 32 hours a week and encountering roadblocks for various reasons. I will keep trying but it doesn't appear promising.

For the last few years my goal has been to invest at least 52k/yr  between retirement/HSA/taxable accounts, and then employer puts in 1.5k for HSA and 3k to state IAP fund. So one more year would add to my stash quite a bit. Logically I know I should stick it out, and see where finances are at end of 2023.

@Dicey , I have a little hesitation too, I think that once I do RE my partner may decide he wants to join me. H doesn't have as many hobbies though--his work is kind of his hobby, he likes to volunteer in the same field. The reasons for his smaller savings are complicated, he remains suspicious of investing in the market, which is why the rental duplex (and larger cash stash). It's tangible and feels safer to him. I think of our rental property as being his though in both of our names. Previously he had worked to pay off our home mortgage early, but then we had to take out a mortgage on it to buy the rental.

Thank you all, reading your responses I have some good steps to move forward:
1) Track shared expenses with partner to get a complete picture and see where we might trim or need to add (home repair)
2) Build up a spreadsheet looking at where the money would come from for each year of early retirement until pension/SS
3) Keep trying to negotiate a 4 day a week schedule (and maybe spend out my PTO this year)
4)Talk more with partner about his/our plans
5) Look into ACA and talk with adult child about what this means for them

For the emotional part, I'm sure there are threads elsewhere, but do you have suggestions for pushing onwards through burnout?

MaybeBabyMustache

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Re: 51 years old-can I retire next year…or now?
« Reply #9 on: November 20, 2022, 11:42:49 AM »
I'm not a rental property expert, but why do you own it if it's only generating under $5k assets/year?

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #10 on: November 20, 2022, 12:14:34 PM »
@MaybeBabyMustache , it’s the hope that it will generate more income soon! Unfortunately due to my error, we rented one of the units under value (to my coworker…) in the beginning. Partner is also paying $200/mo for landscaping services, which I could eventually take over.

Ladychips

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Re: 51 years old-can I retire next year…or now?
« Reply #11 on: November 20, 2022, 12:19:26 PM »
Yea! Now you are thinking in concrete actionable terms. THAT'S how I dealt mostly with my burnout. I spent alot of time on the mechanics of how to fire. It took the focus off my job and also helped me feel confident in my decision. Win-win.

Love the idea of using your PTO to make your own 4-day weeks.  I had a ton of time built up.  My last 3 years I worked only a handful of 40 hour weeks. I highly recommend it.  I also wanted to say that with your stash and the shortage of health care folks, you probably have more leverage than you think.

Ps - am I the only one who chuckled at @Omy response with the user name of ONE MORE YEAR!! @Omy ,You might link your journal...I've always found it  very interesting conversation about the decision making process of retirement, omy-ing, and security (I mean that sincerely).

Omy

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Re: 51 years old-can I retire next year…or now?
« Reply #12 on: November 20, 2022, 12:48:06 PM »

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #13 on: November 20, 2022, 01:26:07 PM »
@Omy , that was a great thread! You were in a much more secure/padded place financially, but it really illustrates the emotional parts of both FI and RE. How are you liking your own RE?

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #14 on: November 20, 2022, 01:28:32 PM »
Thanks @Ladychips ! I think you’re right, it is time to get concrete with plans. For 2024!

Psychstache

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Re: 51 years old-can I retire next year…or now?
« Reply #15 on: November 20, 2022, 01:38:54 PM »

I am burned out! Tired, and so tired of routines. Tired of office politics, grumpy coworkers, sitting in a cubicle, inflexible rules, workplace stress.


I know this wasn't really the question, but others have covered the financials. Given the critical shortage of nurses can you just....not do the stuff you don't like? Ignore political or grumpy coworkers (like walk away from them anytime they try to talk to you), ignore BS rules (assuming they are not related to patient care), and just generally give several shits less than you do now? I know this is easier said than done, but it could go a long way to helping your mental state. Even if they ignore the critical need and do let you go, then worst case you can either make it work on your current budget or find another RN job to fill in the gap.

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #16 on: November 20, 2022, 02:16:15 PM »
@Psychstache This is good advice but I find it hard to put into practice. I will keep trying though.

There are just so many other things that I want to be doing instead of going to work. Fixing up my yard and home. Reading, writing, knitting, baking, hiking, drawing, yoga.

feelingroovy

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Re: 51 years old-can I retire next year…or now?
« Reply #17 on: November 20, 2022, 03:44:17 PM »
You really shouldn't push through the burnout.

Even if you're not quite there for retirement, you do have FU money. You're not stuck in this particular job.

If they won't let you go part time, you absolutely can do any and all of the following:

Take 6 or 12 or 24 months off.
Find a new part time job.
Start working per diem, and only take shifts when you want.

I'm not in nursing but my understanding is there is high demand and many options for flexibility.

You are in a position where you have options.

Omy

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Re: 51 years old-can I retire next year…or now?
« Reply #18 on: November 20, 2022, 07:23:33 PM »
@Omy , that was a great thread! You were in a much more secure/padded place financially, but it really illustrates the emotional parts of both FI and RE. How are you liking your own RE?

It's going well. I don't miss working, but retiring right before covid put a damper on our travel plans. The process of figuring out what to do with ourselves has been interesting.

BikeFanatic

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Re: 51 years old-can I retire next year…or now?
« Reply #19 on: November 21, 2022, 03:15:33 AM »
When I was a clinical nurse and burnt out, but didn’t have enough money  to retire, I was able to cut back to 32 hours and that made a huge difference. I also eventually walked into a full time desk job probably a year later, and finished up my career with a new position, that helped me hang on longer as I was challenged in a new way, and not taking care of patients took a lot of stress away. I was at my desk job when Covid hit and was able to move as I was working from home.  Well 3 years at the desk job , I was comfortable enough to pull the plug.
Then Divorce happened!
Stock market crash too and inflation. Well now 2 years later , I did some very part time work, but mostly 100 percent retired and loving it. I wound up making some extra money on real estate sales so we could separate assets, and from that Covid price inflation I ended up with more than I planned for, despite loosing money in the divorce.
All that said no you should hang on a bit longer, work your PTO in for less hours right away, then look for part time work so you can hang on. I feel it is so difficult to go back once you left. Like I feel it would be a disaster for me to go back to work now! But it was easier when I was working to feel that part time work was a vacation and even the desk job was like vacation almost at the beginning, so different in the intensity of the job.
Good luck I hope you find a sweet spot for your mental health and financial well being!


GilesMM

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Re: 51 years old-can I retire next year…or now?
« Reply #20 on: November 21, 2022, 07:58:20 AM »
Your retirement margin is pretty slim.  I would be more comfortable at 3.5%.  Using your $50k/yr number this works out to about $1.4 million.

The rental duplex is a risk as it could require significant maintenance at any time.  It is grossing less than 1% (should be $5500/mo).  Inflation could push rents up or a recession could see them fall along with property value. I would sell this and put the proceeds (maybe $150k) in your post-tax investments.  This gets you up to about $1.05 million saved.

If you could save another $70k/yr then you could retire in five years.  If sooner, you risk having to cut into the "wants" budget significantly.

Dicey

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Re: 51 years old-can I retire next year…or now?
« Reply #21 on: November 21, 2022, 08:59:55 AM »
Your retirement margin is pretty slim.  I would be more comfortable at 3.5%.  Using your $50k/yr number this works out to about $1.4 million.

The rental duplex is a risk as it could require significant maintenance at any time.  It is grossing less than 1% (should be $5500/mo).  Inflation could push rents up or a recession could see them fall along with property value. I would sell this and put the proceeds (maybe $150k) in your post-tax investments.  This gets you up to about $1.05 million saved.

If you could save another $70k/yr then you could retire in five years.  If sooner, you risk having to cut into the "wants" budget significantly.

You may have missed this response after I asked why the partner's NW numbers were so low:

@Dicey , I have a little hesitation too, I think that once I do RE my partner may decide he wants to join me. H doesn't have as many hobbies though--his work is kind of his hobby, he likes to volunteer in the same field. The reasons for his smaller savings are complicated, he remains suspicious of investing in the market, which is why the rental duplex (and larger cash stash). It's tangible and feels safer to him. I think of our rental property as being his though in both of our names. Previously he had worked to pay off our home mortgage early, but then we had to take out a mortgage on it to buy the rental.
Not likely that selling the rental is an executable option. Probably not interested on partying over at the DPOYM clubhouse either.

MamaMinou

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Re: 51 years old-can I retire next year…or now?
« Reply #22 on: November 21, 2022, 06:34:18 PM »
@BikeFanatic , thank you for your nursing perspective. I am going to try to engineer 4-day weeks using PTO, and also shift focus a bit.

@GilesMM , we are hoping that the rental duplex will become more profitable next year. It should in our local market…but who knows.

@Dicey , I have to ask, what is the DPOYM clubhouse???

Freedomin5

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Re: 51 years old-can I retire next year…or now?
« Reply #23 on: November 21, 2022, 08:35:55 PM »
@BikeFanatic , thank you for your nursing perspective. I am going to try to engineer 4-day weeks using PTO, and also shift focus a bit.

@GilesMM , we are hoping that the rental duplex will become more profitable next year. It should in our local market…but who knows.

@Dicey , I have to ask, what is the DPOYM clubhouse???

I'm not Dicey, but DPOYM stands for "Don't Pay Off Your Mortgage".

Dicey

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Re: 51 years old-can I retire next year…or now?
« Reply #24 on: November 22, 2022, 12:04:58 AM »
@BikeFanatic , thank you for your nursing perspective. I am going to try to engineer 4-day weeks using PTO, and also shift focus a bit.

@GilesMM , we are hoping that the rental duplex will become more profitable next year. It should in our local market…but who knows.

@Dicey , I have to ask, what is the DPOYM clubhouse???

I'm not Dicey, but DPOYM stands for "Don't Pay Off Your Mortgage".
Thank you, @Freedomin5!

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/