Hoarding Cash

Michelle realized she's emotionally attached to her cash. She knows she should pay off her house, but she's having trouble letting go of the money. Dave talks her through her thought process.

QUESTION: Michelle in Los Angeles realized she’s emotionally attached to her cash. She knows she should pay off her house, but she’s having trouble letting go of the money. Dave talks her through her thought process.

ANSWER: Once you have lived in extreme lack or you have gone through an extreme situation, you really have a chance to become a money hoarder. When I went through the bankruptcy and lost everything 20 years ago, I went through a period of time where I didn’t care if I made any money on my money. I just wanted a pile of it. It was an emotional thing. It just gives you some comfort.

There’s a part of this we’re both agreeing with, and we’re saying it’s logical. You took that hit in the dot-com. In your family of origin, you had those issues. I see how you get there. What you have to do is say this is personal finance, which means that the positive emotions that lead you to wisdom are part of the equation. How you feel about your children is part of the equation. That’s not an academic mathematical discussion. Your marriage and relational intelligence and how the money issue flows in there is not an academic discussion. That’s part of the personal part. It’s also finance, which is mathematic and academic.

You have to have this hybrid between relationships and reasonable adult feelings and math. Then you have intelligent and wise personal finance. I want to validate your feelings to a degree. If you paid off your house, you’d have $45,000 left.

Logic is a part of this, and the other part of it that’s mathematical and you’re leaving out in a sense is risk. I’m not totally blowing you out of the water that your feelings are wrong. But if you pay the mortgage off and you hate it, you can always go get you a mortgage. Understand also that all of the money now going to mortgage payments will be going to rebuild savings. I’m also tricking you because if you ever pay this off, you’ll never go back. There’s another thing you haven’t anticipated because you’ve never been there yet. There’s a peace that comes from having a $2 million paid-for home in California making $100,000 a year. You will never sacrifice that peace again. You’ll like that more than the cash once you get there. It’s an unexpected peace and an unexpected pleasure that you can’t anticipate yet. I’m going to beg you to try it.