MtoM #131: Nurse Becomes a Millionaire and Finance 101: Student Loan Refinancing

This is the White Coat Investor Podcast. Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom, this is milestones to millionaire podcast 131 nurse becomes a Millionaire still not sure what to do with your student loans? Overwhelmed with how to tackle that giant debt and never changing political climate, the experts@studentloanadvice.com are here to help guide you through the best options to manage your loans. Our experienced staff have consulted on over $250 million in student loan debt, and the average studentloadvice.com client has saved over $190,000. You'll receive a customized student loan plan using the principles of the White Coat Investor. Get answers to all of your student loan questions, gain clarity about your financial future, and start down the right path toward financial freedom. Book a consult today at www.studentloanadvice.com. you can do this and the White Coat Investor can help. Welcome back to the Milestones to Millionaire podcast. This is that podcast where we share in your successes. We want to hear from you the milestones you've reached. Whether it's paying off your car, whether it is, you know, sending your kid to college, whether it's having $100,000 in your HSA, whatever it might be. Maybe you just got back to broke. That's a great milestone. Important milestone for most doctors. You might be a millionaire or a DECA millionaire or financially independent or whatever. We'd love to celebrate it with you and use your story to inspire other White coat investors to do the same. You can apply to come on the podcast@whitecoatinvestor.com Milestones. All right, one other thing you ought to know about. My friend Peter Kim, a passive income md, has put together a fantastic conference. I'll be speaking at this conference. It's September 21st, 23rd, 2023 in LA. Okay. It's a good time. It's called the Physician Real Estate and Entrepreneurship Conference. Got some great speakers, some great courses, some great events associated with the conference. You can check that out. Pimdcon.com is where you can sign up. There's also a virtual option, so check that out. All right, let's get to our guest. This is a little bit unique. You know, this is a lower income person than maybe a lot of people we've had on the podcast. But I think there's a lot of lessons to learn here and we'll talk about them in a minute. Stay tuned. Afterward. I want to talk about student loan refinancing because that is going to become a Very important topic for a lot of white coat investors in about two weeks. Our guest today on the Milestones to Millionaire podcast is Heath. Heath, welcome to the podcast.

Thank you for having me.

Tell us what you do for a living, what part of the country you live in.

Yeah, so the last 12 years I've worked as a nurse and I live in Grand Rapids, Michigan.

Just a nurse. What kind of nursing do you do?

Yep. So I started out in the neurology floor. A lot of strokes, seizures, back surgeries, et cetera. And then about seven years in, I switched over to rehab nursing. And then last year, for about a year, I did some local travel contracts for travel nursing around Michigan.

Okay, to be clear, you are not a nurse practitioner. You are not a CRNA. You are a regular nurse.

Correct. A BSNRN nurse.

And what's your income been over the last 12 years? What's kind of the range of what your income has been?

Yeah, I took some notes here. So I started out back in 2011 at 22.65 an hour, and then I ended at 36.59 an hour. And so per year I made anywhere between like 60,000 to 90,000 a year, depending on how much extra shifts I picked up or how much overtime or incentive pay that I, that I picked up. So between 60 to 90,000. Except for last year I did make like 130, but that's because I was doing the local travel contract, so I was getting paid quite a bit more for that.

130 as a nurse. That's pretty awesome.

Yeah.

How much work were you doing? How many weeks did you work? How many hours a week?

Yeah. So, you know, as nurses, a lot of us do three 12 hour shifts a week. But when I graduated and got into nursing, I would get bored. That's four days off a week. And I would get bored. So I would usually pick up, you know, every few weeks I'd pick up a 12 hour shift or maybe like an 8 hour shift or a couple 4 hour shifts to break it up. So I would, I would say I'd picked up at the, towards the beginning, the first three, four, five years, I picked up a decent amount of overtime shifts.

But now you're just doing three 12s a week.

Yeah. Yep. And so I'm kind of transitioning. So I, I'm still doing a nurse and I actually, I love finances so much that I am doing financial advising on the side to help out some of my nursing colleagues and other people in healthcare. So I'm kind of doing both doing Part time in both.

But that's all new in the last year or so. The finance, correct?

Yep. Exactly. Yep.

Okay. I go through all that information before we actually get to the financial milestone we're going to talk about today because I think it's all relev. Because you are a millionaire. In fact, you're well past being a millionaire. I understand your net worth is about 1.8 million, is that right?

Correct. Yep.

All right, tell us about your net worth. What's it divided into? How much is in your home, how much is investment, real estate, retirement accounts, et cetera?

Yeah. Yep. So the total 1.8 million when I added it all up. So the breakdown of that, about 17,000 in cash. I have about 47,000 in a money market fund and about 30,000 in my HSA, 164,000 in my Roth IRA, 115,000 in a traditional IRA, 31,000 invested in a after tax brokerage account and then real estate. So about 1.4 million is in real estate. The value is around 2 million. And then I have about 600,000 in real estate mortgages.

Very cool. Tell me about the real estate. Do you own a house that you live in?

Correct. Yep. So I did when I graduated about a year end of nursing. After I got some money saved up, I bought my first house and I did house hacking. So I bought my house. It was a five bedroom house, so it was pretty big. Rented out the four other bedrooms to some random people, which was pros and cons to that. Fun. Some was not so fun living with a bunch of random people. But I did that so I could use their rent money that they're paying me to save up for the second house and then just kind of cascaded that way of saving up money for the third rental and the fourth rental. So I have six and a half rentals right now. One of them I bought with my brother. So that's where the real estate is broken down.

Very cool. And how much leverage are you using under the real estate? What's the overall loan to value ratio?

Yeah, so 2 million in total equity and. Or 2 million total in value and then about 600 in mortgages. So I have about 1.4 in equity. If you.

So really not that highly leveraged at all. You're only about 30% leverage, correct?

Yep. And I've, I've looked in it too. Is, you know, I, I started, I graduated in 2011, so I kind of got some good deals on my first few rentals because that was after the 20082009 crash. And then, yeah, I would buy some, fix them up, and I wouldn't refinance all of them. So some of them I would just put the money in and just let the loan stay at a lower balance.

So you're 12 years out of nursing school and $1.8 million. So tell us how you did that. I mean, obviously part of it was investing and you had some leverage involved and some real estate investing, obviously did some house hacking. But, you know, this is pretty remarkable, right? If you look at the money you've made nursing in the last 12 years, it's less than 1.2 million, yet your net worth is 1.8 million. So how do you explain that?

Yeah, I think I like to consider myself a pretty frugal person. So I would, you know, one, one thing which I actually thought of, I don't drink. So that's one thing which I think alcohol is a big expense for a lot of people. When I. When I go out to dinner with my friends, if we're ordering meals, their bill is usually like twice as much than mine because they buy drinks on top of it. But just staying frugal. Like, I don't spend a lot of money on materialistic things. I like to spend it on travel or something that is going to help me get to the goal of what I want instead of just having a bunch of materialistic stuff sitting around my house that isn't going to go anywhere. I've always driven an older car, right? So I've always had a car that's probably eight, nine years older. Right now my car is a 2011. And just having that in the back of my head that I don't need all this fancy stuff when I could instead use my time better. And I've talked to a lot of people that I think money is just really time in disguise, right? Like, we go to work to get money to use that money to buy somebody else's time, and we sacrifice our time to go to work. So I always try to keep that in my mind whenever I spend money is actually I'm spending my time or my future time that I'm going to have to do when I pay for something.

So are you single, married, kids?

I'm single, no kids. So I'm sure that has part of it to do as well that I haven't. I know kids, art can be quite expensive. So, yeah, single, not by choice. I just have not found the right person yet. And I know on a previous podcast episode you mentioned that in the right Partner is one of the best things you can do financially because a divorce splits your assets in half. So just haven't found the right one yet.

Yeah, for sure. The data shows married people acquire more wealth, but only if they stay married.

Correct.

So this is pretty cool. So how far away do you think you are from being financially independent?

So, like I said, I live pretty frugally. My expenses per month are probably 2 to 3,000amonth. And so my rental portfolio could probably support that if I wanted it to. So I would say that I could be financially independent if I want, but what would I do if I'm not working? Like, I feel like it's good to have a goal or to have a. Have something. And even the social networking that you get at work as well can add a lot to your life. So I would say I could be financially independent, but I'm choosing not to because I want to do something else to try to bring value to the world that we live in and bring value to my life. So this fall, I'm actually school that I went to, and I'm going to teach another clinical rotation for the school with new nurses in the hospital. So I think it's still good to be beneficial or do something beneficial and keep working even if you don't have to.

Yeah. So maybe better said you are financially independent, just still working because you find some gratification doing so.

Correct? Yep.

And.

And so one thing I've noticed too is, you know, because I'm financially independent now is maybe I'm not. I'm not picking up a bunch of shifts anymore if I don't have to. Right. I'm choosing to do some other things in life instead of picking up because I put in the hard work to begin with and invested well and invested consistently that now I can kind of start reaping some of those benefits of not having to pick up extra shifts or off shifts, et cetera.

So how does that make you feel at work? Do you enjoy work more or do you enjoy work less now that you get these, you know, sometimes nonsensical tasks that you don't need the money for?

That's a good question. I think kind of some of both. Right. So I enjoy not feeling like I have to go into work. That's beneficial. But if I go work and the hospital or administration is wanting to do something different than us clinical staff might not want to do, or it doesn't seem like that's the right thing to do, then that makes it probably more frustrating because I know that I don't have to put up with it if I didn't want to. So I think it's some of both.

Now, this podcast has occasionally received criticism over the years that we only put on people that make a gazillion dollars and save a gazillion dollars and have a gazillion dollars. And today we've taken a little bit to the other extreme. You know, a lot of people out there would not necessarily consider a nurse to be a high income professional. Although $130,000 last year, you know, is more than lots of pharmacists, et cetera, make. But what's the lesson there for the typical physician that's making $275,000 a year if you've gotten the financial independence by the time that, you know, some of them aren't even coming out of their training?

Yeah, it's actually one reason why I wanted to come on this podcast because obviously it's a little, it's a little nerve wracking, you know, sharing your finances with the hu. A huge audience. Right. But the last few episodes I listened to it really encouraged me to do it as kind of a, a respectful challenge to other residents and physicians that listen to this show that if a nurse can do it on a salary that's much lower, then there's really no good excuse for, for people that are having a higher income not able to do things. It's all about choices, right. If you choose to live as a resident for two or three years after you graduate, like you say, then you're going to be set yourself up for a much better success. If you choose to be the person that goes out and buys a brand new car and a 600, 700 thousand dollar mortgage on a house, then you'll reap those rewards too down the road.

So now I work with lots of nurses and I talk about finance all the time and I'm going to ask a whole bunch of them to listen to this episode. What message do you have for them?

Good question. I would tell them to, you know, Google a financial calculator and just plug in, you know, a certain percentage at a certain amount of years and so you can actually see how much a small amount can grow over a large number of years. Right. I don't think people truly understand how powerful compounding interests can actually be in the long term. Right. The I think the first five years I did my Roth IRA from like 2008 to 2012, I didn't really make any money. Right. But if you look back 12 years, 15 years from now or ago, all that money and how much it's gained over the years. So that'd be my challenge is to figure out compounding interests and truly understand it so that they can help harness it for themselves.

Now, you made a passing remark earlier about house hacking. Let's talk a little bit about house hacking and your experience. Tell us about the, the pros. Obviously you had that extra income, but tell us about some of the bad things too. Maybe why it wasn't such a great experience.

Yeah, so the cons, I mean, you're living with some random people. They don't treat your house as nice as you treat it. They damage stuff. They don't take out the trash. They, you know, they can be loud when you're trying to sleep and you have to work the next day. Actually, when I was doing the house hacking, I think I only had one person who ended up not paying me rent for like three months. Since then I had to evict them or ask them to leave. And I never got that money back. So I was out a thousand dollars, right. From their rent. But in the big scheme of things, out a thousand dollars of what it's allowed me to accomplish is a very small amount. Right. So those are some of the, the negatives that you're. When you're living with random people.

So were you more picky in choosing your, you know, roommates, your tenants than you might otherwise be if it was, you know, one of your other properties?

I wasn't. If I could go back in time, I probably would be a little bit more picky, but I was just, I was just all about, you know, whoever's going to pay me the rent and pay it on time, then I could deal with living in that situation for a short term because I knew it wasn't going to be a long, long term thing.

All right, well, by the time everything's said and done, 30 or 40,000 people are going to listen to this podcast. What have we not talked about that you think they ought to hear?

I would say the one thing that we didn't touch on that I have a good quote that I think everybody would like from James Clear. And it's about, instead of being the learner, actually be the doer. Right. So his quote goes, the teacher learns more than the student, the author learns more than the reader, and the speaker learns more than the attendee. The way to learn is by doing. And so I would say if they've been thinking about trying something new or trying, trying a podcast or Doing this is just to do it, because we all start somewhere, and it's probably not going to be the best quality to begin with, but as you do it more and more with practice and over time, you're going to consistently get much better at it.

Awesome. Well, Heath, congratulations on your success. It's pretty awesome to be financially independent, and so congratulations to you on that, and thanks so much for coming on the podcast. Inspire others to do the same.

Yeah. Thank you for having me. Hope it does. All right.

Hope you enjoyed that interview. The truth is, income matters, right? The more income you have, the easier it is to build wealth. But it kind of doesn't matter because people that don't have that high of an income can build wealth, too. Yes, they need to do things to boost their income, like this nurse did. Yes, they need to save maybe a bigger chunk of their money, and maybe they need to do it for a longer period of time. But the point is, it can be done. And so I love sharing stories like this because I think it emphasizes to those of us who are making $200,000, $300,000, $400,000, $500,000 a year or more that this is not that complicated. And you really don't have a huge excuse when you have that sort of an income. Right? You got to get this stuff taken care of. It's just a matter of applying some financial literacy, some financial discipline, and you got the combination of those two things. In our world, it's like having a superpower because it's so rare to have both of those. But you can do it. You can put those two together and you can build wealth no matter what your income. All right, I promised you at the beginning that I was going to talk a little bit about student loan refinancing. As this podcast drops, it's August 14th, 2023, and guess what starts happening on September 1st this year. That's right. That student loan holiday is over. It's over. That great announcement made on, I think it was March 13, 2020. President Trump gets up there in front of the White House, declares everything an emergency and says student loan are going to zero percent and no payments. And it's been that way for three and a half years. You don't owe a dollar more than you did before in federal student loans, and you haven't had to make a payment for three and a half years. Well, that all goes away September 1st. Starting September 1st, the interest starts accumulating again. And within a month or so after that, you're going to have to start making your first payment again. And so that means it's time to be thinking about your student loan plan. A lot of you have been thinking about your student loan plan. Our sponsor for this episode, studentloanadvice.com has booked a lot of consults for this late summer and early fall. They're talking to all kinds of people about their student loans and getting plans in place. So check them out. If you have a complicated situation and you need some help putting together your student loan plan, they will help you. Many of you don't have a complicated situation, right? You've just been waiting until the holiday ends to implement your plan. And maybe your plan is you got a whole bunch of cash sitting around and you're just going to take your student loans in a corner and drop an anvil on them on September 1st. So don't forget to do that before the interest starts accumulating. Others of you have been waiting to refinance. You knew that refinancing was right and you made a decision a year or two ago that you'd take 0% for a little bit longer as long as it went. Instead of refinancing to 2% or 3%, well, in the meantime, interest rates have gone up dramatically, so you've lost the opportunity to refinance to 2% or 3%. But I expect you should still be able to refinance to something around 5%. And maybe that only knocks a half percent off your student loans. Maybe it knocks 1% or 1.5%. Just depends on what your loans are at. But if you're going to be paying them back and you don't need the protections of the federal system, the federal student loan system, you're not going for PSLF, you're not going for some IDR taxable forgiveness in 20 or 25 years and you can get a lower rate. You should refinance. And the best place to refinance is through the links at the White Coat Investor. So if you go there, you'll see on Our recommended page, whitecoatinvestor.com Recommended you can go to student loans and, and you'll see the folks we recommend. If you go through those links to refinance, you'll get cash and they'll send you a check or they'll put it toward your loans if you want, but you get cash back. And so that's a great benefit. We're also, at least for a limited time, we're giving you fire your financial advisor, our flagship course. If you refinance a student loan through those links, so be sure to check that out as well. Now, you may find you go on there and you've got student loans, 5.4% or something, and the best they can give you is 5.5%. What's the worst that happens? You waste a little bit of time, like three minutes finding that out, right? You don't even have a hard credit pull on your credit. But you know what, you might also find out that you qualify for 4.75 or something like that. So you can't know unless you actually check on there and go through three or four or five of these and see what rate they're going to give you. Now, a lot of you had something way worse than 5.5%. Maybe you have 6.8%, maybe you got 7.8%, maybe you went to a Caribbean school and you got 10% loans. I don't know what you have. But if you can get a lower rate and you're not going for PSLF or some other federal student loan forgiveness plan, you ought to refinance your loans. It will save you money. You can make the same payments and more of it will go to principal. You'll just be out of debt sooner. But this is your warning. Don't say, nobody ever told you it's time to do something about your student loans again. This fall is the time. It's time to get that done. If you've been putting it off and a lot of you have, don't focus on the payments, right? A lot of you are like, well, they're still using my 2019 income to determine my payments. Payments don't matter so much. I mean, in repay and save, the payments do matter because it means less is accumulating. But still it doesn't help you to pay back your student loans just to have a low payment. In a lot of cases it makes it harder because loans are going up in the loan balance is going up. So get this stuff taken care of. Know what's going on. If you're one of those who's had your head in the sand ignoring it, pour yourself a stiff drink, sit down at the dining room table with your partner, if applicable. Actually write down what you owe, how much, what the interest rates are, what the payments are. Let's get on top of this. It's time to get it done. All right? If you need help or you're just feeling overwhelmed, you're really not sure what to do, you're worried about the political climate, whatever the experts@studentloanadvice.com, they're here to help guide you through the best options to manage your loans. They've consulted on over $250 million in student loan debt. It'll be a whole lot more than that by the time you hear this podcast because they're super busy right now. But the average studentloanadvice.com client has saved over $190,000. A lot of that is additional public service loan forgiveness they didn't know they were eligible for. For example, you'll receive a customized student loan plan using the principles of the White Coat Investor and get answers to all of your student loan questions. You'll gain clarity about your financial future. You'll start down the right path toward financial freedom. Book your consult today@studentloanadvice.com you can do this and the White Coat Investor can help. All right, we've come to the end of another Milestones to Millionaire podcast. Hopefully we've educated you a little bit about what can be done even on a low income, relatively low income. I mean, the truth is that's actually a pretty good income compared to the average American household income, but it's a low income in the white coat investor community. And we've talked a little bit about student loan refinancing. I hope this information is useful to you. Let us know how this podcast can help you better. Our goal here is to serve you. We're here on a sunny afternoon in Utah recording podcasts and we're doing it for you because we want to help you. So if this is not helpful, let us know that we'll fix it until it is helpful. We want to inspire you. We want to educate you. We want to encourage you. Because you can do this. We'll stand by you every step of the way. See you next time on the podcast. The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.