MtoM #15 - Financially Independent Military Periodontist

This is the White Coat Investor Podcast. Milestones to celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali. This is Milestones to Millionaire podcast number 15, the Financially Independent Military Periodontist. If you want to be a guest on this podcast and share your financial story, we'd love to have you. If you have accomplished a milestone of any kind, whether it's paying off debt, building a certain amount of net worth, becoming financially independent, receiving public service, loan forgiveness, whatever it is, we want to celebrate with you and use your story to inspire your fellow White Coat investors. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school, or residency. Even though your family and perhaps even your business rely on you to be the Chief Financial Officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance, and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this, and the White Coat Investor can help. All right, we've got a special guest for you today. Let's get him on the podcast. All right, our guest today on the Milestones to Millionaire podcast is Casey, a military periodontist. Welcome to the podcast.

Good to be here, Jim. Good morning.

So tell me a little bit about you, your specialty, and how far you are out of training.

So I am a periodontist in the Air Force, and I am 15 years out of training. I was in a military training program before that for three years. So I've been in the Air Force a total of 18 years.

Awesome. And what accomplishment are we celebrating with you today?

Well, achieving financial independence on a military salary at a relatively early age, I guess. To me, that's the milestone I've achieved, and it's an exciting one for our family.

Now, this is a little bit of a different conversation than we've had with some others. So let's talk both about your net worth. What's your approximate net worth as well as the pension you have or are expecting?

That's exactly right. Our net worth is right at $1.5 million. That doesn't include a house at all because we don't own a house. We've moved around so many times, but it's 1.5. So that's the investment portion, but the pension Portion, which I'll get here in four years when I can retire. That's the other portion that brings down the total amount of investment nest egg that I actually need to draw off of. And so that's really opened the doors. Without the pension, I don't think we'd have that independence at this early stage.

Awesome. And so what do you expect as a pension four years from now? How much do you expect that to pay you a month?

Good question. So in today's dollars, it would be right at about 80,000 a year. For me as a retiring colonel, that's.06. So in today's dollars, 80,000. That does come with a cost of living adjustment. So it'll go up every year with inflation or trying to keep pace with inflation. And that will start for me if I retire in four years, I'll be 48 years old. So it's not a pension I have to wait on someday. And it's not one that's stagnant. It goes up with infl.

And there are other benefits that come with it.

That's exactly right. You know, you have military health care for me, my wife, my dependents, that sort of thing. And so it opens a lot of doors that I don't think I really counted on way back when, when I signed up for this dental school scholarship through the Air Force back in the day. I learned about this later and thought, you know, that's actually an important key to our financial independence.

Yeah, it's interesting. You talk to early retirees and they're all worried about paying for health insurance. If you added up somebody in their 50s, it's not unusual for them to be spend 25,000 or even $30,000 a year on health insurance. So it's not an insignificant part of that pension for sure. Now, you've already made colonel?

Yes, sir. Yeah, I made it, I guess about four years ago.

Oh, congratulations. Very well done. Okay, so tell us about what the other portion, your net worth. This $1,500,000 and none of it's home equity. What is it divided into?

Good question. So it is a typical Boglehead's three investment portfolio. So it's about 50% stock index, 20% total international stock index, about 20% total bond index with some TSPG fund. And then I have about 5% in a REIT index. Not enough to move the needle, but it's just a small portion.

And most of that's in retirement accounts. Most of that's in a taxable investing account.

Where's it at most of that, that's all in my military 401, we call it the TSP or Thrift Savings Plan. Roth IRAs, some in traditional IRAs and most of it in a taxable account.

And what's been your range of income throughout your career?

So when I started, I know you did the same back in the day, but it was somewhere around 75,000 a year when I was a young captain in the Air force as a resident. And right now it's up to about 260k, which is on the high side. We live in a high cost of living area here in the national capital, and so my housing allowance is higher, so I make 260ish. If I live somewhere cheaper like Texas, I'd make a little bit less based on that scaled housing allowance.

Now, some of that, I assume, is because you're a colonel with a lot of years of service.

That's right.

Is there also a bonus because you are a dental specialist?

Yes, sir. That's it.

All right, tell us a little bit about how much you spend. I mean, you're financially independent now. You got a certain amount of money coming in. What do you guys actually spend in a given year? Have you added it up?

Yeah, that's a good question. So I have five children and we are single income, so it's just my income. My wife is a homeschooling mom, so she works harder than I do every day. But our spending firm, family of seven is about 130,000 a year. That includes taxes and tithe to our church. So counting tax and tithe, it's 130k a year right now.

Okay, so that 80,000 goes a long way toward that.

It does, it does. And you know, we live frugally. And between our frugal and our highest savings rate, I invest about 100 grand a year over the past decade or so. Maybe a little less a decade. So those two in combination keep our expenses down.

You know, it's interesting talking to doctors and my audience agrees with you that you are very frugal. But if this were a typical FI blog or podcast, everyone would say 130,000. That's a ton of money. You know, I know that's twice the average American household income. So it's. It's all relative, right?

That's exactly right.

Your parents obviously didn't pay for your school. The military paid for your school. Did you receive any sort of an inheritance or anything?

Nothing like that. My wife and I both grew up maybe lower middle class. Middle class, that sort of thing. So it was all on us student loans, that sort of thing.

And how much debt do you have currently?

Zero debt.

Completely debt free.

That's right.

And what would you say were the secrets to your success? How did you and your wife and your five children become so wealthy?

Well, I think it certainly wasn't being smart early on. I didn't invest hardly anything in my 20s or even my early 30s and I'm only 44 now. We also made a mistake of getting into a variable universal life insurance policy. You know how those go. So it wasn't smart early on. But I think the secret really has been frugal living. We drive 15 year old Honda and Toyota. We don't have a flashy lifestyle, although you know, we still spend on vacations and sports and things like that. So my kids would tell you they've never had to do without, but I think it's just a frugal lifestyle, not a whole lot of luxuries. I could spend more on a house but I don't because I'd rather have the financial freedom earlier at say age 48 instead of 60.

And what advice do you have for those who are behind you? Let's go back a decade or two. Let's say we got a medical student or a dental student living on an HPSP scholarship. What would you tell that person?

Well, I think I would tell them don't be so drawn by the higher salaries on the outside as I once was. You know, when I was a captain periodontist, I saw what my colleagues were making downtown. It was a lot. But what I never factored in was the pension that I could serve 20 years in the air Force retire and that pension alone will decrease the amount of investment nest egg that I would have needed, which would be around 3.5 million to draw what I need. It decreases it down to maybe one and a half million. So three and a half down to one and a half is huge. And it's all due to that pension. If I get an $80,000 pension and I have one and a half to 2 million invested, which is totally doable in a 20 year military career, it will enable my family to have our 120,000 to 130k and probably a little more per year that we need to draw off. So I would say consider sticking it out for the pension.

What are your plans when you leave the military? You plan to retire completely or do you think you'll have a civilian practice yet?

It's nice to have options. I don't know if I'll Ever be a full time practicing periodontist again? Maybe something completely different. Maybe a university administration setting, maybe work at a church. I don't know. There's a lot of options, but it's nice to know I won't have to have something high paying. I want to have to have something even low paying if I don't want to. So I don't know. We'll see.

Jim, how did you balance? I mean, you got five kids. How did you balance being a parent and becoming financially independent at such a young age?

Oh, good question. I think I've just taught my children a lot of smart financial things. I've taught them save more than you spend, never borrow money. Whenever you need to buy something, try not to buy either the cheapest or the most expensive, maybe something right in the middle. You know, teaching them to be smart financially has led to them not asking me for money as much. So if my 14 year old needs money, she doesn't say, hey, I need some money. She says, what jobs can I do to earn some money? And so all of that has made my children less needy and demanding for things.

Awesome. And how about your upbringing? How did that affect how you think about money?

Yeah, good question. So, you know, like I said, we were kind of lower middle class in a small town in Texas and money was always a stress every month. And so I think in me it just created the desire to have a job. That money would never be the concern it was leading me to medical or dental school, that sort of thing. And so my upbringing, my parents taught me well to not live a lavish lifestyle and to work hard so I'd never have to worry about the same things they did.

Awesome. Well, Colonel Dr. Casey, thank you so much for your service. Thank you so much for coming on the podcast and sharing your story. I know many of those who are on this same pathway as you will find it inspir inspiring. And congratulations on your success, Jim.

Thank you. Thanks for your time today. It's been great.

All right, so that one was a little bit unique. I was really excited to have that on. Not only did he come out without dental school debt, but he's financially independent on a relatively small amount of assets compared to many doctors. And I think it's really true what he points out. That pension is super valuable. You can't even buy an inflation index spia these days. And he's got one that pays $80,000 plus another 20 or $30,000 worth of health insurance. That is a not insignificant benefit of military service. Also pretty cool. He doesn't even own a house right and he's totally debt free. So pretty unique story. There a lot of lessons to be learned that there are many roads to Dublin and you can achieve financial independence and financial security in a lot of different ways. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the chief financial officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the white coat investor can help. All right, keep your head up, shoulders back. You've got this and we can help. I'll see you next time on the Milestone to Millionaires podcast.

My dad your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.