MtoM #224: CRNA Hits Half a Million Dollars and Finance 101: Investing Cash

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 number 224. CRNA hits half a million dollars. Today's episode is brought to you by Doc2Doc, a lending solution built by Doctors for Doctors. We understand the unique financial challenges you face. From Match Day to residency and beyond. Are tailored loans like Match Day relocation and in training loans help cover moving costs, consolidate credit card debt, or tackle life's unexpected expenses. With a fast 5 minute online application, no prepayment penalties and smooth funding, Doc to Doc makes it easy to get the support you need. Empowering doctors is our mission because we've been in your shoes. Visit whitecoatinvestor.com doc2doc to learn more. That's the number two. All right. Welcome back to an episode of the Milestones podcast. We'd love to have you on this podcast. You can apply@whitecoatinvestor.com Milestones and we'll celebrate any milestone with you, no matter how big or how small, and use it to inspire others to do the same. We've got a great interview today. Stick around afterward and we're going to talk a little bit about investing cash and what your options are when you you really need to make sure you get the money back when it's done being invested. Our guest today on the Milestones to Millionaire podcast is Kelsey Kelsey. Welcome to the podcast.

Hello. It's great to be here.

Tell us what you do for a living, what part of the country you're in and how far you are out of your school.

So I'm a certified registered nurse anesthetist, the CRNA. I graduated school in 2022 in December. So I'm two and a half years out. And we just moved to Arizona.

Arizona, One of my favorite states. Very cool. All right, well, you have hit a net worth milestone recently that you should be very proud of. Tell us what net worth milestone you recently hit.

Half a million. 510,000 to be specific.

Awesome. Congratulations on that. This was really fun because there's usually a gap between our application, when we actually get somebody on the podcast, and in the application it said 450. And I'm like, I bet she's half a million now. And sure enough, you are. Okay, well tell us a little bit about who's on this journey with you. Family, kids, any of that.

Yep. So I have a husband and he's been on this journey with me over 10 years now. No kid yet.

Okay. So give us a sense, you know, the last three years and maybe before then, if he. If he or you were working prior to going to CRNA school, give us a sense of what your incomes look like over the years.

Yeah. So this last year we hit 427,000. 367 was mine and 60,000 was my husband. The year prior was 273. And then before getting into school or during school, it was my husband at 145 and then 115 for 2021.

Okay, so I've noticed his income's gone down significantly. Is that because he's taken on some additional responsibilities or just change jobs?

Definitely a lot of responsibilities. He is a carpenter, and so he's had to move over the years as I've gotten into school, changed jobs, and so starting up a business takes time, and so he kind of took a hit. Yeah.

Yeah. Okay, so when you came out of school in 2022, what was yalls net worth? I'm assuming you maybe pay for some of that school with some debt?

Definitely. So me and my husband were talking about this, and we believe we were actually close to zero. We have a home in Utah, and so we had some equity from that, but as far as our student loans went, I had $140,000 in student loans.

And how much do you still have in student loans?

0.

0. You paid them off in three years, essentially. Congratulations on that milestone too.

In March, actually is no debt at all.

Very cool. Was this a goal. Was it your goal to pay off your student loans in less than three years or something?

So our goal was five years, and we just moved to Arizona. We were in Oregon for the last two years, and we sold our home and we did well, and we used all that money to pay off all of our debt.

Very cool. Very cool that that worked out for you. All right, so other than that, obviously using some home equity to pay off debt helped, but tell us about your secrets to success. How have you gotten to half a million dollars just three years out of school?

So a few things. When I graduated, I had two people talk to me, some of my colleagues, and one of them said, right now, Kelsey, you need to put money into retirement. You need to max out today, not next year, not the following year. And I remember that being really scary because I had debt. We had a house mortgage. And I was like, I don't know if I can make that work. But we did. We prioritized putting money into retirement. And then my other colleague said, you need to listen to the white coat Investor. And so my husband was on board and we started from your very first episode two and a half years ago, and we listened to all of them. It was our weekly thing. Whether we were on a road trip or we were at the gym, we were both listening to the White Coat Investor. And that definitely helped us stay on the course because we always had this someone in our ears telling us that we needed to pay off our debt. And so that was our secret to success. And also just us being on the same page. If I didn't have a partner that wanted to do this together, then I think it would have definitely made it difficult.

Yeah, for sure. So you listened to 220ish of these milestones episodes in the past, and how many of them did you listen to before you're like, someday I'm going to be on that podcast and I'm going to talk about my success?

Honestly, I didn't know that I would ever be on this. I thought it would be an amazing goal to have. And like I said, we had a five year plan and I was really hoping that the five year plan was going to work. And then we had, you know, a change of, of moving and selling our home. And my husband, as soon as we paid off our debt was like, you gotta apply to, to Milestones Millionaire.

Yeah. Okay, take us back to the T.O. because you guys have been together for a while. Take us back to this decision. Decision to go to CRNA school where you're like, it's going to cost this much money, but when I'm done, honey, I'm going to make 200 or 300 or $400,000. Tell us about that discussion and how you guys came to make that decision together.

Yeah, so actually when me and my husband were dating, so we were, oh, 20, and I told him, I said, I have a goal, I have. I'm going to CRNA school. And you can either, you either know that and you stick with me and it's going to be a hard decade or, or you don't have to. And he was on board. And throughout the last, like I said, like 10 years between nursing school, moving to get ICU experience and then getting into grad school, he has never once complained. And he worked 60 to 80 hours a week while I was in grad school to pay for life. We didn't pay for my student loans, but he paid for life. And I was on rotations in different states and that was all paid for by him. And he just, like, he just was super motivated. Motivated for me to to go to school and then also to just have a good attitude and that this is what it is and we're making our future better.

Yeah. And he's. So he's part. Certainly put in lots of work, like lots of, you know, physician spouses put in during med school and residenc and see and so forth, and is now starting to reap the rewards of it. Right. He now has a partner that's making $300,000 plus. This is not a bad reward.

No, no.

For all those sacrifices.

Yeah, no, he's. He's definitely living. Living good now. He actually just got a golf membership, and so I'm happy for him that he finally gets to, you know, relax a little bit. So.

Yeah. So what does he shoot? Do you have any idea?

Oh, I have no idea.

Very fun. Very fun. All right. So, you know, there's people out there like you that they're just coming out of CRNA school or they're just coming out of residency. You know, they owe some student loans or net worth, maybe zero if they got some partner that's been busting their butt for a few years, but more likely negative. They want to do what you're doing. They want to start rapidly building wealth. What advice do you have for them?

I think my biggest advice is just starting now. Like I said, I remember feeling very overwhelmed that this was not doable, that we were never going to finish paying off our debt, and just starting was. Was the hardest thing. So just do it. Start now, and slowly but surely you will. You will push through and be at zero. And then, like I said to listening to a podcast, whether it's the white coat investor or another financial podcast, having that play once a week helps really keep you on goal and on track for getting out of debt.

Very cool. Kelsey, what other advice do you have for other white coat investors out there that maybe are struggling? They want to build wealth. They're not building wealth as they would like. What could they change maybe that would help them be as successful as you?

I think just starting that's. I think the hardest thing to do is just to start because you can look at your, you know, your retirement accounts, you can look at your debt, and you're like, this is small, and it's. It's. Or it's large. Your debt's large, your retirement small, and it doesn't feel like it's doing anything. But starting somewhere is only going to help it. And so just having that mindset that you. To continue on month after month to just put something aside for Saving or put more money towards your student debt is, I think, the best advice. And just having someone to be there to support you because it is a hard journey. It's not. Not easy to get out of debt.

Write that check, send it to a lender. Even if it's $200, right?

Yeah, every little bit.

Go read your 401k plan document and figure out how it works. You know, it's not that complicated. You can figure it out. Very cool.

Yeah.

All right, well, what's next? What financial goal are you guys working on now?

You know, we would love to retire early, so just continuing on with where we're at of putting. Continuing to save money, put more retirement or put more money into stocks and helping grow that so that if we want to, we can retire early. It's probably our next biggest goal that we have.

Awesome. Well, congratulations to both of you and on your success, and thank you. And we appreciate you coming on the White Coat Investor podcast and sharing it with others and hopefully inspiring them to also meet their personal financial goals. We'll let you go, but congratulations. I know you'll get to get to your next milestone soon.

Thank you. Appreciate it.

I hope you enjoyed that episode. I talked to you at the beginning about cash, and when we talk about cash, there's lots of different things we're talking about, right? I mean, for some people, that literally means the green stuff sitting in a safe in your home, so that if the excrement hits the ventilatory system, you can get your hands on a few hundred or a few thousand dollars and you can get out and you can use that to buy gas on the way out or groceries or whatever. But in general, when we're talking about cash, we're talking about something that's a little bit less liquid than that. Now, most of us have some recurring expenses, and we need to make sure we have reasonable cash flow in our lives. So that means having some. Some money in our checking account, right? Someplace where you can use your debit card that your credit card gets paid off with every month, that you can go make withdrawals and make deposits and write checks and that sort of a thing. So that's going to be some of your cash as well. Now, the downside of a checking account is you're not making any money on it, which is not an insignificant outcome if you've got thousands or tens of thousands of dollars sitting in there. That's a real opportunity cost, right? That is money that could be earning something, whether it's 3 or 4 or 5%. It could be earning something, but it is sitting there to facilitate your cash flow. And it's all right to have that. Don't beat yourself up about that. All people and all businesses have a certain amount of cash sitting around earning nothing. And that's okay. That is not going to make a difference between you being financially successful or not successful. What I really want to spend time talking about is the next level. Whether you want to call it an emergency fund or whether it's money that you don't need for a few weeks or a few months or a year or two. Where do you invest that? If you're saving up for a down payment for a house you plan to buy in six months or 12 months or 18 months, that's really not money that should go get invested in risky assets. You certainly don't want it in anything illiquid like some real estate property. But you probably don't want it in the stock market either. Even though the stock market is pretty darn liquid, right? You put it in an index fund, you can pretty much have your money back in your checking account three days later. But it might drop in value 40% in the meantime. And if the return of your principal matters a lot more than the return on your principal, well, those are times when a cash investment is appropriate. Now, two of my favorite cash investments are high yield savings accounts and money market funds. And these work very similarly. They're basically a savings account, for lack of a better term. With a high yield savings account, it's generally through a bank, something like Ally Bank. It's usually a primarily online bank. And these days they might be offering you 3% or 4% to have your money in there. That's way better than your checking account, right? Your checking account's paying you nothing and this thing's paying you 3% or 3.5% or something like that. So it's way better. And you can usually transfer money back and forth within one to three days. No problem. Just transfer it back and forth. As long as you don't need the money today, it's going to be fine to have it in there. Now the high yield savings account has one benefit over a money market account. A money market fund at some place like Vanguard or Fidelity or Schwab or something like that. The benefit is FDIC insurance that's not worth that much, but it's worth something on up to 250 to $500,000. The federal government actually stands behind your deposit. So if the bank fails, you still get your money. Now it's not like that's a huge risk. Over with a money market fund, let's say you're a Vanguard, right? And you're worried, oh, a Vanguard's going to fail. Well, there is something called SIPC insurance. SIPC insurance essentially makes sure you can get a little bit of cash even if your brokerage fails. But the difference at the brokers is your money's actually invested in something. Right? It's not just sitting in an account of Vanguards. Right. It has been used to buy something that has value and eventually you're going to get the value out of that thing. And so even if the brokerage fails, you still own stuff via the fund, whether it's a stock mutual fund or it's a bond mutual fund, or it's a money market fund. Right? Money market funds invest in very short term bonds. They essentially can guarantee the buck, you won't lose principal. In fact, it's a very huge deal. When they talk about a money market fund breaking the buck, there's a little discussion about this in 2008, but even in 2008, no retail money market fund broke the buck. And even the ones that did were commercial only. And there was like a 1% loss. It wasn't some huge deal. So the nice thing about money market funds is in normal times they'll pay more than a high yield savings account. And I would call this a relatively normal time because right now money market funds will yield more than a high yield savings account. The other option, the other cool thing about them is there's different types of money market funds. For example, you can get one that invests only in Treasuries. So you're essentially backed by the US Government that way. Right. It's basically the same as FDIC insurance if you do that, but it is also state tax free. So that's a benefit. If you're in a high tax state, you might like a Treasury money market fund, especially if it's paying about the same as a prime or a federal money market fund or some other option like that. And you also get out of the state taxes, so the after tax yield might be even better. The other option you have is a municipal money market fund, right? And these are federal tax free. I suppose if you had a state specific one, and there aren't very many good ones of those, but if you had a state specific one, it would also be state, state income tax free. And so even though it offers a lower yield, your after tax yield might be higher, especially if you're in One of the higher tax brackets. So that's another advantage of money market funds over a high yield savings account. Now people talk about other options, right? They talk about very short term bond funds. And yes, your principal's pretty guaranteed there, but it can drop a little bit when interest rates change. People also talk about just buying treasury bills directly from the treasury and that's a very cash like investment, but it's not really cash, right? It's going to take a few months or a few weeks or whatever for that treasury bill to mature. So theoretically, if you had to sell it in the meantime, you could lose some tiny amount of principal on that. Plus there's the hassle, right? You got to go and buy them and you got to wait for them to mature, you got to sell them or whatever. You got to roll the ladder of them. It's just not quite as convenient as using a money market fund or a high yield savings account. There are other options if you want to guarantee your principal, but you're okay not having liquidity, right? You don't need the money for six months or a year or two years or whatever. You got a couple of options. One is a certificate of deposit from a bank and theoretically that'll pay a little bit more than a high yield savings account. Those are highly variable, of course, so you have to kind of shop around. The other option is just to buy a Treasury bond, right? If you know you need the money in a year and you know you don't need it before then, you can buy a one year treasury bond and that'll pay a little bit more than a money market fund. You know, if it was two years and three years, you'd get a two year or a three year treasury bond. So lots of different options for your cash. The general rule is figure out how much you need for your cash flow needs, you know, and a little bit of emergency kind of stuff and keep that at home or in a checking account. And beyond that, make sure you're getting paid something for your cash whether you're using a high yield savings account or whether you're using a money market fund. I'm a little bit partial to the ones at Vanguard. They do tend to have a little bit higher yield than the ones at Fidelity and the ones at Schwab, especially when it's just your settlement fund, right? This is the way Schwab makes some of its money and keeps its other fees low is by it basically doesn't pay you much on your settlement fund, whereas Vanguards does. So it's one really nice thing about Vanguard, so make sure you keep your cash in a smart place, pay a little bit of attention to it, but don't get all obsessive compulsive about it. You know you don't want to be bouncing checks because you're trying to keep too much money in the savings account and not enough in your checking account. Today's episode is brought to you by Doc2Doc, the lending solution built by Doctors for Doctors. Whether you're a fourth year student preparing for residency, transition into practice, or an experienced physician, Doc2Doc offers tailored financial products for every stage of your career. Our loans cover relocation, consolidate debt, and address life's unexpected expenses with a quick online application, no prepayment penalties, and a history of funding millions for the White coat investor members. Doc 2 Doc makes financing simple and stress free. We're here to support your journey from training to practice. Visit whitecoatinvestor.com doc2doc to learn more. All right, that's it for this episode. Tune in next time and until then, keep your head up, shoulders back. You've got this. We're here to help you along the way.

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.