MtoM #30 - Nurse Practitioner Multimillionaire

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 30, nurse practitioner millionaire. If you're looking to boost returns, lower taxes and build wealth, join the WCI monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Now we've got a special guest today. Not a physician, not a dentist, but a nurse practitioner. Let's bring him on the podcast and and talk about his recent financial accomplishment. Our guest today is Stefan. Welcome to the Milestones to Millionaire podcast.

Thanks for having me Jim. Appreciate being here.

I understand you recently became a millionaire. Congratulations.

I recently became a millionaire twice over.

Awesome.

I'm almost 2 million now.

Tell us about what you do for a living and how far you are out of your schooling.

Sure. I'm a board certified psychiatric mental health nurse practitioner. Seven years out of training and I worked as an RN for three years prior to that. Two of those years were during my nurse practitioner training.

And what's your approximate net worth Right.

Now you said approximately 2 million.

And what's that divided up into?

Home equity 469,000 Private real estate equity 100,000 Total US stock market 656,000 Total international 388,000 Value 62,000 Small caps 62,000 Small caps Value 54,000 Growth 8,000 A 2045 BlackRock Life Path Index 88,000 Cash vehicles and miscellaneous property 56,000. I max out all of my retirement accounts. I contract an S Corp so I have a solo 401k HSA and backdoor Roth IRA. My wife has a work 401k with a match and a spousal backdoor Roth IRA. We also have a 529 plans for two kids. Each were front loaded with 5450 per month are put into those. I intend to have a cash balance plan eventually but I'm currently saving for a larger home. You probably noticed I didn't mention bonds. Holding no bonds is definitely not something I can recommend to others. I have a high risk tolerance and I verified that I have a high risk tolerance during the last bear market because after it had dropped about 30% I was fine. And I asked myself how would I feel if it dropped another 20% and I was still comfortable? This is because I've educated myself about market history. If I had to wait 10 years for my portfolio to recover, I'm going to be fine. However, I would not want others to assume that they would be just fine. So I recommend that they hold a portion of their portfolio in bonds actually.

So pretty standard investments. Aggressive but pretty typical investments. A bunch of index funds, a little bit of real estate, your home equity, and only seven years out of training, which is the impressive thing. People are going to go, wait a minute, I thought he said he was a nurse practitioner seven years out of training. How in the world does he have $2 million? So let's ask the follow up question, which is what's been your range of income throughout your career?

So as a psych RN in 2011 I was making about $24 as a W2 employee in upstate New York in 2013 making $48 per hour as an RN as a per diem tax 1099 in the LA area. By 2015 as an outpatient psych NP, I was making around 280k per year working 50 hour weeks. In 2017 I started working as a contractor for a prison by 2019 working 50 hours per week, I was making around 325,000 in 2019 and finally 408,000 in 2020 working 60 hour weeks in the prison. And I've since cut that down to 50 hours per week.

That's a pretty solid income for a nurse practitioner. That's probably 4x the nurse practitioner average. Now I've always been thoroughly impressed more by the range of income in a given profession or a given specialty than I am the average income between specialties. The intra specialty differences always seem to be greater than the inter specialty differences, but that's still a pretty impressive income. Given your training. What did you do in your career? It sounds like we can read between the lines a little bit that you decided to work pretty hard and also were willing to maybe take some jobs that maybe weren't as desirable as others. But what would you say was the secret to success as far as getting such a high income in your career?

Sure, and I have a fairly long list for you, so bear with me on this one. But I think I have a lot of good info for your listeners here. Number one thing was frugality. The saying a penny saved is a penny earned is wrong. When you give regard to taxes, a penny saved is worth two pennies earned. Spend a bit of time to shop for the best deal. And whatever you save is worth double in earnings. So it's a good idea also to marry a frugal spouse. Our savings rate is around 45% of gross. That's including 529 contributions and mortgage principal. We achieved that rate despite living in an $800,000 home in Southern California with two children. About half of that goes into maximizing retirement accounts and the remainder goes into taxable for now. So you know, I mentioned before that I'm planning on buying a house. So technically it's not all savings that's going into retirement right now, but eventually really is going to be about 45% once we buy another home in a couple of years. Number three is do it yourself Investing. I don't have to pay a financial advisor and that saves me a ton of money. The problem is if you don't know what you're doing, it can lose you a ton of money. And people who don't know what they're doing rarely seem to know it. Number four is don't sell in a bear market. Even if you think it will drop more, it probably will leave without you. Instead, while you wonder when to jump back in. Number five Investing, not speculating. I invest in private equity real estate funds, as you mentioned, and passively managed broadly diversified mutual funds with low expense ratios. So I'll outperform nearly 90% of investors simply by keeping my costs low in mutual funds. Number six and this is kind of more alluding to what you're getting at. Geographic arbitrage. I focus on earnings potential and I'm willing to travel for work. I drive two and a half hours per day, allowing me to listen to financial audiobooks and podcasts along the way. That segues into number seven, which read finance books. I've listened to 67 audiobooks, most of them more than once. You can get most of what you need, of course, from reading about two to six quality books. But I'm a hobbyist. I listened to your WCI book and Boot Camp book three times each and your Boot Camp was phenomenal for proactive financial structuring. Number eight Participate in finance forums and read finance articles. The WCI Forum Forum was a humongous contributor to structuring my financial life in a tax efficient manner. The quality and sophistication of the free advice there is far superior to anything I've ever paid for. I also participate in the WCI Facebook group regularly. You guys have done some great work cleaning up the nonsense in there, by the way, recently. Understand how compounding works is number nine and be able to use a compound interest calculator to determine real inflation adjusted returns or costs. 10. Frontloading work hours I'm opting to work harder while younger in order to front load my financial future, allowing the force of compounding to start working early. Dollars earned early in your career are much more valuable than dollars earned later due to compounding. Through nearly one year of the pandemic, I worked 60 hours per week working 10 hour shifts because I was afraid I was going to lose my job potentially so. I made 408,000 in 2020 as a lowly nurse practitioner. In January I cut down to 50 hours per week plus the two and a half hours per day of commuting time. I'll cut hours down as I go since compounding has less of an effect on dollars earned later and I want to enjoy my life. 11. No debt out of School I graduated with no debt. When applying to nurse practitioner school, I had a choice to go to expensive prestigious schools like NYU or Columbia. I opted for Cal State Long beach and got my degree for under 25,000. I realized that nobody cares where I went to school. They care that I can prescribe and diagnose. Education is what you make of it anyway. Number 12 eliminating my spouse's Debt When I met my wife, she had 160,000 worth of mostly school debt for her college and physical therapist education. Early in the relationship, I informed my wife and girlfriend that if we were to pursue the relationship, we needed a plan to tackle her debt. We refused. Financed early on with SoFi, my wife worked Saturdays and paid off 160,000 of debt in about 4 years on a physical therapist income of about 100,000. While paying about 3k per month towards her debt. She managed to pay off or pay for our groceries and utilities on top of that. Number 13 buy in bulk I buy in bulk to save money. Especially when things are cheap I keep them in storage. I once purchased $3,000 worth of toys and baby items we needed from to are us going out of business sale buying the cheaper price for the items we have. Eventually we would have eventually purchased anyway. Every time we need a children's birthday gift, it saves us time not having to go to the store and it saves us money and gas not used. My wife would argue that the time guests are saved via online shopping anyway. However. 14. Credit card hacking we don't travel much so we get cash back making sure to use cards with the best benefit for a given item. This game only works for us because we're frugal. Studies show that most people spend more using credit cards, and we try to make a conscious effort to assure we only purchase things that we would have purchased anyway. 15. Money saving applications we use applications like Honey and Capital One shopping when purchasing online to help us find the best deal. 16. Online surveys I get paid to take surveys online specific to my profession as a side hustle. Seventeen. No new cars. I buy them used and pay cash. They should be fuel efficient. I rarely spend on car washes and I run cars into the ground. 18. Negotiate wages by leveraging multiple job offers against each other. And lastly, 19. Budget. Eliminate extraneous costs that you don't really need to make you happier. And I budget with my wife at least once per year.

That's quite a list.

I tried to cover everything in a nice neat package for everybody, so hopefully that works out.

I'm starting to think maybe I should have told you to write a guest blog post instead of coming on the podcast.

Well, I can do that too.

I think Hobbyist is a pretty good description of your approach to personal finance. You're clearly into this stuff and you're good at it and you've been very successful because of that.

Oh yeah, I love it and I love helping other people do it. It's definitely a hobby that I enjoy and I enjoy helping other people educate themselves as well.

And what would you say to somebody that wants to do what you did? They're a nurse practitioner out there just coming out of school and they're not necessarily a hobbyist. They don't live, eat and breathe this stuff. They're not going to listen to 100 plus books on tape about finance. They're not going to spend any time on forums. What are the things that they most need to do in order to be as successful as you've been?

The big thing has got to be the savings rate more than anything else and invest conservatively, broadly diversified mutual funds and probably some bonds in there. And I think that covers the vast majority of it. That list covered a lot of the other additional little bells and whistles.

Awesome. Well, Multimillionaire is a nurse practitioner just seven years out of school. It's very impressive. Very inspiring. Thank you for coming on the Milestones to Millionaire podcast to share your story.

Well, thank you very much for having me. I appreciate it.

All right, well, that was something, wasn't it? Stefan's great. There are a few things you can learn from this episode. 1. You know, if you're making two or three or four hundred thousand dollars and you save a whole bunch of it and you invest it smartly. Getting that couple million dollars in just a few years is not that hard to do. It can be done. So I think that's lesson number one. Lesson number two is you don't necessarily have to accept the caps on your income that people think they have, right? There are a lot of people out there, whatever they're doing, maybe they're a dentist and they think they can't make more than $140,000 a year. Or they're a pediatrician, they don't think they can make more than $160,000 a year. Or a family practice doc that doesn't think they can make more than $220,000 a year. But I'll tell you what, there is no cap. And it is easier to double your income than you might think. I had a long conversation with Stefan after we stopped recording about what he did to get his income up as high as it is. And the bottom line is he kept looking for jobs that paid better. And when he found them, he took them. Even if he had to drive two and a half hours, even if he had to work in a prison, that's what he did. And if you want to, you know, become financially independent early, you want to have a high income, then that's how you do it. You're willing to move, you're willing to work places that other people aren't willing to work. You're willing to do some geographic arbitrage, and that's how you do it. It really depends on what your priorities are. Now. Everyone's not willing to do that. I totally understand that. But it's pretty interesting to see what can happen when you are willing to do that. And then finally, I think the other lesson to learn is just how powerful it can be when personal finance investing becomes your hobby. Stefan is clearly really into this stuff. I think he's more into it than I am. And you listen to everything he's doing to boost income and increase savings and try to do it all right, and build his wealth as quickly as he can. And you know what? It paid a lot of dividends. He's doing great. He's killing it. And so that's something there that can really be appreciated, that personal finance is the best paying hobby out there. I hope you enjoyed that episode. If you're looking to boost returns, lower taxes, and build wealth, join the WCI Monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns and for introductions to exclusive investment opportunities. Expect educational emails that introduce you to syndicators, fund companies, online courses and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the Milestones to Millionaire 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. It.