MtoM #79 - Pilot Gets Back to Broke

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 79. Pilot gets back to Broke.

Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state, or health status. And one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we've put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this, and the White Coat Investor can help.

This is the Milestones to Millionaire podcast where we celebrate your financial accomplishments and use them to inspire others to do the same. I don't care what your accomplishment is. We'll celebrate it with you. And we've had some interesting ones called in in the last few months. But whether you've become a DECA millionaire or whether you've just paid off your beater, I don't care. We'll use your example to help others because there's somebody that's at your same financial stage and they could use a little bit of encouragement and. And a little bit of inspiration. So if you'd like to come on, go to whitecoatinvestor.com Milestones and apply and we'll see if we can't get you on one of these episodes. All right, we've got a great guest today. He's a pilot early in his career. Let's bring him on. All right, my guest today on the Milestones to Millionaire podcast is Sam. Welcome to the podcast.

No, I appreciate you having me.

We are celebrating a great milestone, one of my favorites. You're Back to Broke. Congratulations.

Thank you.

How's it feel to be Back to Broke?

It's good. I'm a little past Back to Broke now, and it feels even better than it did then. Cool. It's a lot of weight off my shoulders.

That's a good sign. With the way the markets are going this day, this year, I'm afraid people will come on to do Back to Broke and actually not be there because of market changes. But I'm glad you're doing a little bit better. So Tell us what's your profession and how far are you out of school?

Yeah, I'm an airline pilot, but pretty new. I finished training about two and a half years ago.

Okay. Can you tell us who you fly for?

I just accepted a job with Endeavor Air, which is the regional airline that Delta owns previously. The last two and a half years, I flew for a company called Cape Air. It's a really small nine seat piston aircraft.

Cool. What part of the country are you in?

I'm in the rural Southeast, but I've flown in Maine as well as the Caribbean during my time with my former airline.

And how's endeavor different from SkyWest? That's the delta kind of thing. I know.

It's kind of. They're the Endeavor of the west coast, really? Endeavour flies east and SkyWest flies west. But SkyWest also flies for other carriers like United and American.

Oh, really? I didn't realize that. Okay, well, very well. That's what I know. Out here in Salt Lake, it's a big Delta hub.

Yep.

All right, well, let's get into the numbers. What's your approximate net worth?

Right now it's around 50,000.

$50,000. Congratulations.

Thank you.

And what is that divided up into? Tell us about the debts. Tell us about the assets.

Sure. I've got about 12,000 in cash right now, about 100,000 in investments, and that's totally Vanguard Total Stock market index Fund. And then I've got around 62,000 of debt from flight school.

Flight school. Okay, tell us about flight school. I think a lot of our listeners probably don't know anything about flight school.

Yeah, you can really kind of use the analogy of medical school. Really. It's very expensive. It's a lot of time studying. It's a lot of time in the plane. I was living in the little plane that I flew in six to eight hours a day for about a year. So it's a lot shorter than medical school, but it's just very expensive. I did it about as cheaply as you possibly could for the most part, and I still came out with about 78,000 in loans.

78,000 in loans is about as good as it gets, huh?

Yeah. Yep. These days.

Okay. And you. And you paid for it all with loans. Did you get any parental help or some inheritance or you have a prior career, you got a working spouse?

I had an enormous amount of help.

Tell us about it.

I did have a prior career, but almost no savings. I didn't hop on the financial independence bandwagon until I was deciding on a Career change. My parents were instrumental in helping me get my foot off the ground, literally. I guess they provided a personal loan to me when I first got started. And then when it was evident that I was definitely going to do aviation full time, they took out a home equity line of credit on their house. And so I'm paying that back. But I could not have come up with the money myself to get started. So it's really all because of them.

How much pressure do you feel knowing that they borrowed against their house to put you through school? Is that like worse than having student loans from the government or what?

You know, I don't know. When I went through college, I was lucky enough to get scholarships and my parents paid a little bit that was remaining. So I never had a loan before this. I never had been in debt. I do think it's a lot of pressure. I think it's more pressure personally. I mean, if my dad, I don't want to, you know, I have to live with. They're my family, I can't just, you know, get rid of that. So it's a lot of pressure. However, I will say that I've told him, listen, I'll start repaying you back before I even start investing. And he said, listen, don't worry about it. We're totally in a fine financial situation. I think it makes sense for you to get your foot in with your 401k and get all that started. And so he has lessened the pressure immensely. But I still feel a lot of it, a lot of responsibility to make sure I pay them back.

Now, how many years did you say you were out of school again?

Two and a half years. Out of training.

Two and a half years. And what's your range of income been over those two and a half years?

The first year as a first officer at this tiny little airline, I made about $28,000.

That's my understanding of how the industry works.

Yes. Became a captain after that one year and I made about $82,000. Working my tail off for sure. There was a lot of stuff, 70, 75 hour weeks in there. And then I was on track this year to make about 110,000 before I switched airlines. And I'll probably take a pay cut when I go back to a first officer.

Okay. And that's kind of been the case for pilots I know as well, they switch airlines and end up going back to first officer, take pay cuts. But in the end it's usually worthwhile, is my understanding.

It's all towards. It's all in the service of getting to a major airline. Yep.

Yeah. So you've been pretty successful. And clearly one of your secrets is working really hard. What are your other secrets? Success.

Well, yeah, I think the one is definitely working hard. I set up my financial ground game early on. I mentioned to you earlier that I've been a big fan of wci. I was married to a physician before. We're divorced now. But in my head, I was all about, what are we going to do with these loans? We got to get them paid off. And that led me to your side as well as Mr. Money Mustache, among others. That put me in the mindset. And then when it became just down to just, everything was on me. I already knew what I wanted to do with the money well before I actually made the money. So even that $28,000, I had a plan for every single one of those dollars. And then the 82,000 and then moving forward. So that was a big help. Just knowing what I was going to do with it. Living well below my means even on $28,000. I was pretty lucky where I was just single and I didn't have to worry about anybody but me. So I was able to save half of my income on that 28,000. I was living in a very small rural town, so that helped immensely. But just really being specific about where that money went. And then I used the benefits of my job as much as humanly possible. We have excellent benefits as an airline pilot, and I probably took 40 to 50 flights over the last two and a half years, but didn't pay for a single one. So I was still able to live, I think, really well, but kept everything within my means.

Are you listening to this? Attending physicians, $28,000 a year, living on half of it. And you all tell me you can't live on a resident salary, which is, you know, $60,000 these days. All right, okay. So, I mean, your parents clearly love you. Did they teach you anything about money as you were growing up?

You know, I have a very specific memory about money, and just the one when I was growing up. And I think that tells you two things. One, it tells me that money was not talked a lot about in my household. But another reason because of that is we didn't have to. So we had plenty of money. It was very much an upper middle lifestyle. Upper middle class lifestyle. Lots of vacations every year I see lots. Maybe one to two, which is still a lot for the average American, I think. But I remember when I was filling out the fafsa form, which it turns out I wasn't eligible for. But I remember when I had to fill out the parental income, I asked my mom, hey, what does that make? Because my mom was a stay at home mom at that point. She said, you know, I really don't know. And I thought, how strange is that, that my mom doesn't know what my dad makes when we're, when we're, you know, we base our lives off of his income. And so there was a, there was a secrecy. And I think that was because that was the way that he was raised. But that's totally been changed now that I'm older. He's seen how open I am about my finances. And so now, oddly enough, I have a much better picture of their finances because we talk a lot about it.

That's interesting that it was filling out the FAFSA that kind of triggered that. I had an interesting experience filling out the FAFSA for the first time this last year. I learned lots of stuff about the fafsa. I'd written an article about it before, but there were a few things I didn't know just from writing the article until I actually filled it out myself. So. So, all right, well, there's some pilots out there, people that maybe want to be pilots, people with similar career paths. What advice do you have for someone that's just like you were coming out of school, Negative net worth, a bunch of loans of some kind, wants to start building wealth, would love to get back to broke. What advice do you have for them?

I think the best advice I can give is to one, just before you start into aviation, make sure that you can't see yourself doing anything else because it is a grind. It takes a lot of money up front. And you have to also just have your eyes wide open to the fact that you're not going to make a lot of money out of the gate. It's gotten a lot better, tremendously better, as opposed to 10 to 15 years ago. But it's still difficult. You're still not making anywhere near what you likely have in loans that first couple of years. So just be prepared for that. And also I would just say don't give up. The path to becoming an airline pilot has lots of tests and lots of checkrides. And not everybody is perfect and not everybody's going to do perfect on every single exam. And that's okay. You can still make it as long as you stick with it. Really, it's a game of attrition. How long can you last compared to the other guys. And as long as you stick with it, you're most likely going to succeed and everybody wants you to succeed. But then also, I would just kind of echo, do as much as you can of what I did as far as getting your financial ground game in order before you start to make the money. Become educated financially, read the WCI blog posts, listen to the podcast, get excited about saving money and becoming financially independent.

So what's next for you? What's your next financial goal? What are we going to have you on the podcast for next?

Well, you know that $100,000 is kind of staring me in the face right now. The market is just not being kind. So thankfully, because my net worth is so small, I'm still saving a lot more than what I'm losing each pay period. So that's good. But hopefully be able to continue to max out my tax advantage accounts every year. You know, backdoor, not backdoor Roth ira. And then when I get to that point, backdoor Roth IRA, max out the 401ks really just continue to do exactly what I've done. I don't think my goals need to change necessarily. I think my plan has worked. I was at minus $57,000 of net worth when I came out of training and now I'm up to 50,000. So I don't think I need to do anything different. Just kind of stay the course.

Yeah, for sure. You're winning the game. Congratulations to you on your success. It's pretty awesome.

Thank you.

And I know your story will be inspiring to others, hopefully in many different career paths, including all those doctors out there who can't imagine spending less than the $400,000 they're being paid. There certainly are plenty of Americans out there having a nice life on much less money. So I appreciate your example of that. I'm not sure the last time we had somebody on here that came out of their training making $28,000. So that's a great example, I think, to the rest of us. So I appreciate you coming on and congratulation. Congratulations to you. Appreciate you inspiring others to also get back to broke.

Yeah, I enjoyed it immensely. Thank you so much.

I think we've had pilots on here before, but I don't think we've had anybody so early in their career on. It's always fun to hear about it in the hard years, the poor years, as Katie and I refer to them now. We're talking mostly about being in medical school and being in residency and being in the military and that sort of a thing. But for a pilot, until you have experience, until you have seniority, until you get in with the majors, you don't make that much money and you work very hard for it. You know, often resident kind of hours for less than resident kind of money. You know, we always think residents are the worst paid people on the planet. That's not necessarily true. There's lots of people making a lot less money than residents and they have financial goals too, and managed carefully. They can also become financially independent.

Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status, and one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the White Coat Investor can help.

Our next podcast will be dropped next Monday, not counting the regular White Coat Investor podcasts that drop on Thursday. Until then, keep your head up, shoulders back. We'll see you next time. Bye.

The hosts of the White Code Investor podcast are not licensed accountants, attorneys or financial advisors. This podcast is free 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.