MtoM #87 - Flight Surgeon Building Wealth

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 87. Flight Surgeon builds wealth.

Do you ever find yourself wishing there was somewhere to go to ask your finance, insurance or investing questions? The white Coat Investor community is a great place to turn we we have a thriving community across all of our social, Facebook, Twitter, Instagram, Reddit and our WCI forum. We have been discussing solutions to your money problems since 2011. Join the Conversation with thousands of other white coat investors. Follow WCI on your favorite social media platform for financial resources tips and strategies. Just head to your platform of choice and search for the White Coat Investor. You can do this and the White Coat Investor can help or. All right, we've got a great guest.

He is a flight surgeon. For those of you who don't know what that is, in the military, there is a doc assigned to take care of a flying squadron. They help decide when people are safe to fly, when they're not safe to fly, and basically become the primary care physician for those flyers and their families. Oftentimes they do it after just an internship in the military and do it for a limited part of their career. Two years, four years, something like that. Sometimes it's not really their choice. They don't match directly into a residency and end up having to do a GMO general medical officer or flight surgeon or surface medicine for those in the Navy or dive medicine if they're going underwater, that sort of a thing for a few years until they can apply for residency again. And that's what's happened to Nick. And he's going to talk a little bit about that as well as his finances and the successes that he has had. And I think they're great because they demonstrate that you can still be financially successful even when you get a curveball thrown in your career and even when you're not making all that much money. So let's get Nick on the line and take a lesson.

All right, Our guest today is Nick. Nick, welcome to the Milestone to Millionaires podcast.

Thank you, sir.

I guess milestones to millionaires maybe what we ought to call it. But what does your profession, what do you do?

So I'm currently a GMO flight surgeon with the Air Force.

Okay, so you're a doc and you take care of flyers? Basically, yes, sir. You take care of people who need to fly. You take them off flying status, you put them back on flying status. Very familiar with flight surgeons. I spent a lot of time with flight Surgeons while I was in the Air Force a decade or more ago, so got out of school when I.

Graduated back in 2019.

Okay, so you're in your third year now of your flight surgeon tour. Thank you for serving, by the way.

Thank you for your support.

What part of the country are you living in?

So I'm down in the southwest right now in New Mexico.

New Mexico.

Okay. And you have not only moved into the black, but have started to build wealth pretty significantly. What's your net worth at right now?

As of Today, it's about 160,000.

160,000. Okay. And who's working in your family? Just you?

Yes, sir. Just me.

And what's a flight surgeon in New Mexico making these days?

Currently, it's about $105,000 a year.

$105,000 a year. Okay. And for those of you out there who feel like you are underpaid physicians, here is one making $105,000 a year. So, you know, a lot of the commitment to serve is not just being willing to deploy at a moment's notice. It's also, as we learned in a recent post on the blog, you know, a significant financial sacrifice for many of us. Okay. And your spouse isn't working, correct?

Correct.

Okay, so what do you guys spend? You're making $105,000 a year, so you're obviously probably not spending much more than that. How much of it are you spending?

Using our savings rate, because we actually track all of our savings into our budget, so it's a little harder to say. We have about a 42% ish savings rate, so we spend closer to about 50%, so around 50k a year.

Okay, so this is the classic live like a resident. That's about what residents make. You're living like a resident, and is it a huge hardship? I mean, what's your life like?

We never really expanded our lifestyle a whole lot. I started or we started to have that lifestyle creep as we went into intern year when we were making about 20,000 as a med student on HBSP to then the 70 ish as a military intern.

Huge raise. A 3x raise.

Oh, it was huge. And we thought we deserved everything initially, so we definitely felt that lifestyle creep. But we thankfully, that was actually the same year that I found your book and understood what that creep meant and then pulled it back and then just maintained it at about that 50k range.

Okay, so what does that mean? What do you drive? What do you drive? What does your wife drive?

So we have a Hyundai Sonata and A Hyundai Santa Fe. The Santa Fe was actually one of our splurges and was less of a choice because the car before that that was also paid off was totaled, so was kind of forced into a new car.

Have you had either one of them in the shop in the last year?

Other than oil changes? Nope.

Okay, so it turns out that cars that don't cost a gazillion dollars are reasonably reliable. It turns out. Amazing. You know, who would have thought?

Turns out.

All right, so what's your net worth divided up into? Let's talk about your. Let's do debts first. What debts do you have?

So our current only debts are our mortgage at about 170k and our student loans also about $170,000. We had car loans, but again, after starting to read your book, we eliminated that pretty quick. And then we had a little bit of 0% consumer debts for house remodeling that we also said we didn't want to carry that anymore and just knocked it out.

Okay, so $170,000 in student loans on an HPSP scholarship. You got to explain that. Is that your wife's loans? Is that undergrad loans? Is that money you borrowed above and beyond what the military was paying you? Where'd that come from?

So that is 100% med school loans. My wife was in med school with me. That's actually how we kind of met or how we started to date. And she decided that it wasn't the right path for her, so she had some debt that still sticks around. And then I didn't get accepted into the HPSP program until partway through my second year of med school because it turns out the government runs out of money every now and then, so they couldn't take any more applicants that year.

Okay, fair enough. And what's your loan plan? What are you going to do about those student loans? Just planning to pay those off little by little. Or forgiveness. I mean, you're in a PSLF qualifying job right now.

Initially, we got some pretty bad advice from a free financial advisor on base that said PSLF was never going to work and it was a 99% fail rate. So we started to pay that off. But that was also when this slightly small pandemic kicked off and then payments stopped. We took advantage of some of the programs that were enacted, including be able to take all those payments back out. And basically I've now had almost three years of qualifying payments with no actual payments being made. So we're leaning a lot more towards pursuing PSLF for mine and then keeping my wife's until then, just to kind of balance the percentage of the payments to maximize what we do, get back, and then pay it all or hers off that same year.

Okay, fair enough. All right, let's talk about your assets. Where's your assets? What do you have? You have a house. You mentioned you had done some renovations. So what's your house worth?

So we actually got lucky buying from somebody that was desperate to sell right before the COVID price surge.

That's a good way to make money.

Yep. So we actually bought our house at about $220,000. And depending on if you look or what day you look at Zillow, it shows it around 400 grand right now.

Not the best appraisal service, but I'm not surprised that it's appreciated significantly.

So we use closer to about 260 for our own. Own appraisal just to be a little bit more conservative. We'd rather be on the good side of wrong rather than expecting more out of it.

But you could quite possibly have a net worth that's $300,000, not just $160,000.

Depending on how we count it. Yes, sir.

Yeah. Okay. What other assets do you have?

We used to also count our cars and jewelry in our assets. We've since started to drop that out just because. Not really planning on selling the wife's wedding ring or anything like that if we need the money. So as we become more stabilized, we drop that out. The rest of our net worth is in our emergency fund, which we keep about $30,000 for about six months worth. Just with the changes that can happen with military life. We have about $1,000 in cash and then about three to $5,000 in our checking account. Actually, that's about $8,000. I apologize. Because we keep about two months worth in there, and then the rest is invested in Roth IRAs, the TSP, and then a taxable account.

So how much do you have invested right now? You're only three years out of school.

We're sitting close to about. I want to say it is 198 right now.

$198,000 invested after three years of making 70 to $100,000. That's pretty awesome. You're building wealth like a maniac.

We didn't want this leash around us forever. We wanted the freedom to make whatever choices our life leads us to. So we felt, especially before we had our first kid last year, that this is something we wanted to prioritize to be able to give us that freedom in the future.

Yeah, you're going to have it, no doubt about it. Especially as income grows throughout your career, which I suspect it will tell us a little bit about career plans going forward.

So, currently I am finishing up my GMO tour with the Air Force at this time. I'm actually applying for residency, hoping to go into anesthesia. Cards still haven't been dealt on whether that will be in the military or not in the military. So we'll hopefully find that out this December or this March, depending if it's a military or civilian match.

So let's say you end up as a civilian anesthesia resident, your pay is going to go down, you're going to have a 30% ish pay cut. How are you going to deal with that?

We're going to get a nice taste. My last year of military because I'll actually lose the flight dock pay bonus because you have to continue to extend your contract if you want that bonus. So we'll be able to take it in steps with about a 20k reduction my final year and then the additional 20k going into intern year. But realistically, we're budgeting right now to try to live off a resident salary, so that way it's not actually a big shock.

Yeah. But let's see. A year for your internship, four years paying back four years in anesthesia residency. I mean, you're only going to have to stay on staff or get a PSLF job for a year or two, and you're going to get your loans forgiven anyway, so that'll be a nice little kicker there. So it's going to work out pretty well for you, I think.

Nice little bonus.

All right. What was your net worth when you came out of school? Do you remember? Did you ever add it up?

It was at that time about a negative 105, 110,000.

Okay, so you've had a, you know, depending on how you count it, three or four hundred thousand dollars swing in three years while only making about 100 grand. So that's pretty awesome. I'd say that's very, very successful. So congratulations to you on your success.

Thank you.

What do you attribute your success to? What are your secrets?

I've definitely been frugal my entire life, and I've definitely enjoyed earning money my entire life. My parents raised me, understanding what money was and how to live below what I earned. So saving, they didn't necessarily teach me a whole lot about investing, so I was a little late to that game. Only starting about three years ago. But I enjoy getting a paycheck a little too much. So I've had a job since I was 9 and may or may not have misled the newspaper company to let me get my paper out a year early just to be able to do that. Other than that, it's just been budgeting, keeping track of what I actually spend, and being an Excel sheet nerd kind of helps me out with that.

Let's go back a few years. Let's say a military doc that just found out that they did not match into their desired specialty and they're going to do a GMO tour, they're going to do a flight surgeon tour, they're going to go out on a ship for a couple of years. Whatever it is, you know, what advice do you have for them financially and in life financially?

I think it's even more important if you get selected for a GMO tour to start prioritizing your financial health. Just because I am delayed an additional four years before I hit a staff job, I do have these extra four years of only making $100,000 a year. I know I'm still blessed for that part, but it made it even more important that we get to work now because we don't have that same amount of time to compound. So even compared to my peers that graduated college back when they were 22, I won't have a staff job now until I'm 36 if I'm lucky. So that would be my main tip is you really have to prioritize and get it started because every little bit counts and every little bit helps. As far as advice for the job, it was a little disappointing to be selected initially. It wasn't exactly what I planned on doing, but I kept myself open to the opportunities, tried to keep a positive mindset with it. And I've done some absolutely amazing things taking care of some absolutely amazing people. There's nothing quite like hanging off the back of a C130 with the ramp door open, watching it refuel, a Blackhawk right behind you. So there's definitely some perks to the job and you just have to keep your mind open and have a positive mindset.

Yeah. All right. How about some advice for a pre med student that's maybe thinking about the HPSP first?

The main one is probably don't trust your recruiter. They're not going to tell you quite everything. My recruiter was absolutely amazing. Still talk to him up to this day. But he forgot to mention a couple different things like the military match or what a general medical officer was or that it could happen.

Sounds like my recruiter.

Yeah. And other than that, make sure you're doing it for the right reasons. I've always wanted to serve. I was told most of my life I couldn't. So once somebody finally reached out and said, hey, you can, I jumped at the opportunity. There's a lot of police officers and military in my family, so I wanted to continue that tradition. But if I had done this just for the money or just to have my med school paid for, I'd be a much more negative, much less happy person. As the recent blog post kind of pointed out, that 20th percentile, once you're finally a lieutenant colonel or colonel, you can't do this job for the money. You have to do it for the right reasons. And I think that's huge.

Awesome. Well, thank you for your service. Congratulations on your success, and best of luck in the upcoming match.

Thank you very much, sir.

All right, there's a lot of you out there that are not making that much money. And when I say not that much, in white coat investor land, that might be $100,000, $150,000, something like that, but you can still build wealth. The nice thing about making that sort of income, especially as a military doc, is you don't pay that much in taxes. I know you got to pay some taxes, but compared to what you'll pay later in your life, later in your career, you're really not paying taxes at all. And that certainly helps. But even with that added in, it's not nearly as much money as a lot of your peers. And so you have to be a lot more deliberate about your finances. The nice thing about this is, guess what? The average household income in the country is about $60,000. So even if you're only making $100,000, $120,000, that's still twice average. So if you can live like average.

You can still save a whole bunch.

Of money and build a whole bunch of wealth, as Nick just demonstrated. So keep that in mind those of you who are relatively low earners by WCI standards and also realize that often that's only temporary. You know, there may come a time. It may be a few years from now, you know, five, six, seven years from now, when Nick is making five or six hundred thousand dollars as a hardworking anesthesiologist. And the lessons he learned during this GMO tour, when applied to that sort of an income is, is going to really accelerate his wealth building.

Do you ever find yourself wishing there was somewhere to go to? Ask your finance, insurance or investing questions the White Coat Investor community is a great place to turn. We have a thriving community across all of our social Facebook, Twitter, Instagram, Reddit and our WCI Forum. We have been discussing solutions to your money problems since 2011. Join the Conversation with thousands of other White Coat investors. Follow WCI on your favorite social media platform for financial resources, TV tips and strategies. Just head to your platform of choice and search for the White Coat Investor. You can do this and the White Coat Investor can help.

If you'd like to come on the podcast and share your story with the audience, you can www.whitecoatinvestor.com milestones. We'd love to have you on celebrate your story and use it to inspire others to do the same.

Until our next episode.

This is Jim Dahli. I'm the founder of the White Coat Investor and the host of this podcast. Keep your head up, shoulders back. You've got this and we can help. See you next time.

The hosts of the White Coat 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.