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White Coat Investor Podcast
MtoM #219: Veterinarian Gets Back to Broke in 10 Months and Finance 101: Mutual Funds
00:20:46
Today we hear from a Veterinarian who is back to broke only 10 months out of training. This vet lives in the midwest and really shows what geo arbitrage can do. He has a fantastic income and a very low cost of living and those two things make a huge...
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- [00:00]
Jack
This is the White Coat Investor Podcast, Milestones to Millionaire celebrating stories of success along the journey to financial freedom.
- [00:14]
Dr. Jim Dahle
This is Milestones to Millionaire podcast number 219 veterinarian gets back to broke in 10 months. Full disclosure. What I'm about to say is a sponsored promotion for locumstory.com but the weird thing here is there's nothing they're trying to sell you. Locumstory.com is simply a free, unbiased educational resource about locum tenants. It's not an agency, they simply exist to answer your questions about the how to's of Locums on their website, podcasts, webinars, videos, and they even have a locums 101 crash course. Learn about locums and get insights from real life physicians, PAs and NPs@locumstory.com all right, thanks for being out there in White Coat Investorland. I know not all of you are hardcore do it yourselfers and that's okay. You can be financially successful without taking this on as your favorite hobby. A lot of you, in fact, are delegators. You want a money person that you can dump all this stuff on and have them take care of it. Well, the best place to find a high quality financial advisor that would give you good advice for a fair price is our recommended advisor list. If you go to whitecoatinvestor.com financial advisors or just go to the recommended tab on the website, you you will see this list of folks and know that at least you're paying a fair price, getting good advice and you're going to be successful anyway. Does that maybe happen slightly slower than if you became a hardcore do it yourself or hobbyist? Yeah, probably. I mean, those fees have to come out of your returns. That's just the way the math works. But you are way better off paying a fair fee and doing things right than you are doing things wrong. So keep that in mind. All right, we have a great interview today and afterwards, stick around. We're going to talk for a few minutes about mutual funds. Our guest today on the Milestones to Millionaire podcast is Jack. Jack, welcome to the podcast.
- [02:01]
Jack
Thanks so much for having me.
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Dr. Jim Dahle
Let's start by introducing you to the audience. Tell us what you do for a living, what part of the country you live in, and how far you are out of your school or training.
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Jack
Yep. So I'm a veterinarian, just graduated this past May, so May of 2024 and then currently live in the Midwest outside of Des Moines, Iowa.
- [02:19]
Dr. Jim Dahle
Holy smokes. You're less than A year out as we're recording this?
- [02:23]
Jack
Yes.
- [02:24]
Dr. Jim Dahle
Okay, well tell us what we're celebrating today. What happened?
- [02:27]
Jack
Yes, celebrating kind of getting back to broke.
- [02:30]
Dr. Jim Dahle
Back to broke or have you completely paid off student loans or where are you at?
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Jack
I have just a small, small amount left and we're kind of in the process of purchasing a home here. So the mortgage guy told me not to pay any more on the loans. I kind of just stockpiled a little bit up for the down payments.
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Dr. Jim Dahle
Yeah, a little bit of cash is helpful in that. Sit. For sure. Okay, so last May, you walked out of veterinary school. How much did you owe?
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Jack
I owed about 145,000 when I graduated and had no assets at the time.
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Dr. Jim Dahle
Okay, so your net worth when you're starting out this career was minus 145, right? Yes. And you're back to broke just 10 months later?
- [03:07]
Jack
Yes.
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Dr. Jim Dahle
That's pretty cool. I mean my understanding is a whole lot of vets out there come out of school and they are not making six figures. So tell us about your income over the last year.
- [03:20]
Jack
Yeah, it definitely, I mean the wages of veterinarians has increased, you know, over the past couple years significantly. You know, my wage starting out I just took a full time job and that was at about 115,000 base salary. But getting production on top of that, I only stayed there about six months. But at that six month mark, you know, I was on track to make about $180,000 per year, which for vets is great money. Just working four days, four days a week. But also on the side, I started offering or doing in home euthanasia services. So that has greatly supplemented my income. Kind of as a little side hustle.
- [03:56]
Dr. Jim Dahle
Not a side hustle that physicians, human physicians are able to do in most states, I don't think, but certainly a creative one. Okay, so the numbers don't add up here. I mean 180,000, even if you made that in the last year, you haven't even been out a year, your net worth has swung, you know, $145,000. What the heck? What happened? How did you do this? What are you eating?
- [04:22]
Jack
So the six month mark I would say was the most pivotal. I quit my full time job and kind of went more to locum or relief status and that has drastically expanded my income almost doubled. And then as well as giving more time to do the in home euthanasia appointments, kind of on track now to be earning about 300,000 this year.
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Dr. Jim Dahle
Wow, that seems really good for a vet.
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Jack
Yes.
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Dr. Jim Dahle
You know, I Mean, I've looked at some veterinary salary surveys and the averages are nowhere near $300,000. How did you learn that that sort of earning is possible in your field?
- [04:53]
Jack
It was honestly all thanks to you. I was listening to you on your podcast in vet school and it was, you know, you can double your income pretty easily. So I was just, you know, trying to navigate different situations or different ways, you know, to help increase my, my income here. The in home euthanasia was great. It's, you know, on average an extra 4 to 8,000 per month that I'm earning through that. And then the relief, like I said, I mean, the rates are basically just double of what I would be if I was a full time, full time employee.
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Dr. Jim Dahle
And I bet that's a great service for families. I mean, I assume these are pets mostly, right? These are dogs, these are cats. They've got cancer or they've got a broken bone, or their body's filled with tumors or whatever, and the family's ready to put them down. And now they get to do it at home, surrounded by loved ones painlessly. So that's a pretty cool service you're offered.
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Jack
It's. Yeah, it's, it's awesome. I do it through a company called Codapet, but I'm technically like a 1099 independent contractor through them. So they do kind of all the marketing and back end stuff and then I kind of run the business, you know, here, here in Des Moines.
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Dr. Jim Dahle
Okay, so you've clearly become, you know, not only financially literate, but financially disciplined pretty early in your career. How did that happen?
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Jack
I'd say my parents kind of raised me this way. Nothing was ever kind of handed to us growing up. Had to buy my first car at 16, had to pay for college out of pocket. I only did two years of undergrad, so that helped, you know, significantly in terms of undergrad debt. And then going into vet school, I was fortunate enough to have or go to my, in state school. So that, that helps tuition drastically.
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Dr. Jim Dahle
You know, if you weren't buying the house now, would you have the student loans completely paid off?
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Jack
Yes. Yeah, I'm about, I would say $20,000 cash, net positive.
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Dr. Jim Dahle
Yeah. Did you think, you know, when you were starting vet school and you're thinking, oh, I'm going to have to borrow a whole bunch of money for this? Did you think you were going to have your student loans paid off in less than a year?
- [06:40]
Jack
My goal initially when I started was two years. I said I knew I could live cheaply and kind of Work hard the first year. So my initial goal was two years, and then I started doing it and I was like, this can actually be done a lot faster. So that kind of got me motivated and kind of got me moving.
- [06:56]
Dr. Jim Dahle
Is there a partner, a spouse, any kids in the picture here?
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Jack
No kids, but do have a fiance. She's also a veterinarian, but she's kind of going on for advanced training. She's in her internship year currently.
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Dr. Jim Dahle
Okay, so not a ton of income being contributed there, I presume?
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Jack
No.
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Dr. Jim Dahle
Okay, so even so, you're doing a pretty good job controlling expenses. Do you have any idea what you spent per month over the last 10 months on your lifestyle?
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Jack
I'm about 2,500 to 3,000amonth. Very fortunate. Our rent here is very, very cheap for we have a four bedroom house here outside of Des Moines for about a thousand bucks a month. So me and my fiance split that. So that helps a lot. And then I do have a horse, so that is a little bit of an expense. And I do like to travel about once a month. So that is kind of, kind of where the extra, extra money goes to as well.
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Dr. Jim Dahle
Very cool. So, I mean, it's pretty easy to describe the way you've been living the last year as kind of a. Live like a resident period, if you will. How long is your period of living like this going to last? Is this your plan for your career or you kind of done now or another year or to. Or what do you think?
- [08:03]
Jack
I have definitely found myself already spending a little bit more, but I think it helps my fiance kind of being in that mindset already. She is forced to live like a resident. So that kind of unknowingly, you know, forces me to, to, you know, kind of calm down on the spending and things. I mean, I still drive an old car, you know, not looking at getting. Getting a new one anytime soon or anything like that. So I think that mindset and especially her workload, I mean, right now, I mean, she's working 70, 80 hours a week. So I work nothing near that. But, you know, I always try to compare it. Oh, you know, I work or five shifts in a week and I'm exhausted. But no, you know, compared to her who's working six or seven, I really can't complain much.
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Dr. Jim Dahle
Tell, tell us about what you're driving. Year, make, model and mileage.
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Jack
It's a 2005 Mercury Sable and it's at about 80,000 miles. Just turned over.
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Dr. Jim Dahle
It has just. It has 80.
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Jack
Yes, I got it. Yeah, got it in my third year of at school from this.
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Dr. Jim Dahle
Who owned it before? Some little lady that just drove it to church.
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Jack
Yes, my cousin's an estate lawyer, so she's, she was managing her estate. She just passed away and bought it for, for $2,000.
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Dr. Jim Dahle
Wow. Okay, well, you got a lot of miles left in that car. Actually, you know, a couple of years ago, I was driving in 2005 really well, that Sequoia that I just exchanged literally two years ago was, was an 05. It had far more than 80,000 miles. I think by the time I was done with it, it had 280. But that's pretty cool that, that thing's old but maybe not so worn out yet. Yes, very cool. Okay, so tell us what other, you know, lifestyle hacks, you know, tips you have here to be, you know, living on 2500 or three grand a month. I mean, that's, that's pretty remarkably inexpensive compared to most people in the white coat investor community.
- [09:42]
Jack
Sure, sure. We do a lot. Like, I'm really big on meal prep, so we do a lot of cooking at home, meal prepping for the week. Usually, you know, Sunday or Monday. We make breakfast, lunch, dinner almost for the whole week. So that saves a lot on eating out, Uber eats, things like that. I'm not one that loves Starbucks or anything, so we're really not, you know, going out to eat a whole lot. So the meal prep is definitely a big, a big factor. And then our lifestyle, I mean, I don't do a whole too much, you know, day to day going, you know, to different shows or things. I mean, we're in the Midwest. There's not a whole lot to do, unfortunately for, in terms of entertainment. But I do, I do travel frequently, but I'm more of a budget traveler, so going to places where I already have friends to stay, stay with, things like that. So I have a lot of good buddies out in Colorado. Just came from a trip and now going to Florida with a couple friends from high school next month. But we're all just rent Airbnb and it's going to be like $400 round trip for the Airbnb, airfare and food. So pretty, pretty cheap travel.
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Dr. Jim Dahle
Yeah, I don't want to rub this in too much, but those of you in high cost of living areas for whom this sounds like a pipe dream, you know, we've talked about geographic arbitrage that it's possible to have dramatically lower cost of living, dramatically lower taxes, potentially higher income by moving inland from the coast. And this is kind of kind of a pretty good demonstration of that and just what's possible even in what's typically considered as not a particularly high income profession. You know, a lot of people look at vets and go, you know, that's, that's a five figure income is the way a lot of people look at it. Sounds like it's a little bit higher now over the last couple of years, but, you know, that's pretty awesome. You're doing great. What's next for you in your financial goals?
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Jack
Yep. So we're looking at buying a house, like I mentioned before. So we'll be closing hopefully in the next month or so and then going to start putting away a lot for retirement.
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Dr. Jim Dahle
Very cool. And pretty soon you're going to have another shovel going. Yes. That'll make a difference as well. Awesome. Well, was this easier or harder than you thought it was going to be a year ago?
- [11:37]
Jack
I would honestly say it's been a lot easier. I'm truly not working, you know, 80 hours a week. You're working all the time. So that aspect makes it a lot, a lot easier. I would say I'm working with the average veterinarian, work three to five shifts a week.
- [11:49]
Dr. Jim Dahle
What would you say to somebody out there that wants desperately to be a veterinarian but is scared, they're scared to take on the debt to get through school.
- [11:57]
Jack
I would say be smart about which school you go to. If you're able to know you go to your in state school or there's a couple schools out there that allow you to get in state tuition after your first year. I would say be, you know, pretty smart about that and then your cost of living while you're in school. I had roommates all four years. My rent was only 300 bucks a month in Missouri, so that drastically helped keep costs of spending down while I was in school and then keeping the amount of debt that I had down as well.
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Dr. Jim Dahle
300 bucks a month. Was that the whole apartment? Did you have a roommate? Were you renting a room in somebody's house?
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Jack
Yeah, had three roommates. It was about 900 bucks a month for the whole place.
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Dr. Jim Dahle
Very cool. Well, Jack, congratulations on your success. Through frugality and smart decisions and hard work, you have become very successful in a very short period of time, and I have no doubt that you're going to reach whatever financial goals you set for yourself. Thank you so much for being willing to come on the podcast and inspire others to do the same.
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Jack
Yeah, thanks for having me.
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Dr. Jim Dahle
All right. We get a lot of flack out there we get flack because we feature people on this podcast that got a bunch of family help or they have some ridiculously high income, right? They're making $800,000 a year. And of course they became financially successful relatively quickly. But you know what? The last few interviews we've had are people that didn't have that high of income, that maybe weren't even in what a lot of you consider to be a high paying specialty or a high paying field. And yet they've still become financially successful by becoming financially literate, by becoming financially disciplined. I mean, in this case, we have somebody that's made 2x or maybe 3x what the average person in their field makes. And I've told you this frequently, right? That it's easier to double your income than most people think it is. And that the variation in pay among any given specialty or any given profession is much higher than the difference between the averages of professions or specialties. And I mean that you can increase your income. And for most of us as high income professionals, our income is our main wealth building tool. That is what you use to build wealth. You have to turn that high income into a high net worth if you ever want to be financially successful, if you ever want to have financial freedom. And Jack's done a great job of that. So I appreciate him coming on and talking about the early success he's had in his career. Now he's just barely back to broke at this point, right? He's not a gazillionaire by any means, but I have no doubt he's going to get there by applying the same principles that he's been applying, right? Paying off student loans is a little bit like a test run for financial independence. And if you can pay off your student loans in one or two or four years, you can become financially independent in 15 or 20. It's the same financial muscles you're using, it's the same budgetary techniques that you're using to do both of them. So use that student loan period, live like a resident period, to train yourself and to do a test run for becoming financially independent and performing that greatest task of your financial life, which is saving up a nest egg that will support you the rest of your life. Now, at the beginning of this podcast, I told you we're going to talk a little bit about mutual funds. And the reason why is that mutual funds are the main way that most people save for their long term goals, and it should be the main way that most people save for their long term goals and There are obviously lots of mutual funds out there, but the ones that I think most people ought to be using for the vast majority of their portfolio are index funds. Low cost, broadly diversified index funds. We're talking about things like a total stock market index fund. And you can buy these from Vanguard or Fidelity or iShares, Blackrock or from Schwab or wherever. Low cost, broadly diversified index funds. There are total international stock market index funds. If you want some sort of a tilt in your portfolio, maybe you want to tilt towards small value stocks because you're convinced they'll have higher long term returns. Well, you can use an index fund for that. You might want to have some real estate in your portfolio. And if you want to use publicly traded real estate, guess what, there's an index fund for that. The bonds in your portfolio. Yes, there's index funds. You know, there's index funds, there's index like funds. Either one's probably fine. The main point is it's broadly diversified and it's low cost. So what is the deal within that with mutual funds? Why are they so good? Well, they do a few things. Number one, you get professional management. You don't have to become an expert in this stuff. You don't have to go out there and pick your own stocks. The professional takes care of all the buying and selling of the stocks. All you have to do is dump your money in the mutual fund, take it out in 30 years and it's done its thing, right? Professional management. That's awesome. You also get instant diversification, especially if you're using an index fund. Right? You dump your money into a total international stock market fund. You just bought 10,000 of the most successful companies in the history of the world, right? 10,000 of them. Who cares if Nestle goes out of business? It's not going to impact your returns. Who cares if Toyota goes out of business? It's not going to impact your returns. You can do the same thing on the the U.S. side, right? You buy a total stock market index fund and you own 4,000 companies. You are broadly diversified. Okay? The other thing you get that you don't necessarily get with all investments. You know, if you invest in a surgical center or you invest in a real estate syndication or private real estate fund, you're not necessarily liquid. You might be locked into that investment for years. But with a mutual fund, you can liquidate it at the end of the next trading day. By 4pm Eastern that day, you're out, your money's in cash and it might take a day or so to transfer it to your bank account, but it's totally liquid. So if something comes up or you just want to change your investment plan, you can get out now in a taxable account. There's tax consequences for that. But if you're In a Roth IRA or a 401 or 457, there's not even tax consequences. There's usually not any sort of fee or even commission these days, truthfully, given the advent of low cost, nearly zero index funds out there, investing is essentially free now. You don't have to pay expense ratios of 0.5 or 1% or higher. You can invest for free beta, or the return you get from the market is now free. So that's pretty cool. But even when it wasn't free, you still get the benefit of pooling your costs with other investors. You get these economies of scale because that manager is managing money for literally millions of people out there. And so you're pulling your money together with other people. And there are some advantages to doing that. So you get instant diversification, you get professional management, you get daily liquidity, you get economies of scale. That's why we use mutual funds. Now. There are other legitimate ways to invest out there. Okay, if you want to put a little bit of your money into collectibles, you want it in gold, or you want it in some sort of speculative investment, maybe we're talking about commodities or we're talking about some Bitcoin or something, fine, put a little bit of your money into that. If you're really into real estate, I've known lots of docs that have become financially independent primarily from investing in real estate. That's fine. But you know what? There's a place for mutual funds in just about everybody's portfolio. And in lots of people's portfolio, that's the only investment in it. And that's perfectly fine. You can become financially independent and have a wonderful financial life without investing in anything besides mutual funds. Full disclosure, What I'm about to say is a sponsored promotion for locumstory.com but the weird thing here is there's nothing they're trying to sell you. Locumstory.com is simply a free, unbiased, educational resource about locum tenants. It's not an agency. They simply exist to answer your questions about the how to's of locums on their website, podcasts, webinars, videos, and even have a Locums 101 crash course. Learn about locums and get insights from real life physicians, PAs and NPs@locumstory.com all right, this is the end of our podcast. If you want to come on it, we'd love to have you. Whitecoatinvestor.com Milestones is where you apply until next week. Keep your head up, shoulders back. We'll see you next time on the podcast.
- [20:26]
Jack
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.