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MtoM #263: How a CRNA Became a Millionaire: Lessons from Firing a Financial Advisor
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- [00:00]
A
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 263. If you're a high income physician, you already know how hard you work for every dollar. The question is, how much of it are you actually keeping after taxes? Gilt is a tax firm focused on proactive tax strategy guided by expert CPAs and optimized via in house AI tools. They work with physicians and practice owners to use the tax code more intelligently. So your entity structure, deductions and income timing all work together to help you keep more of what you earn. As a White Coat Investor listener, visit whitecoatinvestor.com Gilt to book a free strategy intro and receive 10% off your first year with Gilt. It's time to start using your tax plan as a leverage for growth. Okay, few updates. By the way, we have a new partner for property and casualty insurance called Rate Insurance. We launched this back in February. Okay. And this is an even better option for getting your home, auto and umbrella insurance and making sure you're not overpaying for it. So if you're not shopping your rates each year, you're probably overpaying. Rate Insurance will search 100 plus top carriers to help you find the best rate for your property and casualty insurance. Go to whitecoatinvestor.com Rate okay, this is the Milestones to Millionaire podcast. It's all about you. We're trying to serve you here. We're trying to highlight what you're doing. If you would like to be a guest on the podcast. If you want to celebrate one of your milestones and use it to inspire others to do the same, sign up@whitecoatinvestor.com Milestones. We're also combining these episodes with Financial Bootcamp episodes. Now, Financial Bootcamp also stands on its own. This is a separate podcast. Podcasts we have now, right. To get people up to speed even though all they want to do is listen to podcasts. We put all the basics into podcasts, but we're going to include one of those episodes on the back of a lot of these Milestones episodes as well. And today, after we finish Stick around, we're going to talk for a minute about health insurance. It's actually pretty amazing how little doctors know about health insurance. But first, let's do a pretty awesome interview with a white Coat investor that has accomplished some pretty awesome goals. My guest today on the Milestones to Millionaire podcast is Jefferson. Jefferson, welcome to the podcast.
- [02:31]
B
Thank you and thank you, Jim, for all of the work that you do for this community.
- [02:35]
A
It's our pleasure. It's wonderful to be here with you. But let's introduce you to the audience. They all know me already, but they don't know who you are. So tell us what you do for a living, how far you are out of school, what part of the country you're in.
- [02:47]
B
Nurse, Anesthetist. I work up on the Canadian border in the upper Midwest, and I'm in a few different critical access hospitals. 12 years out of school. I've worked in a few different practice environments, but this one, I think is the most fun for me. Being the only anesthesia provider in the county oftentimes is a responsibility and exciting and is something that I really like doing.
- [03:15]
A
Okay. And married. Children? Partner.
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B
Yeah, married. For about the same period of time we have a little bit longer, actually. We have a 13 year old and an 11 year old.
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A
Your spouse works?
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B
She does. She works in the public schools. The majority of our income comes from the anesthesia income. She's decided not to get too, too involved in the public education machine, if you will. She stays kind of on the periphery.
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A
Okay, fair enough. Okay. You've accomplished, really, a couple of milestones today. Tell the audience what milestones we're celebrating with you today.
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B
Well, we recently hit a million dollars in our workplace retirement accounts.
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A
Congratulations.
- [04:02]
B
That was just in the last month or two, actually, since I signed up to be on the podcast. The bigger one that kind of looms in my mind is back in about September, we decided to manage our own finances. We had been with a retail financial advisor and we decided to move on from there and move our money into different brokerage so that we could manage our own money.
- [04:28]
A
So I want people to get this message out there. The important part of this message is once you sign up to come on this podcast, you actually get wealthier. So that's the key point here.
- [04:39]
B
Yes. We had one comma before. Now we have two commas in that account.
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A
Okay, well, that's pretty awesome. Congratulations on being a millionaire.
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B
Thank you.
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A
As a kid, did you ever think you'd be a millionaire?
- [04:51]
B
Oh, no way. Twenty years ago, I didn't think I'd be a millionaire. My hometown is a university town and I never thought I'd be able to own a house. And now we'll probably get to it, but we own more than one now. And part of that is. What's the term you use? Geographical arbitrage. It's cheaper to own a house.
- [05:13]
A
Here you're not in San Francisco, you say no. Okay, give us a rundown. What's your net worth look like? How much is in various types of retirement accounts and how much is in various kinds of investments and your home and that sort of stuff.
- [05:27]
B
It breaks down to we have about 1.8 million in assets and about 200,000 in debt. One million is in the retirement accounts, like I mentioned. And then we have about 300,000 in various cash and rainy day funds. And then we have about $450,000 of real estate valuation minus 150,000 in mortgages. So about 300 in equity in those homes.
- [05:58]
A
So some of these are investment properties.
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B
Well, we have a house. It gets complicated, but we have two.
- [06:07]
A
Sounds like you've got multiple homes to me. That's why it feels like this is going.
- [06:11]
B
Let's put it this way, Jim. I drive a lot because these hospitals are an hour or two apart. And I like to be involved in lots of different places, but the main hospital where I work is about an hour and a half from home. So we have two houses in our hometown. And then I. I did buy a house in the town where I work most often as well.
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A
Okay, but is one of them in your hometown you're renting out?
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B
We do rent it out, but we also use it for personal uses. So we use that as a guest house.
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A
So it really is a combination of a consumption asset and investment. Okay, yeah. All right. And your mix of investments, you know, when you look talking about your traditional investments, what's your asset allocation?
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B
Yeah, I just looked at it this morning. We have about 82% equities and 18% bonds at the moment. A mix of domestic and international.
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A
Very nice. Okay, now, some point last fall, you decided you didn't want to use the financial advisor you had been using. Why not?
- [07:14]
B
Well, I will say this podcast and others have given me the confidence to do that. And so I want to express once again my appreciation for that. But the main thing is I didn't think he did a bad job, but I did feel like he had mixed incentives. We ended up triggering the pro rata rule while I had him, and that kind of opened my eyes a little bit. And his suggestion was to open a solo 401k. But at the same time, I still have workplace 401k, 403b at a W2 job where I work occasionally, that takes incoming rollovers. And so I didn't really see the point in spending money to set up a new account when I already had the mechanisms to Roll that money over from SEP ira. And then the other thing was we had a variable universal life policy.
- [08:14]
A
Which this advisor sold to you?
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B
Yes, yes. And so we cashed that out because I realized that it wasn't ever going to get better, that waiting it out wasn't going to make it better. And so we took the money out of that and we were not going to look back on that except for learning opportunity.
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A
Okay, so you were essentially. You were essentially getting bad advice. You had mistaken, like I did. You'd mistaken a commission salesperson for a real financial advisor that just gives you advice for fees.
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B
Yes. All right.
- [08:50]
A
Well, typically I've found people's confidence lags their knowledge by about a year when it comes to doing stuff yourself. Did you find that was true for you?
- [09:01]
B
Yeah, I would say that the confidence definitely lagged the knowledge. I started learning about personal finance in earnest when we paid off our student loans. And suddenly we had three to four thousand dollars a month that was no longer going towards loans. And it didn't really occur to me until that point where that extra money was there that there may be better ways to use it than others. And so it was at that point we took on a financial advisor. But I've been listening to personal finance the whole time, but really was more reactive and learning about certain aspects of it.
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A
What was the hardest part about going from being an advised client to being a do it yourselfer?
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B
The hardest part really was divesting of the assets that were left behind because he had a larger number of funds that he had invested our accounts in, probably 10 or 12 per account, and figuring out how to move those into the. I kind of had a feeling of what funds I wanted them to put them into. But it was a little bit of work figuring out which ones were short term and which ones were long term capital gains, and whether I should hold on to any of them or whether I should just bite the bullet and move them all over at once.
- [10:31]
A
Was there a significant taxable account as well where you had to deal with legacy investments or it sounds like most of the money was in retirement accounts and you could just sell them without any consequences.
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B
Most of them were in retirement accounts. We did have a brokerage account with him, and that was really the one that took the most attention to move over. Although I will say 529s are kind of a pain to move over also.
- [10:56]
A
Okay, well, what advice do you have for somebody else out there that's going, you know what, maybe I'm not getting great advice either. I'D like to try DIYing it. What should they do before they fire their advisor?
- [11:11]
B
Don't go to the advisor in the first place. Prevention is cure. Well, I think learn what you need to learn to move, and then don't wait any longer. There's no, you know, if you. If. If you know that's what you want to do, just do it. I. I sat on it for longer than I should. If we had moved on it sooner, we would have done better.
- [11:32]
A
Did you come up with a written investment plan at some point in the process?
- [11:36]
B
Not in any formal sense. I had an idea in my head of what allocation I wanted once we'd moved everything over. We're sort of still working on it because this was September and taxes are due, and we're kind of figuring out for 2026 what that's going to look like.
- [11:54]
A
What did your spouse think when you said, we're going to do this on our own? I'm guessing the fact that you're on this podcast is that you're the driving personality when it comes to money in the couple. That might not be the case. I don't know. But I'm curious what reaction you had from your spouse in this process.
- [12:13]
B
We've been married a long time, and she really. She's supportive. But I would say, I think that there was an element of, well, you wanted help with this. You know, the reason we took the financial advisor on was because I wanted another set of eyes looking at our finances. And do you really want to take on another project? And my goal in all of this is to keep it as simple as possible. I want it to be easy if anybody else ever has to take this over. So I think she's coming around to it. But you're right, I do most of the maneuvering of our finances.
- [12:55]
A
Okay, well, you guys have done a great job, right? I mean, you've obviously saved a substantial sum of money. You've invested it, your money's grown. What would you say were your secrets to success in becoming millionaires?
- [13:09]
B
Well, I learned about the White Coat Investor podcast about 15 years ago from a friend who worked in tech. I didn't start listening regularly until about five years ago. And I would say be proactive. Not like me, but be proactive. When I didn't learn about finance until we'd paid off our student loans, and I didn't learn about the variable universal life until we had already paid what we were going to pay for it. So being proactive, I think, is, you know, I know you. You send Literature to med students. And I think that's. That's a really good time to start thinking about this. I think that we overall, yeah, I think we have done a good job. We started investing early, even as we were paying off our student loans. And that was kind of toss up because they weren't. They weren't super high interest rates, you know, and so we were able to do both at the same time. Don't sweat the small stuff. Just put some money away and keep doing it.
- [14:15]
A
Yeah, it's good advice. I mean, you've worked hard, You've got multiple jobs. It sounds like you went someplace that is not that expensive to live. You've got essentially three homes for less than lots of people are paying for one home in other parts of the country. You clearly carved out a substantial portion of your income. I don't know if you told us what your household income has been over the last 12 years or so, but in order to get to a million bucks plus, you had to carve out a big chunk of that.
- [14:46]
B
We've been in the three hundreds for a few years now. So, yeah, we're doing pretty good.
- [14:51]
A
But even just to carve that out, we're talking about 20%, 25%, whatever of your income going toward wealth building. And so you did all the things right. Made a couple of little tiny, maybe slight course corrections. But overall, the truth is, if we just get the big things right, we can become successful like you have.
- [15:11]
B
I think that's right.
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A
All right, what's next for you? What's your next financial goal you're working on?
- [15:16]
B
I'm actually in chronic pain management program. The hospital up here wants to institute a pain clinic here, and my colleague and I are up for it. So that's the next thing. We're at a couple small hospitals up here, and it's. Most of what we try to do is keep patients locally because it's two hours to the next town. So we want to provide services that they currently aren't providing.
- [15:45]
A
Will this be an additional side gig or a way for you to consolidate your jobs into one job or a boost in income, or what do you expect? The financial outcome of this is maybe
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B
a modest increase in pay, but mostly it keeps my brain engaged in terms of learning new skills. And one other piece of advice that I'd say is go somewhere that you can use the skills that you want to keep using and where you can learn new skills, because, well, I don't know. For me, anyway, I always enjoy learning new things, and it has. I Think increased the size of our shovel to do that.
- [16:24]
A
Very cool. Well, Jefferson, congratulations on your success. You guys have done awesome and should be very proud of yourselves. We're proud of you. Thanks for being willing to come on the podcast, inspire others to do what you've accomplished.
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B
Thank you, Jim.
- [16:36]
A
All right, as I mentioned at the beginning, this is a fun interview to bring you guys on. You've become millionaires. You've fired your financial advisors. You've paid off your student loans, you've paid off mortgages. You've become a DECA millionaire. You've gotten back to broke. Whatever your milestone is, we love to celebrate them with you because they're all individual. You all have a unique pathways. Some of you do geographic arbitrage. Like Jefferson, he's in a little tiny town in the Midwest. Some of you are in downtown San Francisco. Some of you are in D.C. or you're in your hometown or wherever you are, your pathway is different. You have different challenges, but you also have different strengths. So apply your strengths to overcome your challenges and reach your financial goals. This is a single player game. Just because you're a CRNA and you're not a millionaire yet does not mean you're losing this game. But if you're not making progress toward your goals, it's time to get, you know, a written financial plan in place and start moving toward those goals. All right, I told you at the beginning we were going to talk about health insurance. Let's do that. Understanding health insurance is surprisingly challenging, even for doctors who accept payment from health insurance all the time. But it's important to understand this very important health insurance. First of all, the most important point is this is one of those financial catastrophes. I fell off a mountain a year ago, and when I fell off, I got two helicopter rides. One was covered by the National Park Service. The other one was covered by my health insurance. My health insurance paid $44,000 for that helicopter ride. I get my annual out of pocket maximum before I ever got to the hospital. And when something bad happens to you, whether it's a diagnosis of cancer, a diagnosis of some chronic disease like Ms. Or something, or whether it's trauma, like in my case, that bill can run up very quickly and put a huge dent in your financial resources or even keep you from being able to get the health care you need. So health insurance is a critical type of insurance. You've got to have it. Don't go bare. There are some health insurance alternatives out there that might be worth considering, but you need some sort of Coverage. Don't ignore this insurance. You need to have it. But let's try to understand the different pieces of it. What's a deductible? Deductible is the portion that you pay, okay? And sometimes there's a whole overall deductible per year for the policy. You pay the first $500, you pay the first $2,500. Sometimes there's a deductible for each doctor visit. Maybe you pay $50 every time you go see the doctor, whatever, right? Every policy is a little bit unique. But a deductible is your portion to pay before the insurance company starts paying. There are also co payments and this is like the payment you make to a doctor every time you go. If you got to pay $50 or maybe you got to pay 20% of the cost, that's the CO payment. And you not only pay your deductible before the insurance starts paying, but but then you pay along the way with the insurance company. And then eventually you hit an out of pocket max. Once you've hit the out of pocket max, the insurance company's on the hook for the rest. Like in my case, my ICU bill was $106,000. My helicopter was $44,000. I got a surgery on my wrist, right? I don't know how many thousands of dollars that was. But when you have all that happen to you in one year, you hit your max out of pocket and then you're not responsible for additional payments. Above, beyond there, there are also another term that's thrown out there a lot called co insurance. And all that is that's the percentage of costs of your covered health care insurance that you pay after you've met your health insurance deductible. So it's a lot like a copay, but that's what coinsurance is. Just like your employer might make you pay 20% of the premiums for your health insurance, your insurance company might make you pay 20% of what it's paying or what the costs are until you hit your maximum out of pocket. But once you've hit your maximum out of pocket, that's all you pay for the year. Everything else is free. Now why is health insurance set up this way? Health insurance is set up this way so you have some skin in the game. If there were no deductibles, if there was no copay, if there was no coinsurance, there's nothing to keep you from just spending willy nilly on everything. So the reason they put these in place is to help you to be a little bit wiser consumer of healthcare, maybe think twice before you buy something that maybe you really don't need or even really want. But it not only keeps your premiums, what you pay for your insurance down, but it allows you to or allows the insurance company to be able to, you know, make sure you have some skin in the game and that you're making logical decisions when it comes to what you're consuming. But at the end of the day, when things get really bad, what you really need is that catastrophic coverage. You need them to take care of the amount above your out of pocket maximum. So buy health insurance. Understand how it works. Not only will it help you to be a wise consumer of health services, it'll help you to be a better doctor so you can explain how these things work to your patients. If you're a high income physician, you already know how hard you work for every dollar. The question is, how much of it are you actually keeping after taxes? GHELT is a tax firm focused on proactive tax strategy guided by expert CPAs and optimized via in house AI tools. They work with physicians and practice owners to use the tax code more intelligently so your entity structure, deductions and income timing all work together to help you keep more of what you earn as a White coat investor. Visit whitecoatinvestor.com Gilt to book a free strategy intro and receive 10% off your first year with Gilt, it's time to start using your tax plan as a lever for growth. All right, that's it for our podcast today. Thanks so much for listening. We appreciate you out there. We appreciate what you're doing. Keep your head up and your shoulders back. You've got this. We'll see you next time on the Milestones to Millionaire podcast. The White Coat Investor Podcast is for your entertainment and information only and should not be considered financial, legal, tax or investment advice. Investing involves risk, including the possible loss of principal. You should consult the appropriate professional for specific advice relating to your situation.