Sunday, January 22, 2012

Financing the Future

As residency interviews for my co-residents loom, many are stressing about money (it is horribly expensive to fly out of our local airport), and as graduating 4th year students gear up for the inevitable "omg what do I do after graduation!?" many of them will be concerned about whether a residency will be able to pay the bills and/or leave extra money for fun. Many of my classmates ended up passing on the residency for just that reason. When you're faced with "60+ hrs of work/wk for $40k" vs "40 hrs of work/wk for $100k+" the decision appears easy.

I took a different approach - that $40k (approximate gross base pay of my residency) is a lot more than I have ever made as a student, even with excess loan money. I've lived on much less then, and I felt I could do quite a bit with the extra, even if cost of living were to be higher. This turned out to be true. To give a brief overview of my situation, I currently rent a 3-bedroom house by myself, outright own my car, and have two large dogs. These, along with utilities, are my largest fixed expenses. My rough monthly fixed-expense budget follows:

Cell phone:$80

My biweekly checks have been hovering around $1300, so for the sake of simplicity, I'll estimate net income at $2600/month. This has changed recently with a larger contribution to my 403(b) retirement plan, but is close enough for this assumption to hold true.

$2600 - $1885 = $715 each month of excess. Wow!

Now, this doesn't include any discretionary spending, but $715 after the bills are paid for my base pay is certainly enough to work with. It isn't quite enough to hit my goal of raising $10,000 to fund flight training, though.

Thankfully, I have been blessed with a hard work ethic and moderate bootstrapping skills. My residency program offers plenty of optional extra shifts at pharmacist rate (>$50/hr) but limits us to 2/month. I've been trying to max out on those. Extra income: $600/month

We have a partnership with the local university, and I have been used my tutoring experience to continue in a very well-paid position there for a few additional hours of my time each week. My earnings here will likely go down as I have many more responsibilities in the residency this month, but for the 6-months just ending:
Extra income: ~$400/month

I keep the thermostat at the extremes of my comfort zone, so my electric bill has ALWAYS been below my budgeted value.
Extra savings: $50+/month

I work on my car as much as I can to keep it running. The water pump had a leak a few months ago, so I replaced it. The repair took about 2 hours and cost me approximately $150 for the parts. What would I have paid a mechanic? Likely $400+.

These are just a few of the ways I have been able to make this dream of flight training attainable during a time when I did not think it was possible. My impression of a resident salary was "just enough to get by." That is not true, and I have more time than I thought I would have (as long as I keep my nose to the grindstone). When I first moved I was scared due to all the expenses creeping up around me, but after I bought the lawn mower, dryer, and other incidentals, I was set and started seeing my net worth climb back toward black.

Even beyond those incidentals associated with the cost of moving, I took 2 flights, paid back $1500 in loans, and attended a large conference that cost >$1000 overall. Despite these expenses, I was able to save over $6600 in 6 short months.

Without those incidentals, I would be looking at around $10,000.

In 6 months.

On $23,000 of net income.

I'm going to be a pilot.

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