Dev Raga’s (from My Millennial Money Professional) interview with Captain Fi, covering Captain Fi’s upbringing, career, investing history and journey to Financial Independence.
I was interviewed by Dev Raga1 from My Millennial Money Professional2 and this was released as a podcast, which you can listen to HERE for Part One and HERE for Part Two, but we actually didn’t get time to cover everything we planned. So, I put together Dev’s questions and my answers and included them here for interested readers! Read on!
The Captain as a person:
Dev: You grew up with not much money, and I think raised by your mother – as a single parent. What are some of the lessons your childhood taught you about money?
Captain Fi: Big ones: living within your means, frugality, and low cost entertainment through education, reading and creativity. Only boring people get bored.
Dev: You did engineering – what type? Then went on to do flight training – and spent $300,000 all up – which you cash-flowed – which is pretty remarkableI How did you cashflow that amount of money, and over what time frame?
Captain Fi: Bachelor of Aeronautical engineering, honours year for research, and then Master of space engineering. I’m not quite ready yet but looking at applying for research proposals for PhDs over the next few years.
I was lucky to snag a scholarship for my engineering degree so had tuition and books covered, was paid during my study, and got subsidised accommodation.
Pilot training is horribly expensive, but I used my scholarship income as well as working second jobs and side hustles, from 2009 to 2015 before I was fully qualified with an ATPL and instructor rating, amongst other bits and bobs.
Dev: I did not realise flight training was so expensive! Why is it so expensive, and how do most people manage to pay for it?
Captain Fi: Most people get a bare bones Commercial license and maybe an instrument rating which might cost them about $100k in HECS and pop out with minimum time and barely employable.
To become employable you need to pay for ratings and endorsements for what you’ll actually be flying and the type of flying you’ll be doing, and a lot of people also pay for what’s called ICUS (in command under supervision) as well as build hours on multi-engine aircraft – I flew barons which cost me $770/hr during training and that was going back 5-10 years ago so prices are definitely up now.
Most pilots max out their HECS, and also work second jobs – I had several friends that were builders, labourers and even diesel mechanics. There is no way you’re employable realistically for less than $150-200K, and if you are, it’s going to be flying scenic flights once a week but the rest of the time doing unpaid work as a cleaner and sales assistant, or putting in fencing in an outback station. You can understand my lack of enthusiasm at entry-level pilot jobs. But you do have to start somewhere.
Dev: Do you get special rates for business or first class (can you help a brother out!)? I note usually business and first class is around 4-10 times as expensive – do they just mark it up significantly on purpose, or does it actually cost significantly more to provide that level of service?
Captain Fi: Personally no, I flew cargo so no options for business or first class, and I am retired now. For long ‘dead head’ or positioning flights we would sometimes get business, but honestly most of the time just economy, and other times we would just be sitting on a jumpseat or a fold-down seat on a cargo plane.
For my mates in Mainlines they usually have a company loyalty thing for yourself and family members and close friends – so you can bid for empty seats and usually get them ‘at cost’ – flights from Australia to Japan for $150 bucks, that kind of thing. But if they sell the seats, then you’re stuck at the airport waiting for the next flight. Also, more senior airline employees can trump you and take your seat. I’m not sure exactly how it works though.
Now I’m an ex freighter, not a mainline passenger operator so take away what you will – my take is, it is a bit of both – It’s marked up significantly because they can, but also because of the whole ‘cost per passenger mile’ thing. For example, you could fit one first-class seat or you could squeeze four economy seats into that space. So 1st and Business take up more room. They also get better flight attendants to passenger ratios, and better food and drink, although those last two are marginal costs. They also take advantage of the perceived status of 1st class and Business. Personally, I wouldn’t bother – but that’s just me! I’m happy to sleep in economy.
Dev: Airline mileage points – worth it, or is it a scam?
Captain Fi: People love talking about this online and make their whole brand about points hacking, but I think talking about airline mileage points online and selling advertising space and working with travel affiliates is a lot more profitable than actually points hacking, if you get my drift.
Certainly there is some value to be had but it’s below 1% of the purchase price – so you spend $100 to get $1 back in value. Similar to credit card point hacking.
You have to really do a lot of travel or spending for work to make it worthwhile – I personally don’t even bother, because I think that effort is better spent on training your frugality muscles. But you know, it’s something I’m still learning and looking into.
The real value I think is Getting cheaper upgrades and perks, for example, upgrading from economy to premium economy or business or upgrading hotel rooms, that kind of thing. So yes, you can make it work if you are a big spender and frequently travel or holiday, but for your average person it’s probably a waste of time.
The Captain as an income generator/Career:
Dev: You have a pretty impressive income stream, I read on your blog at times – you worked as: a) Graffiti removalists and general caretaker duties for some shopping centres, b) Landscaping/maintaining repairing cars, c) and doing some online arbitrage – eBay, Gumtree etc – that’s pretty impressive and interesting – do you still do that?
Captain Fi: Thanks Dev. Yes, I worked a lot of shit jobs when I was younger to Get qualified as a pilot without having to resort to going into debt. These days, I try to focus only on things I can scale and outsource – for example, the website portfolio, and a bit of consulting work, as I value my time a lot more now.
I still can’t resist a bit of arbitrage selling every now and then, and I always am selling things I’ve picked up for free or cheap and done up – it’s a bit of a hobby and pays for my interests such as new beekeeping equipment (which then allows me to harvest and sell honey and the cycle continues haha)
Dev: You had a 80% savings rate – which is impressive! Is this practical for most people, even FIRE people who want to save money?
Captain Fi: This became an unhealthy obsession and a way to cope with a pretty toxic, very high tempo and results-driven workplace. So, aiming for a super high savings rate will get you to FIRE quicker, but you face a very real risk of burnout and fatigue. Many people can’t sustain it and give up.
These days, I have relaxed my spending a bit to allow for more conveniences.
Dev: I think most of your pilot experience is flying international cargo, is this correct? Do cargo pilots make more money than commercial pilots? Is it true that ATC (Air Traffic Control) make more money than pilots?
Captain Fi: In the heirarchy I think trash haulers sit just below passenger mainline ops, and there is a minimum award wage set out that employers must be paid. Typically, good employers like Qantas or Emirates will far exceed the award rate.
I left on about $160K which I thought was a pretty decent salary, but when you consider some of Qantas’ most experienced A380 Captains are earning over AUD $500k, and internationally employers like Cathay Pacific and Emirates have Captains earning over USD $500k, often tax-free due to overseas hiring contracts.
I have many friends who contract for overseas militaries training their pilots, for example in Riyadh, Saudi, earning tax free $550k per year plus benefits such as accommodation, healthcare, insurance, travel and family benefits.
Air traffic controllers generally do out-earn most pilots3 over their careers – and can start off around $100k as trainees and rapidly progress to $300k or more. Certainly, over the first decade or two they out-earn pilots, it’s really only the senior captains that trump them. We have a joke – if the pilot fucks up, the pilot dies. If the ATC fucks up, the pilot dies. But in all honesty, it’s a very difficult role and ATC are deserving of every single dollar.
Pilots also may typically go into $200k of debt for initial training, then basically have to work for free for 2-3 years building your hours whilst also working at a pub or servo or caravan park somewhere remote, and then get a modest job for 2-3 years in a regional airline earning under $100k before they can get a $100k+ job on a mainline or specialist company. And then once you start progressing, your pay should increase nicely.
Dev: Is English the universal language when it comes to ATC – how does it work when you move across borders, and interact with other pilots, ATCs, and people who don’t speak English as their first language?
Captain Fi: Yes – very difficult. Many funny anecdotes to share flying in PNG, Asia and the Middle East. Sometimes it gets quite dangerous as in certain places they revert to their mother tongue and don’t exactly have great English.
They also vary in units, ICAO is supposed to be English and imperial measurements, whereas if you go to say China, they will give you the lowest safe altitude measurements in meters, not feet. So they tell you to descend to 10,000 – they think Meters, but if you’re using feet which is the international standard, and you descend to 10,000ft, you may very well fly into the side of a mountain.
Dev: Most doctors will be fascinated by what you do – being a pilot sounds so cool – what are some of the bad elements about it?
Captain Fi: Shift work, a lot of time spent away from family, remote locations, pressure and radiation exposure, medical exposure to viruses etc, sleep deprivation, living in hotels/restaurants, extreme environmental conditions such as heat and cold, snow storms, dust storms etc, working in dangerous areas (remote PNG etc), high training costs, treated poorly by employers, job insecurity, sedentary job, G forces, extreme stress (physical and mental) can lead to health issues such as back issues, cancer, bronchitis, anxiety and PTSD.
Dev: I suspect it has taken years to train as a pilot, will you ever stop flying?
Captain Fi: I am pretty glad to not be flying commercially anymore and have the pressure removed, but I still look forward to flying recreationally with friends and family, as well as potentially casual flying instructing when I get some more time.
The Captain as an Investor:
Dev: What do you invest in, and why?
Captain Fi: I have three main investment vehicles which have the bulk of my investments around $2M total in;
1. Global Index exchange-traded funds (shares)
2. Residential investment property (Australia)
3. Online business – a portfolio of content websites
I also have some smaller satellite investments such as;
4. Private equity / Angel Investing
5. Cryptocurrency investing
I used to do monthly updates, but since pulling the pin on Flying and moving to semi-retirement or ‘FIRING’ as we call it, I moved to quarterly updates on the portfolio.
Dev: Do most pilots invest, or what is the general financial literacy like amongst pilots, and the people from the airline industry?
Captain Fi: Not all, but the smart ones do. Most start out in debt from training, and unfortunately, it’s pretty common for poor financial literacy amongst pilots to continue. Which is ironic given the level of education and complex training requirements – pilots are generally speaking quite well educated – many pilots these days have post-grad qualifications.
Yet they still opt for flashy cars, watches, houses etc as status symbols, and when the disposable income increases, so too does the car and home upgrades, boats, Jet skis and so on. Unfortunately, a lot end up using credit cards, car loans etc, and use their high incomes to service them ironically.
One of the things I loved to do in the cruise was chat and learn from the senior Captains about their finances, often the older pilots become savvy eventually, typically favouring investment properties due to the negative gearing tax loophole. I loved sharing this knowledge with my peers, but often it fell on deaf ears.
However, many senior captains I flew with also had bricks and mortar businesses, and invested into expensive managed funds using financial advisors, where they got rorted on expensive management fees.
Dev: Do you debt recycle?
Captain Fi: Not currently – I have $360k of debt on an investment property (~65% LVR), and I was thinking that I may do it for my PPOR when I buy a property in the hills. But I’m also weighing up the risk tolerance, as a paid off home really appeals to me from a stability aspect once my partner and I start thinking about starting a family, so we may simply opt to sell parcels of shares and some websites to pay for a property outright, and we might even sell the IP to be debt free.
Once you have a paid off PPOR and decent level of semi-passive cash flow income so you don’t have to trade your time for money, I don’t really see the point to continue to try to aggressively grow wealth and take additional risk.
Dev: Do you do self-managed super4 (or maximise super), or trust structures?
Captain Fi: No, I looked into it but the compliance and administration costs for SMSF and trusts just were not worth it for me for the limited benefit they would provide (for example I have very limited potential people to distribute to)
There is a lot of talk of using these for asset protection, but actually, corporate veils and trust structures can be penetrated and circumvented quite easily, family courts have a lot of power.
I personally think these over complicated financial structures are great for the accountants, lawyers and admin clerks constructing and maintaining them, but probably not so good for the actual customers.
Having said that, I recognise the unique environment medical professionals operate in with regard to risk and personal liability – I would suggest it’s perhaps beneficial to speak to a few lawyers, estate planners or financial planners that have experience working in this field, but most Australians are going to be best off with a standard industry super fund where they can opt for a low fee index based investment, – obviously the younger you are the more of a high growth or aggressive investment option is best.
Dev: What is your FI number? Do you think it’s achievable, realistic? Are you concerned it may not be enough?
Captain Fi: My single FI number was originally $2200 per month, which just covered a very modest lifestyle in a small unit or shared living arrangement. I recently looked into this and due to cost of living pressures, this comes in at $2600 today. Thankfully I receive around 4% of my portfolio per year in dividends which averages out to $3250 per month.
But yeah, when I have kids, this is certainly not enough to live on to provide for the family. I have estimated that with 5 kids I would need worst case approx $6500 per month after tax or around $80k salary, but I have a bit of a process that I’ve calculated where I actually plan to sell down parcels of shares to fund that increased cost over the 20 or so years of being financially responsible for the kids.
Additional sources of income are rent as the IP grows more cash flow positive over time, distributions as my business grows, income from the future hobby farm (beef, lamb, honey, eggs), my partner’s income and of course paid parental leave for us both ; )
Dev: Do you find it slightly ironic that you have reached financial independence at such a young age, but you are still working as hard as ever before?
Captain Fi: Haha yeah, I must say some days I work hard on my business, but it’s definitely not every day. And if it is, it’s capped at a few hours.
I now have the ability to work around my schedule and actually have a social and family life, as opposed to previously working pretty much 24/7
Sitting at a computer (or standing in front of my vario desk), or writing an article on my laptop on the couch cuddling the dog is very different to the 2am red eye grind somewhere in the tropics dodging thunderstorms.
When I left flying though I took on palliative caring duties for my mum which was a pretty full on task, basically a full time job.
Overall – Working for your own business or on passion projects is a very different motivation than working as an employee, and I don’t think anyone should retire to nothing – you have to find ways to do things you enjoy and stay productive and healthy both physically and mentally.
Dev: You have the ears of thousands of people listening in – mostly health care workers, who have above average incomes – one of the things I have noted is – a lot of them struggle with personal finances, they find it complex and time-consuming. What tips could you share, or what would you recommend when it comes to personal finance:
1. You are incredibly blessed and privileged to have such a powerful income shovel. Use this to your advantage, and to the advantage of your family, friends and community. You can make such a positive influence on those in your life by making just a few very small sensible decisions to live below your means and consistently invest the difference.
Personal finance is not rocket science. It does not require medical school-level intellect. To throw a risqué analogy out from Robert Kiyosaki – don’t be that highly educated ‘poor dad’
2. Don’t burn out. You simply must put yourself first, and this means prioritising your time, physical and mental health.
For example, You probably don’t need to be spending your valuable time on running multiple side hustles to earn an extra $50 a day when you can get such a better return on investment in your main specialty – maybe several hundreds per day!
You should strive to maintain a sustainable work life balance to be mentally rested enough to provide a safe level of care to your patients – this is no different to the strict crew rest cycle requirements flying a $250M dollar plane with hundreds of passengers.
3. Pay particular attention to symptoms of deteriorating mental health and toxic workplaces. Often obsessing about finance and daydreaming about FIRE can be a coping mechanism and symptom of a poor work-life balance, stress or workplace bullying. Do not put up with unacceptable behaviour in the workplace – the standard you walk past is the standard you set. And you have a duty of care under OH&S legislation to provide a safe work environment for your colleagues and subordinates. Hospitals and medical centres can be insidiously difficult workplaces, just by the nature of the work.
Dev: Thanks for the chat Captain Fi, it’s been insightful!
Captain Fi: No worries Dev, thanks for having me on My Millennial Money Professional!
- My Millennial Money Professional, Spotify. Accessed online at https://open.spotify.com/show/4i7qGU4QdWzUAW7r1eikTr on May 16, 2023.
- Self-managed super funds, ATO. Accessed online at https://www.ato.gov.au/Super/Self-managed-super-funds/#:~:text=Self%2Dmanaged%20super%20funds%20(SMSFs,the%20super%20and%20tax%20laws on May 16, 2023.