Wednesday, May 28, 2014

Aviation Debt-Free

Before I write this post, I want you to know that I am by no means a financial advisor or accountant or anything of that nature.  But in my years of aviation I have been asked many times how I paid for my training (mostly student loans) and then how I paid them off so quickly.  So here goes...

I accrued nearly $50,000  in students loans to pay for my flight training.  That cost does not include my school tuition, books, housing, etc.  I earned a BS Degree in Aviation Science Professional Pilot from Utah Valley University and did my flight training while I was pursued my degree.  It took me only 4 years to accrue that debt, and only 4 years to pay it off.  Most people think I'm exaggerating a bit when I tell them that, but that is the truth!  Here's how I did it.

I worked my way through college.  My first semester of college I worked at Cold Stone Creamery and Shopko.  Sadly, having those two jobs barely helped me pay for my tuition and housing; the summer between my first and second semester of college I took a break from flying and schooling and worked at Liberty Safe, creating the interior for gun safes.  Of course that was not an ideal job, but it helped me save so I could pay for my tuition for the upcoming school year.  During that summer,  I interviewed for  a receptionist position at a car dealership and was given the job.  I started out part time but was soon offered the full time position.

During the second school year I attended classes in the morning, had my flight lessons around noon, and then headed to work after that until 9pm.  That job was perfect for me because if all my work-work was done, I was allowed to do homework as long as all the phone calls still got answered.  Because I was allowed to do homework at work, I began taking online classes from UVU as well as classes in the classroom.  That was a lifesaver for me.  I was able to pick up a few more hours at the dealership the next semester and take more credits at school.

My third year at college I landed a job in the UVU Aviation Student Support Center assisting students who were interested in taking college course online.  For the easy and fun work I got to do there, I was paid quite well and was allowed to do homework as long as it didn't get in the way of my work.  Again, another life-saver job.

With all of those jobs, I never had to use student loan money for college tuition.  It can be done, but you have to get creative and maybe get a job that allows you to do some homework in the downtime.

As far as my student loans go, each school year I applied for Financial Aid.  I typically received a little bit from subsidized loans (I didn't have to pay for the interest while I was still in school), unsubsidized loans (interest accrued while I was still in school), and grants (free money for making such little money).  My grants total was under $1,000, but every little bit helps!

Financial Aid didn't cut it for me, so I had to apply for some additional loans.  I received a loan from 2 different banks.  For some reason I'm drawing a blank on which banks they were, but they were the ones the school recommended at the time.  I didn't have any co-signers for my loans (I didn't want somebody to be stuck with my debt if something happened to me), so I had to accept higher interest rates.  But I am a firm believer of taking care of myself, so that seemed like a reward, not a punishment.

By the time I finished my flight training and all the interest had accrued while I was in school and not paying, I was nearly $50,000 in debt.  That sounds like a lot, but I had a plan.  I didn't want to be paying my loans for the next 30 years so I did a little research and devised a way to pay off my loans as quickly as possible.

Avoid Frivolous Spending.  
I bought a Honda Civic for $4,800 while I was still in school and paid it off in less than a year (yes, I needed a car).  I kept that car the entire time I paid off my students loans.  Many of my friends bought  beautiful new cars while they were in school- I felt at times that a new car maybe was something I needed, but it wasn't.  I always came to my senses before it was too late.

I always looked for great deals as far as housing goes.  I found a sweet apartment just before I graduated that was only $250 per month for a single room; of course I had roommates, but doing so helped me to save more and pay more on my loans.  Plus, having roommates ended up being such a great experience for me!  To this day, we are still great friends.

Later on, I ended up moving in with my oldest sister and her family because her and I wanted to spend more time getting to know each other.  She didn't charge rent (wahoo), but I did my portion of house chores to (kind of) make up for it.  That helped me immensely in getting rid of more debt.

Have Discipline
Do I Need It, or Do I Want It?  Ask yourself this question each time before you buy something.  You have to have discipline when learning to fly, so why not carry that over to managing your money?  Instead of going to the 3-D IMAX theatre, maybe go get a RedBox movie with some friends and watch a movie at home.  Instead of going out for dinner, go out for lunch when many menus have smaller and less expensive items.  Instead of shopping at Nordstroms, shop at Marshalls.  I think you get my point.  Have discipline and you will have your loans paid off in no time.  Every little bit helps!

Have a Plan
I'm not sure if it is the same today, but when I graduated from college, loans went into repayment 6 months after graduation.  When I received all the balances for my loans, I laid them out next to each other and devised a plan.   Initially I thought it would be best to consolidate them into one big loan, but no bank would do that for me (no cosigner and not enough credit history).  Not consolidating them, however, made paying them off so much easier for me.

I got online and set up automatic minimum payments for each loan; that way I wouldn't have to remember to pay each month- what a life saver!  Then I picked the smallest loan with the highest interest rate to pay off first.  I made a monthly budget for myself and figured out how much EXTRA money I could stick on this loan.  It wasn't much in the beginning, maybe $200 or so.  But I was able to pay that small loan off in just under 1 year.  It felt so good to pay off that loan that it gave me the momentum to keep going.

I took all the money that I would have put on that loan (that was now paid off) and added that to the minimum payment for my second loan; I was paying an extra $700 or so on the second loan now.  That loan was my biggest one, so it took me a couple of years to pay it off.  But putting that much money each month on a loan makes it easy to see the number decreasing, which motivated me to keep going.

Two years later that loan was paid off!  I had only one more loan to go.  Those payments were over $1500 per month (I don't remember the exact amount), but because I had never had that money for fun spending, it wasn't hard to see it go.  So I added that money to the minimum payment of my third loan.  Towards the end, I was so antsy to just pay it off that I put a few thousand dollars on it to just get rid of it.   And I did it!  Paid off $50,000 in 4 years!

To reward myself, I took that money that I would have paid on my loans and put it towards a new car.  One of the motives I had while paying loans was "When these loans are paid off, I'm going to buy a brand new car, not used, but NEW."  And I did, on April 9, 2012... and then paid off that car in a year.

I'm not saying that paying off my loans that quickly was easy, but it was so worth it.  There were times when I wanted to go on some elaborate vacation with my friends, or just give in and buy my car NOW, but I didn't.  I had discipline and waited patiently for those things.  

Another plus of having my loans paid off was the reduced financial stress my first year at the airlines. It was okay that I had to take a huge paycut because my loans were all paid off!  It actually didn't feel like a paycut because if I deducted the money that I was paying on student loans, I actually got a raise working at the airlines with no debt.  I fly with other pilots all the time who having been flying much longer than me who still have student loans.  If you pay off your loans with only minimum payments, you will waste so much money in interest.  If you can afford to, I highly recommend paying your loans off much quicker.  Eliminate frivolous spending, have discipline, and work hard to pay of your student loans.  You can do it!

Monday, May 5, 2014

Do it Right the First Time

A few months back there was a water leak in my apartment that caused a section of our carpet and wall to get moldy (gross!).  Maintenance came over to investigate the problem and decided the leak was coming from our old shower head.  They replaced the shower head and called it good.  A few days later, we noticed the carpet was still soaking wet, as well as the wall now, and mold had started growing.  We called maintenance again and they came over only to realize they hadn't really fixed the leak.  After tearing apart the wall they found a leak in one of the pipes.  It was a quick fix, but a section of our carpet now had to be replaced as well as a huge section of our wall.  Had maintenance fixed the issue the first time, they could have avoided tearing apart such a huge section of our wall, and having to replace and clean our carpet- it ended up being a much bigger deal than it needed to be.  How does this relate to aviation, you might ask?  The same goes when taking a checkride- do it right the first time and you can avoid a lot of wasted time and money (and emotional stress).

A lot goes into preparing for a checkride, so why take the test before you are ready?  I've mentioned in a previous post (click HERE to read that post) that I failed my instrument checkride; I feel that if I had just waited one more week and practiced my flying skills a little more, that would have given me the confidence I needed to pass, and I would have passed my first attempt.  Of course I learned a lot from failing, but I still think it's better to just pass the first time.

If you take the checkride before you are ready,  you still have to pay for the examiner and airplane, then pay your instructor again for additional training, then pay the examiner and airplane fees again (though most examiners will do the retest fee at a lesser rate).  You will spend more money if you take your checkride before you are ready because you are paying for a checkride twice.  Maybe that doesn't seem like a big deal, so let me throw out some numbers here.  Most examiners charge $400 for the checkride, and airplane rentals cost around $150 per hour (checkrides are usually 1.5 hours).  That's $625 you will never get back and that could have been saved had you waited until you were ready.

If you fail a checkride, it goes on your record forever.  I don't say that to scare you, but it is a fact of life.  Every aviation interview I've had asked me about "Have you ever failed a checkride?"  It would be so awesome to be able to say "No."  But if you can't, have an explanation of why you did, what you learned, and how you improved and became a better pilot because of it.

I flight instructed for 5 years; it was very easy for me to know if a student was ready or not for a checkride.  If your instructor doesn't think you are ready (and your instructor really does have your best interest in mind) then don't take the checkride until you have their stamp of approval.  Instructors put just about as much energy into you passing the checkride as you do- they want you to pass.   They want you to feel the joy of succeeding at something you've worked so hard to get to.  If they think you need a couple more flights, then you probably need it.

Of course there is still a possibility of failing, but it will just be bad luck, not that you didn't prepare properly.  Through all my years of instructing, I had only one student not pass on the first attempt, and it was on a maneuver I wasn't even worried about- short field landings.  The winds were just different enough that day, the turbulence just distracting enough, and the heat out-of-control, that he didn't land on the spot.  It wasn't that he hadn't prepared properly for his checkride, it was just a bit of bad luck.  So even if you are ready, and you still don't pass, don't be so hard on yourself.  You'll get it right the second time.

Before I would take a checkride myself, or send my students on checkrides, I would make sure I (or my student) could talk about each technical subject area in the PTS, and fly each maneuver on one flight within PTS standards.  If you can do that, you are ready!

If aviation is the career you want, I want you to succeed!  I want you to find checkrides enjoyable and rewarding.  I want you to pass the first time!  So study hard, and train hard.