In this episode, Toby Mathis, Esq., of Anderson Business Advisors, interviews Ryan and Tait, hosts of the Passive Income Pilots Podcast and seasoned real estate investors. Ryan has built a $750 million self-storage portfolio while Tait continues flying for a major commercial airline. They share how pilots can build tax-free income while traveling the world through strategic real estate investing, syndications, and debt funds. The conversation covers the biggest mistakes new pilots make with retirement accounts, powerful Roth conversion strategies during probationary years, and how to leverage real estate professional status to offset W-2 income. Tyler and Tait explain how they legally pay almost no federal income tax on nearly $1 million in combined annual income using accelerated depreciation, cost segregation, and oil and gas investments. You’ll also hear about whole life insurance strategies, airplane leasebacks for depreciation benefits, and why pilots’ largest expense is actually taxes—not housing. Tune in for expert insights on building multiple income streams and achieving financial freedom!
Ryan Gibson is the President, Chief Investment Officer, and Co-Founder of SIG. He has organized over $450M of private equity for Spartan’s projects. Ryan has experience managing the development of SIGs projects in challenging markets. For SIG, Ryan is responsible for investor relations and capital raises for projects. Ryan is also a highly experienced commercial airline pilot. Ryan graduated from Mercyhurst University with a bachelor’s degree in Business, with concentrations in Marketing, Management, and Advertising.
Tait Duryea is the Founder and Chief Executive Officer of Turbine Capital. As an experienced airline captain and third-generation aviator, Tait combines deep industry knowledge with more than a decade of real estate investing experience across single-family, multifamily, self-storage, industrial, mobile home parks, and short-term rentals.
Highlights/Topics:
- Best pilot-friendly passive income models: syndications, debt funds, and strategic real estate investing
- Biggest mistakes new pilots make: rolling old 401(k)s too quickly and missing Roth conversion opportunities during probationary year
- Tax-advantaged real estate: using accelerated depreciation and cost segregation to offset high W-2 income
- Real estate professional status: How Tait and his wife legally pay almost no federal income tax on nearly $1 million annual income
- Stacking strategies: combining low-income year Roth conversions with discounted LP valuations for maximum tax savings
- How one Southwest pilot saved $100,000 in taxes by following podcast education and implementing strategies
- Lifestyle creep: Converting purchases into time to make smarter financial decisions and avoid overspending
- What separates financially free pilots from those who aren’t: continuous education, networking, and disciplined saving
- Share this with business owners you know
Resources:
Listen To The Passive Income Pilots Podcast
Learn more about Ryan Gibson and Spartan-Investors
Learn more about Tait Duryea and Turbine Capital
Schedule Your FREE Consultation
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Full Episode Transcript:
Toby: Hey, guys. Toby Mathis here. Today we’re going to dive into pilots investing. In fact, we’re going to talk about how these two pilots built tax-free income while traveling the world. By the way, they have a podcast, Passive Income Pilots Podcast, where they work with pilots all over the place. The reason being is because pilots have a very unusual schedule and things like that. I’m just curious. We’re going to go over really five areas with them, five big questions for these guys. I’ll introduce you, Ryan and Tait, both have flown for major commercial airlines. Tate, you’re still flying for a major commercial airline.
Tait: Occasionally.
Toby: Ryan, you’ve built a $750 million portfolio in the self-storage space. First off, welcome guys. I should just say that.
Tait: Thank you for having us.
Ryan: Good to see you, Toby.
Toby: Yeah. Let’s dive in. My audience likes to, Toby, get to business, let’s go into it. Pilots have very unusual schedules and usually pretty high income. What are the best pilot friendly passive income models you see actually working? Ryan, why don’t you start with that one?
Ryan: I think one of the things that I enjoy the most is real estate. In layovers, we have a lot of time, we have a lot of days off typically, things like that. I spent a lot of my time building a passive portfolio. The story that I have is, I went out and bought a bunch of single family rentals. That was where everybody went, where I started generating real cash flow. That’s a thing that you can do. That makes you nice monthly income, and I like the return.
Everybody’s experience is a little bit different with real estate. I actually didn’t enjoy that very much because while I was getting a good ROI and passive income, I wasn’t really getting a good ROI on life. I was actually spending a lot of time tending to those rentals and really not benefiting from the investment. I was buying a rental property basically in all my layovers. Whatever layover I had, I’d buy a rental property and I thought, hey, I could work on this while I’m in my layover. It could be passive.
What I found was I actually have been investing in syndications. The reality is I don’t want to go out and spend all this time and effort, do all these deals on my own, and not get the benefit of the ROI of my time. I’ve actually invested in 26 different syndications outside of what we do at Spartan that help me earn and generate passive income so that I can enjoy my days off and have really good real estate in my portfolio. I would say that’s probably the best one. Outside of stock, bonds, mutual funds, investing in real estate passively, I would say those are probably the things that I would enjoy the most. Tait, what would you add to that?
Tait: I would add that passive income isn’t passive when you’re building it. That’s something that I think a lot of people need to come to terms with. Everybody thinks, oh, I’m going to go buy this rental property and it’s going to be passive income. It’s like, oh, boy, you are in for a treat because real estate is not passive, especially when you’re actively managing that. You can get very passive when you invest in a syndication deal or you invest in a debt fund. Oftentimes, people, their first foyer into real estate, passive income, that thing is active ownership. I think a lot of people get blindsided by that.
The first thing I would say is, if you’re a pilot, you have a lot of time off, that’s okay. You don’t need to be a hundred percent passive from day one. I think the first step is education. Obviously you’re listening to Toby’s YouTube channel here, which is fantastic. I have learned so much on this YouTube channel in terms of taxes, deal structure, entity structure, and asset protection over the years. Shout out to Toby and Clint. Thank you for all the education, but education and then taking action, understanding that maybe it’s not going to be so passive in the first few years, and then you can transition into a more of a passive role later on.
I do want to say there are five things. Real estate gives you depreciation, benefits. You can offset passive income. The second thing is you could invest in other operators’ deals, syndications that still give you the same passive income. I think pilots overlook the fact that they flew at a regional airline. They probably have an old 401(k) there that they can convert to a self-directed IRA and actually invest passively in their investments.
The fourth thing I think pilots are not overseeing is they have all of their money in the stock market, stock bonds, mutual funds. We get a great defined benefit contribution plan, 18%-20% at some airlines automatically going into your 401(k). It’s incredible. About February or March of the year, most pilots now making a half a million dollars, they’ve already maxed out their 401(k). What I say is they can go get a 401(k) loan, and they can diversify away from the stock market, buy that 401(k) loan, or they can do something like a portfolio loan against their brokerage account, things like that, to get out of this only focusing heavy concentration in this space.
The other thing is the last one, the fifth one, is be a private lender. A lot of pilots don’t realize that they can invest in credit funds, debt funds, private loans, all these things that will generate them real passive income. Pilots, all they’re thinking about, I felt like, when I got into this 10 years ago investing, learning from you Toby, and seeing a lot of podcasts getting on a lot of what a lot of webinars, is a lot of pilots that this is how they think. They think, are you going to fly to 65 or not? Am I going to get to 65, or am I going to try to get out a little early? What ends up inevitably happening is the career gets better and better as they get closer and closer to 65. Why would they ever quit this job? Now they’re only flying a trip a month or something like that.
I think the big misnomer is that they get to retirement. They have this big 401(k), and all they do is take the air out of it to live. They’ve inflated all this stock, bonds, mutual funds. Now they’ve got to start taking all that money out of it, and they hope that they have enough in there. By the time that they pass away, they have enough money. What they’re not thinking about is diversifying their income streams and getting some real estate, getting some hard assets, getting some liquid assets, getting some things that are generating passive income that actually will help them benefit in retirement and really start working a barbell strategy.
I’ll just say one more thing. I would talk to a lot of pilots, especially FedEx pilots, that they have a military pension paying them money at retirement, they have their 401(k), and they might get some real estate in there. They’ve got a barbell strategy really working for them to give them multiple sources of income when they retire versus just solely relying on whatever’s left in their 401(k).
Toby: I think you just hit on something. There’s a lot there to digest. I’m going to grab that last item. Multiple streams of income. You just list it out. Is that something realistic for most of the pilots out there? By the way, if you’re not a pilot, you’re still be listening because pilots, it means they’re traveling all over the place. They have downtime and they have really high income. This could be doctor, dentist, lawyer, just sales person, manager, whatever. Fill in the blanks, still applicable. What are the income streams? Tait, I’m going to throw this at you. What are the different types of investments in the income streams that you have found work best for folks in your situation?
Tait: Based on how active you want to be. You can go out and you can buy cash flow in real estate, especially, the lower amount of debt that you put on a property, the better it’s going to cash flow. You can go out and very intentionally build an active portfolio of real estate. You can go and invest in notes directly, but you can also take a lot of the work out of that by investing in debt funds or investing in syndication deals that provide cash flow. It depends on your personality type, how much time you have off.
What I always like to keep in mind is let’s say you got this new car or this new boat that you want to go spend money on. Take that value, take the price tag, and multiply it by 0.1. A typical debt fund, you can get about a 10% return. You can either compound that or you can cash flow it. If you’re going to buy a $200,000 boat, think to yourself, do I instead want to not have to work for $20,000 a year for the rest of my life? You could put $200,000, put it in that debt fund. That’s $20,000 a year that you never have to work for again. You save up again.
Each time you make one of those investments, you’re shortening the cycle of the next investment. If you made $300,000 a year, now you make $320,000 because you’ve got the additional passive income coming in. When you start to think about that snowball, it makes it very compelling to go and invest over here versus maybe buying that boat. That’s not to say that you can’t buy the boat, it’s just maybe wait a year or two until you get some cash on temperature. You can fund the boat with passive income instead.
Toby: One of the things though is you’re talking about high income folks, where a lot of them are adverse to making additional money in investment because they’re like, I’m just paying half of it in taxes. Depending on where you live, you have your federal and your state. You’re just getting smooshed by it. I’ll throw this maybe Ryan, at you, because I know that your fund and for those of you guys who don’t know, Spartan Investment Group is Ryan and his partner. They do a fantastic job. It’s well over $750 million at this point.
One of the things they do is that they’re focused on tax advantages. I want to talk to you, Ryan, about tax advantage real estate and especially things like accelerated depreciation. Can anybody use that and offset their other income? If so, what do you see pilots using to offset their income?
Ryan: Yeah, I’m going to push this back. This is the entire reason why we had our podcast. Tait and I decided to start this podcast over two years ago. It’s called Passive Income Pilots, as you brought up, because there was no education out there for pilots. There’s an old saying in aviation, which is never take investment advice from a pilot. What they don’t say is, where do you get it? Okay, great. I’m not going to listen to my fellow captain or first officer on a flight. Where do I get the investment advice?
Our podcast has over 140 episodes. We bring on experts like yourself, Toby, that answer these types of questions. Tait and I share our network basically with our listeners and share this education so they can make these decisions. That is a loaded question. I’ll get to it, which is, look, you can get depreciation. People think, oh, that sounds bad. As you know, Toby, you get straight line depreciation. You buy commercial real estate. If you invest in one of our deals or one of Tait’s deals, you get depreciation benefits. This is tax efficiency, so any distributions that come off that investment can be shielded by these passive losses that the investment generates.
Can it deduct against my Delta income, United income, or whatever? No, it can’t unless you reposition yourself to be or your spouse to be a real estate professional. If you get real estate professional tax status like Tait has with his wife, now you can start taking this depreciation that flows off these investments. You can deduct it against your very heavily taxed Delta income, which can be highly attractive.
Another thing that you can do is you can go buy a short-term rental as a pilot. There’s a lot of flexibility here in that. As long as you keep the seven days or less rentals, you can take the depreciation you get from that short term rental that you buy, and you can get tax efficiency. There are many things. In our deals, yeah, absolutely. In a Spartan self storage deal, we’re going to hire a cost segregation engineer. We’re going to have bonus depreciation. We’re going to hand those benefits to the investors. Pilots benefit greatly.
It was funny. When I was a new hire ground school at Delta, one of the guys in my class was like, hey, what do you do? I’m explaining real estate and he goes, what’s the difference between making 8% with you versus 8% in the market? I was like, a lot because my 8% in real estate is going to come with a massive tax break, and your 8% is going to go right down to your ordinary income rate, and you’re going to get taxed on it, or you’re going to have some gains.
I’m not saying don’t do stocks. We talk on the show about making sure you are doing stocks, bonds, and mutual funds. On the real estate side, you start benefiting from the cash flow earlier in the investment versus having to wait for your retirement and also take advantage of the tax efficiencies that real estate comes with along the way in tape.
Toby: Tait, Ryan said you’re a real estate professional. For those of you who don’t know, it’s an exception to having the passive activity loss rule. It makes real estate investing non-passive, so it flows down. It can offset your income. How much does it save you? I don’t want to get too personal, but how much does it save you every year to be a real estate professional or have your spouse be a real estate professional?
Tait: It’s highly significant. My wife is a realtor. She checks the 750-hour box obviously with her full-time job, and then we split the 500 hours of material participation throughout the year. That’s really the only reason why we maintain a physical rental portfolio still to this day, is to check that material participation box so that we can maintain rep status. If it wasn’t for that, I’d be a hundred percent LP positions in syndication.
We’re mostly passive on the passive side. Obviously our fund, Turbine Capital, participates in a pretty wide array of different asset classes and strategies. I invest heavily with those opportunities. It’s key to have that physical rental portfolio so that you can do that 500 hours a year because like you said, it knocks down that barrier. If we invest in that self-storage deal with Ryan or whatever else, we’re able to take those losses against active income as well as whatever physical assets that we have in our portfolio, we can take the depreciation losses and the bonus depreciation against active airline W-2 as well as my wife’s active brokerage income.
Toby: All right. Now, there’s something Ryan said. You were talking about when you were a new pilot. Let’s talk about new pilots and pilots in general. What are the biggest mistakes do you see pilots making? Because they come in. I’m going to throw this at Ryan, you first, and then I want to hear from you, Tait, because you both seem like you have something to say. What would you say to a new pilot on day one?
Ryan: Lots of things. First of all, when you’re going through ground school and you’re going through indoctrination, it’s a lot going on. You just got hired at your major airline or your regional and you’re excited. The first thing you do when you go to training, you sit down, the HR person’s there, the flight ops person’s there, and you’re getting thrown all this information. You’re just hanging on by a thread hoping that you make it through ground school, then you get out on the line, pass IOE, and get checked out.
Unfortunately, you’re forced to make some decisions, but you don’t have to make these decisions, which is about your retirement account. You probably came from Sky West, Republic, or Mesa, one of the airlines. You probably have an old 401(k). Your HR person’s going to say to you, what do you want to do? Do you want to roll this into the Delta plan or United Plan? What do you want to do? You go, ah, I don’t know, I’ll just roll it into the Delta plan. Why not? I’m going to be here forever.
Mistake number one, you don’t have to do anything. You can just leave it at the old employer’s 401(k) until you get out of training and you have time to breathe and think about life planning. You can take that money. Actually, if you wanted to, roll it with a self-directed IRA like IRA club, which is part of the Anderson network. You can take that, then you can take that money and you can invest it in things like real estate.
Once you roll that into the Delta 401(k), it is locked in there until you resign, retire, quit, whatever, but you’re not going to for probably a long time, hopefully. You can’t unlock that money, it’s stuck in the market. You can create a greater degree of flexibility if you roll that plan that you used to have outside into another part. I’d say that’s probably the number one thing that people have the opportunity that don’t take advantage of. We talked about this I think on episode 10, and we walked through these nuances in our podcast bit by bit with Ramez from IRA Club.
Toby: How about you, Tait?
Tait: I’d say looking at Roth conversions. First of all, I’ve made all the mistakes, that’s why we’re here to talk about them. I’d say Roth conversions. Pilots have a probationary year in their first year of employment, and that comes with a much lower income, a much lower salary than they’re going to have for the rest of their career. It’s your probationary year, first year pay.
Usually your pay doubles in year two and then goes up from there. Keep in mind that if you just got hired at one of the majors, you’re never going to make this little for the rest of your career. It’s the perfect opportunity to look at any of your traditional accounts and roll them to Roth because your tax hit on that conversion won’t be nearly as punishing as it would be down the track when you’re making much more.
Ryan: Can I layer onto that? That is such a good piece of advice, by the way. That’s a really basic strategy that I think a lot of people overlook and a massive mistake. However, I would even add onto that, Tait, I think you know where I’m going with this. You can layer the strategies, and this gets me super excited.
Let’s say you do have a traditional account at your old regional, a portion of your 401(k) is a traditional. You convert that into a self-directed IRA, and then you invest that IRA into a real estate deal or a syndication as a traditional account, and then you get that investment reappraised at a lower value. We’ve seen our investors, Tait and I, as much as 70% discount, and then you convert it. Now you’re getting the conversion to Roth on your low income year, and you’re getting it done at a lower appraised value.
Tait: Yeah. That’s stacking three strategies.
Ryan: Yeah.
Toby: Because you’re a limited partner, I say limited partner, to me that means limited partner in a partnership, but in an LLC, you have non-controlling interest, so there’s lack of marketability as a result. It’s tied up. If you go into a syndication, it might be three years before your exit. There’s a discount that you get. If you get the appraisal done on it, instead of having to pay tax on a hundred thousand dollars during a roll, you might only have to pay tax on 40, 30, or 50 of it. You’re going to end up getting a much bigger bang for your buck in the future.
Ryan: Yeah, exactly. I want to add one more strategy, one more thing that I think pilots miss out on. Maybe this isn’t like a new hire, but think about this as a new hire anytime in your career. I think you know what I’m going to say, Tait. We talk a lot about it on the show, which is the airline is going to give you a term life insurance policy. They’re going to say to you, hey, for being a Delta, Hawaiian, or Alaska, whatever pilot you are, you’re going to get some term life and policy. That’s reassuring that if you die, you’re going to get a death benefit. That’s going to protect your family for a little while with cash to continue going.
However, what they don’t talk about is a whole life policy. I think the industry has made this myth too mythical. I think we really do a good job on our podcast of unpacking this. They call it the infinite banking strategy. They put all these confusing marketing terms on it. At the end of the day, it’s a great way to get not only some limited death benefit, but also invest and earn income on the investment you make into your whole life policy. It begins to become a liquid strategy, where you can borrow against your whole life policy. You can invest it in syndications, you can invest it in real estate, and you can really amplify the returns.
These layering of strategies is something that we’re really focused on with pilots because this is not stuff taught in flight school. A lot of doctors have good doctor groups, where they learn about investing in the different strategies, but we don’t have one yet for pilots until our podcast started. This is really what we do. Anything to add to that, Tait?
Tait: No, I think that’s great. I do want to go back too. If anybody’s scratching their head on that valuation thing because we glossed over that, that is a specific strategy. That is a third party appraisal, taking a look at your syndication deal, your LP position in a syndication deal, and beating it up saying, well, it’s illiquid, you don’t have control, and maybe the market’s down, and this and that. They will do a fair market appraisal on that.
When you do the conversion from traditional to Roth, instead of a hundred thousand dollars position, you might only be rolling what the appraisal says is a $70,000 position, so you can save some taxes there. I don’t know what your thoughts are on that, Toby. I know that we’ve tried to get a few of those evaluators on our show. They shy away from it. They say, eh, we don’t really want to be in the spotlight.
Toby: They don’t want the attention because they don’t want to just put a big old bullseye on their back and say, hey, I’m going to go auditing that guy does.
Tait: I just wanted to clarify that.
Ryan: One thing too is, I think as investors, a great piece of advice is invest in what you know. If you don’t understand it, run away. I think too many times, pilots put way too much trust in an advisor, in the market. Hey, take my money and I trust you, but they don’t really understand what their portfolio is doing. I think that’s such a recipe for disaster. Our philosophy on the podcast is, let’s learn about what you’re investing in. Let’s go on this education journey together so that you can actually understand what you invest.
A great example, I’m not saying go out and buy an airplane, but one thing that we do talk about on the show is we talk about airplane leasebacks. If you know flying, you probably graduated out of some flight school, and you probably flew somebody else’s airplane that was dedicated to the pool in that rental, what a great thing to get depreciation from.
Did you know you can go buy an airplane, a trainer airplane? It doesn’t really matter what the price is. If you want to buy a small, old Cessna 172, a brand new Cirrus, or anything in the middle, you’re going to get a hundred percent bonus depreciation, which means you can write that off because you use it for a business purpose. The way that you finance that could end up, where you don’t end up paying any money out of pocket. You end up with an airplane that’s in a rental fleet that’s earning you income.
We bring on people who actually set these up on the podcast. This is a strategy that pilots know because they probably rented a lot of airplanes to get to where they are. They can be familiar with the type of operation and what right looks like, and then get this massive tax break from doing it. I think a lot of pilots miss out on that opportunity potentially.
Toby: You guys are talking a lot about tax, which is again, the world that I live in. I’m cracking up because it’s like, here are the pilots. Instead of talking about money, we’re talking about if I’m making the money. By the way, for anybody that’s in a high income profession, this is something that comes up all the time because they’re like, I may not want to make a dollar if I know half of it’s going away. You’re like, it sounds weird because a lot of people are like, what do you mean, you’re just going to walk past money? It’s not worth the risk.
Tait: I always say, you poll 10 pilots and you ask them, what is your largest expense? Eight or nine of them will say, housing, dining? I don’t know. It’s like, no, it’s tax, it’s taxes. You got to figure out how to tame that tax headwind because if you don’t, you go from $500,000 a year down to $250,000. It’s what you keep. If you can figure out how to optimize your tax situation, it’s like giving yourself a 20%, 30%, 40% raise.
Ryan: Tait, we’ve got to give ourself a little bit of credit. We’ve had some educational events around the country. We had a happy hour in Atlanta last year down in Peachtree City. We had a bus tour, where we took all of our show listeners on a bus. We walked real estate. My favorite part about that, and I know he’s a listener of the show and an investor of yours, Tait, he showed up to the happy hour. He brought his tax return.
He’s a Southwest pilot. He brought his tax return with him and he said, I want to show you something to the bar. Who brings their tax returns to the bar? I guess we do. I always have my tax returns on me. He shows me his tax return and he says, I listened to your show and I saved a hundred thousand dollars on my tax return this year based on following the education that I’ve learned.
Tait: Part of that was Toby. Toby, you’ve been on there how many times now? Three, four times?
Ryan: Yeah, Toby. Yeah, episode 10 and 14.
Toby: The fact that they know that is weird.
Tait: I think they’re our most listeners in the episodes because the tax issue, you’re saying like it’s funny, we’re talking about tax. We always keep coming back to this tax issue because it all revolves around this.
Toby: This is something you get a lot from doctors, dentists, and other things. Again, it sounds weird until you’ve been living it and you’re writing those big checks. You’re like, I’m working and I’ve hit it. I’m making half a million dollars a year, but you’re not. You’re keeping so little of it, and it sounds like you’re whining, oh, I only get $300,000.
Tait: This is where I’ll blow people’s minds that I fly with. Between my wife and I, we make close to a million dollars a year, and we pay almost no federal income tax legally.
Toby: Because you are using accelerated depreciation, bonus depreciation, and cost segregation on your real estate to offset your W-2 income.
Tait: On top of REP status, plus some oil and gas investing, so on and so forth.
Ryan: By the way, you’re making passive income too. That’s the beauty. You’re not waiting to cash out your 401(k) till you’re 65. You’re benefiting from your cash flow today.
Tait: My (401k) is still growing, I just don’t contribute to it because the airline already contributes enough.
Toby: Yeah, you’re letting the match go because that’s a hundred percent.
Tait: Right. We’re very lucky in the airline industry. There isn’t a match. It just dumps in there whether you do anything or not.
Toby: Yes. I just mean like they’re paying it on your behalf. Guys, hold on for a second because we’re a little bit over time, but I have to ask this because I’m always curious. As a traveler, I look at my Marriott miles, my Bonvoy, and all this other stuff. What are the tricks of the trades for you guys? I don’t know who to ask. Who wants to start on this one?
Tait: Ryan, you take it.
Ryan: For airline mileage, I’ll tell you the easiest way to do it. Go grab a Delta American Express card, hook it up to all your expenses, and you’ll be a diamond medallion before you know it. I’m a big Delta fan. The automatic upgrades, automatic mileage, it’s a no brainer. Just get the card. You don’t have to fly the airplanes. You don’t even have to book Delta flights.
Toby: You guys never got them, right? As pilots, you never got miles.
Ryan: No.
Toby: When you were traveling around, were there any tricks to trades? It sounds like you had. Houses in places where you had typical layovers so you had a place to go to, but did you use hotels? Are there any tricks that people aren’t aware of that you guys know that we don’t?
Tait: Just marry a pilot, and then you get all the travel benefits. You don’t even have to worry about it.
Toby: In your case, you have two. Are there any out there because there’s per diems, there’s all this stuff, there’s points, there’s tax?
Tait: I wish I could share better. I actually just flew with someone recently who’s a points guru. He’s got 26 credit cards and he’s doing all the things. We fly for free, but it is nice to book a confirmed business class ticket. I have to be honest. I could spend three hours wrapping with you on taxes, but when it comes to mileage and points, it’s really not my forte. I booked my hotels on the Chase portal and that’s about it.
It’s great as a pilot, you’re able to jump seat. You can fly in the cabin for free on your own airline. There’s a lot of flexibility. I can walk up to a ticket counter and just say, hey, can I catch a ride? They type a few keys and they say, here you go. It’s pretty nice.
Toby: All right. I’m going to ask you guys one last question. This is a mean one. What separates the pilots that end up financially free from the people that the pilots that are not? Ryan, why don’t you start with that one?
Ryan: We always say on the show, you got to change your facts to change your tax. I think too many pilots are not listening to advice. They’re head in the sand. They don’t want to read, oh, I heard from this guy or that gal, this is what happened, and I want nothing to do with that, or they fail one time on an investment and they think that it’s no good anymore. I think that concept of mining for gold, you get inches from gold, and you quit, I think that’s a big problem. I think just not being willing to educate yourself.
Also just remember, this is an investment in you. When you go to the Anderson Tax and Legal Workshop, you attend one of our happy hours, or you go to a bus tour to learn about real estate, you’re investing in your education, you’re investing in yourself. Yes, that’s time away from home and on the road, but it could save you millions, hundreds of thousands, or tens of thousands of dollars in taxes and income.
Just continue to invest in yourself and your education. I think pilots have such a great opportunity to do this on layovers, on days off, et cetera, that all they got to do is just open up their phone, find Passive Income Pilots Podcast, and start listening to episodes. It’s amazing the places it’ll take you. You can meet the hosts or the people that we bring on the show. You can meet us. You can network with other people. I would just conclude with saying, your network is your net worth. Get out there and meet people that are actually doing it.
Toby: Tait?
Tait: I love what you said, Ryan, but I’m going to go with lifestyle creep. That’s followed closely by prenuptials and living trusts. Lifestyle creep is a really big one because as pilots, we spend a lot of time very poor. Like doctors going through residency, we’re flying. We’re getting paid peanuts. You go to a regional, you’re working like crazy, and you’re just not making much money. When you hit that big time, we have that sports athlete mentality. It’s like, I made it. People want to buy that nice car in the big house.
A trick that I used when I was early on in my career to become a good saver was I converted everything into time. As pilots, you can only fly a certain number of hours per month. A typical line might be 80 hours of flight time. Let’s say you’re making $300 an hour. You multiply it by about 0.7 because you got to use your after tax rate, and you’re making $210 an hour after tax.
Let’s say you consider, I want to go lease this new Lexus. It’s going to be $850 a month. You’re thinking, I make $25,000 a month, what’s the big deal? You convert that down to time, that’s four hours. It takes you four hours of that 80 hours a month just to pay for that Lexus, where you put that $850 somewhere else, maybe that debt fund we were talking about. Now the interest is working in your favor rather than against you. I’m not saying don’t use leverage. We can get into that and a big fan of using debt to build wealth, but just a different way to think about your spending. You got to avoid the lifestyle creep, be disciplined, and be a good saver first.
Ryan: Can I just say one more thing that made me think of?
Toby: Yeah.
Ryan: Airline pilots that know their pilot contract make the most money.
Tait: That’s right. Work the system.
Ryan: He who knows the contract knows how to make the gold. It’s the same thing in life. If you know how the code is written, how it’s constructed, and how you can benefit from it, you’ll do the same thing. Who likes to sit and read the contract? Not me. What I like to do is I like to fly with guys or gals that really know the contract, you hang out with those people, and they know the contract. You actually learn the practical application. That’s what this is all about. You do the same thing in investing.
Toby: Listen to those who’ve been there before and know it. How about that? That are doing it well. You’re not going to listen to the guy that’s scraping by and say, hey, what do you do? You want to talk to the people that are killing it. Hey, guys, speaking of killing it, thank you so much. You guys have done a great job. I really appreciate you coming on and educating our group. Again, I know there’s a lot of folks out there that are pilots that are listening to this, but a lot of people that are not as well.
I will put your information guys up in the show notes so that they can reach out. If you’re looking for syndications and you’re looking for investments, boom, I’ll give you guys. You put your information out there so they know. If you can’t trust a pilot, who can you trust? I just want to say thanks. Like, subscribe, and share this with anybody that you know, guys, that could benefit from this information. I’ll see you guys later.
