Are Airline Pilots Heavily in Debt??

[your_dreamguy]

Just curious.

Was talking to a captain about this a few days ago. This captain knew of a regional pilot who took out about a $100,000 loan to pay for their aviation training. Then they took out about another $100,000 loan (mortgage) to pay for their home, leaving them at least $200,000 in debt while making under $30,000 per year.

Also, a friend of a friend who wants to become an airline pilot just got turned down for a large loan to train at an aviation academy.

Another friend of mine, told me of some Captains he knew at SWA that are trying to pickup overtime because they are heavily in debt while making approximately $230,000 per year.

I try to follow the Dave Ramsey model and avoid debt, so, I'm wondering if anyone has any guesses on what percentage of pilots are in debt?

Just curious how pilots stack up against Doctors, Lawyers and other employees when it comes to debt.

Your thoughts please.

 

[pianoman]

Well, depends on how you view good debt/bad debt.

Currently, my wife has 50k student loans from her masters, we have one car loan of about 14k and the other is paid off. Zero credit card debt and a home loan. I think we're doing ok.

Dave R. has some good philosophies and I got a lot of good points from his book, but honestly I can't quite agree with his $1000 emergency fund being all you have in reserve while you dig out from the debt snowball. In our industry I don't sleep well unless I have at least 15k in the bank ready to draw.

Just my opinion.

 

[scoreboardII]

I have talked with the extreme few who played the "buy a house, buy a few more, buy a few more lots" and are now in bankruptcy, but thats just two out of hundreds. Most are fine, however if they ended on the street, all the fun would be repossessed.

 

[becket]

Does the Pope sh*t in the woods?

 

[N1atEcon]

Most guys I fly with have their financial house in order, as in a lot of $$$$ in the accounts. There are a few that are on their 3rd wife and have kids from all of them. They have a big house, a diesel pusher, a boat, a vaction home a few new cars and a lot of debt.

 

[densoo]

Another friend of mine, told me of some Captains he knew at SWA that are trying to pickup overtime because they are heavily in debt while making approximately $230,000 per year.

That's common to all airlines I would think.

 

[AA717driver]

Multiple ex-wives, deadbeat kids who never left home, spouse's medical bills, spend now/make it up when I make Capt., etc.

No different than Joe Sixpack.

TC

 

[pilotyip]

Live below your means, a 1400 sq ft home is just right even though you qualify for a 3500 sq ft 5 BR, 4 BA home. 6 months salary in cash. Remember you are an airline pilot you will be "between jobs" an average of 2.7 times during your career.

 

[Bigoober]

I don't think pilots are really any different than most other careers. The blaring difference for some, as you pointed out in the original post, is that some go to an aviation college and take out a large loan to pay for it.

Me, I was furloughed from CAL, with about a year's worth of savings. With unemployment benefits, I was able to avoid touching the savings for six months before I hooked onto a "long term" set of reserve orders that has allowed me to build another year or so's worth of savings. This wouldn't have been possible had I not sold my house in DC before the crash and avoided all other debt. I feel for those that had loan commitments.

As mentioned a couple of posts up, it all comes down to one's view on debt, not the profession as a whole. Me, I don't like being a slave to a lender.

 

[HalinTexas]

Seeing as I haven't flown a jet in a year, I would say no. But, since ATA shut down, and my gig with KX ended, and I've started a business, I've gone from no debt with $20K plus in the bank, to about $40K in debt (not all CC's), with a little savings.

I know a lot of TZ warriers that have fared worse. Hey, I haven't had to go to India yet!

 

[Stifler's Mom]

Reminds me of the book, "The Millionaire Next Door", in one section it referred to occupations that are image conscience. Doctors, lawyers, etc. that feel that their outward appearance is a signal of their professional success. Big home, nice car(s), expensive clothing, toys, etc. I would imagine thats pilots fall into this category as well with all of us making $200K or more.

I like Dave Ramsey, and I watch Suze Orman as well. Suze Orman talks about your finances as a game. There's offense and defense. Since the industry is stagnant, and increasing my income (offense) is not an option, I have resorted to tighter control of my spending (defense). I bundled my home and auto insurance, and realized a savings of $150 a month. Cut out the HBO package at home, ($360/year).

 

[Lear70]

You see a few of both in the business, I'd imagine it probably falls into that rule of thirds, but as far as I know, no one (including ALPA) has ever done a study - it would be seen as asking for too much personal information.

I personally don't *COMPLETELY* agree with Dave Ramsey, but until people learn how to manage their finances, it's certainly a good way to get people who are otherwise struggling out of debt inside 12-18 months, just because it gives that "almost" instant gratification to see one card get paid off, then a 2nd, then a 3rd...

When I got kicked to the curb from AirTran, I had a *LOT* of debt, having a new-born and a wife who had dropped down to part-time work, and having depleted the savings on 1st year AAI pay - having the help of the pilot group there until I got off training pay at Kalitta made the difference, that's for certain.

3 years later, things are under control, the credit card debt is gone, the car loan debt is gone, bankruptcy was averted (barely), and now it's just the student loan (low interest, tax deductible), and the home loan (low interest, tax deductible). It'll stay that way until I can build a 6-month reserve, then I'll start whittling on the student loan.

Some debt is just a requirement in today's society, mainly your home loan and, for many years after college, a student loan. After all I've been through, plus lessons learned from family after the pensions died at USAirways, I've learned the need to live "reasonably". You don't have to have a $300k house, new car, new boat, just to enjoy life. Have all the other pilots in this industry learned that yet? Sadly, probably not. But I think with the demise of the pensions that a lot more pilots are saving than they used to.

 

[AA767AV8TOR]

Why do you think Age 65 came into being in the first place?? It wasn’t exactly because pilots were in a good financial place.

In just a generation, airline managements have reduced Captain’s pay to that of what an FE was making in the late 70’s. Guess what, they’re not done yet.

It's hard to stick to a financial plan when your pay continues to decline.

AA767AV8TOR uke:

 

[richav8ter]

I worked as a lineman 32 hrs on Friday, Saturday and Sunday and then drove 100 miles to flight school for class during the week. The training took a little longer, 2 and a half years, but I got my ratings with no debt. Later I worked for a large pilot mill in AZ. I shook my head in wonder at the kids who took out $80,000 dollar loans to get their ratings through CFI and CRJ type, in 18 months. Now I'm making 35k a year as an FO with a total debt of $1500 dollars on a credit card and those kids are making close to the same pay with a mountain of debt. You can become a pilot without going in the red but you will not see six figures fast.

 

[Lear70]

I question the sanity of ANYONE who gets into this career right now in ANY way except for debt-free and without a paid-off house and no other expenses.

I know dozens of people in their early 30's still making under $40k a year, a mountain of debt, and no way to even move out of their parent's house on that money without moving in with a bunch of other guys.

Any time I run into kids in FBO's working on their ratings and this comes up, I urge them to go back to school for something else... I love to fly, but wouldn't do it for a living if I had it to do over again, would've gone to med school.

 

[pilotyip]

but, but, but

I worked as a lineman 32 hrs on Friday, Saturday and Sunday and then drove 100 miles to flight school for class during the week. The training took a little longer, 2 and a half years, but I got my ratings with no debt. Later I worked for a large pilot mill in AZ. I shook my head in wonder at the kids who took out $80,000 dollar loans to get their ratings through CFI and CRJ type, in 18 months. Now I'm making 35k a year as an FO with a total debt of $1500 dollars on a credit card and those kids are making close to the same pay with a mountain of debt. You can become a pilot without going in the red but you will not see six figures fast.

but you didn't go to an aviaiton college and get a four year degree in Aviation. How can you be a professional pilot? I bet you discovered that college has nothing to do with flying an airplane.

 

[richav8ter]

but you didn't go to an aviaiton college and get a four year degree in Aviation. How can you be a professional pilot? I bet you discovered that college has nothing to do with flying an airplane.

I got the degree, in aviation (sigh) paid for the old fashioned way, by my folks. Your right the four year degree is not the prerequisite it used to be. If I were to do it over again, I pay for flight training first, then go to school for a useful nonaviation degree while I instructed to build time and skill.

 

[Whine Lover]

I would do it all over again, but I wouldn't even have attempted it in the airline environment of the last 10 years which sadly is the new norm with no good news in sight.

There will be no "taking it back". It's gone.

Debt and financial responsibility have much less in relation to career and income, than they do to self esteem, ego, social patterning, and other things.

I have an airline pilot friend and his wife who exceed 200K annually (and have for the past 4-5 years) who are now bankrupt. Even in bankruptcy his wife refuses to shop at a different grocery store where she has been shown that they can trim almost $600/mo. off their budget.

She claims that the products are inferior, even when it is proven to her that many of the products come from the EXACT manufacturer of the products she prefers. What she really is worried about is that her friends will see her shopping at the discount store...It's not about career or income, it's about emotion and perception.

They will be out of bankruptcy in 5 years.... and back into it just as quickly.



Another friend of mine is a local truck driver who makes 60k annually. He is constantly in debt over his head and always on the verge of bankruptcy. When he asked me to help him develop a financial plan I agreed and showed him where he could trim almost $700/mo from his budget....simply by changing grocery stores and limiting fast food purchases. He would have been debt free in 2.5-3 yrs. with the plan we developed.

He is now carrying twice as much debt as he was 3 years ago, blows $10-20 a day on fast food, and when he does buy groceries he still shops at the Mom and Pop market where he pays approx. 40-60% MORE for each item he buys. He claims it is "too far" to go to the other store. (it's about 4 miles ).

The real problem, once again, is that he was raised without money and in his small Kansas town it might get out that he shops at "that discount place." So living on the financial brink, having zero wealth doesn't matter....having his neighbors see him buying only "name brand" does.

When he was looking at getting a management promotion and making 75k a year he asked me: " I could live pretty well on 75 Grand dont'cha think!"

I stated: " Well, if you can't live on 60 grand a year, you can't live on 75".

He looked puzzled for a moment and then he got it...

It isn't what you make or how you make it...It's all about how you perceive yourself and your money, coupled with a small bit of logic and some self discipline, that allows you to handle finances with some degree of responsibility.

Of course, keeping ex, current, and future wives to a bare minimum certainly helps as well.



YKW


P.S. - The "Magic" grocery store in the above examples is: ALDI.

Learn it, Love it, Live it.

http://www.aldifoods.com/us/html/service/store_locator_ENU_HTML.htm?WT.z_src=main

If you are fortunate enough to have one near you, you will knock 30-40% off your monthly food budget immediately ... and without pesky coupons or "sales".

( No, I have no investment or vested interest in ALDI. )

 

[Lear70]

Oh God... Please... Not ANOTHER college degree thread from YIP.

I'll move this thing to non-av chat faster than you can say "College Degree Required to apply".

 

[Lear70]

I go to Aldi for the basics, but have to go to Krogers/Publix for the other stuff I buy (specialty fish and meats, etc). I also shop at the Farmer's Market for my veggies.

I only buy the sales stuff at the bigger chain stores and freeze it for later. Have shaved about $300 off my grocery bill a month since I started doing that... works nicely.