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Stop Sending Checks To The Wrong
People To Start Building Your Personal Wealth.
The Big 3 Roadblocks To Retiring
From Your Dental Practice.
Do you know a dentist
that is past what you would consider the “ideal” retirement age? Do you know why
he still works?
There are tons of
people in this situation. I had a 69 year old dentist call me the
other day because he was expanding his office.
He was about to take
on 10 years worth of debt for a practice that was not worth investing in.
How did he get to be in that situation?
Every Dentist Big 3 Roadblocks:
(1) Not enough cash to invest, (2) The wrong debt structure, (3) No plan
Did you know that
dentists are in the top 5% of ALL wage earners in the country? So if they
(and you) are making so much money then why is it that at retirement age, over
90% of all dentists CANNOT retire and maintain the lifestyle they've been
accustomed to?
 The
reason is most dentists FAIL at making correct financial decisions of how to
structure their debt and where to invest. Like the masses, dentists find
out that most sound financial decisions are hard to make because they are
contrary to what they believe to be true?
And like the masses,
most dentist's debt structure and investments are probably not optimized to
create personal wealth. Over 20 years ago this is what probably happened
(or did not happen) to our 69 year old comrade.
Roadblock #1: Not enough cash to
invest.
“If I had extra money
at the end of the year I would invest it and not be reading this article”.
If this sounds like you, you are not alone.
Most dentists are
working hard but are not creating the free cash flow in their practice
that will allow them to invest in (1) a
qualified plan or (2) real estate.
Both are tax deferred
investment vehicles that shield your gains from taxes until they are
harvested. So if you do not have the free cash flow to invest either one, just
where is your money being spent?
 The
1st step to finding out where the money is going is by going through a
unique process we call
The Financial Health Assessment™.
Like a physical at a
doctors office, we assess your financial health by uncovering what you are currently financially capable of
based on your current practice cash flow, your lifestyle expense requirements
and your goals or the things that have to happen for your to feel really good
about the results in your life. This snap shot helps us create your
Blueprint.
When borrowing money
has any banker or accountant ever asked
you what has to happen for you to feel really good about the results you
create? Humans create goals or visions for what they want. Whether
written or thought, as we dwell upon them, they begin to appear in our lives.
Guess what?
Goals usually require money to achieve them. Surprise right? Think about what
you want to happen in your life. Can it be accomplished without money?
Sure, some
of the highest goals can like a fulfilling relationship with your family or your
God. But when Junior wants to go to college and you can’t afford the
college or the lifestyle that Junior wants, he is going to throw rocks at you.
 Same
thing with your spouse. If you envision the two of you sitting in Florida for
the winter months and sitting wherever else during the summer, you better get
that plan in place now. This dream doesn’t magically happen.
The Financial Health
Assessment™ takes these goals and stuffs them into a proprietary financial
model so the cash required to achieve them is in the plan. And if it’s not,
because the money just isn’t there, you are going to know it now.
Your lifestyle
expense requirements are bigger than you think.
If you have a spouse
that spends too much money, the likelihood of you retiring with enough money is
"zip" unless you make changes now. Working with us will force you to uncover
how much you really spend to maintain your lifestyle.
If you have this very
important part of your financial life handled, you need to congratulate yourself
because you are alone. Feel free to prove me wrong on this point. Most of the
country is writing checks to the wrong people. Here is the stark reality.
| "Personal saving
-- disposable personal income less personal outlays -- was a
negative $141.0 billion in the second quarter, compared with a
negative $97.0 billion in the first. The personal saving rate --
saving as a percentage of disposable personal income -- decreased
from a negative 1.0 percent in the first quarter to a negative 1.5
percent in the second.
Saving from current
income may be near zero or negative when outlays are financed by
borrowing (including borrowing financed through credit cards or home
equity loans), by selling investments or other assets, or by using
savings from previous periods."
Source: http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm
RELEASED AT 8:30 A.M. EDT, FRIDAY, JULY 28, 2006 |
Roadblock #1
disappears after we take you through the next two steps in the process. Keep
reading.
Roadblock #2: The wrong debt
structure
Dentistry requires
reinvestment in plant and capacity. You have got to buy new stuff and you
have to maintain a quality facility.
To do this, you
borrow money. You want to maintain a certain lifestyle. Live in a nice
house, drive a decent car and basically live the American dream. For most
dentists, this means
debt.
The problem that I
see over and over is that the way you structure your debt is killing your cash
flow. Since you don’t have the cash to invest in your retirement,
you put investing on hold until you have
paid off your debt.
This million dollar
mistake is further compounded by getting into more debt as you move through
the equipment replacement & CE training cycle.
You know the cycle
where you must update this or that before year end or lose the tax benefit (per
the dental supply rep). Or you must attend an expensive CE course that
involves travel and your staff. I like CE myself and take it all of the
time, so I am I not poking fun at it, but it is expensive (or is it more
expensive not to have it?)
If you pay your debt
off rapidly and then pile on more debt later, how have you helped
yourself? You pay the bank interest which is tax deductible. You
also pay the bank principle which is NOT tax deductible. So
you are sending after tax dollars to the bank.
Follow this sequence.
You do a procedure, pay your expenses, then pay the state and federal taxes,
then send the bank their money. If you borrow $100,000 and pay it back over 5
years, you are committed to paying $20,000 per year in after tax dollars. Have
you ever thought that there must be a better way?
Interest rate is not
the number one criteria for shopping for money. Let me repeat that.
Interest rate is not the number one
criteria for shopping for money.
Before you shop for
money you need to complete The Financial Health Assessment™ which points to the
ideal debt structure. The ideal debt structure allows you to achieve your goals.
Never borrow money that does not allow you to achieve your goals.
 The
Ideal Debt Structure Solution™ uses the results of
The Financial Health
Assessment™ to identify several debt solutions. Once we have several
solutions to discuss with you, together we can arrive at the ideal solution.
Why
would you need Finance Geeks to help with this?
Unique Ability. We
have over 10,000 hours experience helping people identify what their ideal debt
structure should be. We know what just about every lender is capable of doing.
And the ones we don’t
know about, we are happy to talk to on your behalf. If we know what
The
Financial Health Assessment™ indicates is ideal for you and we know a bazillion
lending programs, wouldn’t we be the ideal people to match the two up?
You
cannot get this level of analysis anywhere else.
We call it constrained
optimization. We are dumping the constraints on the table and optimize your
goals within the context of those constraints. I find this process the most
fascinating out of all of our process components. It requires the most
creativity and absolute indifference to the commodity supplier (the bank, money
is a commodity).
If you do not have
access to the right lender or understand how to optimize your situation, how can
you possibly achieve the ideal outcome?
 The
Ideal Equity Structure™ - The next step is structuring pretax funding of your investments
so you can reduce the
amount of tax you pay to Uncle Sam, diverting money from him to you.
The question you have
to ask is what is the ideal plan for me? I would argue that it’s
the one that gets you the most money. You can contribute up to $44,000 per year
in 2006 into a defined contribution plan. This is a business expense. You
are using pre-tax dollars to fund this.
For example if you are
in Hamilton County, Indiana paying 5.5% state and county income taxes and are in
the 33% marginal federal tax bracket, you have a reduction in your taxes by
$16,940 by contributing $44,000.
This is the closest
thing to a free lunch as you’ll get. One less tank tread for the government,
one giant step towards your retirement.
What are you going to
do with this money? Invest it and allow the gains to grow tax deferred. As
part of this service we use an institutional grade money management firm that
uses an asset allocation strategy to meet your risk tolerance and goals. You now
have one less thing to worry about.
Everyone’s Big 2 Roadblocks SOLVED:
Not enough cash to invest; the wrong debt structure;
The last Big Roadblock: #3, No
Plan
We are going to crush
this like a bug. The plan was crafted in The Financial Health Assessment™ when
we pulled all of your goals out and plugged them into our proprietary model. We
laid out all of the things that have to happen in your life to feel really happy
about your results.
We tested your risk
tolerance and laid your investment time frame and our Institutional Money
Manager crafted the ideal asset allocation strategy to give you the best chance
of hitting your goals.
The plan in on paper,
but we are not done yet.
 The
Execution Solution™ - Your unique ability is caring for your patients and
leading your practice. It is not implementing financial
solutions.
We do that for you while you focus on what you do best: dentistry. We
execute the plan by working with all of the commodity providers (banks, pension
advisors, money managers) to get the best possible outcome for you. All
you have to do is review and approve.
This step alone pays
for our fee. There is no way you could execute a plan on your own for less than
we charge for the entire service. The execution entails countless hours of
numbing calls with third party commodity providers.
How much to you make
per day? If you work 200 days per year and produce $800,000, you are generating
$4,000 per day. You could spend 10 days implementing this program and still not
have completed it.
 The
Monitor Program™ - Once your plan is executed, we will monitor your results
to make sure you stay the course. The areas of critical importance include
changes to your personal goals which may change The Ideal Debt Structure™ or
The
Ideal Equity Structure™. If changes are needed, we are here to help.
Why would you need
to have Finance Geeks monitor your situation?
Since 2002 we have had
17 interest rate hikes. Have you taken advantage of that? It made sense to be in
a variable rate loan when the rates were low and then convert the loan to fixed
rate as the rate move began to mature. From a financial optimization standpoint,
do you want to fix the rate for a long term, medium term or short term?
The stock market began
its current bull run in March of 2003. What does that mean to you? What areas of
the market have done well? Where should you make adjustments? Is it best to just
buy and hold? How do you handle these decisions today?
The financial markets
and your financial future are not an area for amateurs. It takes 10,000 hours of
experience to become an expert. Do you want an amateur handling your financial
future? I sure wouldn’t.
I have a financial
planner and an accountant. Why do I need you?
Great question. Most
financial planners look at your W2 earnings and plan from there. They might even
help you install a 401k plan. It is not likely that they understand your dental
practice. Does he know what your financials should look like? Your supplies,
lab, staff costs, production per operatory, etc.
Does he understand the
financial norms for a practice of your size in your area? Unlikely. If you are
having an issue in your practice, we are likely to spot it on the financials and
will provide you with ideas to fix it.
We spent our 10,000
hours working with dentists. We are experts.
As for accountants,
they are great at what they do. Record history. Mostly for tax preparation. This
is no insult. My accountant is great. But I am not going to ask him for advice
on getting a loan. Finance is not accounting. Let me repeat that. Finance is not
accounting. These types of financial solutions can only be properly implemented by an
experienced finance person.
Why? Because
experience is what creates the edge for you. This is not a Betty Crocker recipe
that can easily be followed. It takes experience to deal with the unique
challenges that each client brings. You must think like a finance person and not
like an accountant. This is an extremely creative area tucked inside of a
science.
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The
process you just read about are the elements of
The Found Money Solution™.
It's components are The Financial Health Assessment™,
The Ideal Debt Structure™,
The Ideal Equity Solution™,
The Execution Solution™
and The Monitor Program™.
The Found Money Solution™
is an exclusive, unique service of Finance Geeks. |
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Have a question about
The Found Money Solution™ or a
comment for me? Send it to
david@financegeeks.com.
Finance Geeks
provide unique wisdom and expert advice to dentists that are contemplating or
have completed large financial projects like expansions or transitions. Their
strategies help dentists create and maintain wealth. David Catalano has over 20
years experience dealing with dentists. See them on the web at
www.financegeeks.com.
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