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Doug Carlsen Shares His Blueprint for Early Retirement – Episode 28


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Dentist Money™ welcomes financial expert, Doug Carlsen, who retired comfortably from dentistry at age 53. Dr. Carlsen is a nationally renowned speaker and has been a regular contributor for publications like Dentaltown and Dental Economics. In this episode, Reese and Doug compare notes and discuss the biggest factors that lead to financial longevity for dentists.

Podcast Transcript:

Speaker: Views on this program are opinions of dental industry experts and not necessarily those of dentist advisors. Opinions shared in the following interview do not constitute personal financial advice. This program is furnished by Dentist Advisors, a registered investment advisor.
You’re tuned into Dentist Money, Industry Expert Series. Now here’s your host Reese Harper.

Reese Harper: Welcome toe The Dentist Money Show. I’m your host Reese Harper here with a special guest who’s flown into the studio in Salt Lake City from Denver Dr. Doug Carlsen. Doug, how you doing today?

Doug Carlsen: I am doing fine. The weather here is just fabulous today.

Reese Harper: I was glad that it wasn’t-

Doug Carlsen: It’s breezy cool. Man.

Reese Harper: …it wasn’t raining on you when you got in.

Doug Carlsen: We had thunderstorms in Denver last night, so it was weird about midnight. Back and forth and back and forth. Yeah. This is gorgeous.

Reese Harper: We really appreciate you coming in. I want to jump right into the interview because there’s so much stuff to cover and you’ve got such a wealth of knowledge. You’ve retired earlier than most dentists will ever retire. You’ve had a great practice, a great career. You’ve learned a lot of clinical skills and you’ve got financial skills. You’ve been a writer, a speaker. You’ve really impacted the dental community in a lot of different ways over your career. I think you’ve got one of the most interesting stories of people in dentistry right now. It’ll be really good for our listeners to get some insight into the things that you learned along the way.
The questions that I’ve kind of thought through have kind of been targeting… Getting the best of Doug Carlsen that we can in the short amount of time we’ve got. I appreciate you being willing to pop in and take these questions. Let’s jump into the first one which I think shows kind of an interesting side or gives us some perspective into how you’ve developed some of your financial philosophies, you know, which is tell me a little bit about your financial circumstances growing up and the experience that helped shape your financial philosophy and your views on money?

Doug Carlsen: Growing up, a lot of dentists grow up in controlling families. This was brought to light many years ago. Bob Lavoy talked about it in particular 20 years ago. My family was controlling. We were strict about a lot of different things. It wasn’t just money. It was about activities in particular. I talk about the man in my notes here, but my dad was the man, and my mom too, as far as what we could do. An example that I put down here is that in college going into my sophomore year, I had enough money saved through working in the summers and some during the school year to buy a car, a used car, and pay for insurance and basically everything. I could take care of it.
Both my parents said, “No, you’re not going to do that. If you’re going to come home and live here during vacation,” I went away to school, “then you’re not going to have that home to come to anymore if you do that.” It’s like wait a minute.

Reese Harper: Interesting.

Doug Carlsen: Wait a minute. I’m being responsible. I’ve got everything taken care of and you won’t let me do it? No. I think that sort of thing instilled an attitude in me that there were always strings attached to things in my family or it seemed that way. Of course, my family and I got along fine over the years, but that was something where whenever there was debt to be paid or debt to be taken on, I didn’t want to owe the man. The man being the big man, the corporation, the company.

Reese Harper: How do you see that affecting other dentists? How do you think their financial circumstances growing up play into how they behave?

Doug Carlsen: A lot of dentists come from dental families where their education is paid for and it’s easy for them financially. Others work like crazy and don’t have anything. Worked a lot during dental school, which I did not, and had a tougher time of it. I would say the guys that had the tougher time in dental school who had to work on the side during college a lot or maybe even had to do say lab work in dental school probably are doing better in their practices just because it was tougher for them. They knew how to work hard.

Reese Harper: You write a lot in your Dentaltown articles, your videos, your posts. I mean you’ve retired early. You lived a pretty frugal conservative lifestyle to make it all happen. I think people who are familiar with your work, they know that about you and they appreciate it. They respect that. They like that candor, that perspective that you share about making some hard decisions, owning up to the fact that you can’t have everything you want sometimes.
Yet there’s this element, probably a significant portion of dentists that say, “You know what? I’ve worked hard for all this stuff. I’ve put a lot of energy and effort into this, and I deserve to have the things I want.” How do you kind of balance the advice of like being really frugal and conservative with enjoying the money along the way? What would you say looking back at this point?

Doug Carlsen: That’s a tough one. That’s a really tough one. By the way, I did buy the big house. I bought the mansion in 1989 at about age 39. It was a big house in Albuquerque. Did it work out financially? Yes. One thing that I really kept track of, both my wife and I did very well, was not buying a bunch of upgrades and watching our maintenance. That’s where people really get into trouble.

Reese Harper: You mean like remodels and improvements and furnishings?

Doug Carlsen: It’s all about remodels and improvements. Tom Stanley. I’m going to go jump ahead here from where our notes were, but Tom Stanley and Danko who wrote The Millionaire Next Door series said that your choice of home and neighborhood has the most impact on your net worth more than anything else. I really believe that. A lot of times with more expensive homes actually you can spend up to 3 to 4% per year just on maintenance and upgrades. That’s not including your mortgage and your insurance and taxes. It can get crazy.
Anyway, we kept that under control and it did work out in the long term, but dentists who have more modest homes in particular seem to be able to save more easily. You probably see that in your business.

Reese Harper: That’s an important point to kind of talk on as it relates to this “I want to enjoy my life.” I mean a lot of people that’s kind of their big… That’s their big moment, right, is when they buy that house. They feel like they’ve arrived, but it seems like it’s a moving target too sometimes where, at least my experience, what was the dream home is no longer the dream home seven or eight years later. Sometimes people have to get to the point where they realize that a house is… It’s not what is providing them-

Doug Carlsen: It’s a money pit.

Reese Harper: It’s a money pit. Right.

Doug Carlsen: Actually right now in Denver my wife in retirement wanted to buy something in an older neighborhood in Denver. Bigger homes in older neighborhoods are money pits. What we have right now-

Reese Harper: Yeah, but their historic. They’re classic.

Doug Carlsen: …it’s historic. It’s 3,000 square feet. I have to watch it very, very carefully. Every time it hails like it did yesterday it’s like, “Oh no. Is this going to be another roof?” But back to the point about spending and I deserve, “I’m a doctor. I worked hard. I work hard at the office. My back is sore. I’m 50 years. I need something,” cars I don’t think are a big issue. I’ve ranted for a long time about cars and buying something that’s slightly used versus something new, different types of luxury cars. I don’t even think that’s as important as the home is.

Reese Harper: The home’s a much bigger portion of the budget.

Doug Carlsen: It becomes that. Yes. To have some niceties around your home and around your life are certainly good. One thing I want to bring up is vacation for doctor and vacation time. I don’t think doctors spend nearly enough time out of the office doing something pleasurable. So many doctors will take vacations which are coordinated with a CE course and I think that’s cheating. You need time away from dentistry.

Reese Harper: To really disconnect.

Doug Carlsen: Yeah. Six weeks a year is probably ideal. How many guys do that? Hardly any. I never did, but to take that time away and recharge your batteries, it’s been proven over and over again by various consultants that you come out ahead financially and your income is actually higher if you do take more time off.

Reese Harper: What do you think is reasonable? Do you have any guesses on what you think reasonable time off would be?

Doug Carlsen: I think at least three weeks a year. Realistically I took two or three. The other thing I want to point out is you lose so much money being away from the practice. You might as well take a luxury vacation. You don’t have to cheapskate that either.

Reese Harper: The cost is leaving…

Doug Carlsen: Here’s Carlsen who’s frugal saying, “Spend more time on vacation. Spend more money.” It still is going to have very little effect versus other things that you spend your money on.

Reese Harper: I think this is interesting because I’m getting a little bit of insight into your personality. I can see that there are some things you really do value and you are willing to spend money on some stuff that really does result in a nice lifestyle balance. But in the same token, there’s a lot of ways in I think specifically as it relates to housing, let’s talk about it, probably a lot of it boils down to the square footage. It’s the square footage that ends up kind of coming back to bite you long term. Maybe not the house itself. At least in my experience that’s been the challenge I’ve seen.

Doug Carlsen: Yes. You mentioned earlier after six or seven years it’s not new anymore. What do you do? You do a new kitchen or you extend out in back or you build that infinity pool.

Reese Harper: They don’t realize that the square footage isn’t just the higher mortgage expense. It brings a lot of other things into your financial life that you wouldn’t realize start coming up. If you buy a house in the nicer neighborhood, then everyone has pools.

Doug Carlsen: You’re taking away my thunder, but keep going. This is perfect. Yes. Yes. They have pools.

Reese Harper: Everyone has pools, right?

Doug Carlsen: The kids go to private schools.

Reese Harper: Yeah, and then kids go to private schools.

Doug Carlsen: Which private school is the best or the more expensive in town?

Reese Harper: I mean in my neighborhood right now, if I sent all my kids to private school, which I know is the best school, I’d be spending more money per year than what it cost me to live. Whatever. But anyway, pools. Furnishings plays a big deal in this too. I don’t think people realize that there’s always little trinkets that you need within the house to furnish it, to keep it maintained, to have it looking nice. That can add up to something that you’ve referred to often as like a percentage of the total cost of the house, right? Talk about that just a little bit.

Doug Carlsen: Yeah, but don’t touch my man cave.

Reese Harper: Okay.

Doug Carlsen: Don’t touch my man cave. I’ve got to have a good receiver. I’ve got to have really quality speakers. By the way, we’re kind of down in a man cave here and this is awesome down here where we’re recording today. The main thing that I caution people about is the upgrades and staging them. That’s what we’re doing exactly in our house right now. We’re going to put in some cabinets this year. We’ve got a couple other little projects planned, but redoing the garage is probably five years off, eight years off. Stage your upgrades. Budget them. We’ve got $10,000 to spend this year. Maybe $5,000 next year. What are we going to do?
People tend to think we really deserve the kitchen. It’s going to cost $135,000. Let’s do it. Then a year later, well, now we need the pool. That’s what really eats you up.

Reese Harper: Let’s talk about this idea that financial health is relative, okay, because not… A choice for a multi-location specialist is not the same choice as a singular location GP that is struggling to get by.

Doug Carlsen: Dentists compare production all the time. That seems to be the big number and overhead. You go into much more important detail than they do on that. That’s one thing that they compare. Yeah.

Reese Harper: We talk a lot about-

Doug Carlsen: Lead on with this a little bit more here, Reese.

Reese Harper: We talk a lot about this in our practice where we say, “If you make…” The way we look at how healthy someone is financially is if their savings rate is high, meaning if the total amount of money that you don’t use in a year, right, that you either save into your investments or that piles up in your practice checking. Let’s say if we make $250,000 a year and you’re savings rate is 25%, from my perspective, a 25% savings rate on 250,000 is a really healthy number.

Doug Carlsen: That’s pretty darn good.

Reese Harper: That’s really good for someone at that income level because as everyone knows, out of that first 250, all of us have our living expenses that come out of that first 250,000 or a lot of it does. You know? Someone who makes 500,000 a year, their savings rate can probably be a little bit higher.

Doug Carlsen: Exactly.

Reese Harper: In a lot of cases, it’s not. You know? Someone who’s making a million dollars or more a year, their savings rate can be a lot higher, but it’s often not. Knowing your own savings rate to me tells me whether your lifestyle’s in balance. You know?

Doug Carlsen: Yeah. You’re talking savings versus spending in particular. Someone who is making a million dollars a year and is only saving 25,000, there’s a whole lot more spending going on there. Is that appropriate long term and especially in retirement when they may need to cut back quite a bit?

Reese Harper: I just tell people don’t beat yourself up over what you’re spending if your savings rate is good.

Doug Carlsen: That’s a huge point. As long as you’re saving at an appropriate level, it’s your life, you decide what you want to do. If you want to buy a plane and everything is within limits that you can afford, that’s fine.

Reese Harper: I think one of the things that I think people would be interested in learning from you about are that there… You’ve given people a lot of tools and a lot of education to self-direct in a lot of ways and do some of their own financial planning. Sometimes the industry doesn’t really offer a good solution, right? A lot of people look online or they try to do things themselves and try to figure out their numbers. How does a dentist really know if they need to hire someone or if they should be doing things by themselves?

Doug Carlsen: I’ve come across a fair amount of dentists who are investing on their own in particular. They get into day trading. Dentists have high math IQs. I checked this out a while back and by and large, dentists have an IQ in math which is higher than any profession other than math professors and physics professors. That’s it.

Reese Harper: Wow.

Doug Carlsen: We’re really high. We think we can beat the system and statistically it doesn’t work that way. Guys really want to do it on their own. I wrote a series of articles in Dentaltown. There were like eight of them several years ago called Do It Yourself Investing where I went through if you really want to do it yourself, this is what’s involved. The first part was about your home office, what you should buy, what kind of set up you should have. You should have budgeting from mentor Quicken or whatever. It gets into actual investing and how that is done. Later on we go into estate planning, the basics. There’s no way anybody should touch estate planning.
That should be left to the attorneys. In any of these articles, I always said you may want to tackle this, but realistically do you want to and here’s where you go for help. I think it’s stupid to try to it all on your own. I know guys that try to sell practices on their own and they do it, but man, you need attorneys and CPAs involved or you can have real problems later on several years later and get sued. I think it’s probably wrong in most instances to do all of your finances on your own. Certain things you can take care of. Sure you can track your budget.
You can set up a basic plan, but you need an expert to help you out and see if that makes sense with your specifics.

Reese Harper: Do you think it’s difficult for an entrepreneur, like a dentist, to spend money on a service whether it’s legal or tax or consulting? Why do you think it’s so hard for any business to want to spend money getting help? Have you seen that more in dentistry than you think should be there?

Doug Carlsen: Absolutely, where guys want to do it on their own. Absolutely.

Reese Harper: A lot of different things they want to do on their own, right?

Doug Carlsen: The dental equipment salesman will come in and service your equipment. A lot of guys try to do it on their own. They’ll take three hours out from the day to go fix a faucet.

Reese Harper: Yeah, I know. It’s crazy.

Doug Carlsen: It’s like, “Because I know how to do it and I don’t want to bring somebody else in because I’m going to have to pay him 20 bucks to do it.” Is this nuts or not?

Reese Harper: I had someone the other day I was kind of talking to this about and he said, “You know, I have a…” I said, “Well, how much did you produce last year? How much did you collect?” He told me and I said, “Well, how many hours did you work?” He said, “I don’t know. Probably took four weeks of vacation.” I said, “Well, you know-

Doug Carlsen: That’s pretty good.

Reese Harper: …based on what you did, your hourly rate is somewhere around 350 bucks an hour or 400 bucks an hour or something,” which is pretty typical for most guys. He said, “But my time’s really not worth that.” I said, “Why is your time not worth that?” He said, “Well, because a lot of times I’m not busy.” I’m like, “Well, why are you not busy? Why are you not busy all day? If you were busy all day, do you know what your time would be worth?” He said, “Well, it doesn’t really work that way because sometimes I’m just sitting at my desk waiting for an appointment. When I’m just sitting there, I just like to do things that I don’t have to pay for.”
I said, “Well, if you spend a little more time trying to get to where your schedule is full and you were busy all day and you were at capacity, you’d be making 500 bucks an hour not 400 bucks an hour.” This is a 50 year old really sharp guy and he just kind of said, “Well, yeah, I guess that make sense.” I said, “The things that you’re doing, they’re like $40 an hour jobs. You know?”

Doug Carlsen: Exactly.

Reese Harper: “You’re doing $35 an hour work-

Doug Carlsen: Exactly.

Reese Harper: …but you’re not spending time any time to try to get to do the $500 an hour work.” I just think that concept even though I know people know about it, I know they know that they are… I know dentists know that they’re worth a lot, but they will not pay an attorney because an attorney costs 150 bucks an hour or they’ll try to sell their own practice because they don’t want to pay 10% and then they realize they’re going to have to-

Doug Carlsen: Guys hate that 10% and it is worth it.

Reese Harper: Anyway, I think that’s an important concept. Let’s talk one more about when people… If let’s say they do decide to work with a financial advisor or they need to hire someone to do help, what are some of the attributes that you think make a good financial advisor and what are the kind of things people should look for? Different qualities or business models, just different ideas that you feel like. Because you’ve seen a lot of advisors over the years and you’ve probably seen a lot of different things that people do for dentists, so just wanted to get some of your perspective on that.

Doug Carlsen: It’s called fiduciary, the fiduciary standard. You want someone who’s going to provide advice or products that are in your best interest for you in particular. There’s been a great divide in the financial world since what, 1940? Is that when the federal law was passed?

Reese Harper: The Securities Act?

Doug Carlsen: Yeah, the Securities Act.

Reese Harper: ’33-’34.

Doug Carlsen: Yeah. Traditional brokers and insurance agents have not been held to a fiduciary standard. They need to provide suitable products to you, which may or may not be the best products for you and maybe more expensive than other equally good products. That’s been the issue.

Reese Harper: One thing is make sure you’re working with somebody that is operating under the fiduciary standard.

Doug Carlsen: Which would include a registered investment advisor, a certified financial planner. The traditional brokers don’t do that. Now we have a new standard that has just come up from the Labor Department and I’m going to have you talk about that a little bit for us.

Reese Harper: Yeah. Without getting down into the weeds too much, yeah, there’s some transparency that’s going to start to have to happen inside of retirement plans at dental offices that wasn’t happening before. A lot of times the fees and commissions that were being paid through your retirement plan at work, those are kind of like buried into your 401(k) and you couldn’t really understand what they are. Now they’re going to start requiring that those types of plans at least have a lot more transparency and that you have access to a fiduciary that can provide investment advice on the plan separate from commissions. Basically the thing that people need to know is that it’s getting to be a topic that’s more discussed.
It’s something that the investment communities… When you’re a financial planner, you’re going to have to start picking sides and say, “Am I going to be a fiduciary or am I not going to be?” The public’s going to be a little bit more aware now of the difference between a salesperson and an advisor who’s being paid for their advice. I don’t know if that kind of covers the angle you wanted to take on it, but if you have anything else you want to add, I’ll let you do that.

Doug Carlsen: Yeah. To have somebody who’s paid by the hour, flat fee or portion of assets that you have is definitely worthwhile. Anyone who says, “I’m not charging you anything for this service,” you know that there’s something hidden.

Reese Harper: Yeah. Probably something to run away from.

Doug Carlsen: Still even with the new rules that are being enforced, they apply to retirement accounts not cash accounts that you may have. Also, if you want to sue your advisor, you have to be involved on a class action. They kind of water down. I think the intent of the new rules was very, very positive for individual investors. It’s not perfect, but it’s better than it was before. Another thing about advisors, a lot of them will promise returns which are much, much higher than they should be. There’s a TV and radio host in particular who says that he feels that his certified advisors can provide a 12% return.
Well, that’s absolutely ridiculous. Anybody that promises over maybe even 8% be very wary of. There’s pie in the sky out there all over the place. It isn’t appropriate and it’s not professional.

Reese Harper: I want to go to some kind of shotgun questions here that I think are interesting. Now we haven’t really rehearsed any of these answers, but I thought this would be a good segment in a way to get some candid feedback from both of us.

Doug Carlsen: From both of us, yes. Okay.

Reese Harper: I’m going to down to-

Doug Carlsen: I’m channeling your best you.

Reese Harper: Best you. I like it. Okay. I’m going to ask Doug some questions and then I’m going to respond to those with my first thoughts too. I had Ryan kind of help me… Sir Ryan Isaac helped me come up with some of these.

Doug Carlsen: Uh-oh. This could be trouble.

Reese Harper: What we want to do is we want to give some financial advice to different types of dentists. Just what’s on the top of our mind right now. We’re not going to overthink it, but we’re going to start by looking at different people-

Doug Carlsen: That easy.

Reese Harper: …along different career paths and we’re going to give advice based on where they’re at in their careers. Okay?

Doug Carlsen: Okay. Okay.

Reese Harper: Question number one is Doug, what advice today do you give to a guy in dental school?

Doug Carlsen: They’re under so much pressure. You weren’t in dental school, but I was. So much pressure to get things done, to pass tests, to pass boards, to get your requirements done. There’s a lot of worry from young dentists about how much they’re going to have in student loans after they’re out. This is an issue, you know? It’s up to $500,000 in some cases today or close to it. That’s significant. But you know what? People do pay down their debt. They do survive. Back in the day when I graduated in ’77, guys in private school, I was fortunate to go to UCLA which was public, but in private school, and today’s dollars it was maybe a half to a third which we have today which was still really tough to get through.
Not to say it was as significant as it is today, but people are paying it off. Some can pay off $500,000 in six, seven, eight years. There’s generous federal grant payments plans. There’s income-based plans. There’s the repay loan, which replace the pay loan. There’s all sorts of different alternatives. In other words, don’t let the financial issue get in the way. I have young people who are thinking of applying to dental school who ask me if I think it’s worth it.

Reese Harper: Okay. You’d say…

Doug Carlsen: I say follow your heart.

Reese Harper: Don’t freak out about the student loans-

Doug Carlsen: Absolutely not.

Reese Harper: …because if you want to go into this, there’s plenty of money to be made.

Doug Carlsen: Agreed.

Reese Harper: Anyway, let’s talk about someone who’s 10 years in. Any financial advice for someone who’s been five to 10 years in that comes to mind that just sticks out? You got three people you’re going to meet with. They’re all five to 10 years in. What financial advice do you give that person at that point?

Doug Carlsen: The big one from my standpoint is if you are going to purchase a practice, if you are going to get yourself into another financial situation, whether it’s a loan attached beyond student loans, wait on buying the luxury home until afterwards. There’s so many dentists that right out of school go ahead and buy a home. It maybe a modest one and that’s certainly okay in some instances. But before you put big bucks into a home, know what your income is going to be.

Reese Harper: Yeah. That’s great advice.

Doug Carlsen: One of the worst case scenarios is you buy a home, then a year later buy the practice. Hey, guess who did that? Me. It puts enormous pressure on you, purchasing a practice or starting out in a practice having that home loan.

Reese Harper: That’s such a good piece of advice.

Doug Carlsen: Wait a couple years until you’re stable and you know what you can actually afford and maybe more than the home you just bought. It could be more. The other thing that I’d like to say and this seems to be off the wall here but it isn’t is join a study club. Engage the local dentists in your community. I don’t care if it’s Indian health. You’re going to have contacts with other dentists in your area. This is the smartest decision I ever made. I was involved in two or three study clubs always during my dental career. Those other dentists helped me tremendously clinically and financially.

Reese Harper: That’s really good insight. Would you say maybe renting up to that point could make sense or at least… You know?

Doug Carlsen: You run the figures. I argue with people about this all the time. A dentist that’s rented his whole life, never bought a home-

Reese Harper: Is still ahead.

Doug Carlsen: …like at 55 is always in great shape financially.

Reese Harper: I know.

Doug Carlsen: Absolutely always. The other thing is is they’re always single. Do you really make money on your primary residence over a period of time? I certainly haven’t. I’m in the whole long-term. But you know what? Homes provide stability and stability gives you the ability to earn more income.

Reese Harper: That’s the reason you buy a home. That’s a good point though of why you need to make that long-term decision later on. I can’t tell you how many people the housing tail wags the practice dog.

Doug Carlsen: Oh my god.

Reese Harper: Do you know what I mean?

Doug Carlsen: Absolutely.

Reese Harper: They don’t make smart decisions within the practice because the housing decision is kind of driving it.

Doug Carlsen: Isn’t that amazing?

Reese Harper: It’s funny like why are we beating this house and thinking over the head so much, but because it’s such a huge issue, man.

Doug Carlsen: It’s Stanley and Danko from a way, way back said that’s the biggest obstacle we all have. It’s not professionals. It’s everybody in America.

Reese Harper: Okay. Let’s talk about someone who’s maybe at that… I didn’t really give a tip. I just agreed with your tip. On the side, it’s your tip. I agree with that tip and I’m going to give one on the five to 10 year guy.

Doug Carlsen: Okay. Okay. Let’s do it.

Reese Harper: The five to 10 year guy, I would say to this person, “You need to have a solid advisory board. Your board of directors, your advisory board, it needs to be in place.” Every business owner around the world builds a board of directors and I’ve built one for myself. It’s been invaluable to me. I know that all startups do it. That’s the success of Silicon Valley is largely based on how they’re able to put boards of directors in place to help little companies get off the ground and be successful. Dentists just aren’t quite as resourceful that way. I’d say 10 years in, make sure that you’re really happy with your advisory board because you should have them from day one.
But by the time you get five to 10 years in, you’ll have rotated through some people. You’ll have found who the right fits are for those different roles that we talked about in that last episode. I just feel like that’s a good… That’s what comes to mind to me at that point. I just feel like you should be really in a stable position with a good advisory team that’s going to help you grow a little bit more. Because if you can make an extra 50,000, an extra 75,000 for the next 10 years, I mean it will make a world of difference. You don’t have to spend a lot to make that happen. You just have to have the right systems in place. That’s my thought for the 10 year old. Anything to add to that?

Doug Carlsen: Okay. You get major points on this one, dude.

Reese Harper: Okay.

Doug Carlsen: Here’s the reason, I have never come across an advisor before who has laid it out as completely as you two guys did a couple days ago. This is episode 26 or 27. The nine people that you need on your board I think is what it was called. Something to that effect. I just don’t see anybody who lays it out like that. You need these people onboard to help you out. It gets you better organized. You feel better about yourself. There’s so many groups out there and entrepreneurs who come to your practice and say, “I’ll do it all. I’ll take of your investments, estate planning. I can do that. Practice management, I can do that. I can hire and fire your people. I can take care of all of that,” and it just doesn’t work.
You need a board. What’s the bottom line here? You’re going to practice better dentistry. It doesn’t seem to make any sense, but you’re going to practice better dentistry because you’re going to feel more comfortable working in your office, guys. Excellent point.

Reese Harper: Okay. Let’s talk about a dentist that’s 15 or 20 years in who feels like they’re not struggling. They feel like they’re doing well. You talk to someone and that’s the tone he gives you. He says, “I’m doing really well and I’m 20 years in.” What financial advice starts coming to mind for that type of person at that point? Anything?

Doug Carlsen: It’s time to buy a plane because if you weren’t struggling now, you will be. That’s all I came up with on that one, Reese.

Reese Harper: That’s a good point though. I think that’s true.

Doug Carlsen: Get stupid.

Reese Harper: Maybe that’s why I think that there’s two people…

Doug Carlsen: Planes are cool, but they’re really expensive.

Reese Harper: 20 years in, there’s two kinds of people. One person says, “I really need help,” and one person says, “I don’t really need. I’m doing great.” Maybe they’re legitimately in a good spot. Maybe the guy that says he doesn’t need any help is legitimately in a good spot, but I think the point you’re making is are you sure? Have you really validated whether you’re going to be okay or you just feel good because you have a lot of stuff? Right?

Doug Carlsen: Yeah, exactly.

Reese Harper: You just have a lot of things and you can buy whatever you want. You just make a lot of money or you’re worth a lot of money.

Doug Carlsen: Exactly.

Reese Harper: There’s a big difference there, right?

Doug Carlsen: Yeah. You know what? Guys into their 60s who are in a position where they have a lot of things and they don’t have a lot of savings, they’re not ready to retire, think that they can work through it. They can work long enough to eventually make it work and they’re working in their 70s. We know of guys that are working in their 70s.

Reese Harper: I think just knowing there’s a big difference between what you’re worth and what you make and sometimes that guy that’s 15 or 20 years in when they say, “I’m doing great,” just make sure that you’re able to know that you’re doing great based on your net worth. I’d say if your net worth, if you add up all your stuff and subtract your debt, if it’s more than 30 times what you spend in a year, you’re doing great.

Doug Carlsen: Exactly.

Reese Harper: If you’re 10 times what you spend in a year, you’re probably not… You’re really not there. If you’re 20 times, you’re getting close, right?

Doug Carlsen: Yeah.

Reese Harper: If you’re 40 or more of what you spend in a year, if you’re worth 40 times than what you spend in a year-

Doug Carlsen: That’s really good.

Reese Harper: …yeah, you’re great. You’re wrapped up. You don’t need to work anymore. You can choose to, but you don’t have to.

Doug Carlsen: That gives you total flexibility in your life. It’s amazing to have flexibility.

Reese Harper: It is. Okay. What about the person that’s really struggling still late? The person that says, “Doug, I feel like I’m in a bind still and I’m 55 years old. I’m 60 years old.” What’s your advice to them?

Doug Carlsen: That’s a good question. I did have an answer to that and I’m going to give it to you and I’m going to defer to you on the rest of it. I see people who are 15 years into their practice, sometimes 20 years, who finally have paid off their practice loan. Maybe at the 10 year mark, but anyway, they’ve paid off a big loan. What did they do? They decide to buy a bigger house or to significantly upgrade their house. In other words, they see this 5 or $6,000 a month-

Reese Harper: Going away.

Doug Carlsen: …that’s just sitting there. It’s not there. Now what do I do? This is the time when they can really ramp up their savings-

Reese Harper: That’s great advice.

Doug Carlsen: …and build their investments. But instead, they go buy something else which maybe they think they rationalize in their mind, “Well, the house is going to be worth more later, so it’s a good investment.” Not as much as buying a diversified portfolio of mutual funds or ETFs, whatever. This is my thought on that, but I think you have a different take.

Reese Harper: Sometimes who’s saying they’re struggling, I’d say you need to take a real hard look at that point. If you still feel like you’re struggling, you need to take a really hard look at your lifestyle expenses and start to get used to pretty quickly a more realistic living expense budget for yourself. Because if you’re struggling and you’re 55 or 60 and you’re not getting ahead, it’s because you’ve gotten used to living on way more than you make. That’s going to be really hard to change at any point. I mean ever. The only time you’ll get some relief is when social security kicks in at 67, which coincidentally is like the average dentistry time and age or at 70.

Doug Carlsen: I’ve actually heard 69 from Charles Blair. It’s even higher.

Reese Harper: Because sometimes that’s when social security kicks in. I mean honestly when I see Charles Blair stats or I see the ADA stats, those are like the most common times when they can take their social security checks.

Doug Carlsen: Pretty much.

Reese Harper: It’s like that’s when it happens and it shouldn’t be that way. You know? If you’re struggling, it probably is because you’re not living by the numbers. Your savings rate’s too low. Your living expenses are too high. You might as well get used to making some hard decisions right now. Those hard decisions usually involve, and I don’t want to say it because everyone’s going to freak out, but it usually involves relooking your housing and usually it involves relooking at a lot of lifestyle expenses and saying, “Can I really afford to live the way I’m living?”
Because if you’re struggling and you feel like you haven’t made a lot of progress and you’re in your early 60s, it’s probably lifestyle and it’s probably housing and you’ve got make some hard decisions quick or you’re going to be out into your late 70s still working as an associate because I see. You know?

Doug Carlsen: While you’re talking, I was trying to think of other lifestyle choices that you would have to cut back on rather than housing. There really isn’t anything significant at that point. It’s not really vacations, not so much. Clothes, not so much. Cars. Guys kind of get over that. Well, some of us get over it in our 50s and 60s.

Reese Harper: Just build your net worth up to a point to where you’re at that 30-35 multiple of spending and you can stay in your house. You don’t need to worry about it. But if you’re at a 10 or a 12 or a 14 multiple of spending, it’s just going to be too much of a challenge for you to ever get to the point where you can be financially secure. I just hate having social security, that fixed income stream, be your only saving grace.

Doug Carlsen: That’s the American way pretty much though.

Reese Harper: It’s just a mess, but yeah. Anyway, Doug, it’s been a pleasure. I think we’ve got a ton of content down for people. You’ve been a wealth of information. You got great perspective. Any parting thoughts you’d like to leave with people before we go?

Doug Carlsen: Yeah. I would like to say here that I think what you guys have done with your elements in particular, we went through some analyzation of specific individuals beforehand and how you guys are tracking expenses, saving, investments, simplifying it down to something that people can actually understand easily in their practices as far as personal and professional ways of doing things I think has been simplified to a point where it really works out well. In other words, it’s elegant.

Reese Harper: Oh, thanks.

Doug Carlsen: I think your services here are very elegant, well-thought-out. You’re not selling pie in the sky to the people. You actually want to help people and work with them. I applaud that.

Reese Harper: Well, thanks, Doug. I really appreciate it. You’ve done a lot for the industry and we look forward to seeing what the next 30 or 40 years of your career will bring.

Doug Carlsen: More mountain biking accidents probably.

Reese Harper: You got to take care of that hand. All right. You heard it here on The Dentist Money Show, Industry Expert Series with Doug Carlsen. Thanks again, Doug. We look forward to having you back soon.

Doug Carlsen: Hey, it would be my pleasure. Thanks.

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