Listener Q&R #10: How to Finance a Practice, Avoid Lifestyle Creep, and Track Debt – Episode #691

What is the best way to finance a practice? How do you prevent lifestyle creep? How do you track debt payments? On this listener Q&R (Question and Response) episode of the Dentist Money Show, Matt and Ryan answer some financial questions posed by members of the Dentist Advisors’ Facebook Discussion Group. Tune in for practical insights on financing options, strategies to keep spending in check, and tips for staying organized with debt so you can stay on track toward long-term financial freedom.

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Podcast Transcript

Ryan Isaac: Welcome to the Dentist Money Show where we help dentists make smart financial decisions. I’m your host, some call me Sir Ryan Isaac and I’m here with the mountain Matt Mollcock. Good morning, mountain. You got the mountains behind you actually, good morning.

Matt Mulcock: Good. I do have the mountains behind me. Well, sort of. It’s like, it’s a view of like a hill. Yeah. We didn’t, we moved offices and we upgraded, but, we didn’t upgrade to the one with the view. So.

Ryan Isaac: A hill. but theoretically. Yeah, well,

Matt Mulcock: Exactly. Exactly. I will take the employees in the marketing. ⁓ should we share with the good people, We are together, but apart. We.

Ryan Isaac: view or better marketing budget. A view or a new employee. Yeah. Amen. Yeah. It’s really funny actually. It just shows you like how easy podcasting has become and yeah, we’re in this, we’re 20 feet apart right now. Yeah, but it’s just easier editing, capturing. It’s just so much easier with good tech.

Matt Mulcock: Yeah, you’re in the conference room. I’m in my office. Yep. Yeah. You came in, you and Christine Ewen, shout out came in, which was great. I’m so glad you did. we had a on-site off-site last, yesterday all day with our advice team.

Ryan Isaac: Yeah. I love these. You can trick your team. Here’s a little dental tip for your, but this is actually a practice management tip. Tell your team you’re going to do it a really cool all day offsite. And then when they get there, just say meet at the office and then just be like, it’s an onsite offsite. Yeah, that was good. It’s nice.

Matt Mulcock: That’s exactly what we did. ⁓ that’s exactly what we did. ⁓ we have a sweet conference room downstairs though. It was like really cool. Brought in lunch and we had an all day advice team, onsite offsite. And, if you want to blame somebody blame Taylor, shout out Taylor Sutterfield. You all know him and love him. And we were talking about, we were planning the meeting out. We planned this for literally months and, to have this meeting. And we were talking about going somewhere fun and maybe going up to park city or something.

Ryan Isaac: you hate your preference. Really? That was on the table?

Matt Mulcock: Taylor’s like, that was on the table and Taylor goes, and he is a good point. He was like, I mean, if we’re just going to work, like, why don’t we just do it from the office? Like if it’s just about work. So he’s like, if we’re to do something fun and activity, let’s go somewhere. He’s a huge activity guy, but he’s like, if we’re just going to be sitting down, head down, grinding, talking about our company, then let’s just do it in the office. So I took his advice.

Ryan Isaac: I have a different opinion. He’s such an activity guy. Yeah. Dude in the office. Yeah. It’s fine. You listen to the people, the people spoke. I say go off-site off-site and have mimosas You know what I mean? And then start working. So anyway, speaking of, yeah, I didn’t have a good segue either. I was just going to make it up.

Matt Mulcock: Yeah. Yeah. And then start working. I like this. Yep. Well, also last thing, well, wait, hang on last thing. ⁓ okay, perfect. We will segue this after we’ll just make it up. ⁓ we’re going to give a public shout out. She might cut this, hope she doesn’t. We’ve mentioned her before, but Michelle, we, you don’t know her, but you love her. you, if you do know where you love her, she is the, ⁓ mastermind behind the production and editing of our podcast. She just officially, she was going part time cause she’s,

Ryan Isaac: Mmm. Yeah.

Matt Mulcock: She’s been an intern and been doing school. She’s about to graduate. She is now our newest full-time employee at DA and we are so excited about it. So want to give her a shout out.

Ryan Isaac: Yeah, she’s so good. Yeah, thanks Michelle. You’ve been awesome. And also she always makes jokes at our expense and I like them. We’re old. I’m really old, but…

Matt Mulcock: She’s amazing. She does. She, she makes fun of us because we’re the old guys and she, she, she’ll, you know, she passes around, edits and clips and she’ll pass around the show internally to the content team and they’ll make fun of us. So like right now they make fun of me because of the whoop thing and like the Fitbit thing. like, they just are like, you, I think astute, I think.

Ryan Isaac: They clip it and then pass it around internally? I hope so. I like that for them and I like that for us. I like that actually.

Matt Mulcock: Yeah, they’re making fun of us like all actively because, all, cause I’ll say something on the show and then, ⁓ later I’ll be talking to Sthuti and she’d like, really? You brought up the whoop again. I’m like, wait a second. Are you guys talking about us? Yeah, they are. Yep.

Ryan Isaac: Like, wait, wait, how’d you hear that? It hasn’t even been released yet. It’s because, okay, well, I like that for them and us, actually. It makes me, it brings me joy. Yeah, yeah, I mean, I’m relevant in some way. That’s okay. You know what mean?

Matt Mulcock: I do too. I think it makes it fun. I can be a punching bag. It’s all good. That’s the you know what? Famous for something maybe and least inside the team with that said.

Ryan Isaac: Famous for something, I’ll take it. All right, speaking of being famous, speaking of being famous for something as a punching bag, we have today’s Q &R, we have questions submitted. By the way, what are you drinking? Ghost Protocol? Tom Cruise’s new drink? What is that?

Matt Mulcock: No, so this is a ghost. It’s Welch’s grape. I’ve been trying to stay off the energy drinks. However, I was up three separate times last night with my kids. we won’t, we don’t want to talk about it. let’s just say my four year old, peed the bed twice last night, twice record twice. So I was like, you know what? It’s going to be probably a double day, a double caffeine day.

Ryan Isaac: Not today. Okay. That’s okay. But on the scale of being up at night with kids, if the word projectile didn’t get put in front of any of the verbs,

Matt Mulcock: Didn’t. Nope.

Ryan Isaac: It’s a little lower on the scale.

Matt Mulcock: I will say, I will say the second time he came up. So the first time he was like, it was all good. Just got him changed. We’re it’s all good. Got him back in bed. The second time he came up and he was just sobbing. Cause he just knew like, cause he just knew he was like two, like this is a problem even for me. And so luckily I was able to get him laughing and he was fine, but it was not, he was not feeling good.

Ryan Isaac: Aww, poor guy, aww. Oh, poor guy. Okay. Double ghost day for you. We are going to do some user submitted questions. First, let’s say Matt, how do people we want as much of this as possible. This is I won’t speak for you. This is probably my favorite content to do is responding to questions from listeners, clients and friends

Matt Mulcock: Yeah, I would agree.

Ryan Isaac: Anyway, how do people submit questions to the show? Because we want as much of this as we can get. We love doing this.

Matt Mulcock: Yeah, I was going say, do love this. think it feels like the most pertinent and valuable of the content because it’s coming directly from people like directly from dentists. So you, dentist advisors.com slash podcast. You can go right there. It’ll say, right. There’s a link on the left side down the middle of the page. it says submit a podcast question. So submit them. We also have one.

Ryan Isaac: Yeah, exactly. Yeah. I got you.

Matt Mulcock: So we’re going to cover two today. The other one we have is from Instagram. So you can also comment on Instagram and we will eventually get, this has been a while, but we are, this has been from, I don’t even know when, a while ago, but we’re still going to hit it. We will get to it at some point.

Ryan Isaac: Yeah The non-uncs probably don’t see the Instagram comments, but Michelle does.

Matt Mulcock: Michelle does sends them to us and then we respond.

Ryan Isaac: Or a lot of people that submit questions are clients or they’ve talked to us before. So if you have any of our email addresses, just send us an email. That’ll work too. Okay. This is a long one. has multiple parts. We love stuff like this kind of set up. Yeah, let’s see the short one first. Let’s do that.

Matt Mulcock: You could do that as well. Yep. Wait, do you to do the short one first? Let’s do the short one first and we’ll spend the most of the time on the long one. It is long and I’m going to read every word of it. I feel like we should. Don’t you think? Is that sound threatening? I’m going to read every single word of this, Okay. I actually worry sometimes that I come off like more aggressive than I mean. didn’t mean that aggressively. I was just like, I’m going to read every word. Like this deserves to be read.

Ryan Isaac: You’re right. every okay. Yeah, no, yes. Also, I like a threat. I felt very ready. The way you said it, I was like, fine. Really? I come off. It was aggressive. A little bit. I come across sarcastic 99 % of the time all the time in

Matt Mulcock: I didn’t mean it. Okay, I’m sorry. You do. There’s actually times I’m like, are you being serious? I can’t tell.

Ryan Isaac: And it sucks because it’s just the way my voice sounds and like I’m not I am sarcastic a lot joking around but quite often I’m not and people think I’m sarcastic I think yeah like what do you mean my kids do all the time they’ll be like look at me funny I’m like no I’m being serious this is a compliment I’m giving you a compliment right now

Matt Mulcock: Yeah. Like wait. What? Yeah. So I’m sitting here, people are like intimidated, like, are you mad at me? I’m like, no, I’m just going to read this. it’s, I want to give it some, then you’re like, Whoa bro. Okay. And then you’re over here making jokes and not meeting to.

Ryan Isaac: Just gonna read it. Calm down. Making jokes,

Matt Mulcock: it’s it’s we go from one a one line question to literally paragraphs. So the first one is, Ryan, what is the best way to finance a practice?

Ryan Isaac: Great. Okay, that’s the whole thing. You didn’t send me that one.

Matt Mulcock: That’s it. sorry. just surprised. I just surprised you. I had it locked and loaded. I was going to say, do you want me to send it to you beforehand?

Ryan Isaac: Yeah, well, there was no need to send that one because it’s one, one sentence. What is the best way to finance a practice? I like this. We’ll obviously talk about this a few different ways. I guess let’s talk about the possible ways to finance a practice. Is that what you’re going to say first? Yeah. The possible ways. So, you know, obviously you can get a loan from a bank.

Matt Mulcock: I, ⁓ my gosh. It’s like, we’ve been doing this for a long time. That’s what I was going to say. Yeah. Let’s do it.

Ryan Isaac: We’ve said this for many, years. The landscape of banking and interest rates in lending obviously has changed over the course of us being in business. I’ve always been, especially the longer our business went in, I’ve always been impressed and a little jealous at the ability for dentists to get money in their careers. Because in most fields, you cannot go to a major bank and in two weeks have like a million dollar loan. Maybe it’s a little…

Matt Mulcock: I’ve tried.

Ryan Isaac: Longer these you tried. Yeah. You had that one idea. Well, I

Matt Mulcock: I’ve tried. get laughed out of the bank every time. Yeah. I had a killer idea. Yeah.

Ryan Isaac: Yeah. So like, my whole career, I’ve always watched dentistry and just thought, man, anytime you need equipment, you need more chairs, you need like a cooler office to work out of another office, you want to buy a practice. It’s very unique and rare to be in an industry where you can just literally go get money at the best rates, the best terms, fixed rates. And I mean, think about brand new students can come out of school with no experience and just pick up a seven figure loan. A little harder than it used to be. I get that rates aren’t what they used to be, but first and foremost, I know debt is annoying and we don’t love to carry debt. Especially dentists have so much of it. But it is a very rare and unique thing to be in an industry. having said that, traditional banking, always a certain route. You have, I was gonna say, little less used, family money. We have a lot of clients with family loans. ⁓

Matt Mulcock: The best way to do it. It’s like, it’s kind of like the best way to own a boat is have a friend’s boat. I think the best way to finance a practice is have a friend or family member finance it probably just pay for it.

Ryan Isaac: huh, huh. Yeah, till like, every client you have that has loans from family, how do they feel about it? What’s the overall? It’s not great, huh? It’s not it’s not good, huh?

Matt Mulcock: It’s not great. All jokes aside. mean, it’s, I feel like the, I feel like there’s always a, you were saying, you know, debt is annoying. think you’re speaking to like the psychological or emotional cost of debt. feel like that’s higher generally when it comes to taking money from family or friends, even if you’ve got a better finance, like financing terms, like with a, with a family member. But they often do also be careful of that.

Ryan Isaac: Yeah, psychologically, Yeah, it is. It’s more taxing. Yeah, and often they do.

Matt Mulcock: Uh, if you go, you got to be careful of gift tax and all that, but that’s for another day. But I don’t know if people think often about the other cost of debt, which is that psychological and emotional debt. And I think probability wise that tends to be higher. That tends to weigh on people more, at least what I’ve heard in my experience of like, man, I’ve got this debt from my dad. I just want to get rid of it. And even though it’s like 3 % rate, it’s, I just don’t want that hanging over me anymore. Family dinners. Yeah.

Ryan Isaac: Mm-hmm. Yeah. Mm-hmm. Mm hmm. Yeah. 3%. Yeah, even if the relationship’s good, yeah, it just feels off. But that’s common. It’s very, very common for people to have loans from families. Then of course, there’s seller financing when you buy a practice. So Matt, do you want to talk about how that usually looks or maybe why that is?

Matt Mulcock: Yeah, this is pretty common. think the two most common are the bank and then tell her financing. So the seller. let’s say again, the, older doc selling to the younger doc, there’s various reasons why you would do this. we can cover that, but the seller financing is pretty straightforward where.

Ryan Isaac: Mm.

Matt Mulcock: The seller. So again, the older doc is what we’d say carrying the note. So they are essentially the bank and they are going to, you know, and if you, I’ll say this, if you’re going to do this, you might be out there thinking like, would do this? We’ve seen it, no handshake deals here. Like this has to be legit. Ambers amortization schedule, promissory note, all legit with an accountant. Usually do it on a 10 year. And again, the selling or the buying doc,

Ryan Isaac: Yeah.

Matt Mulcock: would be would be just making payments to the seller, the older doc, just like a normal bank. So that’s a seller financing deal. Again, there’s various reasons to do this. There’s pros and cons to this that we can cover. that’s, yeah.

Ryan Isaac: Yeah. Yeah. Mm-hmm. Yeah, which maybe that’s what we’ll talk about. Then maybe probably the least common scenario is probably just paying cash for it yourself. Which I don’t very rarely actually just did meet someone the other day who has done their, they’re on their third practice and the first two were cash. Yeah. Very rare. First two. Yeah. Very, very rare. mean, cause what that, what that means is you have to be sitting on a lot of cash early in your career, which is just rare for most people.

Matt Mulcock: You ever see that? Okay, I was gonna say, okay. first two. Whoa. Yeah.

Ryan Isaac: So those are the ways, like you said, there’s a combo of all these things and the landscape is different. Lending is different. People coming out of school have so, their student loan balances are so much higher practices, many practices these days, they’re just becoming worth more money. A lot of practices are bigger groups, they’re multi-specialty, they’re multi-location. So the buy-ins are higher dollar amounts. The buyers already have tons of debt coming into it. So sometimes it’s necessary these days to get a combo of some of these things. Because sometimes banks won’t give you the full, if you’re buying into a practice that’s worth, know, five, seven, 10 plus million dollars, which is not uncommon these days, and you’re buying in a share, 20%, 25%, whatever. Yeah, sometimes the banks won’t give you the money right away. So.

Matt Mulcock: Yeah, there’s another category here that we’d call, the technical term would be kind of, non-qualified deferred compensation packages. So this is basically where this is becoming, I’m having a lot more conversations around this Ryan to your point. yeah. Where.

Ryan Isaac: Yeah. Really? Okay. Very common outside of dentistry, but it’s becoming more common to dentistry. Yeah, what are you seeing?

Matt Mulcock: Because of what you just said, because practices are becoming more valuable. So, so the kind of the lead doctor who’s built up a large practice, they don’t want to go, let’s say they don’t want to go the DSL route, right? And that’s a whole other discussion around, around what that’s, what that’s looking like. But I have a, I have a few just relatively recent who I’m in, in-depth conversations with attorneys and CPAs with clients to figure out are there, are there alternative ways.

Ryan Isaac: Mm-mm. Yeah. Uh-huh.

Matt Mulcock: to, and what we’d call a cashless transaction to have the associate, buy in or buy pieces of equity through deferred compensation of profits. There are restricted stock units. There’s profits in trade. There’s a lot of different ways you could do this, but you, like you said, this has been going on outside of dentistry for a long time. It’s starting to make its way into dentistry. I think a lot, a little bit more.

Ryan Isaac: Hmm. Mm-hmm. Hmm. Mm-hmm. Yeah, very common tech companies and yeah, that’s cool. Yeah, that so you’re you’re you’re having conversations about like setting this up. How are these getting set up? Is this I would imagine you need an attorney to set this up some kind of, you know, purchasing agreement, buying agreement, but comp agreement.

Matt Mulcock: Yeah. So you absolutely need, so the first step would be if you’re going to go down this road, the overall conversations can be done with a competent advisor first, like a financial advisor who can at least talk to you about the concept or just talk about the concept of it, pros and cons of it. And then for sure. like, I’m thinking of one particular client who we’re going through these conversations right now. ⁓ you got to get like the

Ryan Isaac: Structure. Yeah.

Matt Mulcock: Serious step is then getting with a with an attorney, right? And so we’ve already had those multiple meetings with an attorney because Entity structure matters, right? The the entity structure and tax allocation is going to impact how Like what kind of type of program you put in place some are restricted depending on your entity structure Anyway, there’s you need an attorney to like make sure all of its structured right and then you need a CPA to make sure that the actual like Is accounted for and that’s all being tracked

Ryan Isaac: Mm-hmm. Mm-hmm. Yeah. Yeah. It’s accounted for the right way, the way the crews. And then there’s, man, there’s like breach of contract on both sides for both parties. possibilities, you know, changes, business changes, you know, what happens if there’s a DSO offer in the middle of this thing or, know, someone gets disabled or yeah. Okay. That’s cool. All right. So what was the question? The question was which one’s best? What’s the best way? Look, we’re thorough, you know, like we just, care. We care about details.

Matt Mulcock: Yep. Yeah, operating agreements, all that. We are that we were like, this is a one line question, but we thoroughly responded to this. this is the, what is the best way to finance a practice was the question, by the way, shout out to dentist on demand. This who posted this. So what is the best way to finance a practice? We just covered all of it. think the kind of the big ways, possible ways. don’t know if there’s any more.

Ryan Isaac: This Okay. Okay. Mm. Possible ways, yeah What’s the best way? I’ll respond for my, my response to the best way is whatever is going to be the most efficient way, the most efficient and sustainable way to get you into ownership. the soonest, I think if that’s the goal, then you want to be able to like start that path as soon as you can. and you want it to be efficient and by efficient I mean, well unsustainable, I just mean like, know, not some payment plan to a, you in-law that’s, you know, they’re like, I don’t know, pay us like whatever you can for the next 12 months then we’ll settle up in a year. Like that’s not, don’t do that, you know? Or like you said, if you’re gonna have an agreement with a seller, then make it legit. Involve an attorney, an accountant. ⁓ Just make sure everything is very, very clear, even if it’s your best friend, even if it’s your parent, it’s your mom who’s selling you her share of the practice. you know, you love mom, it’s fine. Get a contract, just make sure everything’s like super clean. But yeah, my answer would just be whatever is like the most efficient and sustainable way that just gets you into ownership the quickest. That’s what I… That’s what I would just think is the best and it’s just so situation dependent.

Matt Mulcock: That is, I think, true answer is it depends on your situation. But I’d say generally speaking, start with the bank. Don’t overthink it.

Ryan Isaac: Yeah, for sure. If you can’t start with the bank, yes, yeah. They are, yeah.

Matt Mulcock: Rates are still good. Bank, you know, I think change your mindset around, you know, this whole idea that like banks are evil. Like look at the bank as your partner in this endeavor. Like they’re giving you money mean, of course they’re making money. Like that’s the running business, but they’re, they’re a partner in this with you. They’re giving you, I think talk about efficient way to, of use of capital. You, you, can get a ⁓ practice loan right now. Still.

Ryan Isaac: Yeah, what’s the recent race? Yeah.

Matt Mulcock: As of this recording end of mid September, ⁓ probably still in the low fives or high fours. And I think they’re coming down.

Ryan Isaac: Yeah, that’s what I’m seeing too. Yeah, yeah. They are coming down. It’s funny driving around again. Yeah, we’re in middle end of September 2025 driving around Salt Lake. You guys have billboards here for like mortgage teams that have digital rates on their billboards. We’ve seen those. Like if you’re paying more than this, then call us or something. Great marketing that’s been up forever. Last night I saw like 5.8 something mortgage rates, mortgage rates.

Matt Mulcock: Yep, yep. For mortgage? my gosh.

Ryan Isaac: Which is like that’s a whole other conversation because we’ve been saying forever. I really do believe this. This slowdown in housing and everything as soon as mortgage rates get into the fives. I think that’s just mentally like a barrier that we all like soon as it’s in the fives are like all right I’ll do if I’ll do five something.

Matt Mulcock: Going wild. Yeah. Psychologically. Yeah. You get in the fives. If we, if we get in the mid to low fives, it’s going wild, wild.

Ryan Isaac: Yeah, I think it’s gonna be on fire. Yeah. So having said that, practice rates they typically are usually lower than mortgage rates. They’re good, they’re good loans. And you’re getting them on fixed 10 years, you can get them on fixed 15 years for some practice loans, which I like. I mean, that’s just ⁓ generally speaking, I like a longer practice loan, buy yourself enough time, keep the payment low. You can always pay it down faster. So yeah, I like that dude. Start with the bank first. It’s clean. Yep, it’s clean. It’s easy. ⁓

Matt Mulcock: I think path of least resistance for most people is the bank. then there are situations where you can involve family. There are situations that you can sell our finance. There’s reasons to do those things. I’m not saying, cause someone out there might be listening and like, we didn’t do the bank. We did it this way and it worked great. Awesome. That’s awesome. There’s other situations that can work. saying this person’s saying what’s the best way to finance a practice. Generally speaking, I think you start with the bank. Yeah.

Ryan Isaac: Yeah. yeah, yeah, for sure. Yeah. Yeah, just clean. It’s clean. then, you know, why someone might not do that. Some owners don’t like the fact that a bank will put a lien on their practice. And so some some owners, seller, seller docs will be like, I’m going to finance this because I don’t want to lien on my practice from a bank. Which is like, OK, and then sometimes there’s real estate involved in which makes the multiple loans different. So, yeah, I like that’s good advice. Yeah, more and more complex.

Matt Mulcock: Yeah, of course. Yeah, it can get, it can get messy for sure. And again, there’s reasons to do again, seller finance or whatever, or again, coming back to this idea, if you’re a buyer, you’re trying to buy a portion of a practice that’s doing $7 million in collections and a bank’s just like you’ve capped out like you are. You’re trying to buy a portion and it gets confusing or complicated. Yeah. Like maybe you want to do some type of, again, cashless transaction by portions of equity with some type of, ⁓ stock.

Ryan Isaac: Yep.

Matt Mulcock: Stop equity program. But again, start with the bank and then if your situation

Ryan Isaac: Mm-hmm. Yeah, I like that.

Matt Mulcock: If your situation calls for it, then you can get creative. There’s a lot of different ways to do it.

Ryan Isaac: Yeah. Explore their options. Yeah. Involve an advisor, involve a CPA and attorney where necessary and do your due diligence. Isn’t that in our fine print? The other guy who talks at the beginning of our episode. I wish he had a name. I mean, he’s got a name. I just wish he sounds like a bill. I was going to say Carrie. Yeah, he sounds like a Carrie. I know you did say Gary. So we were on like

Matt Mulcock: Yes. Yeah. Yeah. Shout out to that guy with the credible voice. Bill probably bill. Yeah. Or Gary. You were gonna say Carrie. I was going to say Gary. Okay. We’re on the same wavelength. Okay. I threatened you earlier to read this.

Ryan Isaac: Yeah, I mean we are 20 feet apart.

Matt Mulcock: We appreciate you, Andrew. This is awesome. He starts off with hi there. Long time listener, first time caller. That’s kind of awesome. So

Ryan Isaac: Yeah, I like that. That’s so good. Yeah, we grew up in those days of like radio shows when people would say that.

Matt Mulcock: Exactly. I still listen to Dan Patrick show a lot on and off. they first a long time.

Ryan Isaac: Yeah, first time long time. You know what, man? ⁓ I haven’t been a sports video guy for so many years. Dan Patrick is one of the best question askers I’ve ever heard of an interviewer. He’s so good at delivering like a one line question and then just shutting up. And he’s so, so good at that.

Matt Mulcock: He’s great. He’s really good. Yeah. Shots up. Yeah. He’s also got an incredible voice. Like this is amazing. He has a dream job also. ⁓ okay. So I got to get through this. It’s long. So you’re going to let me read it. Okay. All right. Hi there. Longtime listener, first time caller. He’s a client of ours. He’s working with Taylor for the last couple of years.

Ryan Isaac: Yeah, it’s butter. It’s butter. Mm hmm. Okay, okay, okay. Yeah, yes. Yep. Yeah.

Matt Mulcock: I would love to hear your thoughts on how you consider debt service as a form of savings slash net worth growth, And how to plan for the cashflow that can open up as debt gets paid down. I’m a big believer in the idea that automating savings, having an appropriate and maintainable savings rate is among the most important parts.

Ryan Isaac: Go.

Matt Mulcock: of any long-term financial plan. Shadow Andrew, yeah, of course. That’s amazing. Love that. It is easy to see how saving money consistently in a retirement plan, brokerage account, even high-old savings account, but how do you consider debt service? Okay. So that’s the core, but he’s breaks this down and I love this. This is so good. So number one, home mortgage, still at the beginning of paying the mortgage, unlikely to be pulling equity out of it. So I really wouldn’t consider it savings. Currently he pays about $6,500 a month. Future cost of this current expense will drop when the mortgage is paid down, which will be at 65. So while I wouldn’t consider this usable net worth, I would think about after it is paid, the amount of cashflow needed to pass 65 to be lower. Okay. Number two, practice loan. This will be gone in four years. We’ll open up about 8K per month. Though the interest is deductible.

This is an asset that I plan to sell and eventually in retirement. ⁓ so we obviously consider the likely market value of this asset. Number three, student loans. This will be paid in three to six years. Obviously there’s no asset that it can be used later, but it’s also going to be opening up cashflow. Once it’s paid off, that’s going to be $4,000 a month. So it says, question is, how do you consider the fact that some of the income I have is going not to lifestyle spending. And once these expenses are or going, I in effect get a raise with the opportunity to reallocate that income to either actual savings like a brokerage account or to spending and lifestyle or realistically to both. I E future me can save more because I’m not really spending that money now, at least not on fun stuff. Within six years, I will have $12,000 more in cashflow per month, which is amazing. What are the best ways to automate the additional cashflow as soon as it is available to prevent lifestyle creep? How have you advised other clients on this and have you seen it actually happen? Love you, Andrea. He didn’t say that. He said best, Andrew. Okay. That was a lot. Where do you want to go?

Ryan Isaac: The love you got me. I was just hitting my calculator because I was just curious about something. First of all, starting in six years, just on the pure payment savings, he will be able to save raw savings dollars, a million dollars every seven years basically. Starting in six years when that 12 grand a month is freed up. I don’t think Andrew’s, he’s younger, I’m assuming. I think he’s on the beginning and student loans and practice loans and mortgage.

Matt Mulcock: You’re saying after this is paid off? Yeah. I think.

Ryan Isaac: Just think about the power of how nice that is. Now it’s It’s likely that his practice will need some improvements or additional investment through loans, most efficient way to do it in a practice in the future. But starting in six years, this guy will have the power to say, like have a massive million dollars every seven years just for pure savings, not even counting growth. That on itself is just so, cool. let me, here’s what I hear the question saying. I hear the question being debt. A lot of the debt that we dentist Carey is going towards things we’ve invested in. We’ve invested in ourselves professionally in our career and student loans. We invest in our practices, you know, the homes, although he says he doesn’t consider that a usable asset. You can tell he’s a listener and he’s a good kind of an awesome advisor.

Matt Mulcock: You can tell he’s a listener. Yeah. And he’s a homie. He’s just got a good mindset. Yeah.

Ryan Isaac: He’s got a good vibe, good vibes here. ⁓ But ⁓ so he’s saying, you know, setting that up and then he’s saying like, how do you account for like, what, does this count towards me saving or investing? Because these debt payments are going to an asset. It is similar. It is an asset. These debt payments are going to an asset. And then how do you account for the fact that when these are gone, this new cashflow adds to my cashflow, it adds to my net worth. So it’s kind of just a question of like, how do you conceptually think about or track debt payments as a form of net worth building and savings rate. That’s kind how I hear it. What do you hear in all this or what other questions do you hear in this?

Matt Mulcock: Yeah. So again, first of all, I just truly appreciate Andrew in this question. And you can tell as he’s going through this, that he has a long time listener, just the way he’s framing things, which is super cool. Honestly, it’s super cool to see this. and I’m honestly very happy he has Taylor, cause I’m sure Taylor has gone through this with him and helped him with this. ⁓ but I think really, really thoughtful question around thinking about cashflow. And I think the nuance of.

Ryan Isaac: Yeah. Yeah. yeah. Yeah.

Matt Mulcock: What I’m hearing similar to you is like the nuance of like this gray area when it comes to debt payments. How do you count it? Yes. And it’s funny to give people insight into this. we’ve been here for years, Ryan long way longer than me, I’ve been here better part of a decade. And I literally remember early days, ⁓ at the old office when there was only like six or seven of us.

Ryan Isaac: Yeah, like how do you count it? Is it just pure outgoing cash flow that goes nowhere? Yeah. Yeah. Crazy.

Matt Mulcock: And, having like really great debates and like discussions around like this kind of stuff. It just takes you back to the early days of like us thinking about elements and how to apply this and how to talk about it. And this kind of stuff came up, comes up still, but this kind of stuff comes up all the time. Really, really good question. ⁓ so do you want to, I guess the next part of this, I want to break down,

Ryan Isaac: Yeah. Mm-hmm. All the time, yeah. It was foundational.

Matt Mulcock: Well, let me, let me say this. The other thing that came to mind for me that I want to make sure we’re putting out there is, when we make generalist comments around like what a savings rate should be for a dentist. And we, the line in the sand we’ve kind of said is 20%. Ideally, but I think it is hard. So that’s what I was going to say.

Ryan Isaac: Mm-hmm. Ideally, yeah. Which is a high bar. mean, like when we talk about the 30 TT, it’s like…

Matt Mulcock: It’s conservative and I, we’re trying to rethink, we’re rethinking this as well of what that should actually look like for people. but when I, when I see this and I read through this before we even went on and I read through it again, I was thinking we need to be better. We need to be better about being more nuanced around that 20 % savings rate because the point he’s making is really good. It’s like, I’m going to free up $12,000 of cashflow.

Ryan Isaac: We’re shooting high, yeah. Got a message about it, yeah. Mm-hmm.

Matt Mulcock: In six years, I’m guessing Andrew again, he’s still a young guy. And as long as I’m intentional about it, which Andrew clearly is. My savings rate is going to go way up. So don’t put pressure on yourself early on in your career. Like, I guess it’s like there’s a time and a place and there’s stages of your career to be considering this. And you don’t need to be 20 % savings rate when you come out of school. Like you can’t.

Ryan Isaac: Mm-hmm. Mm-hmm. Yes. Yep. Mm-hmm. Yep. And often you can’t and often that’s just an impossible unless you’re Isaac Ortho two locations. ⁓ Yeah. Yeah, that’s a really good point. It reminds me of how we talk about total term growth and you know, over a career, a dentist can average one point per year of total term growth to reach that ultimate ideal goal of a 30 total term by the time they retire. That’s an average though, because in the beginning, at the time you’re not even making progress, you’re just.

Matt Mulcock: course and I’ll be your assistant.

Ryan Isaac: stagnant or going backwards as you’re adding new debts for your practice investment. And over time it does catch up because yeah, your savings rates gonna blow through the roof as soon as that that payments done, which begs the question. And then that’s what I hear him asking is, well, isn’t this savings right now that okay, okay. So maybe let’s talk about the frame of reference for what this feels like. Like how

Matt Mulcock: Yeah, that’s what I was going to get to, yeah.

Ryan Isaac: If that’s a good place to start, how does debt repayment feel to you in terms of, this investing? Is this net worth building? Is this considered savings rate? Or how do we count the fact that I’m doing all this stuff as part of like, where do we capture that? Where are we seeing, where, you know, how do you want to talk about that? How do you think about that?

Matt Mulcock: Yeah. So we, so I guess taking a step back, we look at the middle row of our process or our operating system, you know, as elements. so I guess again, taking a step back, there’s only four places your money can go, right? You can save it. You can spend it. It goes towards debt or it goes towards taxes. I think the first part of this, the first layer of this question is, when we talk about your normal debt payments, so you’re like, you’ve got a practice loan, you’ve got a mortgage, you’ve got a student loan payment.

Ryan Isaac: Mm-hmm. it. Yeah. Mm hmm. Nope. Yeah.

Matt Mulcock: Those are required payments. Those are not savings. That’s just clean and easy. Like those are required payments. You can’t call your without selling the asset, you can’t just stop making payments. You can’t, they’ll foreclose. Like you can’t do that. So that to me is like the easy measuring stick of like, this, is this debt or is this savings? Now, one other part of this is if you’re making extra payments,

Ryan Isaac: Mm-hmm. Yeah. Mm-hmm. Yep. Yeah, that’s cool. Yeah. Yeah. ⁓

Matt Mulcock: that you’ve chosen to make payments to to accelerate that debt payoff, I would consider that savings. Because you can turn that off. Easy.

Ryan Isaac: Easy. Yeah, and that’s easy to track too. Yeah, it’s optional and you can. It’s easy to track because some some savings rate items are easy to track. The money goes into a 401K, a brokerage, automatic savings, extra debt payments you’re choosing to make. It’s a little more vague and ambiguous when you’re like, I don’t know. I think about. three to five grand piles up in the business account, then sometimes I’ll spend a chunk of that or sometimes I’ll eventually move it up a little harder to track. Yeah, so there’s just items that are easy to track and harder, but yeah, extra debt payments, easy. Totally. That’s a question.

Matt Mulcock: And I see where he’s coming from. do. I think a lot of dentists think this where there’s a difference in saying, is this savings because the debt pay down is increasing my net worth? It is like debt pay down increases your net worth, which actually can increase your total term. No question. But that doesn’t mean it’s savings. Like there’s a difference there. just like a business can finance a new project with using debt or use or selling equity.

Ryan Isaac: Yeah. Yep. Mm-hmm. Yeah. Mm-hmm.

Matt Mulcock: two very different things even if it leads to the same result. Accomplishing the same thing.

Ryan Isaac: Yeah. Accomplishing the same thing. Yeah, I think about This makes me reflect on one of the measuring sticks that we publish for our clients every quarter, which is our quarterly net worth progress report. It’s basically like back to school night for your net worth, like little report card. It is? See, like we’re tuned in here. The more ghosts you drink, the more like vibes your brain sends off into the conference room.

Matt Mulcock: Yeah, but hey, back to school night today, dude. I’m going, I’m going with my daughter. Yeah, we are. I’m gonna be ready. Yep.

Ryan Isaac: Yeah, every quarter we’re sending out a report card of your net worth to basically show quarter over quarter, quarter, how it’s changing and why more importantly. So is it changing? it changing because of the raw amount of dollars that you’re saving? Is it changing because of growth in your investment accounts, valuations of real estate or businesses or debt reduction? Might be another one. ⁓ Those are the main ways that your net worth grows. And so when we report on these, that’s what this makes me think of too is net worth. And tracking net worth and the progress of net worth is where we capture all of the things that are coming into this big pile, whether it’s debt reduction or savings or growth on your investments or assets. That’s where it’s captured. So even if it’s a little bit harder to measure a debt payment as an exact savings rate, unless of course it’s extra debt payments, it’s captured in your net worth growth if you’re tracking it, if you have a way to view it. But that’s how I think about it. I don’t know if that resonates with you.

Matt Mulcock: I do too. think as you say that I’m sitting here thinking ⁓ as he as again thinking about his question, there’s two parts of this, right? There’s the inputs that he’s talking about. So the inputs I think of again that cashflow row being cash can be inputted into debt saving spending or taxes. What is the output? The output is the bottom row. That’s the assets. So again, debt pay down can have a similar result as savings, which is like increasing business equity.

Ryan Isaac: Mm-hmm. Mm-hmm.

Matt Mulcock: Let’s say increasing housing equity, increasing overall net worth, but that doesn’t mean it would be placed in the same input section of your cashflow. So, so to his, the core of his question is like, how do you think of debt versus savings? Debt payments are not savings very different unless it’s extra debt payments, right? That you’re using extra cashflow with. I think the other part of this that I think is maybe worth talking about is, which is why I loved he did this. He separated out home mortgage from practice loan.

Ryan Isaac: Mm-hmm. Mm-hmm. Yep. two different types of assets. Uh-huh. Yeah, three different types of assets. Yeah.

Matt Mulcock: And then student loan. Yeah. Yeah. And I loved it. He said, and again, you know, he’s, can tell he’s been listening to us for a long time. so number one is, we talked about home uses the term, ⁓ usable net worth, which I love that because we would not consider home mortgage or sorry, your home. When we say usable net worth, saying you wouldn’t use that in retirement. You need a place to live. You’re not going to sell your home. Exactly. Exactly. Versus how that is the practice loan versus the student loan.

Ryan Isaac: Yeah, uh-huh. Yeah, not the first place you’re gonna go get money when you need life. Yeah, I was going to say how many older clients are going to face a situation where we got to tap into home equity though on their balance sheet. I mean, I’m it’s very, very possible. So, but no wouldn’t bank on it. Wouldn’t consider it usable. And yeah, yeah, that’s a really good point. Great distinction.

Matt Mulcock: Yeah, I think some. Yeah. I just would never be banking on that. The anything else you’d say about the differences of like the loans or anything else we’ve covered up

Ryan Isaac: No, I think that’s good. He made the distinction the best of the assets. And then what’s the difference between categorizing something as a savings item versus a net worth grower? So that’s great. Yeah, I think it’s really clear.

Matt Mulcock: He really did. Yep. The last thing that I thought of when I would go through this question is he mentions this at the end around, again, such a thoughtful question when he talks about, I’m not really spending this money on fun stuff or like lifestyle spending. So how does this impact like the spending bucket of that cashflow element row? and I was thinking like, Hey,

Ryan Isaac: Yes. Yeah.

Matt Mulcock: Andrew’s going to be successful. You can just tell because he’s thinking about this already, but how many dentists are not meaning they’re not even thinking about savings now or any of this stuff. Cause they’re like, it’s fine. These loans will be paid off and like I’ll save them versus again, being thoughtful and intentional and saying like, okay, these loans are being paid off. I got to be thinking about how to allocate these funds in the future. Just such an, again, I thought such an insightful point he made.

Ryan Isaac: Mm-hmm. Yeah. Uh-huh. Okay. Yeah. The thing that stands out to me is that Andrew’s very organized, which if he’s with Taylor, of course he’s very organized because that’s really what’s happening with someone who’s not Andrew is Andrew’s still dealing with all this stuff, practice ownership and P and L’s and marketing and team and leadership and stuff breaking and you know, whatever. But Andrew’s organized to the point where he can see what’s coming and he can make plans and he can formulate strategy around it.

Matt Mulcock: Horse ears, yep.

Ryan Isaac: What happens with people who are not Andrew is just a lack of organization, the busyness and the overwhelm of so much stuff going on as a practice owner and just everyday life catches up to the point where it’s not being tracked. It’s not being thought about. And it is easy to just be so overwhelmed with everything, just be like, I don’t know, one day the stuff will be paid off and then I’ll save enough money. But Andrew’s bringing up a point which will happen, which is like during this time when there’s a basically almost 150 grand a year of payments going out the door. He’s sacrificing something either a savings rate or his spending his ability to have like a little bit better lifestyle. He will spend more money when that when those loans are done. And I think he should. I don’t know if that’s a hot. Okay. I think he should. And the beauty of being in the position he’s in where he’s clearly very organized and thinking about this ahead of time is that he will have the ability with his advisor

Matt Mulcock: I was just gonna say that. No, he should. Yep.

Ryan Isaac: And maybe working with the CPA team and everything just to make sure taxes are taken care of and thought about the right way. He’ll have the opportunity to do both to save a chunk of this money so that he is able to have work optional when he wants to and also increase his lifestyle. That’s the benefit of waiting and being patient and staying organized, getting organized early in your career, having accountability and a plan earlier in your career versus waiting till later. Cause a lot of people Like, I don’t know, I just have payments and you know, and then they wait until everything like hits and then they try to get organized and make a plan. So he’s starting early. And the benefit of that is he’ll get to that point when the money’s freed up and not only can he spend it, but he’ll be able to still save enough of that too. And enough will be quantifiable. All this will be quantifiable. It won’t be a feeling, you know, it’s going to be like, yeah, 12 grand a month is left over. Guess what? $5,700 a month right now. Free and clear spending if you want it. If you if you so choose. because we can quantify it, we’ve been tracking it, we can overlay your past into the future and go, this is where it’s gonna keep heading if you keep going the same direction. And that’s where data organization and decision-making with an account-a-buddy comes in handy versus someone else who is not in Andrew’s position, I think.

Matt Mulcock: Yeah. I love that you, you brought that up, Brian, cause I feel like the counterintuitive position here is that organization and being thoughtful and intentional about all this feels, I think restrictive when actually it’s actually what it means is freedom. It’s freedom. It’s relief. It’s P it’s peace of mind. Like the, think honestly, it’s, I love that you said too, that, he should, he should spend some of this money. I think maybe from what I’ve gathered from his true, like very thoughtful, well organized question.

Ryan Isaac: Yes. Exactly.

Matt Mulcock: this speaks to who he is, I would actually dare say there’s a risk, a risk of being that Andrew might have of being over optimized. Like it’s like, I love that he’s thinking about this, but it’s like, man, like when you, when these payments free up, you’ve earned it and be thoughtful, but also like, don’t just think that 12 grand a month just freed up. So we need to go put all that away somewhere else. It’s like, about you enjoy it? Have a little like,

Ryan Isaac: Mm-hmm. Yeah. Yeah. You don’t need to, yeah. Yeah.

Matt Mulcock: He mentioned lifestyle creep. The key there is the unintentional, meaningless, mindless spending of money. Intentional increases in lifestyle spending is completely different when built within the confines of a plan.

Ryan Isaac: Yeah, it’s completely different. And that’s it. That’s it. Yeah, it’s just organization and intention and data. And then always making these big decisions. Because the thing I was thinking along the way during like his story is that clearly very organized, making progress, very successful. It doesn’t take much in a mistake to undo all of those years of progress. So organization and accountability and then avoiding big mistakes along the way. ⁓ Yeah, I totally agree with that. Go spend some money. Like, what does he want? Now I’m curious, like, what would you do, Andrew? What would you do? Are you like a car person, a vacation person? You want a different house? You guys bursting of the seams? You know, what’s the thing? What’s your…

Matt Mulcock: Yeah. Yeah, it would be interesting to talk to him. again, he’s having all these conversations with Taylor. ⁓ it would be interesting to know and how many dentists out there are, are thinking of it like this, of like planning ahead, being organized of like how much cashflow is going to open up. ⁓ great question, Andrew.

Ryan Isaac: Yep. Mm hmm. Yeah. Yep. Yeah. But see, him and Taylor will be doing this leading up to they’ll be already projecting where that 144 can go and how much will go to spending, how much will go to investing. And this stuff just starts compounding so much. Again, it’s the most boring part of like a good financial life is just being really organized earlier in the process, because then

Matt Mulcock: Yeah.

Ryan Isaac: When you hit, it’s almost like that, it’s just like a critical point where there’s enough momentum from the asset of your practice, from the money in your accounts and the steady savings rate you’re already used to. It’s just gonna keep growing to a point that, you know, your kids’ kids will have money if you so choose.

Matt Mulcock: Yeah, it’s so true. And I remind dentists all the time, like it takes longer than you probably think, especially nowadays, because we want things so quickly. ⁓ we want progress so, so fast. But if you really think about it, always tell them, it’s like, you got to give it a decade, which I know that sucks to hear, but it’s like, you got to give this a decade to know what you have. And in most cases, if you do, and you’re patient, those debts start to get paid off. Cashflow opens up drastically.

Ryan Isaac: Yeah, yeah, expensive.

Matt Mulcock: ⁓ like you said, it’s, it’s pretty basic, simple, but not easy of be organized, have some intention. I’d love that you said avoid the big mistakes. Like that’s, it doesn’t take many. Yeah. That’s just a principle of life. It’s like avoid the big mistakes.

Ryan Isaac: Mm-hmm. It doesn’t take many to wipe out all that progress, man. Yeah. Yeah. Yeah, that’s true. It’s funny what you just said to a whole other subject, but it’s the the relativity of having to be patient. give it a decade seems insane these days. But I was just thinking, like, I think most people’s grandparents took the like a Hawaiian vacation in their like early 60s for the first time. It was like the golden vacation when retirements approaching.

Matt Mulcock: Yeah.

Ryan Isaac: And they just went camping all the other years before that.

Matt Mulcock: Yeah. Now, if you’re not traveling internationally three times a year, it’s like, you even living?

Ryan Isaac: It’s yeah, our expectations are. They’re just so so vastly different than generations before us. We have different opportunities, but also I’m not so sure where. You know, I think we’re blowing some money. We’re spending our expectations are high man.

Matt Mulcock: Yeah. Yes. I mean, we just speaking of speaking of vacations and speaking of Taylor, as we’ve mentioned him a few times on this show, uh, we did a vacation episode a while back and he wrote a great article on, you can find it on the website. but he there’s data to back this up. spend eight times the amount of money on vacations alone than we did in 1950. Eight times. Yeah. Yeah. Eight times.

Ryan Isaac: Yeah. yeah. I did not know that stat. That is not surprising whatsoever. I hear my teenage kids these days in summer roles, they’re like, we need to go to Japan. What are you talking about? Like, what do you mean? What do you mean? Like parents used to save up for a decade to go to Disney in California, you know? Kids are like, Turkey. Yeah, not you. Well, Matt, Matt, hey.

Matt Mulcock: We do? What do mean? Yeah. Yep, not me, but yeah, yeah. I also love the word, I’m, hey.

Ryan Isaac: for on the record for being a kind of an anti Disney person, you are now about to embark literally on a Disney cruise.

Matt Mulcock: Literally embark on Disney Cruise about a month out. They got me. They totally, I know I’m going to be in. And I’ve already given her a shout out, but Kelsey and Mike, you know who you are. You are my inspiration. That my clients, I was talking about Disney and taking my kids finally. I was like, I’m going to do this. I need to do this. And I was on a call with them and they’re like, no, you should try. You should check out the cruises.

Ryan Isaac: It got you dude. You’re gonna be in, I promise you. When you see the elation and joy on their faces. Okay, they did it.

Matt Mulcock: And I have two little kids and I’m like, Oh, that could be cool. So I look it up the next day I booked it. So I’m going, it’s, it’s an October. It’s a Halloween theme cruise. Be fun. Am I a Disney guy now?

Ryan Isaac: Yeah, see, they got you. Yeah, there’s nothing better. Yeah, love that. Kay, you might be, we’ll check in, in our November episode. We’ll see if you’re Disney guy. ⁓ Okay, well, first of all, thank you for submitting the questions. What was the first name? It was like an Instagram handle. We don’t know who that is, but you’re on demand right now.

Matt Mulcock: Maybe. We’ll do it. Thank you. Dentists on demand. Yep. Yeah. And then Andrew.

Ryan Isaac: And Andrew, thank you, Andrew and Dentist On Demand. Again, Matt, where can they submit questions? I mean, besides like DMs and emails officially.

Matt Mulcock: Yeah, the official, ⁓ way to do it, if it’s going to go directly to our team to get to us, it would be dentist advisors.com slash podcast. And then you can click on the Semitic podcast or submitted question.

Ryan Isaac: Yeah, we love it. We love that. Anything else, Matt? Anything else? People want to talk to us. You have questions?

Matt Mulcock: Yeah, I would just, well, I’d say if you, if this is helpful, if you’re, first of all, if you’re still here, thank you for still listening. You’re one of the cool ones and we appreciate it. ⁓ if, if this is helpful, if this is valuable in any way, we always, again, we like to have fun if you can’t tell, but hopefully we add some value to your life. And if there’s a dentist out there that you’re like, they need to hear this. This could be helpful for them. We asked, please share the episode. The everything we do is education.

Ryan Isaac: Yeah. Yeah.

Matt Mulcock: And it’s, trying to add value to the dental community. So we’d love if you share the episode. and then if you want to talk to us, ⁓ Dennisadvisors.com book a book, free consultation.

Ryan Isaac: Yep, book a free consultation. We’d love to hear your story and talk to you and help try to point you in the right direction. So thanks, Matt. Appreciate it. Thanks, everyone, for tuning in. We’ll catch you all here. Come high-five me in the conference room. Yes, corporate. Okay. All right, thanks, everybody. See you next time. Bye-bye.

Matt Mulcock: Thank you, sir. I’m gonna come give you a high five.

Keywords: dentistry, financial planning, practice management, dental loans, team dynamics, listener engagement, seller financing, debt management, lifestyle spending, financial freedom

Debt & Financing, Practice Value