Is Your Approach to Debt Like a Super Bowl QB Smoking at Halftime? – Episode 240

You’re a dentist and here’s why that makes debt different for you.

On this episode of the Dentist Money™ Show Ryan and his webinar partner, Matt Mulcock, discuss the fundamentals of debt. As a dentist, your mindset about debt has to be different. The high income you can achieve requires debt—student loans, equipment, and the possibility of purchasing a practice or practice location. 

That means debt is a greater reality for you. But are your attitudes about debt still old-school? Or, do you know how to use debt as one of your greatest tools?

Show notes:

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Podcast Transcript

Ryan Isaac:
Hey, everybody. Thanks for joining us on another episode of the Dentist Money Show. Today, Matt and I tackle the question, is being debt-free the same as being financially free? Can you have one without the other? We’re going to talk about it and find out today on the show. Thanks for joining us. Thanks for tuning in. Enjoy the show.

Announcer:
Consult an adviser or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show, where we help dentists make smart financial decisions. I’m your host today, Ryan Isaac. You may call me sir, if that’s what you prefer.

Matt Mulcock:
I do.

Ryan Isaac:
And I’m joined kind of in studio by extraordinaire CFP financial advisor to dentists everywhere, Matt “The Mountain” Mulcock. Welcome to the show, Matt. What’s happening?

Matt Mulcock:
What’s up, Ryan? I feel like I need to hire you as my hype man, because every time… by the way, this is, what, twice in the last month we’ve been together now?

Ryan Isaac:
Yeah.

Matt Mulcock:
This feels good.

Ryan Isaac:
We’re making it.

Matt Mulcock:
I’m going to hire you as my hype man, because you make me feel good.

Ryan Isaac:
I would like that. I think I would make a good wing and hype man. Thanks for joining us today. The man himself, Reese Harper, is taking a much… he’s gone this week, so we thought we would play around in the studio on the equipment and see what happens.

Matt Mulcock:
Yeah, just jumped in here and started recording. We’re like, “Yeah, ask for forgiveness later.” He’s going to be like, “You recorded something without me? What?”

Ryan Isaac:
Well, I’m going to start today off with a story. If anyone is listening to this in the future, I think we’re still in the month of July 2020.

Matt Mulcock:
Who knows during the COVID quarantine?

Ryan Isaac:
Don’t even know. We’re in the middle of all the COVID weirdness, and there’s just still so many unknowns. One of the big unknowns I’ve been talking to some people about lately, and this will bum me out… it’s definitely not a high priority considering all the high priorities we have right now in the country… but sports in the fall. Have you thought about this, Matt? Are you a sports guy?

Matt Mulcock:
Have I thought about it? I’ve thought about it a lot. It’s like top three in my thoughts before I go to bed.

Ryan Isaac:
I know. What will you be the most bummed out about if it doesn’t come back? Which sport?

Matt Mulcock:
My go-to answer for years and years, and it probably still is now, would be the NFL.

Ryan Isaac:
Oh okay, NFL guy.

Matt Mulcock:
I am in the minority, I know, when it comes to football fans. I think most football fans will tell you college football is their go-to.

Ryan Isaac:
Yes.

Matt Mulcock:
I’m an NFL guy. I mean, I still love college football, don’t get me wrong.

Ryan Isaac:
That’s respectable.

Matt Mulcock:
But I prefer NFL. NBA playoffs right now, if that doesn’t come back, that will really make me sad.

Ryan Isaac:
That will hurt.

Matt Mulcock:
Yeah.

Ryan Isaac:
I think, for me, it would be college football, but the NFL, I’m glad you said that. See, we’re messing around in the studio, but it’s already going really well, because that was a perfect segue.

Matt Mulcock:
Yeah, there you go.

Ryan Isaac:
That was a perfect segue.

Matt Mulcock:
That was not planned. We haven’t even talked about this.

Ryan Isaac:
For our podcast, I have a little… it’s like the Notes app on my iPhone, and anytime I see a weird story, and I’ve been doing this for three or four years now, I just put a link or a screenshot of a weird story, and I’ve got hundreds.

Matt Mulcock:
I need to get access to that. I want to get access to that.

Ryan Isaac:
It might be weird. I’ve got hundreds of these weird stories, but there’s this picture I took a screenshot of a couple years ago when I first saw it. It’s a pretty famous picture, and I’ve been wanting to use it in a podcast, kind of like the story last week about dolphins getting high on puffer fish. I’ve been holding that one; it’s one of my favorites. It feels really appropriate to use right now, and that was a perfect segue.

Ryan Isaac:
So, there is this famous picture, and we’ll have to post it somewhere when we release this, but there’s this famous picture of Kansas City Chiefs quarterback Len Dawson… and I’m not a stats, history, sports guy, so I’m just reading these things as I read them from the internet, as I learned about it… are you familiar with Len Dawson? Are you a Len Dawson guy?

Matt Mulcock:
I can’t say I am, no.

Ryan Isaac:
So this is a black and white photo. It’s Chiefs quarterback Len Dawson.

Matt Mulcock:
Oh, well, that’s why. Yeah, that’s why. I mean, black and white.

Ryan Isaac:
It’s old.

Matt Mulcock:
Yeah.

Ryan Isaac:
It’s old. It is from Super Bowl I… which, guess the year? Any guesses on the year?

Matt Mulcock:
Super Bowl I, they played the Packers.

Ryan Isaac:
What? Yeah.

Matt Mulcock:
I believe, right?

Ryan Isaac:
Yeah, uh-huh.

Matt Mulcock:
Oh man, the year. I’m going to go ahead and say 1960-something. I don’t know.

Ryan Isaac:
Boom. ’67.

Matt Mulcock:
Okay.

Ryan Isaac:
Yeah. 1967. They played the Packers. Do you remember who won the game, or do you know who won the game?

Matt Mulcock:
Packers.

Ryan Isaac:
You wouldn’t remember, yeah.

Matt Mulcock:
Packers. Packers.

Ryan Isaac:
Yeah, Packers won.

Matt Mulcock:
Packers. Bart Starr was the quarterback of…

Ryan Isaac:
I do not know that. I could click to the Wikipedia page.

Matt Mulcock:
Look it up.

Ryan Isaac:
It’s up. It’s on another tab right now. So, this picture, it’s halftime, it’s Chiefs quarterback Len Dawson. He’s sitting on a metal folding chair, okay, so facilities must not have been that great.

Matt Mulcock:
Not high quality, yeah.

Ryan Isaac:
Sitting on a metal folding chair… no. He’s helmet off, he’s got his legs there and he’s got one hand resting on a knee. Down between his feet on the ground, there is a glass bottle of Fresca on the ground between his feet, which I’m a Fresca fan.

Matt Mulcock:
Okay. All right. I’m a big Fresca guy, yeah.

Ryan Isaac:
Interesting tidbit about Fresca is when you drink a lot of LaCroix, and then you bump up to a Fresca, your taste buds, they explode.

Matt Mulcock:
Explode.

Ryan Isaac:
They can’t even believe what’s going on. So, Fresca bottle on the ground; he’s got these old shoes… it’s an old picture, but the striking part about this is that one elbow is resting on a knee; the other hand, though, is holding a cigarette to his mouth. So, this is halftime of the first Super Bowl, and this is a NFL quarterback… actually, to be, I guess, technically correct, they weren’t NFL. They were AFL.

Matt Mulcock:
Yeah, AFL at the time, yeah.

Ryan Isaac:
But anyway, this is a professional athlete, halftime of the first Super Bowl ever, smoking a cigarette. I remember seeing this picture and just thinking, “Man, it’s funny how some things just come to be… that was fine.”

Matt Mulcock:
No one would have thought about it, then, I’m sure.

Ryan Isaac:
No one thought anything about it, to see a professional athlete… now, if you cut to a locker room today and you saw Tom Brady smoking a cigarette, your mind would be blown.

Matt Mulcock:
Oh, my gosh, yes.

Ryan Isaac:
It would be the most out-of-place… it would be way too out of place. You wouldn’t even know how to register it, right? So, anyway, I wanted to bring this picture into the frame… and we’ll have to post this somewhere. We’ll put it in our Facebook group or the show notes or something.

Matt Mulcock:
I want to see it. I don’t know the photo you’re talking about.

Ryan Isaac:
It’s so iconic, man. It’s so great.

Ryan Isaac:
So, I thought about this. Today, we’re going to talk about debt, and as I thought about debt and some of the points that we’re going to hit about it, I thought about the way we think about debt. If you ask the average person… a lot of dentists, too; if any of our listeners, anyone listening right now, if you just said, “Tell me something about debt, a financial philosophy about debt,” what do you think we would hear? What do you think someone would say, Matt, if you just asked someone that?

Matt Mulcock:
I mean, I think the dental population would potentially have a little bit of a different view than just Joe Schmoe on the street, just because of the fact that it’s just so pervasive. Debt is just like… you have to have debt. But I still think… and we ask this question a lot of times when we’re bringing clients onboard or we’re going through debt rate on a yearly basis… we’re talking about how they view debt, and I would say, more times than not, it’s a negative view. It’s a bad thing more times than not.

Ryan Isaac:
Yeah, and if you ask someone the way to financial independence, what do you think, majority or minority of people would answer that paying off debt is the way to financial independence?

Matt Mulcock:
Oh, majority, for sure.

Ryan Isaac:
Majority? Yeah, I would agree with that.

Matt Mulcock:
I feel like step one, people think is like, “I’m not even financially independent until I’m debt-free.”

Ryan Isaac:
Totally.

Matt Mulcock:
It’s not possible.

Ryan Isaac:
That’s what I think, too. I think that’s a really common… it’s just a long-held belief. There’s a lot of history behind that. I mean, it goes back thousands of years, and I think that’s true. If you ask the average, I think, even dentists, the path to financial independence, I think that would be top piece of advice.

Ryan Isaac:
So, how does that relate to this picture of a quarterback smoking a cigarette at the halftime portion of the Super Bowl?

Matt Mulcock:
I know you’re going to connect it, because you do this brilliantly.

Ryan Isaac:
I hope I’m going to connect it. Look, we’re still messing around in the studio. No one knows we’re here right now. We’re just experimenting.

Ryan Isaac:
So, the thing I thought about when I was wanting to talk about debt this way, and maybe some of these long-standing misconceptions about debt and their place in financial freedom, is… just, sometimes we do things as a society in all kinds of facets that we just kind of do for a long time. You could watch a professional athlete smoke a cigarette at halftime of the Super Bowl, and it was just a really common thing.

Matt Mulcock:
It was the norm.

Ryan Isaac:
It was so the norm. You didn’t associate that with a health consequence, right? It took a long time later, and the same thing can be told or said about debt, where the norm is, if you want to be financially independent, then you can’t have debt. Debt is not a stepping stone to financial independence; it’s a block.

Matt Mulcock:
It’s an obstacle in my way I’ve got to get rid of first.

Ryan Isaac:
Yeah, it’s a huge obstacle. And so, kind of in that light, this pervasive idea that we’ve held for so long, it definitely doesn’t apply the same way we’ve always talked about it.

Ryan Isaac:
So, I guess, point number one would be that debt is a means to an end, but debt is not the end, and I think that’s the confusion. If you ask people that question, what’s financial independence, I think a lot of people would just say, “I’m debt-free. I don’t owe money to anybody. If I lost my job, no one could come take my stuff.”

Matt Mulcock:
That’s true. “I’m living on the street, but they’re not going to come demand money from me.”

Ryan Isaac:
“I’m going to need money for food.” Yeah, so I think this concept of debt is a means to and end, but is not the end, and also the concept that you do not have to be debt-free to be financially free. I think that’s a weird thing. I think it’s kind of head-scratching. If you just told someone that-

Matt Mulcock:
Counter-intuitive, yeah.

Ryan Isaac:
Very. “Hey, what’s a piece of financial advice philosophy that you would share with someone?” “Well, you don’t have to be debt-free to be financially free.” I think people would be like, “What are you talking about?”

Matt Mulcock:
“Huh?” Yeah, yeah.

Ryan Isaac:
So, we’re going to jump into that. We’ll take a quick break, and then when we come back, we’re going to talk about why debt for a dentist is different. Tongue twister. We’ll be right back.

Ryan Isaac:
As you’ve listened to our podcast, maybe there’s a question about your finances you’ve wanted to ask. It’s easy to get an answer. All you do is just pick up that phone, give us a call at 833-DDS-PLAN to set up a consultation, or if you don’t want to call us, you can just go to the website at DentistAdvisors.com, click the “Book Free Consultation” button, and set it up. It’s free. Do it today.

Ryan Isaac:
So, I’ll give it to you, Matt. Top of your head, what are some reasons that make the debt situation for a dentist different than, say… let’s say someone who earns the same income, or even maybe has a similar net worth, but that’s a sales executive or a very successful high-earning employee of a business? What makes a dentist’s debt situation different, in your mind?

Matt Mulcock:
Yeah, I mean, I think the type of debt, specifically, and I think just the mindset of… not every time, but can I say nine out of ten times?

Ryan Isaac:
Yes, you can, yeah.

Matt Mulcock:
For a dentist to get to that income requires the debt, where that’s not the case for a highly-paid executive of a sales company, or whatever it may be. So, I think the mindset is just different for a dentist, where, again, it’s kind of like your pay-to-play, your entry into that income level is the debt.

Ryan Isaac:
I was going to start with kind of a chronological life of a dentist in debt, and that was the first place to start. I mean, that’s a unique position to start your career, after 10 years of school, no less, of just kind of grinding and scraping and waiting for the other side to finally happen, but to accumulate so much debt… I was in a conversation with… man, I can’t remember who this was; it was a client this week. He’s late 40s, so he came out of school with about 150 grand, and he’s an orthodontist.

Matt Mulcock:
That’s not bad, to be honest.

Ryan Isaac:
No, and it’s funny, because we were talking about this. I remember when Reese and I started the business, and it was ’08, ’09, and we started to talking to our first dentists as clients. I remember, myself, when I was collecting data for a balance sheet, I remember seeing student loans at 190 grand and thinking, “What on earth is happening?”

Matt Mulcock:
Blew your mind, yeah.

Ryan Isaac:
“Are you serious? How did this happen?,” as I was learning about the dental industry and the path of a dentist.

Matt Mulcock:
It’s like, “What are you doing in school? Are you buying luxury cars?”

Ryan Isaac:
I know. You’re so irresponsible! Now, in 2020, if you talk to a new graduate that came out of school with 600 grand, do you even blink?

Matt Mulcock:
No.

Ryan Isaac:
I mean, does it even phase you now?

Matt Mulcock:
Well, it’s funny. You just said $150,000 in debt with your client, and my first thought was, “Dang, that’s really good.”

Ryan Isaac:
Way good. Easy.

Matt Mulcock:
I stopped on the other side.

Ryan Isaac:
Yeah, how nice would that be.

Ryan Isaac:
So, I think that’s just the first… you said it, it was the first obstacle. It’s a really unique situation to come out of school with that much debt, and I don’t know the future of dental school and costs, but I don’t think it’s going to get cheaper as time goes on.

Matt Mulcock:
Can’t imagine, no. No deflation in that department.

Ryan Isaac:
So, it goes from these high student loans that’s just a really unique situation, because it puts pressure on cash flow and just the ability to acquire other debt, and maybe it’s as great as that pressure, but the mental/emotional pressure.

Matt Mulcock:
Psychological, yeah, for sure.

Ryan Isaac:
I mean, we hear a lot, too, right? A lot of people have a tendency to want get rid of debt purely for the emotional part of it. It’s not even mathematical, right?

Matt Mulcock:
That’s usually number one reason, right?

Ryan Isaac:
Yeah.

Matt Mulcock:
Especially the way rates right now. I mean, we don’t need to get into the details right now, but the math side of debt currently with rates where they’re at, it’s going to be hard to make a case that the math is going to work in your favor to be aggressive with debt, but the psychological aspect of it, you can’t ever really argue away.

Ryan Isaac:
Totally.

Matt Mulcock:
That’s just real life. You’re not a spreadsheet.

Ryan Isaac:
Yeah, which is a really important point. Yeah, so it starts there. The percentage of dentists that end up owning businesses in the dental field, I think that will probably change over time as there’s more associate opportunities, where associate jobs just fit the lifestyle people are looking for, but the ratio of dentists that come out of school that own business, it’s pretty high. The path to practice ownership is also debt.

Matt Mulcock:
Absolutely.

Ryan Isaac:
I mean, that’s how you acquire practice. That’s how you start it up. That’s how you get equipment, build out your space, even if you get a cheap little lease.

Ryan Isaac:
It starts with student loan debt that’s really high. You don’t even open doors. You can’t even work your own business until you’ve layered on more debt. I think it’s unique… another one came to mind for me is, dentists are in a unique position to be commercial real estate owners. That’s not a common thing. Outside of dentistry, if you think about your friends and neighbors are not real estate investors, how many people… it’s not common for people to own large commercial buildings.

Matt Mulcock:
Very rare, yeah.

Ryan Isaac:
Any friends or neighbors you can think of that have even their own businesses, or physicians that work for hospital systems… I mean, it would be weird for someone to be like, “Yeah, I have a two million dollar building,” but for a dentist to have a two million dollar building is not even a weird thing. It’s totally normal. So, the opportunity and the ratio of dentists that get involved in commercial real estate, it drives up the debt situation a lot, and I think what’s unique about all this, too, is… I’d love to hear your opinion on this, but… well, I’ll just ask it in a question. Do you feel like there’s a point in a dental practice or dentist’s career where debt is finally paid off in the business and you never need to acquire debt again?

Ryan Isaac:
Let’s say you get paid off in your 40s. Can you just… I mean, how do you think about it? Can you just coast for the next 20 years in your practice and never have more debt again? How do you think about that?

Matt Mulcock:
I mean, I guess it’s possible.

Ryan Isaac:
It’s an option.

Matt Mulcock:
It’s an option. I think the way I’m looking at it and the way you’re characterizing it perfectly is the idea that debt is a tool, it’s leverage more so for a dentist than, I think, any other profession. So, I guess when I think about that question of, okay, you’re 40, 45, your debt is gone in the business… again, would you ever get to a place where you never have debt again? Yeah, I think, again, it’s possible, but I guess that just means you’re most likely never thinking about expanding again or updating equipment again.

Ryan Isaac:
Big growth.

Matt Mulcock:
Yeah, growing your business, because if that’s the case… which I’m not saying there’s necessarily anything wrong with that. You might peak and get to a place where you want to just sustain.

Ryan Isaac:
You’re set.

Matt Mulcock:
You’re set, where you have lifestyle practice-type thing, but I think it would be pretty rare that you wouldn’t have some opportunity to at least explore adding more debt throughout your whole career in the business.

Ryan Isaac:
Yeah, I think that’s true. I think sometimes there’s this idea that, at some point, you can pay off all the debt on a dental practice, and then just cash flow anything you need after that, which is probably true to an extent, but I mean, if you’re 50 and your practice needs a half a million dollar upgrade and move, are you really going to go pull 500 grand from your accounts that you’ve been saving for the past 20 years? I wouldn’t do that.

Matt Mulcock:
I wouldn’t advise that.

Ryan Isaac:
I’d go ask a bank to give it to me next weekend at four percent. Just call it good. So, I don’t know, man. I mean, it’s just anecdotal experience, but I tend to see successful practices who keep their value growing up until the end… they keep investing and it costs more debt; probably not the size that it did in the beginning, but, anyway…

Ryan Isaac:
One last thing, and then you can… I mean, chime in if you have any other ideas on why dentists are so different with their debt situation… but one last thing I thought about was, when people have higher incomes, we spend more money. It’s kind of just the way we do in America.

Matt Mulcock:
Humans. Humans.

Ryan Isaac:
It’s just the humans. We earn more and we spend more, and a lot of that spending isn’t just pure spending, like cash out, it’s more like higher income, more debt, higher payments. Again, anecdotal… I don’t even have any studies to back this up; let me know if you do, but it’s not uncommon.

Matt Mulcock:
Just pull them out of my pocket here, my studies that I carry with me.

Ryan Isaac:
I know you’ve got them. You carry them in there on three by five cards. It’s not even on your phone. You’re like an old-school hand writer.

Matt Mulcock:
Yeah, yeah, my index card in my pocket here.

Ryan Isaac:
You’re an index card guy.

Matt Mulcock:
Yeah.

Ryan Isaac:
So, it’s a pretty normal pattern for a dentist to kind of progress through their career, keep earning higher amounts of money, and there’s always the dream house upgrade at some point, or it’s really common to have the dream building upgrade.

Ryan Isaac:
I guess what I’m saying is, the higher your income goes, the higher your tolerance for spending and monthly payments goes, and people just acquire more debt throughout their lives. It makes a dentist really unique because dentists just have such high incomes, and it translates to spending and debt loads.

Matt Mulcock:
Yeah, well, that starting point, like you were saying… if you’re comparing, again, a Joe Schmoe typical, like let’s say-

Ryan Isaac:
Schmoe.

Matt Mulcock:
We keep saying sales guy, I don’t know why, but a sales executive.

Ryan Isaac:
A high-paid corporate executive. I’m trying to keep it classy.

Matt Mulcock:
A high-paid corporate guy that wears a suit and a pocket protector.

Ryan Isaac:
Corporate guy… and a pocket protector?

Matt Mulcock:
I guess those don’t really go together.

Ryan Isaac:
He’s a nerdy guy. That’s all right.

Matt Mulcock:
I’m not thinking pocket protector. I’m more meaning…

Ryan Isaac:
A pocket square.

Matt Mulcock:
Pocket square, yeah. I’m thinking of my brother-in-law.

Ryan Isaac:
Classy little silky pocket square, okay.

Matt Mulcock:
Yeah, my brother-in-law used to work at a big corporate attorney. I’m thinking about him; real fancy boy, right?

Ryan Isaac:
Okay. Fancy guy, okay, all right.

Matt Mulcock:
Again, if you’re comparing those two professions, again, the starting point for a dentist on their balance sheet of the debt load they have to get to that point is just so different, whereas… let’s say, again, that sales executive, their income has slowly been rising and rising, but their debt load, necessarily, may not have been; so their incomes may be the same, but the psychological impact, when you look at the balance sheet… the starting point for a dentist when it comes to debt, at those points of your career, is vastly different.

Ryan Isaac:
So I’ll ask this question, then we’ll take a break and we’ll move on, hit a few points on what someone can do about this, and maybe shift their mindset and their strategy around debt throughout their career, but the question would be: why does it matter to acknowledge that it’s different for a dentist? Why is it important to acknowledge that a dentist is very different than a physician, than a corporate fancy sales guy, or an attorney?

Matt Mulcock:
Fancy boy.

Ryan Isaac:
You said fancy… the “Oh, you fancy, huh?” Drake song came into my head. Oh, you fancy, huh?

Ryan Isaac:
So, to me, the reason… this is a little shameless here, but to me, the reason why this is so important to acknowledge that… this is one of the reasons dentists are so different is, when you go get advice for strategy in your life, whether it’s legal or accounting or business or financial planning or investing, it’s going to matter that someone understands that your unique situation brings different complexities than someone else, even if it’s same income, same net worth… just that unique debt situation and recurring debt situations for your whole career is very different than someone else, even in your same tax bracket.

Matt Mulcock:
Absolutely.

Ryan Isaac:
So, the plug, very shameless, totally no dignity in this, but… just kidding, there totally is.

Matt Mulcock:
Yeah, but we’re just messing around, so…

Ryan Isaac:
Yeah. This is why it matters to hire a dental-specific advisor in your life, if you want someone who understands that kind of uniqueness. That’s why I think it matters to acknowledge this, that it’s not all the same, and it does matter to treat it differently. So, anything come to mind for you on why it matters to acknowledge that it’s different?

Matt Mulcock:
No, I mean, I think that’s spot-on, and just coming back again… there’s that kind of technical aspect of the role that it plays in your life. Again, I think… again, shameless plug if you want to call it… but again, working with someone that specifically knows your situation.

Ryan Isaac:
Let’s do it.

Matt Mulcock:
Also understands, to a certain degree, the psychological impact, or has seen so many different people all over the country in very similar situations, where we can start to have a higher level of empathy on the psychological aspect and work around that to be able to help you develop strategies that take that into account, as well… again, not just the math stuff.

Ryan Isaac:
Man, I’m so glad you said that, because it’s really important to acknowledge how heavy the burden is of debt, and some people, it’s worse than others, for sure. Some people carry that… they would gladly take a lower mathematical return on all of their investments just to get rid of it. Some people are just built that way. But it’s really important to acknowledge what you said, because building a financial plan or an investment strategy, it’s really helpful where someone, like you said, has empathy for that, really understands and has seen it so many times, but can also… counterpoint to that… who can also push you to be a little uncomfortable.

Ryan Isaac:
If you’re an extremely debt-averse person, like, “I will sacrifice anything to get rid of debt,” it’s healthy for you to have someone in your life who is comfortable themselves and confident enough… has seen enough… to push on you a little bit, push back against your tendency to only get rid of debt, because it can be detrimental to you, so I would think that’s super important.

Matt Mulcock:
Oh, it definitely can. Well, and to that point, Ryan, I mean, for you, how many times has someone come to you, a client, and just wanted to know, “Hey, have you seen this before? What are other people doing?”

Ryan Isaac:
Totally.

Matt Mulcock:
“You’re telling me to do this. Is this what other clients are doing?” People ask that all the time, right?

Ryan Isaac:
It’s good to know.

Matt Mulcock:
Yeah, they want to know what other-

Ryan Isaac:
What are my peers doing?

Matt Mulcock:
What we’re seeing across the country, and are they unique, or are we seeing things? The feelings they’re sharing with us… is that something that they’re in the silo, or is it other people are feeling the same? People take solace in that. They like to know that they’re not alone.

Ryan Isaac:
Totally, man. I think that’s great.

Ryan Isaac:
So we’ll take a break on that. When we come back, we’ll talk about a few tips to navigate debt in your life, and we’ll be right back.

Ryan Isaac:
Hey, Matt? What do you like to drink or snack on when we do our webinars every month?

Matt Mulcock:
Yeah, it’s a good question. I’m usually hitting a Red Bull, but it’s hard because it’s an evening webinar.

Ryan Isaac:
Yeah, these evening webinars taking place, 6:30 PM Mountain Standard Time.

Matt Mulcock:
Mountain Time.

Ryan Isaac:
Once a month.

Matt Mulcock:
Where do you find it?

Ryan Isaac:
Well, if you’d like to find the webinar, or you’d like to register for it, you go to DentistAdvisors.com/webinar, or just go to the website and click on “Webinars” under the Education tab.

Matt Mulcock:
It’s a good time.

Ryan Isaac:
It’s a great time. What kind of things do we cover in our webinar, Matt?

Matt Mulcock:
So, each month, we’re going to hit an element, right? So, it’s going to be some component of your financial life. We’re going to dive a little bit deeper than we would on The Dentist Money Show. We get to draw pictures, there’s live polls, you can ask questions.

Ryan Isaac:
Yeah, so it’s a great time.

Matt Mulcock:
Yeah, it’s a good time.

Ryan Isaac:
Well, we’d love to see you in attendance at one of our fantastic webinars. Just go to DentistAdvisors.com. Sign up today for the next one. Thank you very much.

Ryan Isaac:
Matt, let’s hit a few tips here. You need a break, man. We are just emotionally spent from all that talking from before.

Matt Mulcock:
We do. I’m sweating. I’m sweating. I just hit a cigarette and a Fresca. I’m sweating.

Ryan Isaac:
You had a Fresca. Little sarcasm. Shoutout to Fresca, though, honestly.

Matt Mulcock:
Okay, really quick, just on that, what’s up with the shortage? There’s a shortage or something.

Ryan Isaac:
There’s a Fresca shortage?

Matt Mulcock:
Yes, my wife and I have been trying to look into it. There’s a legitimate shortage. It’s Fresca and red meat. I don’t know what it is. I mean, the red meat is easily explained because of the corona outbreak in the factories, but Fresca, we can’t figure it out.

Ryan Isaac:
Yeah, factories. Fresca is unexplained. Somebody please go to DentistAdvisors.com/group. That is our awesome Facebook group full of very smart people and nice dentists all around the country, and please tell us about the Fresca shortage.

Matt Mulcock:
What’s going on with Fresca?

Ryan Isaac:
Does anyone have any insider-

Matt Mulcock:
Or if a client is listening to this, just text me and tell me what’s happening.

Ryan Isaac:
Just text us, and if you have our cell phones… and if you become a client, you get our cell phones, if that’s an incentive. [crosstalk 00:28:12]

Matt Mulcock:
There you go, and we get to talk about Fresca.

Ryan Isaac:
So, tip number one. Okay, here’s what we want. Let’s start with end in mind. As an advisor, I just want somebody to have a balanced life. I want someone to just recognize that, despite what we may have always learned in society or from family or parents, wherever we’ve learned our lessons about debt, you, as a dentist, have just chosen a life of debt, okay? You pent it.

Matt Mulcock:
Just deal with it now.

Ryan Isaac:
Just deal with it. Yeah, let’s just get it out of the way. Let’s just be comfortable at being uncomfortable with the fact that that’s your life. I just want someone to recognize that we can achieve balance throughout your career, and having debt, it’s okay. It’s going to be okay.

Ryan Isaac:
So, this first concept, here’s what I want to point out, is that… let’s go back to the first thing I said earlier, which was you do not have to be debt-free to be financially free. Let’s just tie this in to the concept of what we call total term. For anyone listening, if you’re not familiar, you could push pause right now, and go to the website DentistAdvisors.com, and go to the “Element” section. Scroll down like halfway through the page, you’ll see this colorful table of 12 squares, and we’re talking about the one on the bottom right-hand corner. It’s green. It’s green, right, Matt?

Matt Mulcock:
Yeah, it’s light, a really pretty green.

Ryan Isaac:
Green-ish. It’s called total term. All that number means, you can dig into it and see how it’s calculated. It just means, when are you financially independent, and the math behind it just is this: it’s when you have enough net worth that kicks off your spending money that you need… then you’re financially independent. But net worth can include debt, that’s the point. As long as your net worth is high enough to sustain the spending you want to spend every year, it doesn’t matter if there’s debt or not debt included in that net worth; as long as it’s high enough, you’re financially independent.

Ryan Isaac:
So, you can be financially independent with debt, and if that’s a mind-blowing thing to hear, then just go to DentistAdvisors.com and click on the “Elements,” go find the total term, and learn a little bit about total term. There’s podcasts, there’s videos, there’s webinars that we’ve done on that. Learn about the calculation on how net worth can equal financial independence when it’s high enough, and it’s okay if debt is in there.

Ryan Isaac:
So, anything you want to say about that or add to that?

Matt Mulcock:
No, I think it’s great. I would say, I don’t want people to think that… and I know that you’re not saying this, but I just think an important distinction to make here is that, we’re not saying that being debt-free is not a worthy goal. It is a worthy goal.

Ryan Isaac:
No, it would be awesome, yes.

Matt Mulcock:
I think, at some point, we all want to get there. It’s just that when the means to that goal is sacrificing maybe other opportunities that would lead to a better chance of becoming financially free… if it just becomes about being debt-free by any means necessary, well, sometimes there’s collateral damage, and looking back, you might get to that point and be like, “Yeah, I’m debt-free, but I could have gotten here a lot more effectively. I could have lived a different life, maybe.” I just don’t want it to be like sacrificing these other things that can get you there, all because you think in this monolith, “This is the only way I become financially independent.”

Ryan Isaac:
Yeah, because debt-free does not equal financially free.

Matt Mulcock:
Yep.

Ryan Isaac:
That’s not the equation, so you’re totally right. We’re just talking about balance here. But it is a very admirable goal, and it’s part of a plan. I mean, yes, that is part of the destination.

Ryan Isaac:
So, let’s talk for a minute about early career. Tip number one would be to have a heavy emphasis and focus on building your income and liquid investments, and what we’re talking about here, especially if you’re maybe a new graduate, a new practice owner, and if you’re still in growth mode in your practice, your what we call lifetime earnings… it’s just the amount of money you have a chance to earn while you’re working your whole life… the higher that number, the more opportunities, the more options you’re going to have. The easier… well, easier is not a good word. Some people work and have a hard life; it’s okay.

Matt Mulcock:
Yeah, I was going to say.

Ryan Isaac:
Maybe the more options you’ll have, the more comfortable you might be, okay? But you will have more options.

Ryan Isaac:
This is to your point. You cannot sacrifice your ability to grow your business and grow your income as fast and as soon as possible, as early in life as possible because you just went hard at debt early on, just because it bugged you. You just can’t do that. Again, it might take someone else, another living, breathing human being… maybe a bald one in your life.

Matt Mulcock:
Possibly… ideally.

Ryan Isaac:
Maybe one who squats 600 pounds.

Matt Mulcock:
No, no, no longer, not even close.

Ryan Isaac:
Used to.

Matt Mulcock:
Ideally, a bald one, I would say, with a nice, clean beard.

Ryan Isaac:
Ideally. It’s possible.

Matt Mulcock:
That rocks T-shirts.

Ryan Isaac:
Yeah, that’s selfish. But it might take another human being in your life to give you enough pushback to help you stay focused, but tip number one is, let’s focus on building your business growth and your income and your liquid assets. How many times, Matt, have you seen a younger dentist on their balance sheet, on the debt portion of the balance sheet at the bottom, look at some of the student loans. “There’s a 27 grand, and there’s a 90, and there’s 150,” or the mortgage or some cars, and just look at that and be like, “Ugh. Man, that’s never going to go away. This is so depressing. I’ll never get rid of that stuff.”

Ryan Isaac:
But then you look at a dentist, 15 years down the road, that did a good job building liquidity and building their income, really getting a higher income as much as they could, and it’s amazing how they have a high savings rate, they’re tons of liquidity, they’ve got a great lifestyle, and they still have money just piling up in their checking account. They’ll just text you and be like, “Hey, Matt, I think I’m just going to write a check and pay off that $50,000 loan. Is that cool?” You’re like, “Totally cool.”

Ryan Isaac:
So, let’s go to tip number two. You were actually just talking about this. Tip number two would be: don’t pay off your debts in small chunks. This is really counter-intuitive, too. So, what does this mean? This means you’ve got this debt, the one you hate, whatever it is; let’s call it the student loan. It’s $400,000, and you’re giving in an extra 900 bucks a month, 1,200 a month, 1,500 a month, two grand a month. You’re just slowly giving it a little bit extra.

Ryan Isaac:
I want to, first, validate and congratulate the habit, okay, because that’s better than just spending the money.

Matt Mulcock:
Of course, yeah.

Ryan Isaac:
That is increasing your net worth on paper, okay? Just a tip that you might want to try that I’ve seen work really well for people, and it’s been interesting how they’ve dealt with this; so, instead of giving little chunks of extra money to debt every month… I’ll give a caveat to this in a minute… but instead of doing that, let that money accumulate somewhere. Put it into a account, say, “In five years, we’re going to take the balance of this and put it on a debt,” or decide what to do with it, or in 10 years, we’re going to do that, right?

Ryan Isaac:
What are the benefits of that? Well, along the way, it gives you access to that money and that liquidity that you might end up needing for something else. Today, it’s not on your radar or doesn’t feel as important, but two years from now, it definitely might. You might be giving 50, 100 grand extra a year to that student loan slowly, or less than that, and then three years down the road, you’re like, “Crap, I wish I had that money, because the building down the street finally came available and I just don’t have the down payment money. I wish I had that money back.”

Matt Mulcock:
The dream practice just popped up, yeah.

Ryan Isaac:
“I wish I had that money back.” When you give small amounts of money to a mortgage or a loan along the way, you’re paying it down faster, you will pay less interest over the life of the loan; yes, that’s what’s happening, but you’re not lowering the rate. You’re not lowering your payment. You’re not lowering your burden.

Ryan Isaac:
And so, it’s a consideration. Think about doing this. Here’s what I’ve seen in practice, people doing this: instead of giving a little bit to the loans, they’ve just set up a new account and they’ve said, “This is the debt payoff account. We’re just going to put it in here, and at some period of time, we’re going to go and we’re going to check the balance, and when it’s big enough to write a check and pay off the debt, we’re going to do it.”

Ryan Isaac:
What’s been interesting is sometimes they’ve done that, and then sometimes they’ve gone there and they’ve seen the balance-

Matt Mulcock:
I know what you’re going to say.

Ryan Isaac:
They’re like…

Matt Mulcock:
Dang!

Ryan Isaac:
“Let’s just leave this thing. Let’s just keep saving. I don’t even care about the debt anymore.”

Ryan Isaac:
Why does this happen? Here’s what I would say… bold statement, controversial opinion alert.

Matt Mulcock:
Hot take. Hot take.

Ryan Isaac:
Hot take. Hot take coming in. Can we get some alarms flashing, whoever is editing this?

Matt Mulcock:
We can do anything we want, Ryan. We can do anything we want.

Ryan Isaac:
Oh yeah, no one is supervising us right now.

Ryan Isaac:
So, I would say that stress levels are lower and people are in emotionally better places having more liquidity, but while they carry debt, than if they had no debt, but also very low or no liquidity. Liquidity trumps everything, and I’ve seen it so many times that I’m convinced of it now. I’d gladly do it myself.

Ryan Isaac:
That’s been interesting to watch. Some people have set up these debt payoff accounts, and then when they finally get there, they’re like, “There’s a hundred grand in here. Why don’t we just keep this thing rolling? I’ll just keep paying my four percent loan.”

Matt Mulcock:
Maybe at that point, they say, “You know what? I’ll throw half at it, a bigger chunk at it, but I’m going to keep my liquidity,” because again, to your point, by doing that, you are still with the intent of paying down that loan, but giving yourself maximum flexibility, which in finance, that’s literally number one priority, I think, in a plan, in a strategy, is giving yourself maximum flexibility, if at all possible.

Ryan Isaac:
Flexibility. All right, let’s go, tip number three real quick, and then we’ll wrap this up. The last thing I would say that’s also a little counter-intuitive, especially for newer dentists who are first acquiring debt outside of the student loan, is don’t rush to get the shortest term and the lowest rate right away. It’s a little counter-intuitive, because you might say, “Well, why would I want a higher rate,” or, “why would I want to pay more interest,” or, “why would I want this loan to go up?”

Ryan Isaac:
The name of the game, especially early, when you’re trying to protect liquidity and your business, and growing your income, is cash flow. It’s free cash flow, and it’s savings rate. So, when you’re getting that practice loan or the building loan or the mortgage, do not be afraid to stretch that as long as the bank will give it to you. Put the practice loan on 15 years if they’ll let you. Put the building on 20 to 25. Get a 30 year mortgage. Know that if you do these things right, you can pay those things off. It doesn’t have to be a 30-year mortgage. It doesn’t have to be a 15-year loan, but put it on there, and accept the higher rate… it’s okay… so that you get a lower payment and you protect your cash flow. That’s the number one most important thing for me.

Ryan Isaac:
Anyway, our thanks to you guys for joining us. Thanks for joining me and Matt as we-

Matt Mulcock:
It’s been fun, yeah. We hope it gets released.

Ryan Isaac:
We snuck into the studio. Yeah, we hope this comes out, and we hope you enjoyed it. We really appreciate everyone for their support and tuning in. Couple invitations: if you want to chat about your debt questions or how your debt payments fit it into your financial plan and your investment plan, then just go to our website. Go to DentistAdvisors.com, click on the “Book Free Consultation” link, and schedule a time to talk to one of our advisors.

Matt Mulcock:
Oh, I thought you were going to give your cell phone number out.

Ryan Isaac:
Here’s my cell phone. Everyone give-

Matt Mulcock:
Yeah, just go ahead and text Ryan.

Ryan Isaac:
You can text me. I’m a texter. I like texting. That’s okay.

Ryan Isaac:
If you have a question, and you want to just try to get a quick answer, go to DentistAdvisors.com/group, that’s our Facebook group, or search for it in Facebook… Dentist Advisors Facebook group. Go post a question. We’re in there every day, and our awesome group… lots of smart dentists and nice people all around the country. They’re in there every day to help out.

Ryan Isaac:
So, thanks for joining us. We appreciate you being with us, and we’ll catch you next time.

Matt Mulcock:
Do we get to do a webinar plug real quick, or is that… ?

Ryan Isaac:
Let’s do that.

Matt Mulcock:
I’m just saying.

Ryan Isaac:
Okay, go back. Yes.

Ryan Isaac:
Matt, there’s also one more thing that people should check out that is very awesome, and it also features me and you unhinged, free-range. What is that, Matt?

Matt Mulcock:
I’m pretty sure we just started that, too. We just like each other. We like hanging out.

Ryan Isaac:
Let’s start talking on microphones.

Matt Mulcock:
Yeah, we just talk about lifting weights and eating chicken and broccoli, counting our macros, and it turned into a webinar series.

Ryan Isaac:
It’s okay. It did. Where they can find the webinar series, and what are they?

Matt Mulcock:
DentistAdvisors.com/webinar… singular webinar, I think. Yeah, I mean, it’s going to be very similar to the Dentist Money Show, but we’re going to dive a lot deeper into the elements. We’re going to be talking more details about each category, each indicator of your financial health. You can ask questions. There’s live polls. It’s going to be more interactive. It’s really fun.

Ryan Isaac:
And I just figured out, you can go webinar or webinars, plural.

Matt Mulcock:
Oh, there you go.

Ryan Isaac:
Your preference.

Matt Mulcock:
Perfect.

Ryan Isaac:
Hey, if you’re a plural person, then do it.

Matt Mulcock:
Do it.

Ryan Isaac:
Yeah, new webinar every month, a new topic. We just follow an elements calendar, so if you listened to this episode fresh, you’ll probably still have time to register for the debt webinar coming up, and if you didn’t, if you’re listening to this later, just go to the website, DentistAdvisors.com, and find it.

Ryan Isaac:
Me and Matt, again, coming at you. So, thanks for joining us, everyone. Thanks, Matt, for joining me.

Matt Mulcock:
Thanks, Ryan.

Ryan Isaac:
I will catch everyone next time. Carry on.

Debt & Financing