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Howard Speaks: Make Good Financial Choices Now (and Later … and Always) by Howard Farran, DDS, MBA, MAGD

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by Howard Farran, DDS, MBA, Publisher, Dentaltown Magazine

Maybe you're almost done with school, or maybe you've graduated and you're officially a dentist. Either way, I have a few tips for how to survive the next 50 years and for how to be financially sound the whole time.

Why should you listen to me? Because I've survived the last 50 years and have been financially sound the whole time. There's plenty of stuff I don't know. But I know dentistry, business and—most importantly—the business of dentistry. I've been practicing dentistry on this ball of dirt we all share since 1987. Most of you reading this were pooping in your diapers while I was drilling and filling. Pretty soon we'll trade places. In the meantime, I have some advice.

First, if you're still in school, don't obsess about your grades. You don't need to earn straight A's to become a great dentist. What will make you a great dentist are the things you'll learn once you start practicing. If you take time to have a balanced life while in school, instead of living in the library, you might actually be happy, too. A student who is well-rounded and graduates in the bottom half of his or her class is still going to be a dentist.

This next piece of advice is easier said than done, but if you can do it, it will be one of the best decisions of your life and career. Marry a dentist or anyone who understands a demanding career. You're going to work like hell and oftentimes you're going to do it without anyone around who can relate. Imagine coming home to someone who completely understands the many stresses of the job and who can appreciate and relate to your goals and achievements.

You need to have tough conversations even before you say, "I do." If the two of you aren't on the same page financially, your marriage won't make it. You'll be filling cavities when you're 70, wondering what the heck happened. You might still be in serious debt as a grandparent. Some advice to live by:
  • Learn to make tough decisions about your personal spending. Don't ever complain about not having enough money when you're living in a mansion and driving a Mercedes-Benz.
  • Remember that your personal expenses eat into the bottom line of your business.
  • Stop spending more than you save.
  • Always, always, always watch the numbers. Which numbers? All of them!
Check Out These Dentaltown Resources

There is a wealth of information at your fingertips. You can find these great articles from finance guru Dr. Douglas Carlsen and more on Dentaltown.com. Don't forget to check out Carlsen's article in this issue on p. 42. Dentaltown podcasts
Did you know that Dentaltown.com offers hundreds of free podcasts? Many of them feature Dr. Howard Farran interviewing the biggest names in dentistry. Other industry leaders also share on the most important topics in dentistry, including practice management, wealth management, and much more.Check it all out at Dentaltown.com/podcasts. And join the conversation—upload your own podcast episodes!

Recommended for new grads and students:
On debt
Young dentists, there are two kinds of debt.

The first is debt for consumption, which is dumb—houses, boats, cars, vacations, all that stuff.

The candy.

And then there's debt for investment—to get leverage. This is the meat and potatoes. This gets you to your next meal.

Debt is other people's money. There are almost 200 countries on this planet and very few of them let you have access to other people's money. If you couldn't borrow money, you would have had to work at McDonalds for $7.25 an hour for 20 years while living with your folks so you could save up enough money to pay your dental school tuition in cash. But you didn't have to do that. Instead, you borrowed enough of other people's money to invest in yourself, and now that you're out of school, instead of making $7.25 an hour, you're making good money because you're a doctor of dental surgery.

Debt to become a doctor is good debt. Debt to buy a mansion on a golf course is dumb debt, especially when you're still paying for school. Debt for investment is awesome.

The only way you could be one of the world's 800 billionaires is to borrow other people's money in stocks, bonds, and loans, then build something great, pay back the loan and then earn the money back. Debt is leverage, and using other people's money for something you know everything about, and something that you're going to do for 10, 20, 30, 40 years—that's leverage. But only if you're smart about how you use it.

When I look at the debt of dental students, it seems that many of them who graduate with $250,000 in student loans have a $30,000 car, and every spring break they go on a cruise. A lot of their student-loan debt is dumb debt.

When I was in college, three years of undergrad and the first three years of dental school, I didn't even own a car. I stayed at home and ate Ramen noodles and Kraft boxed dinners. Fast forward to this generation and we've got dental students going out for sushi three nights a week. I never lived like that. When dental students graduate with vastly more debt than the price of tuition and housing, it often shows that they saw themselves as rich doctors when they were actually poor students. You're rich when you're rich, not when you're preparing to be rich. Part of how you get rich is by not spending money.

Follow the big spenders on Facebook, but not in life.

A penny saved …
A great way to take a smarter path and reduce your stress is to cut up your credit cards and stop spending money you don't have. Period. When you come home from a long day's work and you and your spouse are happy to see each other and you make spaghetti together, that cheap meal and a meaningful experience will be more nourishing than dropping $400 at a steakhouse, staring into space wondering about debt.

Remember:
  • Live like you're in debt until you're out of debt.
  • Managing your personal finances is step one of managing your business finances.
  • Choose a partner or spouse who aligns with your vision on money.
  • When in doubt, consult the pros. There are resources everywhere!
So be smart. Marry smart. Save money. Being a good dentist is more important than being a fancy dentist. Follow these tips and the next 50 years could be amazing. Best of luck to you, doctors! You chose a fantastic career—now make fantastic financial choices too.

Remember that you have a community to help you. I started the Dentaltown message boards and Dentaltown Magazine so no dentist would ever have to practice alone. We share cases, converse about dentistry and life, and help each other solve problems. We have more than 200,000 members on the message boards! I hope you become a member too, if you're not already. It's easy and free! Just visit Dentaltown.com.


Dentaltown Magazine
April 2024
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