Take Control of Your Debt and Yourself by Jay Geier

Take Control of Your Debt and Yourself 

by Jay Geier

Ever felt confused and frustrated over how your practice can be making so much money yet you’re under constant stress to pay the bills every month, afford major purchases and still take home the pay you expected to be earning at this point in your career? Production and gross revenue may be increasing, but if your expenses and total debt aren’t decreasing at a faster rate, you’re losing more than you’re bringing in. Debt expenses hemorrhage from so many places on a profit-and-loss statement because of the way interest, finance charges and fees get embedded in costs. That’s why it’s so difficult to recognize the aggregate adverse impact of debt on your bottom line.

We coach clients to face debt head on—to be honest with themselves about how much they have, unemotionally take control of it and change behaviors that propagate a negative debt cycle. (We also teach them how to increase the number of new patients their practice brings in so they have more revenue and cash flow to start systematically paying down debts one at a time, which in turn frees up more cash flow.)

Buying on credit is a “win-win-lose”

The purpose of credit is to allow you to buy what you don’t have the money to pay for. When you buy on credit, the sellers get their money, the creditors get their money, and while you get the immediate gratification of having something you couldn’t otherwise afford, you end up paying more than it’s worth. They win and you lose.

Avoiding temptation is tough, considering what a habit buying on credit has become in our society and how easy it is. There’s almost nothing you can’t buy online and with credit scores instantly available, there’s no waiting period; you can be persuaded and allowed to overspend your income in a matter of seconds with just a few clicks.

Climbing out of that rabbit hole is a lot harder than falling into it. Creditors structure payment terms to their advantage and encourage you to pay the debt as slowly as possible to maximize the interest you pay over time. Of course, some level of debt is almost inevitable and even advantageous—think of school loans, a first home mortgage or a business loan to buy or start up your practice.

When done right and for the right reasons, debt can be a profitable business strategy. The key is to have the discipline to pay down the debt you already have as quickly as possible so you’re not overpaying creditors, and to stop overspending your income by buying things that aren’t good for your business and that you can’t afford, especially on the personal side.

The 4 types of debt

If you’ve been gaining weight lately, you probably haven’t stepped onto the scale for a while because you don’t want to know the bad news. Such is the case when it comes to debt. Most people don’t know exactly how deep in debt they are, much less how to tackle it. Breaking it down can make the total less daunting to deal with.

In this article, we’ll discuss the four types of debt, starting with the one that gets most people into trouble.


Way over and above the basic necessities, credit cards enable people to overspend on an endless glut of consumables—cars, boats, vacation homes, furniture, electronics, clothes, jewelry, vacations, you name it. Referred to as consumer or personal debt, this type of spending is where the money-management equivalent to Parkinson’s law most often kicks in: Expenses will rise to meet income (plus available credit).

This fact of finance is why so many allegedly wealthy people never seem to have enough money, no matter how much they make. Celebrities are prime examples—greed notwithstanding, they believe that with more money comes more needs. No, they just have more wants and meet more people willing to extend them credit, so many eventually crash and burn under the weight of overwhelming debt.

If you’re the person described in the introduction of this article—confused and frustrated over how your practice can be making so much money yet you’re always financially stressed—you’ve probably succumbed to the same and have far too much debt of the wrong kind. Creditors encourage you to make minimum payments, which keeps you perpetually in debt and wasting money on interest.

Instead of overpaying for something by paying credit card or finance interest over time, we teach clients to have the discipline to put money aside each month to accrue enough to pay cash for something they really want. If you can’t bring yourself to exert the required discipline to save up for it, you should question how important that something really is to you.


Most homeowners think of their primary residence (and vacation homes) as an investment that’s virtually guaranteed to have a positive return. If you include everything in the cost calculation over the years you own it, that is rarely the case. Homeownership comes with never-ending expenses and is most people’s biggest debt and monthly expense over 30 years.

Few people stay in a home long enough to build much equity, because the lion’s share of every payment goes toward interest, not principal. That’s how banks make sure they make money up front, regardless of whether you ever do. Every time you move and get a new 30-year mortgage, you’re right back to paying the bank instead of building equity. Likewise, if you refinance at some point to get a lower monthly payment, you’ll pay hefty fees up front or they get rolled into yet another 30-year term that’s to your disadvantage.

Build equity more rapidly by upping the payment by some amount—any amount—each month, and make sure the bank puts the extra toward principal. No matter how low the interest rate, paying down a mortgage faster than the original term will save you an enormous amount over the years and ensure you walk away with more in your pocket when you sell.

Another incentive to increase your equity faster is that you increase your chances of a net gain if you sell much sooner than the loan term, which most people do. Selling a house for $500,000 when you still have a $450,000 mortgage (not to mention a second mortgage or equity line of credit), plus agent commissions and all sorts of other fees, makes for a dismal return on investment.


As a business owner, you probably need to have some debt in the category of capital expenditures. This can be good or bad, depending on what you’re spending the money on.

Smart debt is used for doing things that drive growth by impressing patients, increasing cash flow and improving productivity. At some point you’re going to max out your practice’s physical capacity, so anticipate and plan ahead for growth and the capital investments you’ll need to make to keep from plateauing. For example:
  • Student loans (you wouldn’t be in business had you not made the investment).
  • Business loan to buy or start up and equip a practice.
  • Office renovation that wows new patients and generates referrals, such as carpet, paint, furniture and décor.
  • Addition of treatment rooms so you (hygienists, associates) can treat more patients to generate more revenue.
Ideally, capital expenses should generate enough additional revenue to cover the payment, increase cash flow and be amortized in five to seven years or less. Then you make larger payments to speed up debt reduction and free up cash flow.

A prime example of an unwise capital investment is equipment or technology that doesn’t drive revenue, despite what the salesperson tells you. These are typically impulse purchases seen at a convention that you don’t take the time to financially analyze. Have you considered the cost and downtime of training? Service contracts?

Shipping and installation? Other added or hidden costs? Before you decide you can’t live without that latest gadget, remind yourself that your patients are far more impressed by a great end-to-end experience at every touch point in your office and with every team member. Do you really want to be paying for that piece of equipment for years to come and ultimately at a total price that far exceeds what you intended to spend on it?


The size of mortgage debt involved in purchasing commercial real estate keeps most business owners, especially new ones, from even considering the possibility of buying their own building. So you enter into long-term lease agreements and someone else earns all the income as the building owner. Yet owning your own office building could be the goose that lays the golden egg for a practice owner.

Buying your office building is the single best long-term investment you can make not only for your business but also for your personal future. As the building owner, you earn additional income by paying rent to yourself. Ideally the building has additional office space for tenants who pay you rent and for room to expand, whereas a lease land-locks you so you can’t add treatment rooms when you grow to the point where you need more capacity.

While initially expensive, commercial real estate is a valuable, income-producing asset with significant tax advantages. Unlike residential property, you continually recover your investment through rent and once paid off, that income is pure profit for a lifetime. We teach this as one of the most fundamental long-term strategies for becoming financially independent.

Take the first step

Tackling heavy debt can be overwhelming when you don’t know where or how to start. Begin by making a list of every debt from the smallest to the largest (which is probably your mortgage). Systematically pay down the smallest one until you can cross it off the list entirely. Then move on to the next.

Chunking your total debt into smaller bites and using an approach that gives you quick wins builds confidence in the process and in your ability to take control. Even small extra payments will eventually lead to big balance reductions, and applying discipline will help you avoid the debt trap because you’ll be loath to undo all that you’ve accomplished.

It may take a while, but eventually you’ll get to the point of being able to pay extra on your mortgage. By then, you will have positioned yourself to leverage credit responsibly to make strategic investments designed to grow your business and its value to accumulate wealth and build net worth.

Learn more about debt and finance
with a chance to earn 1.5 CE credits

Dentaltown founder Dr. Howard Farran’s video CE course Uncomplicate Business—Advice for the Next Generation of Dentists goes into more detail about debt, personal and business spending, and the importance of consulting a pro and finding a mentor. The 90-minute course is available 24/7.

Author Bio
Author Jay Geier is an advocate for independent dentists and an authority on growing independent practices. His mission after 25-plus years of coaching doctors is to help them preserve and protect their legacies and financial futures. Geier is committed to helping dentists build their businesses, get out of debt, accumulate wealth, build net income and become financially free so that they can live the life they dream of and help people in more ways than they originally planned. To obtain more information on the content discussed in this article, visit doctorswealthsystem.com/DT.
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