DR. ACE GOERIG
OWNER & CO-FOUNDER
Almost everyone takes on debt at some point. For dentists, educational debt is usually just the beginning, soon followed by practice start up or acquisition debt. Then comes all the personal debt: mortgages, cars and consumer spending associated with the expectation of living a good life.
For many doctors, debt is rationalized as a temporary necessity that ends up becoming a permanent fixture, with debt payments as a constant drain financially and emotionally. Banks and financing offers seduce doctors to take on more debt with “low interest” loans that perpetuate the cycle.
Consider a $310,000 mortgage at 4.5% over 30 years. In the first year of loan repayments ($1571 monthly x 12 = $18,849 annually), only $5001 goes to pay off the principal. $13,848 goes to paying interest. So, 73.5% of your payments go to interest. By the time you have finished paying the loan after 30 years, you will have paid $255,461 in interest. That’s 82.4% of your original principal amount.
Neither of those percentages sound remotely close to 4.5%. Any time you take on debt, you must realize that (regardless of the interest rate), you are going to pay through the nose for it. Debt may be a necessary evil for school and getting started. However, once you are in practice, continued debt is voluntary self-sabotage.
ELIMINATING DEBT FOREVER
There are many advisors who will give you strategies to pay down your debt, such as paying off the debts with the highest interest rates first, etc. However, none of these methods actually address the fundamental issue that drives debt for most doctors: persistent debt problems are actually income problems in disguise.
Your ability to pay off your debt quickly depends on your available cashflow over and above your current financial obligations. That means the fastest way to get out of debt forever is always based on growing your income, which means growing your practice.
At $1450 per case, the addition of one case per day (working 4 days per week, 48 weeks per year) results in $278,400 additional revenues, which is easily over $250,000 in added profits after clinical supplies and other variable costs on those cases. Two additional cases per day results in over $500,000 more profit annually, which is $2.5 million over 5 years.
With $2.5 million more in income, I would bet that completely eliminates your debt and sets you up with such a strong cashflow that you could self-fund all your future needs without ever having to resort to borrowing money again.
This is why Endo Mastery talks about transforming the practices and transforming the lives of doctors. We consistently help doctors get out of debt quickly, eliminate their financial stresses, and empower them with success that lasts a lifetime.