Balance, Trade-offs, Quality of Life and Debt

By Sam Martin, MBA(tax), CFP®, CPA


Financial folks tend to be investment-centric. Those who have been following my articles in Catalyst know there is much more to a well-thought financial plan than just investments. The purpose of a comprehensive financial plan is to achieve your long-term financial goals and also to protect who and what you care most about along the way. But even that statement fails to embrace balance and quality of life.

Quality of Life Planning
Part of planning is to make certain you are also achieving quality of life, both long-term and along the way. Mitch Anthony, author of The New Retirementality, might argue that by checking off portions of your “bucket” list while you are younger, healthier, and perhaps with the kids still at home, can be beneficial. If you then extend your work career past “normal” retirement age to offset the earlier lifestyle spending, it can be a better way to go. I find that 80 percent of my pre-retirement clients neither see themselves retiring in full nor continuing to work as hard or as much as they are currently.

Finding a glide path for post full-time dentistry and pre full-time retirement is highly desired by many. Many are not ready to give up dentistry, but are ready to give up some or all of the management reins. Or they want flexibility for longer and more frequent getaways, lower stress, less work, but still want to be financially and professionally rewarded.

Those With a Plan Have Better Results than Those Who Don’t
We know those with a “plan” will have better results than those who do not. But even with a plan in place, we know those who have a system for monitoring and adjusting the plan will do better than those who do not monitor and maintain it. So you are not only much more likely to achieve your long-term goals with a plan and a system to maintain it, you are also more likely to address and improve your quality of life along the way. Your plan can and should cover quality of life goals. After all, the finances you accumulate toward your eventual retirement only represent a tool—a tool to help you live the life you desire to live.

Understanding Trade-offs
You may have thought about this—but every action we take represents a trade-off. I cannot be here and be there at the same time. This is easy to apply to financial decisions: more house means less of something else. More private school means less of something else, more car(s) represent less vacations, more vacations means less savings. If you attempted to analyze each and every decision and its trade-offs, you would likely end up mad as a hatter. But, by putting your goals in writing and ranking your priorities, you create a tool through which you can screen a financial decision.

Is this consistent with your goals and priorities—yes or no?
1. Establish your goals and concerns in writing
2. Prioritize your goals and concerns—this is crucial to future decision making
3. Marshall your assets and debts, both personal and professional
4. Prepare a current budget—how much do you spend on various categories?
5. Make a comprehensive tax plan to determine if you could be holding on to more of your hard-earned income
6. Determine what level of monthly/annual savings will achieve your long-term financial goals
7. Decide if your current income/cash flow will handle your budget and savings plan. If yes, implement; if not, see #8
8. Determine what adjustments can be made. Can you lower costs in certain areas? Which categories are mandatory, which are highly important to you and your spouse and which are perhaps not?
9. Determine if a few proactive changes in the practice could help increase cash flow and meet the budget and savings goal
10. Get all of this in writing

Peace of Mind
OK, so a higher probability of good results happens if we plan, monitor and adjust as we go. What else do you have for me? Well, how about an ever-increasing peace of mind regarding all things financial for you and your spouse? If you knew you had a good plan, one you could be successful in carrying out, that achieved your long-term financial goals, addressed risk management, tax planning, wealth transfer and estate planning and any other major goals you may have, and if you perhaps once or twice a year reviewed your plan and updated it as appropriate and that process generally showed you were making good progress in all areas, might you sleep better and worry less?

Peace of Mind Improves Quality of Life
Another important element of a well-thought comprehensive financial plan is to provide peace of mind, which in turn improves your quality of life. And quality of life is what “it” is really all about. It just so happens that to have a certain level of income and assets makes it possible to maintain a good quality of life. Face it. When we are all old, a great deal of quality of life will be based on our ability to maintain our dignity and independence. That should certainly be part of the plan.

Focus on Having a Great Time
What we should focus on, perhaps, are family and friend get-togethers, vacations, relationships with our friends, spouses, kids and the rest of our families. Focus on having a great time however you define that. Getting away from the operatory for a bit, renewing, and recharging—it’s all good. It’s even better when you have initially identified your financial issues and ultimately eliminate them. Planning and monitoring for both your practice and personal finances can help free your mind to better enjoy life.

Good Debt, Bad Debt and No Debt
I am certain that utilizing debt wisely in the purchase or start-up of your practice is essential and a “good thing.” It is also good for your home, as long as the home is consistent with your plan (meaning you are living below your means). If you have the opportunity and the inclination to own your own dental building (or part thereof), that is also a great reason to utilize debt (wisely). Beyond that, debt is a quality of life killer. And even the “good debt” I mention above can be a killer if it is not undertaken and managed wisely. At some point, you are not only going to “want” to be debt-free, you are going to “need” to be debt-free.

Dentists run a rather high risk of disability. So you may want to practice until age 65 or beyond, but there is a significant chance you may not be able to practice that long. It may be prudent to base your plan on practicing to a younger age at which point, if healthy, you have the flexibility to continue full-time work or part-time work, or pursue other interests. But the debt must be retired, and I can guarantee you, the happiest dentists I know are in their 50’s and debt-free. They look forward to going to work because they no longer have to go to work.

Working Your Fingers to the Bone is Not a Good Plan
Now, working your fingers to the bone and having no fun just so you might retire at say age 58 is not a good plan in my opinion. You might turn 57 and 11 months and be run over by a bus (it’s always a bus). Not a good plan. You have to make certain you are having some fun along the way. So, what’s the point here? The point is you need to be very smart and think long-term when you contemplate even “good” debt.

Don’t Bite Off More Than You Can Chew
You need to make sure you can easily produce enough to service the debts in your life and still have the time and wherewithal to fund your retirement portfolio, take your friend or spouse and kids on vacation, and exercise. Don’t bite off more than you can chew—especially when it comes to personal assets such as your home. Think long and hard about the wisdom of owning a vacation home or rental properties. I know a lot of dentists with relatively high net worth who are “real estate poor” and it should come as no surprise that many have struggled and continue to struggle with the aftermath of owning highly leveraged real estate when the real estate bubble burst eight years ago.

Potential Quality of Life Killer
Investing in the purchase of a practice is almost always a good use of debt—again if you use it wisely. Yes, a larger practice can generate a higher income—but there are other costs than just paying the bank back. Those include the pace of dentistry, the number of staff you have to manage and simply more of everything that is required to effectively manage a dental practice. For some, this is no hurdle. For others, it can be a quality of life killer. So be deliberate in thinking through the practice you purchase or start and how you intend to build it over time.

Walk Out of the Office With Very Few Worries
I work with a number of very successful dentists, some of whom operate very large and profitable practices. And, where that is a good personality match—I say more power to them. However, as I age myself, I look at some of my slightly quieter clients who tightly manage a medium-sized practice, are plenty profitable (enough to be in the top 1%-2% of US households), work 3 to 3 ½ days of clinical dentistry with a half day for administration and walk out of the office with everything done and very few worries. These same dentists tend to also be the type to have everything paid off by their early 50’s or even younger—and although they targeted paying down their debts, they balanced the process so they were also making a healthy contribution to the long-term investment portfolio along the way.

Don’t Sabotage Your Quality of Life
I think some of the most successful among us sabotage, to one degree or another, our quality of life by not having a plan and generally sticking to it. When you consider significant decisions or even some of the smaller financial decisions in the context of how they match up with your plan, you will tend to stay the course. Without a plan, we tend to make willy-nilly decisions and not think about the long-term implications. Or as I think Yogi Berra put it, “You’ve got to be very careful if you don’t know where you’re going, because you might not get there.”

Sam Martin is Director of Wealth Management Services and Advanced Tax Planning for the Dental Group, LLC / Martin Boyle PLLC / Dental Wealth Advisors, LLC, a CPA, practice advisory, financial planning and wealth management services group exclusively serving dentists and their practices. Sam is a Certified Public Accountant (CPA), a Certified Financial Planner (CFP), and holds a master’s degree in federal income taxation. Located in Kirkland, Washington, Sam can be reached at 425.216.1612 or

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