The Northern Dental Alliance had a lunch and learn with Dental Students from the University of Minnesota. The following is my response to a question:
I just started my career as a Dentist and I am deeply in debt. Where do I start to get my finances in order to position me for owning my own practice and for the long term ?
The following list will assist you in getting started:
Obtain Disability Insurance – Individual not group coverage: The first to do on your list is to put in place a high quality individual disability insurance policy that you can increase as your earnings increase. Your biggest asset is your earnings ability.
Build Cash Reserve: In order to purchase a practice, you will need to have in place about six months of cash reserves to get you started and to qualify for practice loans. Setup a monthly auto purchase into a FDIC insured savings account like ING Direct to build the account.
Pay down Debt: Your first inclination may be to pay down debt as quickly as you can. It is much more important to have the cash reserve in place and even begin to save for your retirement. I recommend you pay your bills on schedule and at the amount due to build a good credit rating while maintaining flexibility.
Avoid the big purchases initially: I recommend you hold off buying the fancy car and/or big house until you have a better handle on where you will end up for the long term. Not buying these big ticket items will help maintain flexibility and better position you to buy a practice.
Begin Saving for Retirement: If your employer has a 401k plan, at a minimum, save enough to earn the full company matching contributions. This is “free” money you don’t want to lose. In order to achieve financial independence, starting early will help you greatly on your path. If you are buying a practice, make sure you look to establish a 401k plan to help with your own savings and to lower your tax bill.
For more information, contact: Rick Epple, CFP® at Epple Financial Advisors, LLC.
P. 952-470-5049 or Rick@EppleFinancial.com or www.EppleFinancial.com
