JEFF ANZALONE INTERVIEW – The Debt-Free Doctor on Managing Debt & Real Estate Investing

Welcome to the Next Level Income show where it's our goal to take your income, your investments and your life to the next level. I'm Chris Larson.

And I'm Caleb Welborn.

You can get your free copy of our newly released book@nextlevelincome.com book in my book, I share a strategy about how to optimize your investments. And today's show is sponsored by Money Insights and their investment optimizer strategy. Their strategies have been used by the wealthy for generations for estate planning, minimizing taxes, preserving wealth and increasing stability for their investments. Money Insights can help you develop a plan to build an emergency fund, pay for college, fund a business plan for retirement, or optimize your investment strategy. You can find more information and a free webinar at our website, nextlevelincome.com banking today we're excited to have the debt free doctor on our show, Jeff Anzalone. Dr. Anzalone is a periodontist who after building his practice from scratch, spent the next seven years becoming debt free. Today he helps other doctors learn the strategies they need to get out of debt. In addition, he's a real estate investor who's used passive investing to build additional streams of income. Jeff, welcome to the show.

Thanks, Chris. Thanks, Caleb. Honored to be here.

Yeah, absolutely. As we're recording right now, we're deep in the middle of the COVID 19 crisis. So this is our first recording. We're recording separate outside of our studio at our office in downtown Asheville. How are you guys managing during this period? Jeff?

We are. We're managing the best we can. Hopefully most of us out there are following the orders that the government has been issuing. So everybody's in it together. So. And we'll get through it. It's all you can do.

Absolutely. Well, we're really excited to have you on the show. You and I have worked together on some syndications and we were talking about not too long ago about the importance of being debt free. Over 15 years in the medical device industry. I've worked with a lot of doctors, a lot of surgeons, family practice, actually even oral surgeons, periodontists. We launched a product when I was with Medtronic over a decade ago in that space. BMP2. I don't know if you're familiar with it.

Oh, yeah.

Or not. Yeah. But I think now more than ever having not only passive income, but also not having the burden of debt, something that can be very important to people. So perhaps you can share with the audience a little bit more about your journey. How you got here why you feel it's so important to be debt free. And we can get into some of the other areas as well.

I think this topic is probably perfect for what's going on now and then for any future financial crisis because it's just part of it. And I'm sure, hopefully there's not going to be many more, but I'm sure there probably is going to be. And I think this one is really going to make people really rethink their lifestyle, rethink what's important. And I think that's really doing that for a lot of people. And I've already just spoken to people just with this last week and it's really opened their eyes. And actually I just finished writing an article on my blog to revisit some of the different steps Dave Ramsey teaches regarding kind of the proper baby steps to live. But when I finished my training I was supposed to come back here in Louisiana to join a group practice. But unfortunately that deal fell through just a couple weeks before my training. So I really never thought too much about or worried too much about debt because I was always under the impression that, hey, you know what, I'm going to get out, I'm going to have a decent income, I'm going to be able to pay off these student loans. But you know, that all pretty much just went away very quickly. So we had about $300,000 total in student loan debt. And then about six to eight weeks before I finished my training then this was before the 08 crisis, we were able to get a house, interest only. And it was literally just. I called the banker and he's like, oh yeah, I know the group that you're going to join, we'll take care of it. It was literally just signing a sheet of paper and that was it. Now I know you know, you can't do that now. So we had a house, we had all of this, a two month old. And for people that, that go to medical school, dental school, chiropractor school, you know, even law school, you know, they don't teach you anything about running a business. It's all about your field. So I was like, I don't have a clue what to do. So long story short, I did whatever I could that, that first year either mowed yards again. Like I, wow. Used to mow yards. High school and college. So I remember knocking on a lady's door and, and I said, hey, I just want to let you know if you need somebody to mow your yard again. You know, I'm I'm available. And I used to do her yard, like in high school. And she said, son, aren't you supposed to be a doctor by now? So, very humbling experience to say the least. But.

The.

There was a. Another specialist here I connected with. He really helped me out. He showed me the ropes, and I started some of the Dave Ramsey steps. But I felt that I was. Well, let me back up. I think that was the turning point that changed the way I thought about money because before it was, it was, you know, how you're going to have a good income and everything's going to be okay. But now I saw kind of like what we're going through now that everything can be taken away from you, literally with the blink of an eye.

Yeah.

And of course I wasn't prepared for it because I wasn't making any money. But moving forward, I wanted to make sure. Still having that little fear in me. I want to make sure that I was prepared for something moving forward. And luckily I was able to do that. But I felt that I was disciplined enough to where I could do a couple things different than Dave Ramsey teaches. Because he teaches you get the emergency fund first thousand dollars, pay off all your consumer debt, and then after you do all that, revisit the emergency fund, build it up three to six months of expenses, then start your retirement account, and so on and so forth. But I knew that it was going to take a while to pay off my student loans, and I didn't want to miss those four, five, six, seven years of compound interest. So I followed the baby step. I started aggressively paying off one loan at a time. But at the same time, I also started investing in our retirement accounts. And the only thing that I knew at that time was just, you know, index funds. I didn't know anything about real estate or anything like that. And also at the same time, I did start some sort of emergency fund. It wasn't much, but, you know, a little bit. So fast forward to once we got, you know, everything paid off, the house paid off, then I went back and I really increased our emergency fund and continue to do so to where, you know, I probably could live a year, year and a half on our emergency fund. But that would be like bare bones, you know, stay kind of like, you know, just staying at home, you know, cooking own food, that sort of thing. So I just. And I'm glad, maybe I'm glad I went through that to help me through something like this and hopefully moving forward, this will teach people to do that. So once. Once I, you know, think about it. In life, you always typically have goals. You know, you want to get out of high school and you want to graduate college. You know, for me, my goal was to get into dental school. Then it was to get into a residency, and it was, you know, had all these goals, getting out of debt. And then once I finally met them, got everything. It was like, all right, now what? You know, so I got a little bit of. Got a little bit of complacency, you know, so. And if you follow Dave Ramsey for any time, you can see that he's starting to have to pivot a little bit his message, because, you know, for years he's taught to get out of debt.

Mm.

So now you're getting all these people calling him and saying, okay, Dave, I'm out of debt. Now what?

Yeah.

So now what is he doing? He's like, okay, everything's focused on becoming a millionaire. So now that's. That's what their big thing, okay, now that you're out of debt and you've got all this money you can do. So let's. Let's talk about. So now he'll have something to talk about the next, you know, 10 years, 15 years about millionaires. So the. Once I got to that point and started getting complacent, I started realizing after, you know, talking to people and starting to do a little more education, that I only had one source of income, which most people do. Your active income or your earned income, which, as you know, Chris and Caleb, that's the highest tax income, especially for doctors. I mean, we just get hammered. So another thing was, what happens if I get injured? What happens if something happens? A financial crisis such as that we're in now, that income stream stops, which pretty much it has. You have nothing else coming in. So I started to look around about passive income, learning about it, and I realized that real estate seemed to be on everybody's radar.

So.

And with study of millionaires and that sort of thing, I think they average anywhere from three to nine sources of income, the average millionaire. So I said, you know what? So that was. That was kind of where. Where I was, which led me to start my website. And I won't go any further. I'll let you guys interject here, so I could. I could keep going on forever, but you just let me know.

This is going to be the easiest interview we've done, Jeff. You're just going to take it? No, I think. I mean, you touched on some great things. I think, you know, we have. We have Kind of a three step process that we talk about, you know, on our website, in our book, and you hit on a few things. So, you know, like we talk about how to make more money, keep more money and grow more money. And you know, that's, I think that's one of, that's the most important thing I learned up front was be good at something, but always have something else that's going on in the background. And I think, you know, that's the, you know, you mentioned, you know, what's Dave Ramsey going to talk about? We always talk about like, you know, you want to invest like the rich, not the poor. And I think it's important that people, you know, at least that we educate to think about things a little differently. It's like, yeah, you can pay down all your debt, but getting to the point where you're retiring or what it might be, you can't live off zero debt. You have to have something else going on. But yeah, it's a real challenge for so many people as well because they're just, that's all they know. They're comfortable making money paying off debt, making money, paying off debt. It's a totally different way to shift and think about things.

What happens when that income stops? You're not making money, but that debt's still rolling in.

Yeah. So Jeff, what you were saying, that was a great story about mowing lawns and all of that. And when you mentioned being in school and you became an expert at your specialty but not learning about business at the same time, and you sort of vocalize that struggle. And I have a good friend of mine who's a CRNA who's probably listening to this right now, and he described student debt from medical school as being like a mortgage. Like, I actually wrote it down because I thought he wrote it. He said a mortgage like debt that has to be accrued to work in this field that the community needs. And so if people listening right now, if they have a family member, a family friend who has a kid who's thinking about going into medical school, or maybe they're younger and they themselves want to go into medical school, what advice would you give them on how to decide what degree they should get, what, what field they should go into, and how to weigh the cost and benefits of whatever the area they want to go in is because he sort of vocalized a bit of a struggle with that. And he has some, some stories about people who did it really well, as well as some people who unfortunately maybe didn't have the Inference, the knowledge to make the decisions that could have led them to a better spot.

I think the only way I can answer that question is from my experience and looking at what I did and what I went through, and if I could go back to my previous self, what would I do differently? So I think a lot of times people get in such a rush to jump right into, okay, I got to go to physical therapy school or medical school. And they don't think. They take the time to really go out, you know, especially while you're in college, really go out and try different areas, shadow people. I have people that come to my office all the time to shadow me and really find out what you like and really talk to them. Like, not. Don't look at it like, with. With the money. Look at it like what they're doing. How are they with their. With their team, how is their quality of life, you know, because, you know, you hear people say, oh, you know, I want to be a surgeon, blah, blah. They don't think about, well, you're never going to be at home with your kids. Well, talk to them about that. Yeah, yeah. So that. That's one of the things. And then once you find out maybe two or three things that you're really interested in, then maybe get to the point where you're really focused on it. And then, you know, I just reread Gary Keller's book, the One Thing, and.

Then once your summary. That's great.

Yeah. Thank you. Once you. Once you figure out what that one thing is, then really pursue it. And there have been calls. You can probably search on the Dave Ramsey site where people have called in and either they're getting ready to go to, like, medical school or dental school or law school, or maybe they just got in it and they've got all this debt. What does he recommend? So you may want to listen to some calls like that, but there's a lot of different options out there. One of the great things, probably, if I could do it all over again, I would really look into. There's a bunch of different scholarships and grants that just go on every year without people taking them. And also consider the military. Military will pay for everything. Plus, you're doing a great service. I've got a friend that's a periodontist up in Connecticut, and he went through the Navy, loved it. He said he had a great experience. I mean, they take care of you. So if I could do it all over again, I would probably look at that and think about it. You get out, you're Basically no debt. You're being paid the whole time. So that's what I would do. Again, I'm answering the question based on what I would do. So everyone is different, but if you really want to do something and you're kind of debt averse, which I think this situation that we're in now should probably make people debt averse, plus physicians, dentists, I mean, we're all, we don't make near. And you can go back and look at the stats and this is on average, you know, there's some people above and some people below, but on average, especially physicians, they don't make near the money that they used to because of a lot of the insurance regulations, what's happening. So to go out and start your own practice now is almost unheard of because it's just, it's so expensive. So when you think about, okay, well, do I want to go through school and do all this and take out 3, $400,000 a year to get out making $175,000 a year? That doesn't make sense.

Yep.

So look at that. And then if you still want to do Something that makes $150, $175,000 a year, do it smart. Let someone else pay for it, like the military or something like that.

That's great advice. Actually. My, my best friend that I grew up with, he's in physical therapy school right now, and he served in the military and got the contract and everything. Where they, and it's, I like to, when people say, oh, they get free college, I'm like, well, they worked for it. It was part of the package. They did it and they earned it.

You know, so, yeah, yeah, it's like saying, my employer pays, pays for my healthcare. It's like, well, they do, but that's part of your compensation, which is. If anybody doesn't know that story, go back and look, look at how the wage restrictions over 100 years ago put, put the health care in the hands of employers as a benefit. You know, one of the things you brought up, Jeff, is really what I would call the opportunity cost of paying for an education. People ask me, hey, do you have a 529 plan for your kids? And I have a blog article that'll be, it'll be coming out here in the near future. But I have a good friend, and actually he and his wife are both CRNAs and they live in California. Combined, they make five to six hundred thousand dollars a year. And they really struggle to save at the end of the day. And he asked Me, hey, do you have a 529 plan for your kids? I said, no, I don't. And he's like, how can you not pay for your college, your kids college education? And what we set up is a cash value, life insurance policies. And there's going to be an opportunity for money for my children to go to college if, if they can explain the ROI and do that, but they're going to understand what the opportunity cost is as well. And kind of two part question, but I think it overlays here. You were talking about how expensive it is to start a private practice. One. Do you know?

Well, before you, before you ask that, Chris.

Yeah.

I don't think I ever read anything in the parenting book where you have to pay for your kids college.

That's right.

If you can't do it, then you can't do it. So hey, sit down with your kid and just tell them what I just said. If you want to go to college, you can work. You can get the military to pay for it or somebody else get scholarships. I mean we're on our kids now. They're freshmen in seventh grade and they already know, hey, you can get a free ride. I mean they can pay you to go to college if you do well. So I mean, I'm putting it on them.

Yeah, no, I think that's, I think it's fantastic. And it's, I think it's up to us, especially, you know, those of us in the, in the financial industry, if you will, that are trying to share this message about financial independence. How do you teach your kids these things and do that? So, you know, I think there are better ways to pay for medical school as you so illustrated there, as far as the percentage of doctors or surgeons that are private versus employed now, I guess I wonder if, you know, kind of this lackadaisical attitude is lulling surgeons in to say, well, hey, I can just go work for a hospital and make a salary and not worry about all these things. It's almost like we're teaching surgeons to become employees. Can you speak to that and kind of what the difference between private practices versus employed. And you know how you think that's changed over the years?

I know just, and I'm in a town of 51,000, so. And I, and I know what it's done here just from when I, when I was in high school and college, I had a really big lawn service where I was mowing 30 to 40 yards a week. And a lot of those were physicians and dentists and the Majority of them, and this is just from my own perspective, the majority of them had their own practice or they were in a group. Fast forward now, there's hardly any physician now. And in the last couple years, the ones that still had, you know, their name on a shingle, they've all joined the hospitals.

Yeah. Less than 50% now, I think.

Yeah. So you can probably do the stats right now. So see, but think about it. If you get out and you owe $300,000 student loan, let's just say, and it's going to cost another 5 to $600,000 to start up a practice and get loans and everything. Well, plus you got add your home. I mean you're boom, you're a million dollars in the hole making a buck 70 a year. So it's just like, it doesn't make sense anymore.

And you probably, if you're, I mean, you can, you can share. Jeff, how old were you when you, you got out and you're about to start your practice?

I was 31.

Yeah. And that's, I would say that's pretty young for a specialist, am I right? Like, I mean you're looking at like.

Yeah, probably mid, mid, early to mid-30s would be. Probably the youngest. Yeah.

Yes. I mean you can imagine. I mean, I know dozens, dozens of surgeons that are in their mid-30s. They've, they've had kids because they want to have kids, you know, before they get too old. And then like you said, they're a million dollars in debt. They got two, three, four kids and they're in their mid-40s before they can even begin to see the light at the end of the tunnel. I think a lot of people just don't really appreciate the sacrifices that a doctor or surgeon or specialist goes through to get where they are from a financial perspective.

Yeah.

Until you really need them, then you really respect them.

That's right. But everybody, you know, I feel, you know, especially over these last election cycles, people talk about, oh, the 1% this, the 1% that. Well, the biggest group of the 1% are physicians. And they're out there, you know, I mean, you know, you see these, a lot of them are, my friends are working 60, 80, 100 hour weeks sometimes, you know, being on call, like not seeing their families and under the burden of this load. So it's again, I think, I think what you're talking about is very valuable.

So you're talking about, you know, getting out then in the 30s and already being a million in the hole making 170 doesn't make much sense. So this next question is around mental health and how it relates or if you think it relates at all to personal finance. Because these careers we're talking about, these physicians, dentists, also pharmacists and also nurses, Suicide rates in these professions are higher than, than a lot of others. And what impact do you think that your strategies for becoming debt free could have on combating this important issue?

Yeah, and you could. I wrote an article last year about doctor and physician burnout. I have a friend here that's the dentist last summer took his life and he was late 40s, had a teenager and you know, we, we don't. Didn't leave a note or anything like that. But you know, some people say that money and finances were a part of it. So I just think that that's. If you get your finances in order, that's just one less thing you got to worry about. And that's probably one of the biggest things out there that, I mean what is it the leading cause of divorce is. Has to do with your finances and your. In laws. Yeah. So you can, at least you could do something about one. I don't know about the other. But, but if that's, if that, that just shows you right there and there. And I don't, I don't remember how many times this is reference. You can probably look in Google. But I know that in the Bible, whether you're a believer or not, you get a Bible and you look up money or finances. The. It's talked more, Jesus talks, I mean thousand times more about money and finances than he does getting into heaven. So that just kind of shows you right there. It's, it's pretty important if, if you know, that's talked about a lot. So I think with getting your life in order, preparing for financial crisis, preparing, hopefully it never happens, but having a plan with, as with anything, I think that will, will definitely help your mental health for sure. And then teaching like you said, teaching your kids what you're learning, teaching your, if you're an employer, teaching your staff. I've got, I went through the Dave Ramsey coaching. I was certified as a coach last year. Not to coach, but just to go through the process. Because now when I do calls with people that are interested in investing in real estate, that's one of the things that I wanted to do is ethically recommend one thing or the another. So for instance, last year I spoke to a young dentist that wanted to get into real estate syndications, wanted to get passive real estate. And I went through what I was taught with the coaching. And lo and behold, after you added everything up, he didn't realize he was $940,000 in debt between his house, his practice loan, the practice, the building, student loans. And I said, you know what, to be honest with you, I wouldn't do real estate right now, and this is why. And I helped lay him out. But they sent me stacks of the total money makeover book that Dave Ramsey wrote to help, you know, with people like that. So I think if you educate people again, that's going to help with your mental health as well moving forward.

I think it's huge. Jeff and for anybody that's interested, we're going to get your website and your information on how to contact you both at the end of the show as well as in the show notes. Let's shift gears a little bit. You were talking about real estate there. I think again, right now we're in the middle of this slowdown. I'm getting a lot of call from investors. I'm also reading and listening to stuff every day about how this slowdown is going to affect real estate, specifically the multifamily market. And I know there's concern about certain asset classes and assets that have too much debt, they can't pay their mortgages. So can you relate kind of how your philosophy on being debt free in life, how you apply that to some of your investments that you make specifically? Like, what do you look for in terms of loan to value fundamentals as you make an investment in that space?

Jeff well, I just wanted to say I'm certainly not an expert in investing or real estate. I just from what I learned from meeting people like you guys, from reading books, networking podcasts, that sort of thing. But when I started this real estate journey, I realized that I had about 90. We had about 98% of our money in the stock market and most of that was index funds. So I knew with passive income I needed to be diversified and looking at what the market has done in 2020. I'm glad that had started that diversification process. But we still do our retirement practice accounts because that helps with our taxes and that sort of thing. But the more that I learned about syndications and met people, the more that I really liked it. I really liked it from the standpoint that whenever you get your either monthly or quarterly distributions, as you know, most of that is you don't pay any taxes on it. So that's really huge for somebody with a high income that already paying a lot of taxes. So I really liked really like from that standpoint. And I have a certain thing that I do whenever, you know, I get money in from syndications, plus I'm saving money on the side. So I combine that money and then as it grows, once I get to that limit to where I can invest, then I start networking with the people that I invest with. So once I started doing this and it started working out great and I started telling other people, they were like, what is, what is a syndication? It's like, what are you talking about? So I took my website that I'd started that was teaching people about how to get out of debt and how to invest and I said, you know what, I'm going to completely shift gears. And I did that. And now I'm focused on teaching people about, just educating people about passive real estate, passive income, and on the website. And then a couple of months ago, I started something called the Passive Investors Club. Again, it's free, but it's for those people that are really interested in learning more about it. I have a talk with them just like that dentist to see is it a right fit for them or not. And then if it is, then they actually have access to deals with people that I know that I invest with personally. Because as high income earner we have like a target on our back. It's like, hey, Dr. Gullible, let's go sell him something. And we get burned so many times with that. So I really wanted to be kind of seen as that trusted advisor out there that you can do what I want, you can do whatever you want. It doesn't really matter to me, but at least I wanted to take a lot of the stuff out there and kind of filter it down to what we really need because we just don't, A lot of people just don't have time to do all the research and read the books and do what you're supposed to do. So that's really the focus of my website now.

I think it's fantastic. And we kind of followed a different yet similar journey. I started investing at 21 in real estate. But you know, you, you start to talk to people and share this message and say, hey, this is, you know, people say, well, what, wait a minute, you have, you have all these properties or you have, you own an apartment building. Like, how is that possible? How do you do it? How did you do it? How did you get to that point? And it's been fun, you know, to share that. You know, Caleb and I started this podcast and the website and wrote a book to share the Message because as I realized, like you just said, Jeff, you talk to high income earners and again, so many of these are doctors and they've been taken advantage of or they just haven't had the time to educate themselves on this because they spent so many hours educating themselves in their specialty. So we love what you're doing.

Thank you.

Yeah. And I feel incredibly fortunate to have been introduced to this space through Chris at such a young age because so many older people who I know and look up to, they talk to me and they're like, man, Caleb, it's awesome that you know about this now because I wish I would have known about this when I was your age because it would have helped me out so much because, yeah, I see so many people who are, yeah, super talented, they're doing all this awesome stuff and then they don't know about it till they're like 40 and they're dang, you know. So that kind of leads into our next question that we ask on every show, which is if you could go back to your 25 year old self and give yourself one piece of advice from everything you've learned over these years, what would that one piece of advice be?

That would be very easy. It would be start to educate myself on real estate, find a mentor, find people to help me to do that and then start investing in it a little bit back then, which now it made a huge difference. But you know what the, if you can't start in the past, the best time others time to start is right now. So even for people out there that are listening to this that are maybe think they're too old or it's too late, who says that you won't live to you to your 100 or longer, you know, so even if you're 65 or 70, you got enough 30 years, you know, so if that's what you want to do and make a difference, start now.

Yeah, that's great advice. And what's that? I think Warren Buffett said I might be butchering this quote, but it's the best time to invest was 20 years ago. The next best time is today. I think it's something along those lines. I think about that a lot.

Yeah. So Jeff, again, you've talked a lot about things that overlap with what we talk about at next level income. If people want to get ahold of you, they want to learn more about your strategy, how you eliminated over $300,000 of debt, what's the best way to get a hold of you and to check out your website.

Probably through the website. It's debtfreedr.com I wanted to get the website debtfreedoctor.com but it was already taken. So debtfreedr.com or you can email me jeff j e f fetfreedr.com Excellent.

Well, like I said earlier in the show notes, we're going to have information about how to get a hold of Jeff. If some of the things you heard about today you want to learn more about, you can get our free book@nextlevelincome.com you know, as always, we always wish our guests well, Jeff, but especially in this uncertain time. Please, I hope you and your family stay both healthy and happy. And we thank you so much for being on the show.

Yeah. Thank you, guys. And you guys stay safe and healthy as well.

Absolutely. Thanks so much.