MtoM #26 - Orthodontist Pays off $480K

This is the White Coat Investor Podcast. Milestones to celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali.

This is Milestones to Millionaire podcast number 26. Orthodontist pays off $480,000. Love what you hear on the podcast. Looking for more great white Coat investor content? Head over to our YouTube channel where you can watch video recordings of our podcast, short snippets of financial tips explained succinctly by me and others, and deep dives into topics for more in depth learning. You can even learn all about real estate with webinars from our real estate partners. Check out all this and more@YouTube.com thewhitecodeinvestor you can do this and the White Coat Investor can help. You know, I really enjoy doing these Milestone to Millionaire podcasts. If you would like to come on the podcast and share your success story, we would love to have you on. You can apply@whitecoatinvestor.com Milestones. But whatever your financial success story is, maybe it's getting back to broke. Maybe it's paying off your student loans or receiving public service loan forgiveness for them. Maybe it's paying off your mortgage. I don't think we've had one of those yet. Maybe it's becoming a millionaire. Maybe it's becoming a deca millionaire. Maybe it's hitting financial independence. Maybe it's having a million dollar donor advised fund. I don't know what it is for you, but whatever your financial milestone is, come on the podcast, let us celebrate it with you and let us use your experience to inspire others to do the same. You can apply@whitecoatinvestor.com Milestones. Our guest today is Michael. Michael's an orthodontist. Let's get him on the show and let's hear his story. Okay. Next on the podcast we have Dr. Michael Courtright. Welcome to the podcast.

Thank you.

And what kind of medicine do you practice?

I am an orthodontist, actually, in the dental profession, so.

Okay. And it looks like we caught you at work today, so thanks for doing this.

Yeah, just finished, wrapped up seeing patients and decided to do this.

So tell us how much debt you paid off and I'm afraid to hear it. Knowing your specialty, how much it could be.

Yeah, I had about $480,000.

$480,000. Okay. Could have been a lot worse. I met orthodontist with far more, but that's a pretty good chunk of change. Did it take you to pay it off?

It took us seven years.

Seven years.

The original goal was 10 years, but we beat that goal, so we're pretty happy about that.

Nice work. And what was your range of income over those seven years?

It averaged around 450,000.

$450,000?

Ish.

Okay, so how'd you do it?

Well, we started with a budget and lived by that budget. And what we would do is we would let the excess money accumulate in the business. So I own my own practice, and we let that extra money accumulate in the business. And then at the end of the year, based on our tax projections, things like that, we would take that excess as a shareholder distribution and then just put it all towards the student loans. So we just were strict about living by that budget. And then any of the extra just went straight to the student loans. So that's pretty much how we did it.

So you set yourself a salary from the practice?

Yes.

And everything the practice made above and beyond that went to student loans?

Yep, exactly.

Well, congratulations. You must have been pretty successful doing it. You managed to get it paid off three years before your original plan, anyway.

Yeah, I mean, we were excited about it. It was something where I thought about those debts every day until they were paid off. And when we first bought the practice, we had also a practice loan, too, which added the stress to it, too. But we've been blessed. The practice has grown. We've been able to put a big chunk towards those student loans and get them done.

Yeah. Well, with the practice growing, presumably your income was Significantly less than 450 when you first started out.

Yes.

When you sat there seven years ago and looked at it and said, well, all right, this is what we're going to do. We're going to pay it off over 10 years. Did it turn out to be easier or harder than you thought it was going to be?

Well, when I first started, we were really nervous and stressed. Right. We had student loans, we had the practice loan, and really that first year, we did not have any excess. We had just enough to live on our budget, pay off the minimums on our loans, and so that was pretty stressful. But then as the practice grew, each year kind of became less stressful because we had more and more access. At the end of the year, we were able to pay them off, and we kind of saw the light like, hey, we keep growing this thing. We might be able to get done early. So at the beginning, I was nervous and didn't even know if we'd be able to get it done in 10 years. But then after a couple of years, me and My wife were like, hey, maybe we'll be able to do this and maybe even get, get it done early.

Awesome. That's pretty cool. So how does it feel now?

Awesome. Both my wife and I feel like it's a huge weight off our shoulders now. There's not as much stress, I guess that I have to build this practice and grow it as quickly as possible to pay those off. So now I feel like I can enjoy my work more. I can come to work and just not stress about having that debt over my head and that I have to go gangbusters to be able to pay it off. So it's been a huge weight off our shoulders for sure.

Were you ever tempted to kind of invest that extra payment and try to outperform the interest rate on your loans or were you always focused just on getting rid of the debt?

So I had read and heard and talked with a lot of financial advisors who recommended that. But I'll be honest, it just never sat well with me and my wife. We've always been debt averse. I guess we just wanted to get rid of our debt. Now to say we also felt like we needed to be balanced. We needed to invest in the 401k and the Iraq right off the bat because we felt like those were important. But to just put that extra money in a taxable investment, things like that, we just felt like we would rather pay off that debt than do it. And so against some of the advice of people, we decided to use it to pay off the debt.

So what advice do you have? Somebody who's just like you were seven years ago, they're coming out of orthodontics residency, they owe 6, 7, $800,000 in student loans. What can you tell them?

I think the biggest thing that has helped me is owning my practice right away. I think I see too many people come out of residency or dental school and they go work for a corporate dental office. But if you own your practice right away, and it is, it's nerve wracking. You don't know how to run a business, they didn't teach you in school how to run a business. But if you own your practice right away, your earning potential is so much greater than if you work for a corporate dental office. And because of that, I feel like we were able to pay off our student loans faster. Because I owned the practice, I was in control, I was able to grow it, and thus my earning potential became much greater. Whereas if you get stuck in a corporate dental office, you're kind of stuck at that salary, especially for orthodontists, they're not really paid by production. They're stuck with the salary. So if you work harder, you still get paid the same, essentially. So my advice is, don't be afraid. Go out there, buy a practice, own your own, and work your tail off to grow it and you'll be able to get those student loans paid off.

Do you feel like it was a good investment going to dental school and then orthodontics residency?

I do. I enjoy my career. I do. I like working with teenagers and adults. I'm a kid at heart. It was definitely worth it. I can say that, especially looking back now that they're paid off. At the beginning, you're like, what did I get myself into? Right. But I definitely feel like it was worth it. I enjoy my career and it's a great career to have.

So what's next for you? What are your financial goals going forward from here?

So our next goal is to be completely debt free. And we should accomplish that this next year, in 2021, we should be completely debt free.

Practice, loan, mortgage, everything, everything.

Everything should be done next year. And then with that, we want to be able to do some home renovations, pay that with cash. Wanna do some renovations to my own office. I want to start contributing more to the 401k with some profit sharing and a defined benefit plan. Start saving for kids, college, and then long term, maybe in a few years. I'm hoping that I have three offices. I'd like to sell one of them off and maybe go down to three days a week.

Awesome. Well, sounds exciting. Congratulations. You're on your way to the good life, it sounds like to me.

Thank you. Hopefully that's the plan.

Yeah. I appreciate you sharing your story with our listeners.

Thank you. Appreciate it. Thank you.

Bye, bye, bye. Okay, that was a really great episode. Really enjoyed that one. A lot of lessons learned there. Number one, you can pay off a ton of student loans, right? $480,000 is a lot of money in student loans. And yes, Michael eventually made good money. But let's look at what he did to make that good money. He became a business owner. And as a general rule, you're going to make more when you own the business and where you're an employee of the business. If you look at what the average employee orthodontist makes, it is not $450,000, it's. And so he got into his own practice and made more money and was able to use that to pay off his student loans. I really like the approach too, where he set his salary and everything above and beyond that went to student loans. So he knew there was money to eat with, but also was able to pay off the student loans relatively quickly. It's also noteworthy to remember that, you know, just getting started and making some progress on the loans reduces the stress. They don't have to be completely gone before the stress starts going down, down. And I thought that was a great takeaway point from that interview. Hope you found that as inspiring as I did. Love what you hear on the podcast. Looking for more great White Coat Investor content? Head over to our YouTube channel where you can watch video recordings of our podcast, short snippets of financial tips explained succinctly by me and others, and deep dives into topics for more in depth learning. You can even learn all about real estate with webinars from our real estate partners. Check out all this and more@YouTube.com thewhitecoatinvestor you can do this and the White Coat Investor can help. Keep your head up, your shoulders back. We'll see you next time on the Milestones to Millionaire podcast.

My dad your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor, so this podcast is.

For your entertainment and information only and should not be considered official personalized financial advice.

Sam.