Taking the Reins of Your Financial Future

How to Set Yourself Up for Financial Success

by Dr David Phelps

by Dr David Phelps

“In the midst of all these variables, dangers, and distractions, what can we control to make the most of our profession and make the best decisions for our financial future?”

I often meet ambitious individuals with a vision of reaching the top of the pyramid or scaling the top of the mountain, usually through higher education or a higher level of skill set.

We were all taught to go to school and get the best education possible to become doctors, lawyers, or engineers. Those had always been the staid professions that were deemed highly respectful and provided a lifestyle that few others could have.

For many generations, this held a lot of truth. But the models have changed immensely today. 

Dentistry No Longer Guarantees the Life You Want

The higher cost of doing business has induced the sunk cost fallacy at a higher rate in practice professionals. Certain professions, particularly dentistry, have some of the highest capital costs of any other profession.

Lawyers and accountants have very little costs compared to dentists, especially if the pursuit is to own your own practice. 

Educational costs are immense, causing many students to go into higher debt. The cost of student loans keeps going up, and the return on the actual investment diminishes over time. 

Once you’re in active practice, there is compliance regulation; insurance has become a tyrant, and private equity has been taking over and consolidating the industry.

It's very, very difficult for the individual who thought they could be a soloist or an entrepreneur not to have to join the larger throngs of private equity consolidators. The pressure is immense.

You also need to consider the direction of our economy and the motivations of our government. If the government could put small businesses out of business, they would in a heartbeat because they want control.

In the midst of all these variables, dangers, and distractions, what can we control to make the most of our profession and make the best decisions for our financial future?

How to Combat Sunk Cost Fallacy

We can begin to take the reins with the issue you can control the most: the sunk cost fallacy. We expend so much time, effort, capital, and risk into one area of life that it almost seems logical to continue to put everything in it and throw a Hail Mary pass. Just throw it in the air and hope somebody on our team catches it.

That's a tough way to live life, and I’m personally familiar with the frustrations it provokes deep inside – frustrations we can't even communicate to our spouses, certainly not to our kids.

We have to be the strong ones. We have to carry that weight and act like it's all good when inside we feel like we are on a hamster wheel forever spinning.

The amount of stress you experience can throw your peace of mind and health out the window. It's not a position we thought we'd be in.

How did I get free from this? I had the benefit of a wake-up call, my daughter’s health crises, and also the curiosity early in life about becoming a better steward of my capital.

I didn't know where to invest or even what an investment really was, but because I was curious, I read books about assets, particularly tangible assets like real estate. With this knowledge, I began, unknowingly, to build my Plan B before I became a dentist.

Part of who I am is being willing to experiment and even fail to reach higher and arrive at a better place. This is especially true when you’re younger and have a lot more time to use and learn from trial and error.

So, to escape the danger of sunk cost fallacy, you must realize what you’re risking by continuing to invest everything in your professional career. The risks might come in areas of your life you have not previously considered: your relationships, time, health, peace of mind, and even the true purpose of your life.

Then, you must be willing to learn how to be a better steward of your capital. It may seem daunting at first, but you don’t have to do it alone.

Shiny Object Syndrome

I found a way to exit my active income sooner and relieve some of the pressure. It's exactly what we do at Freedom Founders.

Many have ideas of, “I can, if I just do this. If I get involved and buy some Airbnb properties like everybody else has done in the last two or three years coming out of COVID, that's the answer.”

Real estate syndications are the place to go because everybody's talking about these big multiples and IRRs (internal rate of return) in various investments.”

Or crypto or some other shiny object promoted in the public place. I'm not saying those things are bad, but you have to understand how that investment model works or can be successful. 

You can’t change your model based on the whims of the market or the popularity of the moment. Here’s why.

The Economy and Markets are Changing

The economic cycle has been changing rapidly in the last 18 months. Whatever has worked in the past – business and investment models, 401(k), etc. – is all up in the air right now. They have a high probability of not working the way they might have in the past.

The worst thing anybody can do right now is follow the same course. Don’t assume that we'll get back to some normalcy, there are many signs that we won’t.

I predict a lot of volatility going forward. This will frustrate many people, especially those who refuse to change their ways of doing things. Doing the same thing over and over again and expecting different results will frustrate you to no end.

You need a game plan for your finances, as in-depth if not more than your game plan for your practice. For your dental practice, you seek help, advice, and mentorship. You're in study clubs; you get CE, etc.

What are you doing about your finances? Other than just Hail Mary's or a monthly brief review with your financial advisor?

Your finances include your practice but go way beyond it. They concern your family, your children, your legacy. It concerns your future after selling your practice.

But there is no common go-to for such finance coaching encompassing your entire life. No one ever taught you how to do this. You weren’t trained in this area, and what most people learn is from life experience.

You might think your financial advisors are supposed to be that expert, but he or she, even with the best intentions, often only have one model to “sell” that puts food on their table.

Financial advisors are incentivized to do their best, but they can't give you the entire picture. Like most of the population, they are still 9-5 employees, yet they give financial advice to entrepreneurs and business owners.

How to Take the First Steps in the Right Direction

How can you begin to set up your finances and your investing so that it advances you towards your active income replacement?

The best way to do this is to join a community with experts who have the life you want and other professionals in your position who are trying to accomplish the same goals.

Freedom Founders is one such community. We have helped hundreds of dentists in the same position. These are business owners, high-income and high-net-worth people who have worked tirelessly to be financially successful but do not know how to translate that high income into passive cash flow. They don’t know how to take the stress off of themselves and create more freedom in their lives.

In Freedom Founders, we co-create a plan with measurable milestones and a high degree of certainty that people can't get anywhere else. Creating such a blueprint helps change people's decisions right now, and accelerates their path to freedom.

Do you want to go deeper into the hole until you can no longer climb out by yourself? This leads to making some bad decisions based on fear when you're in your late fifties or sixties, and it is very difficult to overcome big financial hurdles the closer you are to retirement.

Now is the time to reinvest in yourself again. You have done so in the past, in your academic studies and your practice.

What about your financial future? Have you invested in yourself there? It’s not just putting your money in investments. It’s investing in your understanding of how and what you’re investing in. It’s investing in how to make better decisions with your finances and your investments.

It's all about your freedom, but you have to take the reins to move in the direction you want to. Are you ready to do that?

It's all about your freedom, but you have to take the reins to move in the direction you want to. Are you ready to do that?

To your freedom!

– David


P.S. Whenever you’re ready, here are some other ways I can help fast track you to your Freedom goal (you’re closer than you think) :


1. Schedule a Call with My Team:

If you’d like to replace your active practice income with passive investment income within 2-3 years, and you have at least $1M in available capital (can include residential/practice equity or practice sale), then schedule a call with my team. If it looks like there is a mutual fit, you’ll have the opportunity to attend one of our upcoming member events as a guest. www.freedomfounders.com/schedule

2. Become a Full-Cycle Investor:

There are many self-proclaimed genius investors today who think everything they touch turns to gold. But they’re about to learn the hard way what others have gained through “expensive” experience. I’m offering a free report on how to become a full-cycle investor, who knows how to preserve and grow capital in Up and Down markets. Will you be prepared when the inevitable recession hits? Get your free report here.

3. Get Your Free Retirement Scorecard:

Benchmark your retirement and wealth-building against hundreds of other practice professionals, and get personalized feedback on your biggest opportunities and leverage points. Click here to take the 3 minute assessment and get your scorecard.

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