Graduating from Dental school is a major accomplishment, but it also means facing some financial decisions you may not have encountered before. There is a tendency among some new dental school graduates to want to immediately create the lifestyle they think a dentist should have. However, jumping into a big mortgage and car payment too quickly can lead to buyer's remorse, and the feeling that you just aren't able to get ahead.
If you recently graduated, or will soon be graduating, from dental school, here are some dental practice finance tips designed to help you get - and stay - on secure financial footing:
1. Address Debt
Dental school tuition and expenses can add up, especially when piled on top of undergraduate student loans, credit card debt, car payments, etc.
If you're having trouble getting on top of your debt, the first thing to do is stop using credit cards. Then, prioritize your debt by the interest rate you're paying. That almost always means you should tackle your credit card debt first, before trying to put extra money toward your student loans. If you are paying 15 - 20 percent interest on credit card balances, put as much money as you can toward paying those down.
If you have three credit cards, pay the minimum on the two lower interest rate cards, and put everything you can toward the card with the highest interest rate. When that card is paid off, put the amount you've been paying toward it to use paying off the card with the second-highest interest rate, and so on.
When you've eliminated your credit card debt, you will have extra money to put toward paying off your student loan debt and any other financial obligations.
2. Put Your Practice Before a Mortgage
It can be tempting to run out and buy a big house in the suburbs with an even bigger mortgage. After all, you're a dentist now. Shouldn't you live like one?
Before tying yourself to a particular city or even a particular geographical area by assuming a home mortgage, focus first on getting your dental practice up and running. Then, look for a home you can realistically afford, one that is convenient to your new office.
3. Make Informed Decisions When Looking for a New Car
As with the temptation to jump into home ownership, many recent dentistry school graduates want to drive something new after graduation. Before signing up for a new car payment, take a good look at your finances to make sure you're not obligating yourself to more than you can actually afford to spend. Consider that your car insurance will likely also rise when you get a new car.
You'll also want to carefully consider whether you should buy or lease your new vehicle. When you lease, you'll be able to drive more car for your money, however at the end of the lease, you're left with nothing to show for years of payments. As a general rule of thumb, most experts agree that you should buy instead of leasing if you want to have your car for more than five years, or if you anticipate driving more than 15,000 miles/year.
Find Tools and Professionals to Help Make Your Personal and Professional Finances Easier
While these financial decisions can seem overwhelming, the good news is that you don't have to go it alone. Look for a financial advisor who has experience working with dentists and other medical professionals, to help you with your personal financial life.
When it comes to establishing your practice, turn to Square Practice for solutions designed to help you build, maintain and grow with confidence and ease. Contact us at (888) 247-5017 to learn more.