Debt-free faster than you imagined

Whether in the first or last trimester of your chiropractic career, you will always be focused carefully on the kind of practice you want to build. But one of the first concerns all students should have before graduation is the amount of debt they will be carrying and how fast they can pay it off.

Whether you decide to go solo or invest with someone else, there will always be numerous expenses. Therefore, you have to develop a plan and devise the tactics necessary to quickly pay down debt while also paying yourself.

It’s frightening to realize that the typical student is now leaving school with about $225,000 in debt. This does not include the cost of relocating and starting a practice if that’s what the new DC desires. Take Helen B. for example. She recently graduated, has a fiance just completing a chiropractic program, and they both want to begin a practice together and buy a home. But Helen is already close to $500,000 in debt and has not yet made a penny. Caution is advised here.

One of the first things to consider is how quickly you can find employment to begin the process of reducing debt. Becoming an associate is the easier way to go because you will have a stable income from a salary. But what you do with that salary is important.

It is easy to spend money on material items on the “want” list. The better financial move, however, is to figure out how much of your income you can have automatically deducted to repay debt. Whether it is a few dollars or a few hundred, the amount should be automatically drawn from your net pay so you never have a chance to spend it on something else.

As you continue to establish yourself in your new office, your pay should increase along the way. It’s worthwhile to take a percentage of any increase and apply it toward your debt. Although it may seem that you are just repaying loans, you are also building your credit rating while reducing your financial burden. Establishing credit will be useful later should you decide to open a solo practice.

If you choose to operate as an independent contractor, one of the first things to consider is what your split with the principal will be and how much of that can be allocated toward your debt. Whether it’s 1 or 20 percent, it is vital to allocate something, otherwise your loans will hang over your head.

Let your owner know that you are working for two reasons: 1) to help make him or her (and you) successful, and 2) to pay off your debt in seven years or less.

In the years following graduation, your income should grow as you gain new patients and opportunities. However, everyone has a different expense threshold.

Income won’t help you if your expenses outweigh your gains. And life sometimes gets in the way. For these reasons, consider conducting an annual financial review.

Using an accountant, a balance sheet, or a profit and loss statement, find areas where you can save more money to put toward debt repayment. In the worst case, if your income falls, you might need to readjust your debt payment schedule to help meet expenses.

Debt is only good for the financial institution you’re repaying. Yet without debt, most may never get the opportunity to learn the art and science of chiropractic. Good things can arise from debt, but accept the responsibility of discharging it. The process is daunting, but so is gaining a diploma.

The same exuberance you feel at graduation you’ll feel the day you are free from your repayment obligation. It will take time, but the sooner you finish, the sooner you’ll be working for yourself – not the bank.

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