Avoid These Financial Sinkholes and Keep More of What You Earn
By Garrett B. Gunderson
You are wealthier than you think. Indeed, even if your top line (revenues) remains absolutely flat for the next few years, I am about to show you how your bottom line can grow significantly. Think about that. Without working any harder, taking any additional risks, trimming back your lifestyle or requiring you to learn some complex new system of investing and money management, there are proven steps you can take – beginning today, to make yourself much wealthier.
Here's the best part: It's your money. You've already generated it, but until now, you've let stacks of it parade straight out your door, unchallenged. Libraries full of books have been written on systems and strategies designed for small business owners and professionals to grow their income and retirement savings. Many of these "get rich" plans push chiropractors and others into risky areas of investing they know little about, such as stocks, real estate, precious metals, or even commodities trading. The problem is – as some of us have learned from painful personal experience – when these wealth promoters note in the fine print that their examples are for illustration purposes only, they are dead on. Only a select few ever actually reap the advertised results. The rest of us are consigned to helping make the advisors wealthier - at our expense.
Let's begin by focusing on how you can get more mileage from what you already earn. Look at the following list or "The Baker's Dozen: 13 Financial Sinkholes That Drain Your Wealth."
To begin your quest to keep more of what you earn, take a minute right now to read each item and place a checkmark next to those that apply to you – or might apply to you.
[ ] 1. I don't monitor my credit score at least semi-annually and take proactive steps to raise it – even when there are no "errors" on the reports.
[ ] 2. I don't distinguish between expenses that are productive, consumptive and destructive.
[ ] 3. I rely on one or more investment advisors who are compensated, at least in part, based upon sales commissions.
[ ] 4. I meet no more than once or twice a year with my tax preparer.
[ ] 5. I have not reviewed my business structure (LLC, S Corp, Unincorporated, etc.) with a qualified legal and tax advisor in the past three years.
[ ] 6. I have outstanding equipment loans.
[ ] 7. I am carrying one or more mortgages (business or personal).
[ ] 8. I regularly pay more than the monthly minimum on more than one credit line (business or personal).
[ ] 9. I have money riding on investments that I am not specifically trained to manage including stocks, mutual funds, precious metals or income real estate.
[ ] 10. I provide my employees a profit-sharing plan.
[ ] 11. My spouse and/or I contribute to a 401(k) plan.
[ ] 12. I have saved enough money to elevate my style of living or to fund a long-held dream - such as a special vacation, a boat or a collectible – but I'm postponing any such expenses until I retire or am closer to retirement age.
[ ] 13. I have lost some of my passion or sense of purpose when it comes to work.
There is no point value or weighting assigned to these leakages. Any one of them, in and of itself, can be sufficient to send your hard-earned profits spiraling into the financial abyss. The good news is that the more items you checked on "The Baker's Dozen," the greater the likelihood that you can quickly make yourself significantly wealthier without ever having to generate a single additional dollar in revenues.
When working with chiropractors, one of the first areas I inspect for financial leaks is taxes. Whether or not you think you pay too much in taxes, my experience finds that more than nine out of ten chiropractors do indeed overpay – not just once, but year in and year out. You might ask: "How is that even possible? I use a respected CPA firm to handle my tax preparation each year." There is a vast, Grand Canyon-like difference between a certified public accountant who prepares your taxes and what I call a tax advocate. Most chiropractors work with tax preparers. These are professionals who you look to at tax season to ingest your bank statements, credit card logs, cash receipts and other tax documents and then, voilà, spit out your tax returns.
A tax advocate, by contrast, is a tax-planning and tax-savings partner who meets with you regularly throughout the year and comes to understand your operations and aspirations. Together with your tax advocate, you develop a meaningful, personalized tax philosophy that skips the gimmicks in favor of a blueprint for long-term tax efficiency. Tax efficiency is a proven approach based on two tenets: 1. The wisest possible tax strategy available to any business owner is always to make even more money. 2. Good tax planning should be framed inside a system of good business planning.
If you're regularly taking actions to trim your tax bill that do not also accelerate your business's growth and profitability, you're making crucial missteps. Of particular note, conventional tax accountants often encourage small business owners to create profit-sharing plans or start 401(k) plans for employees. Yet, when scrutinized, both plans consistently fail to deliver either on the promise of wealth generation or long-term tax savings. Plus, they absolutely fail to improve your practice's inherent profitability. Beyond taxes, more chiropractors needlessly spill away their profits on poorly structured loans and repayment strategies than on any other oversight.
Debt can be choreographed in a manner that reduces the cost of borrowing; frees cash for better uses; saves on taxes; and flips what most people perceive as a liability into a productive asset. An easy place to start alleviating your debt anxieties is with your credit score. Raising your score by as few as 50 to 100 points (it's faster and easier than you might expect) will allow you to save thousands of dollars annually – perhaps much more.
Most chiropractors don't save enough of what they earn. I'm not talking about denying yourself the many pleasures of life in order to squirrel away a few extra dollars each month. What I'm talking about is setting aside money that you would otherwise put into a mutual fund, a stock portfolio, real estate plays or other "at-risk" investments. I'm not one to worship at the alter of those financial advisors who preach that chiropractors and other small business owners must accept risks if they're ever going to become rich.
In my experience, and that of thousands of successful small business owners whom I've advised, there are solid approaches to wealth accumulation that will consistently deliver financial growth (and peace of mind), without subjecting you to the volatility and frequent loss of principal (and sleep) suffered by risk takers. I want to focus on building up your secure financial war chest; paying off debt; reinvesting in your practice and your professional field; insuring away as much potential risk as possible; making savvy spending choices; and relying as infrequently as possible on commission-based advisors who will profit, even if you don't.
Importantly, we also recognize that not all wealth is created equally. Chiropractors who postpone the enjoyment of their profits, have lost some passion, or lack a profound sense of purpose, must rethink the "why" of wealth.
In next month's issue of DC Practice Insights, I'll introduce to you the concept of Quintessential Wealth – in which you not only get to keep more of what you're earning, you get to enjoy it a whole lot more.
Garrett Gunderson is a financial advocate to chiropractors and the author of the best-selling book Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity. Get a free hardcover copy at www.freebookforchiros.com or by calling (877) 389-6547.