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  • FIRE Advice

    I would greatly appreciate any and all advice on our current situation and path forward.

    Two DDS couple with 3 young children
    Current Income just over 1,000,000 annually
    own practice and real estate together - (practice value ~1.5mil (fully paid off) building 1.5mil - owe 730K 10 year fixed at 3.5%)
    own house outright valued at 1.8 mil
    MCOL area with high property taxes
    ~500K in simple IRA, Roths from early days and $1.4mil in Vanguard brokerage (97% stocks currently) - $1.9mil total invested
    only debt is the practice office building - student loans and two practice loans paid off

    In 2020, we spent $80,000. This was low as we had a new construction house with minimal property taxes that we will pay this year and no vacations due to COVID. I would expect spending $120-140K after tax dollars would be plenty for us. We have about $50K in each kid's 529 account and will continue to contribute each year.

    We hope to continue to save $500K minimum annually for the next few years.

    The million dollar question is "When can we begin our exit?" Should we attempt to diversify into RE sooner rather the later? According to FIREcalc, 4 years from now, we should be good to go. $240K pre tax spending with our current savings rate has a 100% success rate for 60 more years of life after selling the practice and building.

    We are upper 30's so would most likely find some sort of income producing side gig after all the kids are in full time school. Maybe real estate? We have read a lot on the topic but have yet to dive in mostly due to current extremely inflated home prices in our area and also not wanting to add more to our plate.

    Four more years of work is doable for us if that's what it takes. We have considered adding a third DDS and lightening our current load sooner, but we can't decide if this will increase or decrease our headaches. In the past, adding employees/growing has been difficult and takes more of our time that we are willing to give right now with the three little ones. We would like to be laser focused on treating our current patients to the best of our ability and keeping our current staff happy while doing everything we can to contribute all of our extra income to retirement savings.

    That being said, anything we can do to make the exit earlier, we would certainly consider. We feel it is a high stress, production based job that we would love to close the door on. We appreciate everything dentistry has given us and the financial freedom we have achieved earlier in life than most, but the ultimate goal is to be able to live the life we choose.

  • #2
    Little will generate more than your current shovel. Why change that? The best real estate what you have already. Just being in employees for the practice and make it your real estate business would.be my suggestion

    Comment


    • #3
      I’m amazed that young people with such a big shovel with the potential to create opportunity for generations would squander it. I get the whole FIRE thing. But you can’t see yourself “holding on” until you’re 50? The difference would be astronomical.

      Comment


      • #4
        Originally posted by MidwestDDS View Post
        I would greatly appreciate any and all advice on our current situation and path forward.

        Two DDS couple with 3 young children
        Current Income just over 1,000,000 annually
        own practice and real estate together - (practice value ~1.5mil (fully paid off) building 1.5mil - owe 730K 10 year fixed at 3.5%)
        own house outright valued at 1.8 mil
        MCOL area with high property taxes
        ~500K in simple IRA, Roths from early days and $1.4mil in Vanguard brokerage (97% stocks currently) - $1.9mil total invested
        only debt is the practice office building - student loans and two practice loans paid off

        In 2020, we spent $80,000. This was low as we had a new construction house with minimal property taxes that we will pay this year and no vacations due to COVID. I would expect spending $120-140K after tax dollars would be plenty for us. We have about $50K in each kid's 529 account and will continue to contribute each year.

        We hope to continue to save $500K minimum annually for the next few years.

        The million dollar question is "When can we begin our exit?" Should we attempt to diversify into RE sooner rather the later? According to FIREcalc, 4 years from now, we should be good to go. $240K pre tax spending with our current savings rate has a 100% success rate for 60 more years of life after selling the practice and building.

        We are upper 30's so would most likely find some sort of income producing side gig after all the kids are in full time school. Maybe real estate? We have read a lot on the topic but have yet to dive in mostly due to current extremely inflated home prices in our area and also not wanting to add more to our plate.

        Four more years of work is doable for us if that's what it takes. We have considered adding a third DDS and lightening our current load sooner, but we can't decide if this will increase or decrease our headaches. In the past, adding employees/growing has been difficult and takes more of our time that we are willing to give right now with the three little ones. We would like to be laser focused on treating our current patients to the best of our ability and keeping our current staff happy while doing everything we can to contribute all of our extra income to retirement savings.

        That being said, anything we can do to make the exit earlier, we would certainly consider. We feel it is a high stress, production based job that we would love to close the door on. We appreciate everything dentistry has given us and the financial freedom we have achieved earlier in life than most, but the ultimate goal is to be able to live the life we choose.
        I don't have any advice, but this is pretty incredible to read as a 4th year dental student.

        Congratulations on your success!
        DMD '21. Perio '24.

        Comment


        • #5
          Originally posted by ENT Doc View Post
          I’m amazed that young people with such a big shovel with the potential to create opportunity for generations would squander it. I get the whole FIRE thing. But you can’t see yourself “holding on” until you’re 50? The difference would be astronomical.
          I'm curious how you'd go about "creating opportunity for generations?" Beyond fully funding a 529 for the three kids, what would that look like?

          At some point, you get into the double edged sword of creating trust fund babies, economic outpatient care, and extinguishing their grit.

          Comment


          • #6
            What will you both do when you check out of dentistry - live a little is fine but do you have some sort of a rough plan. Especially after a high pressure job grossing $1M

            Three young children. Why not give more time for them now. maybe add a third dentist as associate. They may not hold up to your ultra high standards but may be good enough for the majority of the patients and also give you and your spouse some time off, especially if one is alternating with time off with the other in the office. Might help attend those school plays or performances or other stuff that makes memories.

            A slower path to retiring in the 50's might be better in the long run.

            Extra RE really does not matter. Your office building and business and equities should be fine
            Last edited by Kamban; 05-02-2021, 03:58 PM.

            Comment


            • #7
              Originally posted by Lithium View Post

              I'm curious how you'd go about "creating opportunity for generations?" Beyond fully funding a 529 for the three kids, what would that look like?

              At some point, you get into the double edged sword of creating trust fund babies, economic outpatient care, and extinguishing their grit.
              I totally respect that and don’t think money should be distributed until such age as that grit is established. But more specifically, the college cost fiasco will continue until properly disrupted. Our kids get screwed for our income and we end up getting charged more in after tax dollars for the same product with our marginally less after tax money. It’s a ludicrous scam against the wealthy. So yes I’m more than happy to ensure my kids and their kids don’t have to deal with that malarkey or whatever new raw deal is thrown at those with means. New examples seem to come daily at this point.

              Comment


              • #8
                The best part of owning your own practice and being financially well off enough, is the ability to scale it back. Instead of racing to a finish line , slow down enjoy life and continue to do what you were trained to do. Income per hour is going to be really hard to beat what you make now. I get the whole side gig and income from passive investments. Many of these become part time or full time jobs anyway. Tell your wife to stop working and you cut down to a four day work week. Try it for a while you might like. You and your wife could alternate a one dds schedule.

                Comment


                • #9
                  👏 you guys. That’s all.

                  Comment


                  • #10
                    Originally posted by ENT Doc View Post

                    I totally respect that and don’t think money should be distributed until such age as that grit is established. But more specifically, the college cost fiasco will continue until properly disrupted. Our kids get screwed for our income and we end up getting charged more in after tax dollars for the same product with our marginally less after tax money. It’s a ludicrous scam against the wealthy. So yes I’m more than happy to ensure my kids and their kids don’t have to deal with that malarkey or whatever new raw deal is thrown at those with means. New examples seem to come daily at this point.
                    One of the reasons I come from a different perspective is my Dad is 80 years old, has three kids, and zero grandchildren at this point (though odds are better than even that will change in the next few years, if he lives to see it). He was the first to go to college, get an advanced degree, etc.

                    He retired at 55, but I don’t want to work as long or as hard as he did because I don’t really see the point. What I do observe is a 40 year old nurse who left my unit last week with complications from Stage IV colon cancer... a local health care CEO diagnosed with multiple myeloma in his 50’s... a colleague who took his own life a couple of years ago.

                    Yeah, it’s all anecdotal, but these family wealth building goals are all seemingly based on contingencies you can only partially control, but if a wolf comes knocking on your door, it’s going to be real and staring you right in the face. They usually don’t take rain checks because you didn’t get around to retirement.

                    Comment


                    • #11
                      Originally posted by Lithium View Post

                      One of the reasons I come from a different perspective is my Dad is 80 years old, has three kids, and zero grandchildren at this point (though odds are better than even that will change in the next few years, if he lives to see it). He was the first to go to college, get an advanced degree, etc.

                      He retired at 55, but I don’t want to work as long or as hard as he did because I don’t really see the point. What I do observe is a 40 year old nurse who left my unit last week with complications from Stage IV colon cancer... a local health care CEO diagnosed with multiple myeloma in his 50’s... a colleague who took his own life a couple of years ago.

                      Yeah, it’s all anecdotal, but these family wealth building goals are all seemingly based on contingencies you can only partially control, but if a wolf comes knocking on your door, it’s going to be real and staring you right in the face. They usually don’t take rain checks because you didn’t get around to retirement.
                      On the flip side, if something like that comes up then you’re going to be in a much better position regarding medical expenses or living with a chronic illness.

                      There’s a happy medium in there somewhere. I know myself and I know I wouldn’t be happy sitting at home Monday through Friday while my kids were in school.

                      Comment


                      • #12
                        Originally posted by CordMcNally View Post

                        On the flip side, if something like that comes up then you’re going to be in a much better position regarding medical expenses or living with a chronic illness.

                        There’s a happy medium in there somewhere. I know myself and I know I wouldn’t be happy sitting at home Monday through Friday while my kids were in school.
                        I agree with finding a happy medium. If you’re FI and think you’re working too much, work less. If you’re bored, find something productive to do. Could be working in medicine, could be another job, or it could be something that’s not work at all. The whole purpose of FI is you get to decide.

                        Comment


                        • #13
                          I appreciate all of the responses. This is just what we needed. Neither of us have a "strong identity" tied to being a dentist. We would find ways to stay busy if we exited dentistry. I don't think that's much of an issue at all. When all 3 kids are in school, we would love to coach their youth sports teams and volunteer at the school and in the community. We live on an acreage, so we could do more of the upkeep ourselves, work more in our garden, workout, etc. I do think at some point we will end up with investment properties, although we appreciate the notion that we don't have to do that now or ever. That can be a way to diversify our assets down the line when we have the time.

                          We do currently pay ourselves as part of the business and would expect to initially rent the building to the new owner(s) until they are ready to buy it, so that would provide cash flow as well. Depending on our successor, we may finance at least a portion of the practice buyout as well. I'm sure this is true with most high income earners, but I think what has made us successful in ownership also makes it very hard to close the door when the work week is done. The practice is always at the back our our minds, and there isn't a way to totally shut this off.

                          We are each seeing patients 25-27 hours per week with another 5 or so each spent with administration tasks. We have a part time nanny for the kids 2 days per week that has worked well for us. We hired a true office manager about 2.5 years ago, and that has taken a lot of administrative weight off our shoulders. I don't think either of us feels overworked, and we aren't sure less hours at the office would help the situation at all. It seems there are always small issues with staff,equipment,etc to deal with, and with one of us usually there, we can attend to it promptly and before it becomes a big problem.

                          Again, we understand dentistry has provided us great financial security and really the ability to do as we please in the next few years. By writing this out, we are hoping to hear the words of wisdom from those who have been there before us.

                          Comment


                          • #14
                            Originally posted by Lithium View Post

                            One of the reasons I come from a different perspective is my Dad is 80 years old, has three kids, and zero grandchildren at this point (though odds are better than even that will change in the next few years, if he lives to see it). He was the first to go to college, get an advanced degree, etc.

                            He retired at 55, but I don’t want to work as long or as hard as he did because I don’t really see the point. What I do observe is a 40 year old nurse who left my unit last week with complications from Stage IV colon cancer... a local health care CEO diagnosed with multiple myeloma in his 50’s... a colleague who took his own life a couple of years ago.

                            Yeah, it’s all anecdotal, but these family wealth building goals are all seemingly based on contingencies you can only partially control, but if a wolf comes knocking on your door, it’s going to be real and staring you right in the face. They usually don’t take rain checks because you didn’t get around to retirement.
                            Again, totally legit concerns. The “I see dead people” PoF post rings loudly in my mind. I like the concept of FIRE but in reality I’ve still got things I like doing in my job, things I still want to accomplish, but most importantly I have kids and a spouse I need to provide for and make sure they are taken care of for the long haul. Insurance covers that in the event of death. It’s a balancing act. I just think retiring in one’s early 40s is extreme, especially with kids who in a moment’s notice can require a lot of ongoing financial help. Just my take.

                            Comment


                            • #15
                              Originally posted by Lithium View Post

                              One of the reasons I come from a different perspective is my Dad is 80 years old, has three kids, and zero grandchildren at this point (though odds are better than even that will change in the next few years, if he lives to see it). He was the first to go to college, get an advanced degree, etc.

                              He retired at 55, but I don’t want to work as long or as hard as he did because I don’t really see the point. What I do observe is a 40 year old nurse who left my unit last week with complications from Stage IV colon cancer... a local health care CEO diagnosed with multiple myeloma in his 50’s... a colleague who took his own life a couple of years ago.

                              Yeah, it’s all anecdotal, but these family wealth building goals are all seemingly based on contingencies you can only partially control, but if a wolf comes knocking on your door, it’s going to be real and staring you right in the face. They usually don’t take rain checks because you didn’t get around to retirement.
                              Another thing I’ll add, and this is perhaps my biggest ongoing concern for having generational wealth. Our generation and prior generations have royally scr3wed future generations when it comes to our national debt. Our kids will pay or their kids will. With higher taxes. And that’s bull.

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