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1342 Travis Hornsby on the Dental School Debt Problem : Dentistry Uncensored with Howard Farran

1342 Travis Hornsby on the Dental School Debt Problem : Dentistry Uncensored with Howard Farran

1/28/2020 3:00:00 AM   |   Comments: 1   |   Views: 273
Travis Hornsby is the founder of Student Loan Planner and the host of The Student Loan Planner podcast. To date, he’s personally consulted on over $200 million in dental school debt for over 500 dentists and dental specialists. He is a Chartered Financial Analyst and is tired of dentists getting lousy advice on how to manage their student loans.
https://www.studentloanplanner.com

VIDEO - DUwHF #1342 - Travis Hornsby

AUDIO - DUwHF #1342 - Travis Hornsby

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Howard: it is just a huge honor for me today to be podcast intervening Travis Hornsby he's the founder of student loan planner and I never almost never bring a guest back twice but I'm bringing him back he's the founder of student loan he's a chartered financial analyst I am I do want to say that his uh the last time we brought him on he had how many he had how many views did he have you had a thirteen hundred views on YouTube which sounds like a lot until you realize his brother Bruce Hornsby and the Rangers the way it is official video song has twenty five million views so your  older brother is showing you that later they're listening to music that in student loans people yeah people like music they don't like to think about they're dead right um you're the kind of the authority on dental town you answer so many questions I'm so grateful for you I mean you have a nearly 500 post a very detailed answered but you said that um that it's a very fluid market things are changing what would some what's different than last time when you came on the show 

Travis Hornsby: well I think I've figured out a lot better way to explain people's dental school debts to them right so you really have two approaches for dental school debt you can view it as a debt where you actually have to pay it back or you can think of it as a tax and I wasn't really able to articulate that as well the last time I was on the show because yeah we probably have advised about ten times the number of dentists now as we did back when I was on episode 700 back in the day but  that paying your loans as a tax is really a really profound idea because it means that you can rock your finances you can retire earlier than you ever thought possible even if you're one of the kids coming out with six seven hundred thousand out of one of these most expensive schools sin the country 

Howard: so um you know it's amazing or any of the is anybody in academia feeling any guilt about this I mean you know these private dental schools charge at a hundred thousand dollars a year and you go have dinner with the deans and it's a five-star restaurants and they're having they're always talking about all these people who donate and donate and donate I'm like dude do you realize you're dumping out a bunch of kids with half a million dollars I mean are they aware that there don't have one eye on the student in one eye on cos they kind of have one eye on all these grandiose ways to spend a lot of children's money 

Travis Hornsby: yes also that there was this interview I did with NPR like a month ago and they interviewed the Dean of Harvard and my you right and they asked them what was the problem with dental school debt like who's  to blame right and  how are guess what they guess what they blamed they said students there's some real horror stories with student living expenses that are totally out of control and and I just thought you know are you you know bleeping kidding me I can't I don't want to say what I was thinking but when the reporter told me they said that I said is that a joke is that some sort of like just absolutely ridiculous statement do they know how foolish that is from a mass perspective so the reason is because you look at NYU's website today it's a hundred grand direct cost of school right and New York's not cheap you know it's it's it's a little bit more expensive than where you're at in Arizona I think you know so you tack on 40k living expenses and then you tack on the interest and everything that grows and the the kids that are entering dental school that inter dental school this fall we're projecting they're gonna leave with $750,000 of dental school debt so $750,000 for degree that they're gonna associate and they got to do a GPR residency for that first year in the state of New York and then they're gonna get under 20 KN comes out of school starting at least so that's just one example but yeah that I don't think that they do feel guilt I think that they view it as this is what I have to do to get my faculty raises and stay competitive with any other schools and this is what I have to do to keep my job and since they can pay based on their income I hope it works out for them

Howard:  Wow and it's a and yeah I mean look at their tuition it's a hundred thousand dollars a year yeah so but so back to this thing is student loans a debtor attacksI when you said that you know the last you know you know who I thought you sounded just like it was Friedman I remember when the first president I was aware of as a child in high school was Jimmy Carter and he was giving a tax cut but he had an increase deficit which is now just a total norm I mean they've been doing it ever since Carter and then Reagan piled higher and it just gives on but Milton was like okay well if you give a tax cut of $1 but you run a deficit spending of $2 well you you just raise taxes you just raise taxes because if you spend if you spend this dollar it will be paid for either the Federal Reserve is gonna print money and it'll be paid in inflation but you there's no free lunch and so what did you were you helping a Milton Friedman moment what is student loans a debt or a tax what does that mean well yeah 

Travis Hornsby: so you like there's been some other people on your show that have talked about the standard advice you hear from a lot of people that say they know about student loans which is basically they say well stretch it out you know get it get a subsidy you know on something like that revise to pay as you earn program and then just you know you'lll refinance it at some point right and that's kind of the go-to advice and then I'll say stuff like you know oh there's no way that they're gonna forgive these rich dentists you know they're not gonna forgive you know five hundred thousand dollar dentist it's making two hundred thousand dollars a year that's not gonna happen you know I've got a you know coconut plantation in Florida I'd like to sell you right and and so that's just so wrong because what you can do is this you can pay your loans as 10% of your adjusted gross income basically you get a little bit of a deduction too but you can pay it as 10% of your your a taxable income right and so if you're a practice owner you've got a lot of things to write off right you've got your retirement savings you've got depreciation on equipment in the building maybe you've got your business interest and then there's even more loopholes that we can get into if you if you want to but you can get that taxable income pretty low right and so if you on your own did all of this but here's the thing so in terms of like the debts that are out there right so the a da ADEA says that the average dental school debt right now is two hundred ninety three thousand that's what they say for class of 2019 293,000 what they don't talk about is 20% of people graduate with zero and another 20% of people graduate with less than 200,000 which can only happen if you had support from a family member or your own savings or the military right and so there was this data dump that I put on dental town and the financing school and loan repayment section the government just released all these median debt numbers for the schools right and it's so far below what the stated cost of attendance is the what basically you can figure out is all these dental students are being told average debt numbers that are just way below what you actually have to borrow if you're not already rich or coming from a well-off background 

Howard: and it's because people using words instead of median or mode or mean they use average and it's like it's like the average the average the median so income and I say so half the people make more than you have is less he's only $31,000 but the average meaning a household income is 50,000 because you know you got so many billion errors I mean so what so when you I don't know when you look at that the mean or the mode would be the median income is thirty one thirty thousand eight hundred so median income is thirty thousand anywhere at this and I gotta get this in my noodle right I wanna mess up is thirty thousand eight hundred but the mean income is fifty thousand and that's because with the mean you know there's ten people sitting at the table and you say how much to each make an hour and it's like ten nine guys say well I make fifteen bucks an hour then Bill Gates is sitting at the end of the table me says I make a hundred billion a year well then everybody so so mean median our average is a what do you like you like what what number do you I think they should only use mean or mode

Travis Hornsby:  well here's the problem there's  lies there's damn lies and their statistics right have you ever heard that one so that's what's happening is the dental schools are kind of hiding behind these bias statistics that are not really giving a full picture of what the actual cost is well yeah but even even the median right so what  I'm basically saying is this you've got all these so the maximum student loan debt is the cost of attendance plus some interest accruing right so there's no bill gates it was a billion dollars of student loan debt at least not yet right haha and so what's happening is instead of the big huge values that skew that on the top end what you're seeing is a lot of people that dads are mom is a dentist that are skewing the numbers on the bottom end making it look like the dentistry degree is gonna cost them less than they think it's gonna cost them is that make sense so like that person at the you know the financial aid office at that dental school can say hey you know our average debts 300 grand well it's 300 grand instead of 500 grand because we've got a whole bunch of people that we were able to recruit that are paying a lot of their own way right so  that's kind of one of the problems is a lot of people go into dentistry thinking they're gonna buy they're  you know they're gonna be their uncle right or they're a family friend that had bought their dental practice in 1975 that didn't compete against the DSOs for purchasing it right and then also they're gonna go buy back and get 1975 tuition dollars too or they're gonna be somehow you know have their tuition cut in half cuz they're getting family support when they're not they're borrowing it so so that's the first thing is just realizing that the the actual debts up there are a whole lot bigger than what you hear in the media so 

Howard: so then you're you're advocating they should use a modem number though the most often repeated number of debt as long as it's not 0 right I mean 20 percent have zero and there's no Bill Gates at the end then you can't really do so mode would probably be better than median probably but 

Travis Hornsby: I think that really what you should have is the dental schools I think should be required to disclose what is their 90th percentile okay I like I think that that's the best one because that tells you a nine get a mathematical answer that's the best rile what is your 90th percentile person Oh graduating what does your 90th percentile dental student graduate dental student graduation debt load exactly because that cuts out all the military folks all the people that had a working spouse cuts that all the people that had some financial assistance from family right you just get the the you know the raw truths as to what people are actually graduating with and and so the the thing is there's a lot of the folks the private school grads that graduated in like 2016 to 2019 they're coming out with like five hundred right and so the private school grads that are going to come out and like the mid-2020s under these roles are gonna have three quarters of a million dollars a lot of them so the debt balances are getting worse right and and Howard I've heard on your show before you talk about the reimbursement rates for dentists have gone down and average incomes have gone down from like two thirty to 180 or something like that so you know you've got increasing debts you've got declining incomes or you know they might recover a little bit but you know they've fallen right and so what does this mean does this mean that you're supposed to pay you know your loans back well let's talk about that if you pay your loans back you got to pay one percent of your balance to get rid of it in ten years so do you got three hundred grand you got to pay $3,000 a month right and one three you got to pay one three hundred a month you said yes so like so if you just kind of look at a three hundred thousand dollar student loan balance you know if you're trying to pay it back in ten years okay so if you want to pay back in ten years then it's one three hundred of the amount per month what well 101 percent right or you know one over seven month per month yeah so

Howard:  so one percent of three hundred thousand right three thousand dollars a month that'll get you done in ten years that's a nice little finance restrict so if you want to pay back a debt over ten years then it'd be a 1 percent of debt monthly payment yeah and what was great would that be on like a five six percent you know I mean 

Travis Hornsby: good rule of thumb yeah and about I think 0.6 percent of the balances for 20 years okay so it should be around two thousand a month something like that to get it rid of it in 20 years and over 20 years is 0.6 percent yeah that's that's not as easy to a rule of thumb cuz it's better to just do one percent right it's easier math right my point is this you know if you're if you're looking at paying your debt back paying three thousand a month which rather do that or let's do it on the flip side here you've got two hundred thousand dollar income and let's say that you have practice you know entry of interest on your practice loan so that knocks you down from 200 whatever 170 right and say you max out retirement now you're down to 150 you've got some depreciation going on so now you're down from 152 to like 120 okay and now you're gonna take 10% of 120 minus a deduction that they gave you to so if you do all the math basically that works out to a payment of around 800 a month so my question is is would you rather pay $800 a month or would you rather pay 2,000 a month to pay it back in 20 years or would you rather pay 3,000 to have it done in 10 and there's one big thing I didn't mention about that which is forgiven student loan debt right now is forgiven you have to pay taxes on it like it's a bonus after 20 years so that sounds bad but it's actually not nearly as bad as it sounds we can get into why why yeah so the reason is just because stood alone interest does not compelled so if you're if you decide if you want to know shopping spree right or some you know somebody your family goes in a shopping spree and just runs up the credit cards you don't pay them it compounds right all the interest so you could be just crushed with that but with student loan interest if you're paying on one of these income driven plans the net grows at a simple rate of interest which is a government provided protection basically so what that tells you is everybody assumes okay I'm doing these eight hundred dollar-a-month payments oh five hundred grand I'm an O five million dollars by the time I'm you know ready for forgiveness right but that's not how it works because of that simple rate of interest growth if you pay that minimum payment it grows into a balance that might be maybe double what you started with and so if you look at the way that works out to the math if you put about five percent of your income into mutual funds that you're gonna have enough to pay that tax bomb with so when you know say you've started off with four hundred grand you're paying ten percent of your income that 400 grand grows to eight hundred grand over 20 years if you've been putting away five percent of your income into mutual funds that you'll be able to pull that out and pay that that tax hit at the end and then what you can think about is do I want to have ten percent plus five percent that's fifteen going to my student loans right or do I want to be paying one percent of my balance every month you know which could be three thousand five thousand six thousand depending on how much you owe right and so that's the groundbreaking idea is that if your student loans are a tax then what that turns you into is somebody that has no student loan debt you're just a citizen of Germany that has to pay slightly higher tax rates than than we do here in the United States and that also means that doing things like becoming a practice owner super smart because it can give you ways to minimize your taxable income right and it also means that hey you know people in Sweden they still work even though they're paying seventy percent tax rates right so that means that you want to make more income you don't want to stress out about your student loan debt and that the idea that you just have to pay your loans back is actually an outdated idea and kind of there's a lot of scare mongering going on I think around people saying that people's debts are not going to be forgiven when you know in a lot of cases people's debts are gonna be forgiven and and you know really if you look at the 2020 election you there's a really good chance that that's actually going to become more generous but I mean it's tough because I'm just curious how old are you 30 30

Howard:  I you know I live I agree I'm high school in 1980 that was horrible twenty one percent interest rate so I would do four contractions right hand it was 80 87 mm Lehman's day was 2008 so is this macro is this good is this advice gonna change if there is another contraction I mean just assume I got a Nobel Prize in Economics saying the business cycle isn't going away because humans are making all the decisions and they you know after they pile on a lot of bad decisions for 17 years I look at our government they had a trillion dollars in debt a year and then and then the big campaign issues is well we want a college to be free and healthcare to be free it's like I'm sorry have you looked at your tab on the credit card I mean you got it yet at 19 trillion dollars on your credit card you have 58 trillion of unfunded liabilities and you're still you're still spending like a drunken sailor so you're 30 years old what are you saying to a 30 year old person who's thinking you know the last contracted me was Lehman's day and nobody knows what's ahead of us and if you you can't predict the future and unless you're crazy but you you you're if you're sitting there at 30 years old thing and there's never gonna be a downturn again I mean now we're all drunk yeah 

Travis Hornsby: well it's true I mean I'm not at all saying that this is a good system this is the dumbest system that we've created with our student loans like you that you could possibly imagine like if you got a bunch of people around a table and they just drink the whole bottle of scotch eat you know and they came up with a student loan system it'd probably look kind of similar to the one that we have yeah you know unlimited borrowing there's no caps on which you can borrow the interest rate has just artificially set there's all these loopholes it's ridiculous right and the thing is is you know you can try to pay your debt back you know but if you do it without knowing the rules you're gonna shoot yourself in the foot and you're gonna be fighting Mohammad Ali with one hand tied behind your back right and so that's what that's what we're trying to avoid as yeah absolutely taxes are gonna probably have to get higher for this right you're probably gonna see tax rates go up to pay for all this you know expensive loan policy that we've developed right but the worst thing that you could do would be to pay twice so you know you either want to pay your debt off which you know I tell people if you Oh whew ooohhh less than 1.5 times your income then you should probably pay it back right so let me give you another role too so 200,000 times 1.5 that's $300,000 if you Oh less than 1.5 times your income yeah so take your income put it into your phone calculator right take your income times 1.5 do you owe more or less than that okay if you if you Oh less than that then all those things you get in the mail about student loan refinancing you might as well use those and go ahead and refinance and the the truth there actually is you know we we get people we get actually a significant part of our revenue from her business from people who refinance their student loans right and we take lower commissions so we can give people bonuses that the people you know that give you the direct mailing don't give you know so there's they're like $750 bonuses the 88 bonus things like that so so we're not against people paying off their student loans that's not what I'm saying right I'm just saying that there's a whole bunch of people kind of running out there saying that they know about student loans when they're really just kind of pretending or using that as a marketing strategy to try to sell you a four figure comp Commission disability policy or a five figure financial advising services right they're kind of using student loans is kind of a guys to sell you something else when they actually don't know what they're talking about they're they're talking student loans to get them to sign up for more financial planning financial Commission yeah well absolutely because if you say you don't make a lot anything on the student loan advising right like I've seen cases where people would get a bit giving it away for free and that's a smart strategy cuz if they can give it away for free and then get some you know one out of every five people signing on for their you know whole life insurance product right or their blood mutual funds or their you know ten thousand year financial planning then that's a huge win for them right tons of people I had I had a guy that got taken with a $3,500 a month policy so the guy he's like why would the guy tell me that I said so this guy's either stupid or he's a crook because you know if you got a 4% projected yield on a whole life policy you have a 7% student loan you're locking in a negative 3% arbitrage and the reason he did that is because he gets a $40,000 Commission probably for selling you the thirty five hundred a month policy right yeah 

Howard: yeah Commission financial planners like those and downtown yeah this person is in charge five thousand dollars for a financial plan I'm like well why don't you just open up a Charles Schwab account by five thousand dollar index fund and then never return that guy's phone call again and forget you have that fund in there and look at it again when you're 65 I mean I mean you agree or disagree I mean III would

Travis Hornsby:  I would say it depends right so if somebody's not gonna do what they need to do and they're gonna freak out when the market crashes then some sort of four figure amount of money for a fiduciary if the only CFP is probably a fair thing you know it's probably a decent idea for somebody to not get screwed over and make good decisions right so I'm not saying don't have a financial adviser I'm just saying you know the people who come actually I'll tell you this this is a fun story for dentistry uncensored I had this really high fee or high cost program that that asked me to do a luncheon learned right and so you know what they they said right after I said I'd do the lunch allure and they said we want to check to sponsor the the lunch should learn basically to cover all the cost and everything I said so wait a second so you're basically saying that you've got to pay X amount of money to do a Lunch and Learn so the only people they're gonna want to come talk to your students for people that sell you know insurance or high feed products or something like that and I said so you don't have enough money to pay for Jimmy John's and --which is charging them five hundred thousand dollars you know I I mean I you know some of the dental schools I have good relationships with but like that dental school I mean I just I just wanted them to tell them to go screw themselves I can't say

Howard:  they're absolutely of crop past the line of being a sociopath when they're right they're predatory they're preying on young kids you're gonna be a rich doctor and then they they have no eye on cost and everything's a shakedown and it's just money might you go have lunch with any of them it's just money money money money money money money money money money money money and it's like my god it's like they  found a system where they can live the high life and and not have to be dentists that treat patients and pain and do root canals and extractions but sit in there and be faculty and these kids will pay their lifestyle for the four years they're there and then they don't care that the kid will be paying for this bill plus interest for ten twenty years just like the government I mean look what people are doing to their grandchildren you're  you're a newborn baby today you know much debt a newborn baby has just been born in America hundreds of thousands right I mean it's just it's just criminal and then then grandma has the nerve to say oh I brought you over so a little outfit well a fortunate grandma you're on Social Security or on Medicare you're on Medicaid you haven't had a job in 15 years and all you could do is deliver some booties - babies paying for your criminal lifestyle well yeah 

Travis Hornsby: so let me get into like a loophole just to give you an example how complicated this stuff can be and how people can save a bunch of money right so so if you live in one of these nine states you have a community property rules right so this is a huge loophole that a lot of dentists just don't use and don't know about at all so the states are Arizona California Idaho Louisiana Nevada New Mexico Texas Washington and Wisconsin so those are community property states and so there's this thing called a breadwinner loophole is basically a strategy that we kind of came up with right so the the payment they're gonna ask you for is ten percent of your taxable income so in one of the in those states when you file your taxes as a married couple filing separately they split up your income fifty-fifty right so they split your income up fifty-fifty so let's say you've got a dentist that's making you know three hundred thousand a year who was four hundred thousand of stood alone dad a dentist could pay it back if they want it to right but let's say that dentist is married to same spouse so instead of paying ten percent of three hundred grand you can pay ten percent of half of that 10 percent of 150 grand by their taxes married filing separately you say so that that would be a way I just ran some numbers here before we got on the show so if you had a dentist actually ran it with the dentist making four hundred thousand dollars a year so if you had four hundred thousand of student debt four hundred thousand of income he lived in one of those nine states so you're married to somebody without it without an income then that would cut your payment's from six hundred thirty thousand dollars over twenty years to two hundred and eighty thousand dollars over twenty years so that is a massive drop and that's just because you're taking advantage of the loan rules and you're just knowing that it's a percentage of your taxable income and so you're using that to save hundreds of thousands of dollars so that's just anybody in one of those community property states it has a real high likelihood that they're doing their own strategy wrong and it's not just specific states where there's specific tax rules that can kind of change these loan programs it's a lot more than that a lot of the people they don't know this Howard but you know if you're in residency the loan servicers not going to tell you this but if your plan is to pay back your student loans you can consolidate your loans and get them onto the the revised pay-as-you-earn plan and you can cut your interest cost in half while you're in residency almost I mean it's an enormous subsidy it's worth tens of thousands of dollars but they're not going to tell you about it because the person that you call when you call your loan servicer it's making fifteen bucks an hour right and so there's no incentive there to give you the best advice which is I think why you know but a large part of thanks to your program we really took off in the dental space you know when we were we were on that on that episode 700

Howard:  well then you owe me a Jimmy John sandwich at least yeah this is the shakedown this is the Dentistry uncensored shakedown bring it but yeah that New York every child born in America today will owe $42,000 just on the debt for the federal government right from that all of his relatives who haven't had a job in five or ten years on Social Security and retirement they and they all tell you things like you know I paid for this my whole life and you say okay well the average person gets back everything they paid into Social Security and like for 1/2 years how long have you been retired grandpa 15 years you wrote you really think you paid that much into the system

Travis Hornsby:  the thing that I do want to say is I am this is where I get excited about dentistry about that person that has a huge amount of debt even though it sounds like totally stupid right but the reason is because member I said at the beginning of the show it's either a tax or a debt so if you can calculate it to be a tax so if the worst case scenario is you're paying a percent of your income to the loans and a percent to covering your future tax hit so that means that if you're getting basically 15 percent of your income snatched away for student loans the rest is yours to invest and spend and grow your wealth with right so if you're making two hundred thousand a year you've got five hundred thousand of student loans so you're losing 15% of that and so your net after that let's say you lose 30 grand to your student loans from paying the government and saving for the tax bomb for these income based forgiveness programs so that means your net is 170 so that that's compared with 170 as being a dentist one of the great professions in the world to work in with a bachelor's degree making 5060 K you know that actually can be a wonderful decision even if you're only making that right that's why I think is so profound so interesting about this stuff is a lot of the new grads if they took the advice of you know the financial advisors are trying to sell them something or the financial aid office at the school they're gonna think the only way you know is just to pay the government back you know on the only interest but there's all these refinancing strategies there's all these forgiveness strategies tax filing strategies that you can use to save you know hundreds of thousands of dollars in a lot of cases and most dentists you're just kind of clueless about it to be quite honest 

Howard: okay so we already know that an owner/operator dentist makes a hundred thousand dollars a year more than an employee desam well first of all a specialist makes a hundred thousand more the aboriginal specialist makes 320 every gender Jenna stays 497 but a dentist who owns your own practice makes 244 whereas the dentist who's an employee makes 147 and a lot of that is because of the tax code correct absolutely it's something so the part of you we're just talking about that you were talking about a filing separate for taxes community property states I don't want you to go through that again repeat yourself just so this kid knows because he thinks well if I go work for big box health care I don't I don't have to wear all these hats I just get a guaranteed job you know like okay well when's the last time you read the 60,000 page IRS tax code and at the end of the day the guy who owns is gonna make a hundred thousand more than you so will you will you say everything you just said again but framed under the advantage of what advantage do I have if I open up my own office as opposed to go be your employee

Travis Hornsby: oh yeah well so so we have clients that are making eight hundred thousand dollars a year right the highest associated income I think I've ever heard of is maybe three or four hundred thousand like this like a specialist associate right so you're talking and that's like a that's it that's just an a huge difference we had somebody in rural Iowa she was making two million she was producing two million dollars a year for her DSO guess how much money they were paying her 200 yeah spot-on good guesser yeah ridiculous and so I said she had no non-compete no anything that would prevent her from leaving or anything and so I said you need to go into that office tomorrow and say if you don't pay me thirty three percent of collections I'm leaving you know or better yet just go you know set up another office across the street and that's your threat right but they're so afraid cuz they think they have all the student debt and remember you can put the student debt as a percentage of your income that's not the whole thing that's gonna hold you back right the thing that could hold you back is we had an orthodontist to refinance her loans to a five-year term and she owed ten grand a month on her student loans and then she had a nanny bill to and because she had committed herself to such a high fixed payment the bank didn't want to give her a practice loan and she wasn't able to get the shovel she needed to get out of the debt you know so the the talking about the ownership advantage you know the idea that you're gonna go work for a DSO and give them forty-nine percent of your equity for them to manage your staff and your do the marketing and stuff like that that's ridiculous that's foolish I mean the the amount of ownership the practices that default I think I heard it was zero point three percent one banker told me that's the stat so they and they said of the three and one thousand people the fail - and 1000 of them couldn't put down the bottle right so I mean so that means 

Howard: yeah these financial data poor decisions at dentists - I've been harping on literally since the day I started luxury in 1990 they they still don't have their practice management system hooked up to their accounting they still can't give you any financially and it's not just the dentist it's like even and with dental insurance like they on dental town they always whine about how Delta dentals lowering their feet lowering their feet lowering their fee well what what does Delta respond to they keep signing up for all these lower fee deals so  Delta's pay me a dollar and then I go sign up for another insurance company that's gonna pay me 90 cents in the year after 80 cents and 50 cents and then when Delta starts trending down following your dental decisions to sign up with the lower fees now Delta's the bad guy and then Delta they're just as insane because they have a very high cost structure overhead so as they've been chasing down the lower fee now their overhead is going high  so now the dentist's has eye overhead Delta has eye overhead because both neither of them know how to make a damn financial decision and none of them can see clear financial data go ahead well yeah like 

Travis Hornsby: you know where you have to kind of just take it from Delta Dental is probably North Scottsdale where there's a dentist in every street corner right but where's that city in Arizona you said I think still needs a dentist or doesn't have any dental around California right so there so  you know like the only dental practices and I've seen that legitimately are struggling and failing we're in places like San Francisco and the in the suburbs of New York right I mean just places that super high overhead labor costs you know a huge amount of money

Howard:  yeah but if you build it they'll come I saw it it was a baseball field in the middle of a cornfield movie well if you do a demographic study right and 

Travis Hornsby: you do your homework and you try to figure out like the best places to open a practice and you know you've actually got a business plan yeah and the student loan debt you can set it up for forgiveness or getting subsidies while you're actually going out and trying to take a risk on your startup there's all kinds of stuff you can do with your student to make sure that not the tail wagging the dog 

Howard:  and our leader is the nonprofit organization dental the American Dental Association and you mentioned Jimmy John's earlier they don't they don't let franchisees go across the street for each other so if we if we were a franchisee of the American Dental Association we would each have our territory and we would be equally spaced apart you know but they're just all on top of each other I mean rule number one on demographics just go where they ain't I mean if there's one on every corner that ain't where you go you go where they ain't and the dentists always they believe they just want to go where they want to go but again go back to what the advantages are for a dentist open up his own practice and then we'll see and so what are the owner/operator tax advantages off the top of your head 

Travis Hornsby: well so you know you're gonna get maybe a 30% of collections as an associate right and so you know you're you're you know gonna make hundred twenty thousand maybe even hundred fifty hundred eighty thousand as an associate on average but then you go out and become a you know an owner you're gonna get to take probably like 50 - you know forty to fifty percent as a general dentist probably is gonna be your your net that you're gonna get to keep right in terms of the tax benefits I mean instead of having being a part of somebody else's 401 K you could set up you could even set up a defined benefit plan and put aside a hundred thousand dollars a year pre-tax you know that's that's you're saving all that money on taxes you're you know just putting a ton of money away for your future that's one example I think that the percentage of the to write off on corporate real estate I want to say it's you know 2 percent of the value or something like that I'm that's not my expertise area so but that's a pretty big right off and then you know you've got the business interest that you're getting you can write that off against your income and then also you know you buy one of those machines like CAD cam CDs what you know you know those kind of things you can write those things off as well you know depreciate them against your income so basically what you can do is grow your wealth without having to pay as much in taxes so it's not kind of that you know out of the realm of reason to presume that an owner could be making twice as much as an associate but being paying less in taxes just by virtue of you know writing off the stuff of your practice you know contributing a lot more to retirement savings and just having things like business interest and expenses to deduct 

Howard: and then and then you were say down then repeat that under that umbrella with the filing separate for taxes and community property state again 

Travis Hornsby: yes so this is you know it gets complicated because basically you know if you're paying ten ten percent of your AGI what does adjusted gross income right adjusted gross income is basically your your net income from your business - any kind of other above the line expenses so that's like you know various things like retirement all that stuff so so a lot of people buy ask them what they make and they say I'll make 300 thousand here no you don't make 300 thousand dollars here for the tax code you know what I mean you make three hundred thousand - all these right offs that you're doing and so a lot of people will quote you what their actual income is but their real income they're showing on their tax return unless you have a incompetent CPA is a lot less than that because you want to pay as little taxes as you legally are allowed to pay right and so that's that's the disconnect people don't understand that you can treat your stood alone payment as a percentage of your income and they don't understand the math they just make a bunch of assumptions based off what they heard at the watercooler or based off of you know something they heard from somebody that pretends to know about student loans and so then they just make the wrong decision they sign up for the aggressive refinancing plan where they should have started with a 20-year first you know because they don't know you could refinance multiple times and pick up multiple signup bonuses you know they don't file their taxes the right way so like that example of that community property thing is so say say your goal is to pay as little as possible on your student loans because you think that you want to go for forgiveness right so you're gonna pay 10 percent of your income so if you file taxes married filing jointly you're gonna pay 10 percent of your total income for you and your spouse so let's say your spouse has no student loans and so you know does work as a physician or something like that that you're gonna pay 10 percent of your whole household income and you're gonna think hey the only path forward is for me to just pay this back right but instead you can file your taxes married filing separately which means that under certain repayment plans you only have to pay based off of what you earned specifically not anybody else not your spouse just you and what saying is is this is you know a loophole that we discovered probably about a year ago where in these community property states when you file a tax return if you file separately ok then basically what happens is you're required to file its form 89 58 I think I wrote it down here but basically it splits the income 50/50 on both spouses tax returns right and so that the practical example of this is if you wanted to pay as little as possible on your student loans and you lived in one of these states then say your spouse made nothing and you make you know hundreds of thousands of dollars you can split that income in two right and make half as much on your tax return and then give the government legally am I saying anything that's an illegal right you can legally give the government that tax return showing that you made literally half as much for your AGI is what you actually made and your student loan payments get cut in half so that's that's just one example and you know in a state like New York that's not a community property state if you'd filed taxes jointly maybe you would have included your spouse's income and that's your loan payment and screwed yourself over with that as a super common mistake that we see you know especially for tax filing season just people choosing the wrong status choosing the wrong repayment plan this is it's a total mess so what you're really saying is a quarter of my listeners are in dental school still so if your 

Howard: so what you're really saying what you've said so far is that when you're sitting in class and you see two really hot dental students that you're thinking about marrying you want to look for that 20% who's getting family help or from the military and married that one not the one that's in the same debt as you who then wants to go to grad school that's what I heard you say loud and clear the other thing I heard you say loud and clear is that be careful about student loan advice if it's being part of peanut-butter-and-jelly with financial planning and whole life insurance and things of that because  what I'm concerned about is you know I I'm I'm 57 I got a MBA III know what it's like to be back at that age again so you're talking to a mind and that I remember the first time you saw giraffe I mean so so a lot of what you're saying yeah I can just see that little kid surprise like oh my god that's a giraffe so how this is very complicated to the mind of a dental student financing I mean they got to the party by mastering calculus physics and biology not not anything you're saying so how can you help them see this more clearly and get better advice when they're getting a lot of confusing advice just like the DSOs do they're always in there with a pizza party telling everybody the sky is falling and don't listen to me by name because when I got out of school there wasn't a Walgreens or a CVS and every pharmacist own their own data own their own place and Howard the dinosaur now all the pharmacists work for CVS and Walgreens and a Rick workman always says that 50% of all dentists will be working for DSOs in five to ten years so how does this individual who wants you how do they get the best clarity to make the best decision

Travis Hornsby:  yeah be like so the dental student that's listening I mean you know should obviously keep listening to your podcast that's the smartest thing I think you can do in other podcast in the dental world to get learn how to do business right that's the most important thing they don't teach you in dental school so I'd say that is one piece in terms of the stood alone piece you know our student loan player podcast is free if somebody's a dental student doesn't have any money to pay for you know professional help they should just go listen to that podcast and then you know in terms of getting the student student loan planner podcasts so basically any that's on any anywhere you want to search podcasts that's for free we have like I think over 50 episodes at this point I didn't know you could actually

Howard: oh my gosh I only started this podcast because the only reason I started is we have dental town has two hundred fifty one thousand registered members and about seventy thousand have downloaded the app and it was a year before the last presidential election where people are saying IIIi can't I got an hour to work I can't listen to this bullshit for an hour each way I'm listening your podcast if you do want in dentistry and I said no but I'll sort of genre and now the podcast section on dental town is there are 60 dental podcast and every one of them told me that when they start upload their they already had them for free on iTunes but when they start putting up for free on dental town that was the marketing they needed and their show exploded and there is a couple of these no name nobody that you've ever heard of dental podcast on dental town that have already passed six hundred and fifty thousand views that you could see on the dental town views but you don't need to convince me too much there so what's it so what's the name your podcast these this student alone planar podcast Student Loan planners at three word student long it is planner plan cast planner podcasts is that by it that Travis guy yeah it's by me by Travis so so my homies listen to you they'll find that on the app soon yeah yeah just yeah we'll try to connect to make that happen yeah and then and then what they'll do as soon as they they see that on the app and then they it won't take long and they'll uh they'll do it on iTunes so the the student loan planner podcast by Travis Hornsby my gosh I am I'm I'm mad at myself that I didn't know about this one so it is that on iTunes or you do this it's everywhere everywhere it's on you too yeah it is we put we post the episodes on YouTube too so it's like so that's the way to get the free help right 

Travis Hornsby: I would suggest to anybody listening that's the Dennis is making money is whenever you're working with a financial professional ask them how do how do you make money like how do you get paid what are your what are your conflicts of interest if they can't just explain those and plain talk I would run away and not work with them right so for us we charge a few hundred bucks for a custom plan for people to come up with the best way to pay back your dental school debt so the only conflict of interest that we have is we make money when people refinance their student loans on student loan planner calm and the reason why I'm okay that while also getting paid to give advice is because you know the stuff that they get in the mail that says refinance with this company there's no incentive bonus there's no welcome bonus like you get when you sign up for a credit card right so on our site we take a lower commission so that we can give basically kickbacks to the people who refinance so that's why we get the you know the $500 cash back or like the 80 a bonus through like Laurel Road we have on our site you know we have like seven hundred fifty dollar bonuses through some other places so that's the only conflict of interest that we have we're not trying to sell one of those four or five figure products and use student loans it's kind of like the gateway drug that's all we do so  in terms of refinancing it was just a like high level right the person who's really confused like here's a good two paths to pursue right you're gonna do full pay back in which case when you're starting out probably use revise to pay as you earn because you're gonna get subsidized interest you're gonna get a lower cost you're on your growing interest balance you're gonna get low payments and then you do refinancing so basically you start off with maybe like a twenty year and you pay way more than you have to pay but then the bank sees that low monthly payment and that you really finance it again down to like a ten year and then a five year to keep that required payment very low because remember being an owner is the solution not working for a DSO you know I apologize to the Heartland guys and you know those folks that I just don't think that's the future that's not in people's best interest financially they should be in practice owner and then the other path is to do this pay your loans like attacks strategy right and so that path is you probably get creative with how you file your taxes you probably look into doing something called pay-as-you-earn and you probably try to focus on saving for retirement putting a lot of money into investments and still obviously try to be a practice center because that's how you get the big write-offs so that those are the two big paths that people can go down right and so you know if somebody's super confused they can they can hire us for a few hundred bucks and if they're wanting to manage their own debt they want to refinance their own loans they can get the bonuses that they are not gonna get if they answer the direct mail stuff and then the if you're just totally broke you need free advice that's why we have the blog which we have I think 50 articles on dental student loan repayment on stood alone player calm or also the stood alone player podcast so you know but but I think that one work because marketing is everything according to my friend fragile he wrote the book marketing is everything so congratulations on your YouTube channel student loan planner 

Howard: you have over a thousand subscribers that's so cool but when you're answering because I always following on gentle time but when you're answering your question you know you text that type but there's a little YouTube icon there so when you go so if you've answered this in a video and you go to your YouTube deal and you click share it'll give you a link to share in a texture or whatever but it'll the next one over is in bed and you put that code then on dental town you drop that code in the YouTube button and now your video is in the deal and your YouTube subscribers will skyrocket and it's good for the I think it's good for the dentist because I think when you just see something digital it's not as neroli stimulating as when you see audio Vittel I mean I remember when people when I was little people to always get mad the kids wouldn't read and it's like they don't even have a picture in the book and now the kids on YouTube learning about the solar system but he sees video and he hears sound and it's like well of course he doesn't want to go read a book with a bunch of Roman numerals and all these crazy alphabet letters so yeah so you should be dropping those videos in your post when you I do and like say I it was news to me that you had a podcast on and those those are just some great questions I'm  what happens when you default on your student loans our student loan payments tax deductible how do you go from six-figure that to the six-figure net worth I mean you just got a lot of great stuff I I want to ask you one question this has nothing to do with anything that's how my crazy mind works we just were in the playoffs for the NFL so we're down to like what is that four teams or whatever you always hear the same thing about NFL players that you know halfway through their career so they played in the NFL for years takes four years and they've lost all their money do you ever see any parallels between dentists and NFL 

Travis Hornsby: well the big difference is you can make so the most successful dentists can make the runningback level income like four four hundred thousand five hundred thousand but they can make it for 40 years right or thirty years so I think that the the parallels I would say is you know a lot of the dentists make a lot of the same financial mistakes right they hire their friend of the family right that that cell that gives financial advice when the person is just super high fee you know kind of thing right or you make a poor marriage decision I mean that's that's that's a worse decision than student loans I know you've talked about in the past right or you know you just I would say don't think like a business person you just kind of you know think it's always gonna you know it's always gonna rain cash down you and things are never gonna change we really need to be saving for a future where your back kind of hurts so you just don't feel like working as hard or you want to cut back to three days a week instead of five right so there's a place in parallels for sure 

Howard: what about yeah so one of the things I I see with the NFL players saying because we've had a lot of NFL players over the years just because when your st. Louis so the the Cardinals started in Chicago and then they were in st. Louis when I was in dental school and then I I'm graduating about two feets Arizona and the Cardinals came out here and William Bidwell Pat just recently passed away great guy but I've seen a lot of his players and coaches in the office over the years and they give this big income they buy a bigger house which is illiquid so if you go build a big huge house and dentist to die here they'll go build a nice getaway cabin up north but but you know the people that want to build their own cabin up north they don't want the one you built and anyway these have big spending problems and I it's really weird because my patients if they're a programmer or an engineer or a teacher they're like well I'm I'm not rich dr. Dennis lawyer so on vacation we just go camping at the lake alright we go to Mom's house or you know they're there they they just spend so much less money but whenever you meet someone in the NFL or a dentist or a lawyer you go through their whole overhead nothing is median or modal like like they don't have a Ford Taurus they always got some nice car they don't have a little four-bedroom three-bath you know the it their their excessive on everything where did you go on vacation last year oh we went skiing at Vail oh we went to Hawaii oh we're taking the kids to Rome it's like okay just just tell me one area in your personal life where you just spend at the 50th percentile even their diamond ring looks like the blind man gave it to them and had to feel it to make sure it was on her fingers and I mean just every category of expense is over-the-top and and they're gonna have to pay for that by doing quadrants of mo D composites 

Travis Hornsby: well here's here's here's a good great rule of thumb right you need 25 times your annual spending to be able to be financially independent from work and maybe retire one day right so if you spend eight hundred eighty thousand dollars a year you need two million dollars in liquid assets to produce income from dividends capital gains interest etc to stop working so if you look at that NFL running back and he's making you know five hundred thousand a year he's spending four hundred thousand dollars a year then that NFL running back needs a net worth of ten million dollars to keep that level of spending going into the future but you know the average running backs career is three years right and so you look at a hundred thousand dollars of savings times three you know you may be is best-case scenario you're at $300,000 net worth that's a big difference from ten million right you're not gonna cut your standard of living from four hundred thousand a year to forty thousand a year over night you're gonna keep that going so that's why those people run out of money then I would argue the similar situation could happen with dentists like if you're buying that new Tesla 80 grand right so say you buy a new Tesla that's two million dollars of investable assets that you would need to have to produce a brand new Tesla every year if you're upgrading every two years you need a million dollars to produce that level of upgrading your car right and if you already have a low savings rate as it is then getting to a million dollars of the decimal assets might take forever so that's one thing that we did a lot of work on since we were last on the show and I really have found that savings rate defeats everything like you can have the wrong one strategy cost yourself 200 grand but if your savings rate is good you're still gonna actually end up being ok and so that's that's another great piece of advice to give a new dentist is 3 3 things right let live live in a house that's 2 times your household income or less drive a paid off car and 25 times your average spending that side they're calling that the fire number right yeah that's the 4% rule is what it's often called and but do you hear it called the fire number or not really yeah yeah oh definitely yeah and it's basically like the idea of what's a safe withdrawal rate right so basically you know if you look at a lot of academic studies they say you can pull 4 percent of your money out each year and have that last long-term some people say well I'd rather be a little bit more conservative and presume 3% some people say I'd rather be a little bit more aggressive assume I'm gonna make some income from other sources and say 5 percent right and so that ends up being what you need to have in your investments to stop working and what's cool about a student loan borrower is a student loan borrower with six hundred thousand of student loans or four hundred thousand acetal owns worst case scenario only needs the 25 times their annual expenses plus the amount of money they need when their loans are forgiven and they have to pay income taxes to the IRS right so let's say you spend $80,000 a year and you make you know and you have a student loan balance it's gonna be forgiven that you're gonna owe $200,000 in taxes on and after 20 years of paying based on your income right so if you spend 80 grand a year you need 2 million dollars to be totally independent from working and then on top of that 2 million dollars you need an extra 200 grand to pay that tax hit and so by definition 10% of your income is always affordable right because it's a tax you're never gonna default on that because it's just what 10% what you're making so even that dentist who's struggling with this these some of these strategies could actually hit financial independence in their 40s or 50s if they simply understood how the math worked you can do it on your own with using Vanguard funds or signing up for index funds and just trying to focus on saving and investing more or you can you know hire somebody to help you it doesn't really matter what matters is your savings rate and not doing something dumb with your finances which you know golly so so many dentists will do that it's just unbelievable like you say 

Howard: so one is the fire number which means you need 25 times your average spending to retire from work and fire meaning financial independence or retire early and the other one was your 4% rule is that what you call it that is the fire number right so you can 

Travis Hornsby: so what's one divided by 0.04 it's 25 it's okay so 1 divided by 0.03 that's that's like a 3% rule that's somebody saying that you know what stocks are overvalued and interest rates are low and I hate the economy and the world is gonna fall apart tomorrow so ok instead of 25 times your expenses now you need 33 times your expenses right and if you think that you know the American economy is just gonna keep running and Tesla's gonna go to the moon and you know bitcoins is gonna triple or whatever I mean maybe maybe you could say 20 times your expenses what I've found is a lot of times people just need to feel like they're not trapped with their work like they want to do what they do because they love it and now just because they feel like they have to do it right so I mean we've had people that have wanted to cut back their hours but they felt like they can't because of their student loans and that you showed them that you can think of your debt as a tax and then suddenly somebody that's working five days a week can now work three days a week cut back on the housing expense and spend a lot more time with the kiddos right so that's that's just super exciting to understand that financial math because because if you tell somebody don't buy a Tesla they're gonna say why not right but if you tell them hey that Tesla is gonna cost you an extra 10 years of doing you know extractions and cavities all that's kind of stuff then there's suddenly like oh shoot you know baby maybe i toted cambria looks a little bit better compared to showing up to the office for 10 years when i would maybe like to slow down a little bit having explored some other interests 

Howard:  right you see that and you know necessity is the mother of invention do you think all this student loan problems early on in the career is gonna make these dentists a lot financially smarter throughout their life because I noticed when I was a kid all of us when we were all 10 years old all the cousins everybody you all knew which age of the grandparents all lived through the depression and we all talked about how I left a lasting impact on their mind I mean even when these farmers were had 3 million dollars in the savings account they still wouldn't go to a restaurant and I remember going to restaurants for the grandparents and they'd say I'm not paying $14 for a steak we can go to the store and buy this steak for a dollar 40 you know and it's just like and I just thought to myself man that was really neat that happened to you and then I felt really lucky because I got out of high school in 1980 and that was a worse than ever got and then when I graduated May 11 87 I got my office open September 21 87 about a hundred days later just in time for Black Monday on and where it fell a quarter percent so I've always been like okay I don't care how good it is in an expansion expansions are followed by contractions because the business cycle and the consolidation cycle is real because we're talking about humans making all these decisions so do you think this is gonna have actually a long-term positive thing for all these kids because they're gonna have to get really financially literate at a very young age 

Travis Hornsby: unfortunately I think the answer is no and I'll tell you I'll tell you why it's because it's funny money right if you can pay based on your income your payment is the same if you owe $300,000 and you went to UMKC but where you went to USC and borrowed seven hundred thousand dollars your payment is the exact same right the only thing that you might have to pay extra from having the way bigger stood alone balance is the taxes on the forgiven debt right so like once you surpassed that point of it making sense to pay the loans back which a lot of dentists are surpassing that point just because of debt to income ratio then then suddenly it's all funny money and it doesn't it's not real right so a lot of people are on this income based program but they have no plan right they're just making the payments cuz it's low and they just don't think about it and they go do the things they would have done anyway right so what's gonna happen is I think that the future you know you look at the 2020 proposals right that what they wanted to do for student loans Republicans want to let you pay it as a percentage of your wages so in other words this would be the biggest loophole for dentists ever because what a dentists do that our practice owners they set up an S corporation and they pay themselves a hundred twenty thousand dollars of wages right and so imagine being able to pay ten percent of artificial you know 120k wage as a practice owner with a four hundred K stood alone dead with no income tax hit on the forgiven balance why would anybody care if you're gonna borrow three million dollars to go to dental school you know what I mean and so that's the Republican plan if you look at the Democrats plan it's it's kind of similar ten percent of your income for twenty years with no tax hit at the end at all and so then again there's absolutely no incentive not to go out and try to try to I mean invest a Bitcoin we had but you know we have some people that really understand the rules they're doing that and a how stupid is that right they're they're just they know that there's no reason why they wouldn't go up in a brokerage account and put the money and that once you're at five hundred thousand or more in some cases just because it's the law rules encourage it that's how it messed up the thing is and so yeah so IV you look at that and then the last one is the the Biden plan Biden's plan is basically let's take the ten percent of your income for twenty years and let's make it five percent of your income for twenty years so if you're gonna pay five percent of your income you know I mean the dental school deans are doing the right thing raising tuition into the moon because you know if you don't have to pay it back who cares I mean that's that's that's the that's the weird thing that's happening and and the only thing that's saving dentistry by the way so guess you mentioned pharmacists earlier Howard guess what the acceptance rate for pharmacy school is right now yeah pretty much it's it's basically if you have a pulse they'll take you and it used to be that the acceptance rate was like thirty percent and the big difference between dental schools and pharmacy schools as pharmacy schools went from forty schools to like over a hundred thirty so there was no accreditation notations no back at all and at least Dentist trees had some new schools right you have some of the new ones that have popped up but it hasn't gone from you know where it was to you know just ginormously more right like and 

Howard: I think because like Malaysia went from one school to 11 Australia doubled the number of dental schools I'm if you're talking about just the United States yeah when I got out they were closing down dental schools they closed down Emory and Farley just Dickerson in Georgetown and and I'm you know northwestern you know they were closing down about seven and then it went flat and then they've opened up about what they had closed down when I got out so it's an overall about flat but some of these countries it's gotten crazy like in Indian Brazil I mean the number of dental schools has doubled and then it doubled again when I go to Indian Brazil a lot of times in fact I was just sat in another country a little while ago and I got to talking to the waiter and turns out he was a dentist and he's waiting tables and he says well yeah he says most most all my classmates I mean you know you got to have a part time job and waitering is you know the best one for him and yeah he's waitering Friday and Saturday night just to make ends meet and he's a dentist so

Travis Hornsby:  well the thing I'm concerned about is is you do have the applicant two seats ratio going the wrong way so you had three applicants for every one seat back in like 2007 right and in 2018 you had 1.8 applicants per seat so that ratio is there pharmacy dentistry in the US so three applicants per seat in 2007 proceed right today the most recent data is 1.8 applicants per seat so so that's gotten worse right and 2020 it's what it's 1.8 applicants per seed 1.8 yes so the dental schools can still fill all the seats you know it might be different by each school I'd probably guess some of the more expensive schools probably have or closer to one to one and the cheaper school is probably closer to three to one right but the but that's  the trend and so you're getting a situation where grads got kind of the income pressures from the declining reimbursement you've got the higher student loan debt and so I'll tell you what I think the DSOs want the DSO is backed by all this private equity all that stuff private equity loves leverage so if you can come in to an environment where your default risk for owning a business and dentistry is so stinkin low you know and you can systematize it and make it a process what you do is you go take on tons of leverage try to open up a bazillion practices just rely on the fear and the anxiety of all the new grads about their you know six hundred thousand five hundred four hundred thousand student to just make them so paralyzed by fear they're afraid to go out and start their own business or acquire their own practice right now you've got a captive labor force I can't tell you how many people have been captive with their employer because of like a student loan repayment benefit that's totally useless you know we had people working for like you know some of these federally qualified centers this one guy was driving two hours one way to get to get a fifty thousand dollar stood alone benefit we ran the numbers I told them you know what your loans need to go for like this taxable forgiveness route anyway so you've been driving into work for two hours one way for two years for absolutely no reason at all you know and so they'll go work for these DSO is because of fear and anxiety when if you understood the math if you just understood all the loopholes all the benefits that are out there for people who are bunch of stood alone debt you're either paying it back or you're treating it you know as a tax and paying as little as possible and either way you're doing that in a way that allows you to become a practice owner and so you know you don't have to have the future of DSOs be 50% of all dentistry employed by one I think it probably will continue to trend that way but I think the dentistry is built for this thriving private practice so you know solo doc or partner doc office it that that can persist in a way that some of these other places you know have not right I mean your your pharmacist interaction is very different from your you know interaction with the dentist I think that if dennis understood the math you know they would have the ammunition they need to fight back against all these trends that are not acting in their economic best interest

Howard:  what's your thought from the age I mean the voice of dental education there the I mean there the American Dental Education Association are they well how would you sum those guys up

Travis Hornsby:  I just think that they are focusing on the wrong stuff I mean you know they I've seen them talk about they want more loan forgiveness they want deductibility of interest they want lower interest rates well if you owe 7 or you know $400,000 I mean not to be you know mean but who gives a hoot if it's 3% or 7% or if you can deduct it or not deduct it right I mean that's not the point the point is the tuition is just ridiculous and it's way too expensive you know instead they should be arguing for maybe capping borrowing perhaps that would limit the school's ability to charge if you didn't have so much access to federal loans you know you can look at I mean if you wanted to you know agitate for forgiveness you know the physicians they're all employed by these nonprofit hospitals the physicians get you know forgiveness after 10 years tax free paying based on their income and their residency is you know dental residences you got to pay tuition and you're not getting really paid very much while you're doing it the physicians go get 60,000 a year and then that counts towards their 10 years they need to have all their loans forgiven so the ad a and ADEA got left out in the cold the first time these loan rolls were written the next part of the loan rolls are gonna be written probably by the person who ends the twenty twenty election because the Higher Ed Act that governs all this stuff is due for a rewrite you know so I just think that they they focus on all the wrong stuff and Dentist that's true probably for a lot of dentists in general right you're so focused on your interest rate you're focused on you know all these you know you're focused on you know reimbursement rates for this PPO plan but you really you want to look at yourself in the mirror and say that's the person that can change my life there's all these things that you can control and and most people are just not they don't have the knowledge to control them and that they're not just had that self-awareness so that's what we're trying to give people is give them those tools to just rock it and not have to be stressed about all this stuff and who wins the 20/20 election and who you know what the interest rates are in student loans that's irrelevant as long as you have a good plan for the future 

Howard: yeah and by the way if you're still a young kid and you're still in this world where one party is better than the other party it's it's been a two-person dance for almost a century and one drove the car and one-one robbed the bank and one drove the getaway car and they don't want to solve problems because they  have their constituency and if you buy into the two-party system and then they're always whining about they the people who don't vote well the largest party in America is the hundred million eligible people to vote that says screw you I hate you both and I'm not voting and Congress if you like any surveys go to the Congress has had about eleven percent approval rating since I got out of high school in nineteen eighty there you know when they're lying their lips are moving and I just cannot believe that people still think it's like Bonnie and Clyde it's like why like Bonnie it's like well I like Clyde it's like okay so one of them comes up and breaks your knee with a baseball bat and the other one tries to help you by giving you a wheelchair and and you know they're  all crooks and but last question because I you're so generous with your time we've gone over an hour but a lot of these young kids think when you were talking about tax advantage of owner/operator dentists that employees don't have they go yeah but if I get a job at Aspen or Pacific I I might be an owner Dentist there someday 

Travis Hornsby: I mean my opinion is that's kind of like the whole life projections right they project it out they show you how you're gonna be a millionaire in forty years and and the guy that was kind of paying the forty thousand dollar Commission that I showed him like how much he got taken for he said you know if you put it into my calculator write this to you on planar calculator that we use during consults he put the numbers in there and he saw that he could be the same level of net worth in twenty years instead of forty right so that's the same thing for your Aspen's or your other dsos that have that owner model where you're getting a percentage you know the the reason that they want that is because it's insanely profitable right why would you give somebody forty nine percent equity or fifty percent equity or any equity to do something that you could hire a practice management consultant for ten grand to do I mean why would you pay somebody a huge percentage of your earnings when you could pay a flat fee instead it would be 1/10 as expensive and you don't have to rely on also a lot of people don't think about this talk about illiquid assets member you talk about the NFL player that has the house that he can't sell cuz it's not the way people want it what is the equity worth when you own a part interest in a DSO practice who's gonna buy that you know the market for that's gonna be a lot more limited than if you own a hundred percent of a practice that you can just sell right so you're buying in it these valuations that probably don't even make sense cuz what's your the asset you owns probably not even worth what they're saying it's worth you know so I think that you've got to be a practice owner where you own 100 percent or you're in a partnership where it's not run by the DSOs because I just think that you know it's like in my business why would I give somebody a percentage of my business which would cost me ten times as much when I could pay a flat fee 

Howard: and here's where I am I think a lot of it's just fear I mean I agree I got my dental office I graduated May 11 and my office was open in 133 days September 21 and I wasn't a daddy did it my dad my dad he told me he said I asked somebody pay for my college he goes Howard if I pay for your college you're gonna go up there and smoke pot and chase women but if you have to pay for yourself you're gonna focus so I had to chase women and buy pot with student loan money which you know was just feels horrible but anyway I graduated $87,000 student loans I came out to Phoenix and there was a thousand square foot landlord and I told him I won a thousand square foot and he goes great when he gonna do the build-out and I said well you want $10 a square foot a year for three year lease I'll pay you $20 a square foot for a five-year lease and you build it out because I don't have a dime and he said okay so there's my free build-out then I went down to it was at the time it was called Health Co at a Dallas which got rolled up into Patterson or shine or been Carver Carter and one of the during one of the roll ups and I picked out two beautiful operatories and all the equipment and they said greed and now give us a check for eighty thousand I said well actually I don't have a dime so you're gonna put it all in my office give me a five sixty month payment and on the last payment I own it and they weren't happy but they said well that's better than nothing so I got a free build out I got all the free equipment they got my office open September 21 and I had no patience that day and I was scared to death and I called up my dad and I said daddy I opened up my business and I didn't have one customer and he goes good that's good I'm like dad why is that good because if you just scared and hungry you said away in Kansas when you see three hungry coyotes walking down a dirt road something's gonna get killed and eaten and he goes you if you're scared that's good you're gonna have to get out there and hustle and my gosh I made a stack of fliers and and I go around the the parking lot and I put him under everybody's a car blade for come in for a clean examine x-ray then I walked into Safeway I told the manager I would give him a free dentistry if he'd put the stack of fliers on all the checkout stands and it was it was so amazing I'll never forget when the dentist's cross street mark woodland column ever says hey Howard he goes I don't know how you do it he says you're a great marketer but my wife I come home from work and your flyers on my kitchen table and my wife has no idea where she got it I'm just curious how the hell did you get your flyer on my kitchen table and I told them about the Safeway deal and he goes oh my god that's just genius because I never thought of that and then on Saturdays and Sundays instead of going to Home Depot and starting some expensive project I got a map of Phoenix where where I'm at all with two keys a zip code eighty five oh four four and every Saturday and Sunday from 8:00 in the morning till I couldn't walk I go door-to-door just knocking - oh hey I'm hard Fran I'm 25 years old I see that dental office up at 40th and Elliot that's me I'm gonna be here till I'm 65 I just thought I'd get here and press the flesh and meet the community and two out of three doors thought it was incredibly weird they're just like you know they never had dentists at the door and everything's weird and whatever I never cared what two-thirds of people thought but though one out of third he'd be standing there in his underwear and his wife beater shirt he's like really well hell I broke this tooth and I'm standing out there on his poor so I get out my little dental gloves and mirror and my flashlight and I'm looking at his mouth and I mean I swear to God I probably looked in the mouth of a hundred old men with beer beer bellies in their underwear and t-shirt and and then I'd say um well hey if you need a dentist I said well you know you need to come in let me let me take an x-ray that knee goes well when you got opening I pull out my little notebook and I say well I got an opening 24 hours a day seven days a week until the end of frickin time does any of that work for you and I would not stop going door to door till I'd go back to until Monday through Friday every hour and a half had some patient scheduled for something where there's a new patient cleaning whatever whatever and to this day when I'm in my office I still have patients coming in and say you know I remember when you knocked on my door oh my god you didn't even have kids yet you had hair on your head and now so so you're doing all this stuff cuz you just live in fear and what I see you do this is where you kids are gonna do I mean I'll tell you what you're gonna do you're gonna get out of school you're gonna you're gonna follow this this magical dream that you're gonna go work for a big box healthcare and they're gonna make all your dreams come true and then you're gonna vote for the Democrats or Republicans and they're gonna make all your other dreams come true and then when both of those people break all your kneecaps and as you go from job to job party to party job to job party to party you're you finally all Mia and you'll get your office open and every time you graduated five years ago and you've had five different jobs and you were finally so miserable that you no longer had fear of opening up your own business and you just opened up your own business so it's just yes it's just fear so I you know live in fear I mean I mean I remember when uh Japan bombed Pearl Harbor our President Franklin D Road Delano Roosevelt said living in fear is not an option and of course we don't want to go to war but we're not gonna sit here and live in fear we got to do what we got to do it was horrible and and we're a better country for doing it and you can suck it up buttercup and suck it up buttercup cry whine all that said but finally you're gonna get so damn broke and miserable and and that's why I think they should get out of school open up their own office if you're gonna have kids that's the worst financial decision just knock them all out I mean I had my four boys in sixty months I said if we're gonna be crazy insane and stupid let's get it over with so I had four boys in 60 months I swear to God I didn't sleep for a decade and and just just you know the journey of a thousand miles starts for the first step so just get out there and open up your damn office go to Pew that's a company that's our name directly whew PW and they do all this research on where there's underserved areas so your demographics all done you can go to any or you can go to health go Patterson burkhart any of those people and just sit there and say hey where is all your account receivables over 30 over 60 over 19 they go oh that's all in North Scottsdale okay so now you know you know you're not going there and then you say where where's the zip code word dentist sir adding operatories and buying CAD cams and CBC T's and you keep installing growth and where and where was the last place where someone said well I need another operatory but I don't have place for it to expand I think oh you mean Casa Grande Florence Eloy you know all the all the stuff that's a 30 40 50 minute commute out of town yeah yeah those guys they're called millionaires because they went where they ate and so Travis I really like say I 1,400 podcasts you're one of only five or six I ever brought back for a second time I really appreciate all the questions yes on dental town I hope you start uploading some of your YouTube videos so your YouTube channels will explode and upload your student loan planner podcasts on downtown that'll explode and just thank you so much for all that you've done for dentistry I mean thank you so much for what you've done helping us get started –

Travis Hornsby:  I mean you know you took a risk when you were starting out and that's what we want to make people do is take that risk but if you know Howard if you graduated now he had $400,000 of student loans you're scared of what you don't understand right I'm saying you know general you you're right away she'd understand so if you have that knowledge of student loans that don't need to hold you back that you can do all those things today and it's not just something that you're able to do you know 30 40 years ago it's something that can be done right now too you know that's what we want to have done for more people so you know I guess folks can reach out to us email is help as student loan planner . com if you just want to share what's going on that website that's a great question that's a great name student loan planner dot-com you have another website millennial mu laws that's still the site to go to or should I take that off you can take that off cuz like so so have we talked about all those financial independence things and then how you know you three coyotes you know they like hungry right so I actually quit my job I was really retired from being a bond trader in my 20s because I'd saved up a bunch of money and then my future father-in-law threatened me that in his culture you don't you don't not bring in an income on your wife's working he said that makes you an eater of soft white rice that's what he said so he kind of threatened me that that I needed to go out and earn earn income my wife's Asian American so I guess that's not know so B's so that's that's the term that they use for somebody who sits at home with their wife's work and even though I didn't need to and so and that's how the whole thing started is because she had debt it was really complicated to figure out the right way to pay it all back and so and so he kind of lit the fire under me and and kind of pushed me to do something that I love doing now instead of having to do something just to just to make a paycheck so I'm real passionate about people finding that too you know everybody's got their perfect number of hours they want to work kind of way they want to practice whatever we want to help people find that so you know like I said student 1 planner comm you there's a contact button on the bottom right of the page the podcast and and you know refinancing deals and and you know a lot of that stuff's free right so if you're gonna you know go that route I'm honored that you're using our stuff and also to

Howard: I want to put this whole thing in perspective it was a tough weekend we lost a lot of dentists that we lost three dentist and that um plane being shot down I ran so shout out to doctor for hardening nickname who was killed in the crash of flight 72 he was a dentist in the process of getting his license to practice in Winnipeg according to the Iranian Ontario Dental Association saying to doctor pre single bite egg Balian 42 again it's working an Aurora Eenie dentistry in Aurora Ontario on the plane with her daughter rare only nine years old r.i.p - r I saw Jie a Halle Fox dentist who was killed in the crash so you know there's a lot of things worse than your student loan debt and I also want to do a shout out to my buddy Omar hey Reed DDS who died Saturday at 8:30 in the morning I did a podcast on him gosh just not too long ago but my gosh when I got out of school I wanted to meet him so bad because I got a school in 87 and oh my god all the old guys thought he was you know he was he was just he was turning everything upside down with his practice management and profitability and selling dentistry and and he was one of the reasons when I started my lecture I called it dental mania because when I told her that he liked giggle cuz he knew all the old guys would just cringe when they saw this 27 year old Dentist Howie given a seminar called dental mania so Omar came read my god Omar was just a great guy so we lost out for great dentists this weekend's there's a lot things worse than your student loans and there's a lot things and and if you ask any of these four dentists who passed away how fearful they would be of opening up their own independent practice come on guys do it if you can't do it for yourself do it for them we've had a lot of great legends in dentistry and we need to take a healthcare back from big box healthcare to the  independent practitioner because that's what I want my grandchildren to go to as an independent practitioner some big bucks then I'll retail outlet and so upward and onward thanks for all you do Travis thanks so much for having me on Howard all right buddy bye-bye  

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