Dentaltown February 2013 - (Page 68)

finance feature arlsen, DDS by Douglas C Psychotherapist Phil Tyson lists two factors involving the psychology of debt. First is a psychological principle he labels “future discounting.” We often take on debt giving little thought to how we need to change our lives to accommodate it. Dr. Tyson’s second principle is the relationship between consumption and personal identity. “Advertising has brainwashed us all to consume brands that provide us an identity. Our self-esteem becomes captive to products.”1 Revolving Credit Card Debt If you don’t do anything else, please eliminate credit card debt. Not paying off completely each month is such an easy, yet insidious trap. Not only does it inhibit your ability to save, it psychologically entraps you. Many dentists carry well over $50,000 in revolving debt, often paying more than $10,000 annually in interest. Remember Dr. Bill and Jennifer? They pay off their cards intermittently with an average unpaid balance of $3,000. Their main problem areas, as identified last month, are clothing, entertainment and vacations. They’ve struggled to avoid revolving debt fees, yet with the big cutbacks to the three above budget areas, they will be able to pay off their cards monthly by late 2013. 1. Autos According to the Money-zine.com calculator (www.money-zine.com/Calculators/Auto-LoanCalculators/Car-Depreciation-Calculator), a $40,000 auto will normally depreciate $9,200 in the first year, followed by $4,800, $3,800, $3,200 and $3,000 in subsequent years. A rollover (continual) three-year lease for a $40,000 auto, which primarily covers depreciation, would average $5,933 per year forever, before dealer profit, assuming one leases a new car every three years. To buy a two-year old car for cash and keep for three years, one would spend $3,333 in depreciation per year, using these figures. That’s a difference in payment of $2,600 per year before dealer profit, which is normally more than 10 percent. Adding 10 percent, the difference is $3,200 per year. For two autos, that’s $6,400 more per year for the rollover leases. Investing that $6,400 per year conservatively (4 percent real growth) for 35 years can generate $500,000 in today’s dollars for retirement! Dr. Bill has leased a 2012 Lexus RX 450 Hybrid SUV ($45,000) for $866 per month for 36 months, including down payment and lease. Jennifer has a leased 2010 Lexus IS 250 sedan ($32,000) for $637 Phil Tyson, Ph.D., “Do You Understand the Psychology of Debt?” downloaded at www.mens-wellbeing.com/2010/02/do-you-understand-the-psychology-of-debt.html on April 28, 2011. continued on page 70 68 FEBRUARY 2013 » dentaltown.com http://www.Money-zine.com http://www.money-zine.com/Calculators/Auto-Loan-Calculators/Car-Depreciation-Calculator http://www.money-zine.com/Calculators/Auto-Loan-Calculators/Car-Depreciation-Calculator http://www.mens-wellbeing.com/2010/02/do-you-understand-the-psychology-of-debt.html http://www.dentaltown.com

Table of Contents for the Digital Edition of Dentaltown February 2013

Dentaltown.com Highlights
Howard Speaks: The SWOT Analysis
Professional Courtesy: Get Off the Hamster Wheel
Continuing Education Update
Second Opinion: Predicting the Future of Dental Amalgam Use and FDA Regulation
Nuts & Bolts Full Arch Case Dissected… Tips, Tricks & Stuff
Employee Embezzlement, Not Sure Which One
Corporate Profile: GC America
Sleep Dentistry Section
Product Profile: Sleep Optima
Breathe Easy: The Advent of CPAP
ACSDD Consortium
Sleep Apnea
Townie Meeting 2013 Last Call!
Do-it-Yourself Finance, Part III: Debt
The Most Effective Presentation Process Ever
“Patient Friendly Dentistry” to the Rescue
Does Kissing Affect Oral Health?
Can Groundhog Day Make a Difference?
Top 10 Tips to a Successful Practice Start-up
How to Build Up the Perfect Tooth
Why We See Problems with Teeth Whitening: The Science of Whitening Part IV – Whitening Sensitivity Solutions
Continuing Education: Full-Arch Appliance Use for Nighttime Parafunction Management
Ad Index
In This Issue: Implants Are Growing in Popularity
Perio Reports
Continuing Education: A.I.M. for Implant Success
Scaling on Patients with Implants
Dentally Incorrect

Dentaltown February 2013