How not to be a broke doctor [PODCAST]

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“Remember the things that we’ve discussed as the majority of people are broke. And just because your friends are showing off the ‘stuff’ things they buy doesn’t mean they can actually afford them.

Once you realize that everybody in the world is after your money, the quicker you know how the ‘money game’ is really being played.

Just don’t get played yourself.”

Jeff Anzalone is a periodontist who blogs at Debt Free Dr.

He shares his story and discusses his KevinMD article, “How not to be a broke doctor (5 ways).”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today we welcome back on the show Jeff Anzalone. He’s a periodontist, and he wrote the KevinMD article “How not to be a broke doctor (5 ways).” Jeff, good to see you again.

Jeff Anzalone: You too, sir. Thanks for having me back.

Kevin Pho: So we’ll get into your article in a little bit, but for those of you who get a chance to listen to our first episode, I’d say it was over a year and a little bit ago. Just briefly share your story and your journey to where we are today.

Jeff Anzalone: Yeah, absolutely. I had an issue a couple of weeks before I graduated. I finished my residency program, and a job offer got taken off the table, which left us with a two-month-old, a house we were paying interest only on, and $300,000 in student loan debt. So that really put us behind the eight ball, not only financially but business-wise, having to struggle to start my own practice and figure out how to do it, because, as you know, in dental school or medical school they don’t teach you any of that.

I got a lot of OJT, on-the-job training, from people that helped out, and we did the Dave Ramsey seven baby steps, got out of debt, and did all that good stuff. Then I got to the point where I had a little ski accident where I injured my wrist, and it made me realize, and that’s kind of what we’ll talk about in the article today a little bit, that if Jeff isn’t making money, what do you do? It’s a pretty risky way to live, which led me to start searching out how to find other streams of income, preferably passive income.

Kevin Pho: Now, you have a website that talks a lot about your journey, and you talk a lot about personal finance, real estate investing, and creating these passive streams. So what’s the response generally from your periodontist community and the dental community? Do they ask you, “Why are you doing this? Why don’t you just focus on your periodontic practice?” In general, what’s the response from the medical profession when you talk about these side things?

Jeff Anzalone: It’s actually kind of the opposite. It’s, “Well, we’ve never heard of this before.” We’re dealing with burnout issues, whether you’re a physician, dentist, attorney, or engineer. I won’t forget: A couple of months ago I had a call with a 40-some-odd-year-old female cardiologist out in California. She’d gotten on my site or YouTube channel or something and was reading about some of these passive real estate deals that I do, and she said, “When I read through, I immediately thought, ‘You mean I don’t have to practice until I’m 75? There’s an option?'” So hearing that kind of stuff really keeps me going and keeps me motivated to continue to write and do the videos. So I’m excited about that.

Kevin Pho: So in terms of which demographic your message resonates with, are they primarily people later on in medical practice or dental practice? Are they people in dental school or early on? In general, who generally responds to some of the information that you give out on your various channels?

Jeff Anzalone: I would say for the most part it’s people that have been in practice for a little bit. The ones that are right out of practice, there are fewer of them, but man, they’re really the go-getters, and I always say, “Man, I wish I’d have learned about this.” I wouldn’t even think about anything like this. It was just get out of training and start paying off some debt. But I would say for every 10 people that I speak with or that come on the site, I’d say maybe one is a younger person, maybe still in residency or right out of school. So I would say for the most part it’s people that have been working for a while, kind of getting tired of it, and kind of looking for other things to do.

I had a big response when the government was sending out stimulus money, and some people had all this excess money sitting around. I was getting a good bit of the question, “Hey, I’ve got all this cash. What do I do with it?” sort of thing. I’m not getting that as much now, but that’s what I was getting last year.

Kevin Pho: All right, let’s talk about your recent KevinMD article. It’s titled “How not to be a broke doctor (5 ways).” Now, for those of you who get a chance to read your article, just walk my audience through it and share the story of why you decided to write it.

Jeff Anzalone: I think it resonated with a lot of the conversations that I’d been having at the time that I thought about writing it. When we get out of school, it’s all about how much money we can make: Go get a job somewhere, go work at a hospital, go work at a clinic. Who’s going to pay me the most? We’re always focused on making more, making more. When you come out of school, as you know, all your buddies have been working for 10 years, but you’re the doctor, so you’re supposed to be at the country club, you’re supposed to drive the nice car and have a nice house. Yet you’re broke. You’re typically in debt. They have all that stuff. They make less than us, yet they look better than us. So it’s kind of all those things that come together, and that was kind of the reasoning for writing the article. And then I went through a few ways to help people that are maybe in that situation.

The most important thing, Kevin, I believe, is it’s not how much you make, it’s how you make it. So that’s the first thing: It starts with the change in your mindset. How are you making this money? Do you have to go treat patients? Do you have to work extra hours, extra shifts, take more call, or whatever to make more money? If that’s the case, then all you’re doing is you’re just an employee. You’re nothing more than trading your time for your dollars, and if you’re OK with that, that’s fine. But what if something happens? I mean, look at the pandemic. It shut a lot of us down. We were shut down for two months. Even some of the ER doctors that you would think would never get shut down by something like that, their hours were cut back. So it’s a real risky way to live. So starting with number one, thinking about how you think about money and how you’re making it, I think that’s the first thing.

The other thing has to do with thinking, “OK, I’ve got X amount of dollars in my account, $5,000, and then I can go spend that.” And the thinking goes even more, that if I make $300,000 a year, then I can spend $300,000 a year. Well, think about it. If you go through your whole career like that, you’re not going to have any money saved up or invested or anything. So you’re going to go through your whole life doing what most do, purchasing liabilities, and then you get to the point where I get phone calls from people in their mid to late 60s: “Jeff, I’ve got all my kids out of college, they’re married, I want to retire, but I’m broke.” I don’t want people to end up like that. So I’m teaching along the way: Focus on buying assets first that produce cash flow, and then get to the point where you have enough cash flow to let your assets buy your liabilities. But people do it in reverse. They buy the cars, the boats, and the vacation homes with their earned income, which is the highest taxed, first. They buy all the liabilities, and then, if they have anything left over, which most don’t have a whole lot left over, then they’ll think about assets. So again, it’s just a different way of thinking.

And then, you’ve heard this, and so many other people have heard about this: We’re constantly comparing ourselves with others, especially with social media and Instagram. Society always tells us, “You’ve got to have the next greatest iPhone. Yours is obsolete.” You’ve only had it for two years, but yours is, you make too much money. So we’re constantly told that from these companies that market to that, and you have to get out of that thinking, the comparison thinking, because there’s always going to be somebody bigger than you, faster than you, better-looking than you, and who makes more money. I tell my kids this all the time. So just do the best you can do and just focus on what you know.

And then the last part is, again, understand how the money game works. Robert Kiyosaki, with Rich Dad Poor Dad, was always big on really knowing the difference, when you get out, and I didn’t, about what’s an asset and what’s a liability. He’s really big on telling people that your home, which we’re taught is the best investment we’ll ever make, is the biggest liability we’ll make. His definition is that an asset puts money in your pocket and a liability takes money out of your pocket. Well, unless somebody’s renting from you, your house is taking money out of your pocket, as you know, with maintenance and taxes and all that other stuff. So those are really the five ways that I went through in the article about getting out of that broke mindset of being a doctor.

Kevin Pho: So let’s say I’m a health care professional, hundreds of thousands of dollars in debt, and I already have that proverbial doctor car and doctor house, and I’m listening to you for the first time. Give us some of your highest-yield next steps in terms of how we can change that mindset. What can you immediately do next?

Jeff Anzalone: Well, what I usually tell people, they’re not going to like, and they’re not going to do. But you just have to get to the point where, if you’re at a point in your life where, like you said, the doctor house and the cars and all that, you have so many debt payments that it’s going to take you forever to pay that off, and you can’t invest anything, then you have to start selling some stuff. But again, most people aren’t going to go backwards, because, quote, society thinks you’re a failure or a loser or whatever. But again, is it about what people think about you or what you want to do? So it just depends on your situation. But like I said, if you can’t move forward with what you’re doing now, start selling stuff and getting to that point again. That’s why I said if you could get people right out of training and just say, “Hey, if you’ll just live like you’re living for a few more years, man, you’ll be sick.” But it’s just so hard to do with society today, as you know.

Kevin Pho: How difficult is it to break that mindset? You told that story earlier: You’re talking to a health care professional, and you’re talking about some of your real estate ventures giving that passive income, and it was like a light bulb moment went off in her head. How difficult is it for health care professionals to break out of that mindset of continuously seeing patients and doing procedures, and perhaps even cutting back and relying more on some of these passive income streams that you talk about? How difficult is that?

Jeff Anzalone: That’s a good question, and I think it’s different for everybody. For her it was a specific issue. So I think, typically, you have to get to a tipping point, whether that be burnout or, like for me, having an injury. That was the wake-up call. Probably if I hadn’t gotten injured, I would have just kept on focused on practicing and never even looked at other streams of income.

As you know, and most people can probably relate to this, think about the person that’s 350 pounds. They eat at McDonald’s three times a day. They smoke two packs of cigarettes. When are they ever going to change? When are they going to think about changing their lifestyle? When they get the chest pain, right? The heart attack. So I think, unfortunately, for many of us, it’s got to be something that provides us some sort of, quote, why moment, the Simon Sinek Start With Why, to make us move forward.

Kevin Pho: And in terms of passive streams of income, that’s certainly almost like a unicorn. I talked to a lot of doctors, and they all want passive streams of income. So are we talking about primarily real estate, and what other options are there?

Jeff Anzalone: For me, I can only speak from my personal experience: It has been real estate. And I always tell people the most important thing is it’s not the deal, it’s not the returns, it’s who you work with. It’s finding those people. There are a lot of people out there, so just be careful and do your due diligence. Speak with other people. You can find a lot of stuff online. You can ask people. The ones that I do are real estate syndications, so with these syndicator groups, you can ask them to give you names of their investors, and then when you talk with them, ask those investors, “Who else have you invested with?” You can start making a list, and then I’ll go to these meetings, and after a while it’s pretty easy to know who to avoid and who to invest with. So it’s not too bad.

The only other thing that I’ve dabbled in just a little bit is cryptocurrency, as far as a little bit of passive income. As you may or may not know, some of these different websites will pay you interest, and the ones that I’m on now pay you interest every week just to hold your cryptocurrency on there. So again, that’s another form of passive income that I’ve personally been involved with.

Kevin Pho: And in general, how much time would you spend a week managing your cryptocurrency portfolio or your real estate investments in order for it to be a viable source of passive income?

Jeff Anzalone: That’s the beauty of it with the real estate: It’s almost kind of like set it and forget it. You do all the work up front to find the people to work with, and then they only have maybe just a handful of deals available, maybe two or three, some of them more than that, but on average two or three. Then you pick out the one that works best for you, and once you put your money in, it’s kind of like a mutual fund. You don’t have to worry about it anymore. Typically it’ll be there for five or six years, paying you on a quarterly basis, and then whenever the property or the apartment sells in that whole period, let’s say it’s five years, then you will get the profit from that plus all of your distributions, or passive income. So if you start doing enough of them and you start staggering them, you almost get a constant stream of other income coming in, and a lot of tax advantages, too.

Kevin Pho: And you said that you had to do some work up front when it comes to learning about these syndications. Just give us a sense: How many hours, or how long did it take you?

Jeff Anzalone: Well, first, for somebody that doesn’t know anything, I would be spending several hours a week learning about it, and everything’s pretty much free online. I’ve got over 300 articles, I’ve got 70 YouTube videos, and there are plenty of people like me out there that have this kind of information for free. So think about it: If you spend 30 minutes a day going to work each way, well, there’s an hour. You can watch a YouTube video or a podcast or something and just do it to the point where you’re comfortable with it, where you’re comfortable with what the terms mean, such as cap rate, net operating income, things like that, kind of like in medical school, where you get comfortable with the terms.

And I would probably say, if I could do it all over again, I would find somebody in my area to mentor me. And I did find somebody, but find somebody, and they can really help. People love to teach other people, I’ve found. So find somebody that can mentor you, and then you can figure out which direction you want to go. It’s just a fun process to do.

Kevin Pho: We’re talking to Jeff Anzalone. He’s a periodontist, and he wrote the KevinMD article “How not to be a broke doctor (5 ways).” Jeff, you mentioned that there are some resources that clinicians and people in both the dental and medical professions can look at to learn about some of the tips that you’re talking about, learn how to create these passive sources of income, and learn how to change your mindset. So what are some top resources that you would recommend for people just listening to this podcast and just starting out in terms of changing that mindset?

Jeff Anzalone: I’m sure you’ll have a link to my website. I’ve written a lot of articles, and I recommend other resources on my website, such as BiggerPockets. That’s probably the biggest real estate website there is, for all different types of people. You can actually go to YouTube and just search for passive real estate investing, things like that, and then you can see who the big-name players are. Occasionally I’ll do book reviews, and that’s how I get a lot of my resources, from books. When the authors of a book reference another book or author, that’s when I’ll go and purchase that book. So I kind of just stay in my lane, and whoever people are recommending that I agree with, if I’m reading a book, then I’ll do that other book as well. So again, 99.9 percent of this stuff is free. It’s online. It’s almost like once you start going down the rabbit hole, it’s really easy to keep going down, as you know.

Kevin Pho: And my final question: What are some of your take-home messages that you want to leave with the KevinMD audience?

Jeff Anzalone: I would say the main thing is, again, going back to the mindset. There’s something called the cash flow quadrant that Robert Kiyosaki talked about in his book Rich Dad Poor Dad, and you can actually just google cash flow quadrant. Once you see what that is and where you stand on there, whether you’re an employee, self-employed, a business owner, or an investor, and once you learn about that, that is basically how people make money, and that should be people’s wake-up call to what they’re doing. They’re either an employee or a self-employed person on the left side of the quadrant, paying the most taxes and trading time for money, and your job is to get on the right side, or the rich side, where you have your money working for you.

Kevin Pho: Jeff, thank you so much for sharing your time and insight, and thanks again for coming back on the show.

Jeff Anzalone: Thanks for having me back. I enjoyed it. Thanks, sir.

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