Wednesday, May 21, 2008

Cash Money

I give a lecture to young dentist and the part that really wakes them up is the money part of the lecture.

I am going to give you a piece of it. It may take a day or two.

Before I start I want to tell you a couple of things.
I watched two movies this weekend...
1) Good Luck Chuck
and
2) In the Land of Woman

Good luck Chuck was pretty funny. I don't really like Dane Cook but it was a decent concept. I somehow reserved the unedited version and there was too much frontal nudity (I can't believe I just said that). But it was suppose to be a romantic comedy and I was watching with my wife and she kept looking at me (you know with that look, REAL NICE JOHN, YOU PIG).
In the Land of Woman...it was okay. Nothing special. But Melanie Griffin is in it and apparently she just had botox in her upper lip or had a lip job because I could not stop staring at how bad her lip looked. Don't agents tell their clients anything anymore, "like your lips look ridiculous".

OH, and lastly...David Cook is head and shoulders better than "no range" David Arquelleta.
I think David Cooks body of work is so much better. I think he has more talent, I think he is much more marketable. I think David Arquelleta is a good singer and he is spot on all the time. I think all his songs sound the same and I wouldn't buy he album for a million dollars.
Randy says he could sing the phone book, well it would sound exactly like all the other songs he sings.

Okay to the topic of the day...

The part of the lecture is called "why $150,000 is not enough."

Where this came from is the fact that when I was 5 years out of school I was making good money and I still felt like I was swimming up stream.

Here were my thought on the whole thing.

When I was in dental school my dad was giving me $800 a month. This is $9600 for the year.
This is how it broke down.

Rent $175
Electric 80
Cable 40
Phone 75
School stuff 100
Beer the rest

I mean when my dad was telling me I might make $60-70,000 my first year out, I thought I would live like Donald Trump.
I had everything I needed with $9600 imagine how high on the hog I would be living with 7 times that.

But here I, five years later, was with 15 times that and still struggling.
So I started to put all I spent on paper.
Lets start with all the big stuff

Total $150,000
Taxes (28%) 30,000
-------------------------------------------------
$120,000

Now this is something that I was not accustomed to. Just so you know 28% is really $42,000 but I know I didn't pay that much so I just made it $30,000. That figure still might be a little high also. But work with me. I couldn't find my W2.
Now I realized why my dad always sweated tax time. I don't have a problem with taxes but this is something that blind sided me.

$120,000
Tithe 15,000
--------------------------------------------------
$105,000

The first class I took out of dental school was Crown Ministry. This is a Bible study on money.
I tithe. So it is a budget item.
As an aside, tithing is the only place in the Bible that God tells us to challenge Him.
He says, go ahead and do it and I will bless you. So my wife and I take 10% of our money and it is an automatic withdrawl from my paycheck to our TITHE account. (I have increased the percentage about 4 times, if I never get it in my checking account then I don't miss it)

$105,000
Mortgage 27,000
--------------------------------------------------
$78,000

Okay I was 1 year out of school. I didn't have any money for a down payment. So I needed a second mortgage to pay the down payment.
I bought a modest home that cost $176,000 (in 1996). It was 2300 square feet and very comfortable for my wife and I.
3 big bills and I am at about half of my money.
I am sweating just writing this.

$78,000
Insurance 14,000
----------------------------------------------------
$64,000

I was not a partner so I was responsible for most of my insurance.
Life, disability, home, cars, umbrella policies, flood, medical.
I think insurance is the biggest racket, but you have to have it.
I even have more now but this is a big benefit to partnership.

$64,000
Student Loans 6,600
------------------------------------------------------
$58,000

I owed $38,000 at the time. It was a five year repayment. I know some of you are way higher.
In retrospect, I feel really blessed to have my family pay for most of my education.

$58,000
Kids Tuition 8,000
---------------------------------------------------
$50,000

This was for one kid (who was my nephew, this is a long story, maybe I will tell you about this later) who was in elementary school and for one pre-K kid.
Now I laugh at $8,000, in two year I will have my third kid in private school and I think it is going to cost me $19,000. I tell my wife not to tell me how much school costs, I don't want to know. This will be for a 5th, 3rd and a kindergartner. Middle school and high school are more.
OH JOY.

$50,000
Retirement 12,500
--------------------------------------------------
$38,000

$12,500 was the max you use to be able to put in a 401k. Remember the book The Millionaire Next Door, it says "pay yourself first".

WOW!!!
We just finished the big bills and we are at $38k.
Just remember we haven't eaten yet or filled our cars up with gas. Speaking of our cars....I haven't talked about a car payment yet.

I will finish on Friday. Isn't this fun to watch your money go so fast.
I have spent $112,000 in 5 minutes.

I am in full body sweat now.
Have a great night,
Talk to you on Friday.
john

1 comment:

Susie said...

Archuleta is a much more marketable "pop" singer.I like Cookie, but he's a rock band lead man; Slurs his words together too much.
The money talk stressed me out just reading it. You totally blew my peaceful evening.
Good night.

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