Financial Planning Checklist for Dental & Medical Professionals

I can’t believe I’m saying this but, a new year is fast approaching! I don’t know about you but this time of year usually means getting my financial ducks in a row (it’s always a great time to do this). As 2022 approaches, let’s start to think about ways we can improve and be better for our future selves. One way to do this is to re-assess to finances. Here’s a quick checklist to follow:

Create and Stick to a Budget

Develop good financial habits early by setting a budget. There are several guidelines out there as to how an ideal budget should be set up. I personally follow the 50-30-20 rule (with some variation). Essentially this means, 50 percent of your money each month should go to essentials like bills and housing, 20 percent should go towards your financial goals like savings, investments, saving for retirement and paying off debt/student loans, and 30 percent should go towards wants like vacation, entertainment, etc. If you want to, you can switch the 30-20 around if that makes more sense for you. Of course, your budget sometimes need a little wiggle room but for the most part try to stick to this plan. Automate it so that you don't have to think about it.

Build an Emergency Fund

Make sure you have at least three (3) to twelve (12) months of funds saved up for a rainy day.  Personally, I think 12 months is a good buffer. This is where part of the 20 percent savings portion of your budget should go, and it's there in case you lose your job, become ill, or encounter an unexpected expense. Keep this money in a separate savings account at a separate bank from your checking account and forego a debit card for that account. Also, automate your contributions.  Ask your employer to direct debit a portion of your salary into your emergency fund account or you can do this yourself. You can also consider placing the funds into an account with high yield interest. Another smart thing to do is put this money in a short term investment vehicle where you can access it immediately if needed.

Create a Plan For Student Loan Repayment

The pandemic gave us a nice break from the pressures of repaying student loans every month. Hopefully we were smart about taking advantage of the 0% interest period as the end of that is fast approaching (after Jan. 31, 2022). Explore all the options for student loan repayment that is available to you and choose the best one for your situation. Look into options like public service loan forgiveness (PLSF), the different repayment options available through the federal government and/or take advantage of the benefits of student loan refinancing or consolidation. If you are still not clear about the best option for you, seek a professional help. I have personally used Travis Hornsby, The Student Loan planner and he was able to help me figure out a repayment option that fits my goals all while saving me money in the long run.

Pay Down Debt and Build Good Credit

All debt are not created equal. There is what we call good debt and there's bad debt.  Things like credit card debt are considered bad debt because it grows pretty quickly and doesn't help you in the long term. Interest rates are usually higher and can take much longer to pay off. On the contrary, student loans are considered good debt because it's an investment into your future earning power. Put as much money as you can towards credit card bills first starting with the with the one with the highest interest. Once that's paid off, prioritize the next highest interest debt, and so forth. Also consider automating the contribution to your debt payment so that you never have to worry about a missed or late payment.

Protect Your Paycheck

An injury or illness could limit your ability to practice. Ensure you have enough disability insurance coverage to cover you in case of sickness or injury. Supplemental insurance options are available specifically for health/medical professionals, but be sure you understand how the policy defines total and partial disability. Finally, remember to update this coverage as you grow in your career and into your practice.

Put Additional Protections In Place

As your career grows, explore the various life circumstances and get the right insurance to protect against potential impacts to your budget:

• Malpractice Insurance

• Life Insurance

• Renters/homeowners Insurance

• Auto insurance

• Umbrella Insurance

Save and Invest For Retirement

It is really important that you get on this early! It is vital that you prioritize creating and contributing to a retirement fund and take advantage of compounding interest. Compounding interest will do a lot of the hard work for you if you start early. Try to maximize your contributions and take advantage of any match system your job has to offer. If your job does not offer retirement options, you can do this on your own. Speak with your financial advisor and your accountant about the tax benefits.

Explore Attorney Assistance

Utilize attorney expertise to review employment contracts, help protect your assets from malpractice, maximize tax planning and discuss estate planning.

Start a College Savings Plan

You certainly know the value of a good education - and the cost of getting one. If you have a child or children and their education is a priority, start saving now. A 529 plan is a great place to start.

Talk To a Professional

Financial planning can feel overwhelming, but it doesn’t have to be. A financial representative can help you design a plan and implement strategies to meet your specific goals with confidence.

Getting your finances together means stability, security and dear I say it, freedom. It’s okay if you don’t have all this together just yet. The important thing is that you start, now. I will have the 2022 planner, budget and financial tracker ready in a few days so be on the look out for that. Let’s make 2022 the year we get our lives together. Our future selves will thank us for it.

How One Doc Paid Off $200,000 in Student Loans in 4 years

One of the hot topics on this blog and among young professionals has been student loan debt. If you attended professional school, chances are you accrued some debt along the way. However, it is a stark reality that this debt has to be repaid. A known debate for many of us is whether or not to pay down debt aggressively and get rid of it quickly or to pay the minimums as designated by your loan servicer and have the rest forgiven after 20-25 years. I personally have had this debate and have gone back and forth on the two options, which why I was really excited meet our guest, Dr. Rania Habib via Instagram and learned that she repaid her six-figure student loan debt in a short amount time and is now financially independent. I reached out to her to find out just how she did it and she was happy to answer all my questions. I am hoping this will inspire you as it has inspired me.

Q: Thank you for agreeing to answer some questions on your journey to financial independence. Please, tell us a bit about yourself 

A: Hi. My name is Rania A Habib and I am a board certified oral and maxillofacial surgeon (OMFS). I was born In Texas and raised in Minnesota. I obtained my BS in microbiology and completed dental school at the University of Minnesota. I then went on to complete a 6 year joint OMFS/MD program at University of Maryland in Baltimore. I worked in a busy private practice in the Maryland area while living in DC for two years. I then completed a one year fellowship in Pediatric Craniofacial Surgery at the University of Florida, Jacksonville. I love to teach and mentor students, so I found my calling in academic medicine 

Q: You are an Oral & Maxillofacial Surgeon with a specialty in Pediatric Cleft & Craniofacial Surgery. Please tell us what your specialty entails.

A: Oral & Maxillofacial Surgery is a unique surgical specialty that crosses the realm of both dentistry and medicine. We specialize in the treatment of all conditions in the oral cavity, face, head and neck. In addition to performing dentoalveoalar surgery and treating oral benign pathology, there are several fellowships that include cosmetic facial surgery, craniomaxillofacial trauma, pediatric cleft & craniofacial surgery, head and neck oncology, microvascular reconstruction, temporomandibular joint deformities, orthognathic surgery, dental anesthesia and implantology.  I am passionate about treating patients with congenital or acquired deformities in the craniofacial region with an emphasis on the pediatric population. 

Q: What made you interested in that field and how long did it take?

A: I loved surgery from the moment I was exposed to it as an American Heart Association scholar in my senior year of high school. I was initially a pre-medicine student, but decided that dentistry offered the unique ability to combine artistry, surgery and engineering. While in dental school, I fell in love with oral and maxillofacial surgery. I completed my undergraduate degree in three years, dental school in 4 years, combined OMFS/MD in 6 years and one year of fellowship. My training took a total of 15 years post high school. 

Q: Did you have student loans? And if you don’t mind, please tell us how much. Was this from undergrad as well as dental school?

A: I had student loans from my 4 years of dental school and my two years of medical school. For my undergraduate degree and first 2 years of dental school, I had in-state tuition that was offset by academic scholarships. My parents saved for my education, so I was fortunate that I did not have to take out loans for my undergraduate degree. I took out partial loans for my first 2 years of dental school and full loans my final two years of dental school and medical school to cover both tuition and board. My total debt was just under $200,000

 Q: Did you get paid in residency? 

A: Yes, 4/6 years. 

 Q: What was your strategy for tackling student loan debt?

A: For peace of mind, I wanted to eliminate my student loan debt as soon as possible. I opted to take a lucrative job in private practice to facilitate this goal prior to pursuing fellowship. After 10 years of straight post-high school training, I needed a break from the chaos of training. I hired a financial advisor to oversee my finances. He managed my malpractice insurance, disability insurance and helped me establish a budget based off of my salary and spending. We carefully documented my rent, utilities, car payments, car insurance, disability insurance, malpractice insurance, cell phone, groceries, gas, travel and fun. Based off that budget, I established an emergency savings fund to cover three months of living prior to aggressively paying off any student loans. When I first finished residency, I only paid my loans off according to the amount due until I was able to accumulate my emergency fund savings. Once I was done saving the emergency fund, I then began to aggressively pay off my student loans. 

I did not live ultraconservative, but I did not overspend my means. I lived in a nice apartment with good amenities. I did not upgrade my car. It was paid off during residency, so keeping that car saved me a ton of money. As a coffee lover, I invested in a Nespresso machine, so that I was not paying $4-6 for coffee every day. I limited eating out at restaurants to only once a week. I am a big advocate for meal prep, so I usually prepared my own breakfast, lunch and dinner. Eating out is extremely expensive, so learning to cook will save you a ton of money. I did not deprive myself of anything, but I was extremely practical about my spending. I still enjoyed my money, but I eliminated consistent extravagance. 

Q: Did you have other debt and what was your mindset towards those? 

A: I was lucky in that I did not have any other debt. I did not buy a home, nor did I upgrade my car. 

Q:  In a nutshell, how did you achieve financial independence?

A: I set my long-term financial goals, hired a financial advisor and lived according to a budget that we designed as a team. I did not overspend my means.

Q: What is your approach to spending and your psychology about money?

A: I am a strong believer that you should do what makes you happy. I enjoy experiences over extravagant items. I would rather pay for a beautiful trip around the world then regularly spend a $1000 on a pair of shoes. That being said, I still enjoy finer things. When my loans were paid off, I opted to finally lease a luxury car. Every once in a while, I will buy a nice pair of shoes, a tailored suit, an expensive purse or jewelry. I just do not find myself drawn to spending my liquid income on expensive, luxury items on a regular basis. I enjoy spending my extra income on family, charities and people in need. 

Q: What advice would you give to other health professionals/ health profession students on handling debt and student loans?

A: I would recommend that you invest in a financial advisor who has adequate experience with student debt from the medical/dental profession. These are different than the average financial advisor. They will understand how to incorporate your malpractice and disability insurance in addition to investing. It is not a bad idea to have a financial advisor to handle malpractice and disability and a second financial advisor to invest. Your financial advisor needs to devise a plan that includes a spending budget, an emergency fund, retirement, and your end goals. When you finish school/training, you will have the option to pay off your existing school loan interest as a lump sum. If you have the financial ability to pay that lump sum, then do it! If you do not, you will accumulate interest on that interest. Depending on your interest rate, you may be eligible to consolidate your loans and pay them off more aggressively in a shorter time frame by applying for an outside loan agency geared towards medical professionals. If paying off your loans is a financial goal, consider these companies to help you pay them off in a shorter time, at a lower interest rate. Always consider your own financial picture before making these decisions. If you have other sources of debt such as a home mortgage or car loan, you may not be able to pay off student loans as aggressively as I did. Utilize your financial advisor to help make these decisions based on your personal goals and what makes the most financial sense for your situation and lifestyle. 

Dr. Rania Habib attended the University of Minnesota for undergraduate and dental school and the University of Maryland for medical school, General Surgery internship and Oral & Maxillofacial Surgery (OMFS) residency. She worked in a busy OMFS private practice for 2 years, then completed a full scope Pediatric Cleft and Craniofacial Surgery Fellowship at University of Florida, Jacksonville. She became the first female attending surgeon in the Department of Oral & Maxillofacial Surgery at LSU, NOLA where she was appointed as an Assistant Professor with a primary focus in Pediatric Cleft and CranioMaxillofacial Surgery. Her main surgical interests include pediatric/adult OMFS, cleft, craniofacial, orthognathic, facial trauma, obstructive sleep apnea, benign head/neck pathology and facial reconstructive surgery. She is now full time faculty at University of Pennsylvania. She is an active volunteer with Smiles International and the Global Smile Foundation where she provides cleft and craniofacial surgical care internationally. In her spare time, Dr. Habib enjoys traveling, rock climbing, biking, cooking, attending live music/art events, volunteering, reading and spending time with her family and friends. She is a master level SCUBA diver who is also a fitness fanatic.

You can find Dr. Rania on Instagram @raniahabib.md.dds

How Does Student Loan Interest Work?

When taking out loans to cover the costs of college, most students aren’t looking ahead to the decades after graduation. They might know that student loan repayment is on the horizon, but borrowers often fail to consider the interest that can quickly accrue once their loan is disbursed.

How does student loan interest work, exactly? What’s involved in setting interest on student loans? What should a reasonable monthly payment look like?

These are crucial questions that all borrowers should ask to avoid taking on too much debt and to stay afloat when loan servicers start sending the bill. This guide will help you understand the basics of student loan interest, how to find good rates, and the best methods for developing a repayment plan.

How does student loan interest work?

As with a mortgage or any other type of loan, student loans are not free advances. Because of interest, the amount you borrow is typically less than what you will end up repaying over the life of the loan.

When you apply for a student loan from the U.S. Department of Education or a private financial institution, you will be quoted an interest rate. Depending on the information you provide in your application, this might or might not be your final rate.

The student loan interest rate your provider settles on is expressed as an annual percentage rate, or APR, which represents the actual yearly cost of funds over the term of a loan. Your rate could be fixed or variable.

• Fixed: A fixed APR will remain the same for the extent of your loan term.

• Variable: A variable APR fluctuates with changes to the market index to which it is tied. Variable interest rates are often lower than fixed rates at the outset, but might increase over the term of your loan.

You will be required to sign a promissory note before your provider disburses your loan. This note will indicate your official rate, and also outlines:

• Terms and conditions of your loan(s)

• Repayment plan choices

• Late charges and collection costs

• Explanations of defaulting, forbearance, consolidation, and any other pertinent information

Each day or month, the interest your loan generates will be tacked onto your total balance, which includes the principal (the initial borrowed amount) and interest accrued.

You must repay the interest prior to paying down the principal balance, so failing to make payments makes your debt more expensive over time.

How Often Is Student Loan Interest Compounded?

Compound interest is the addition of interest to the principal of a loan. Put simply, it is interest on the interest. 

The promissory note for your student loans will also indicate how often your interest accrues as well as your compounding rate. Most student loans accrue interest daily and compound either daily or monthly.

Daily accrual means that lenders will divide the APR by 365 and apply that daily interest rate to your principal balance each day. Daily compounding would mean that your APR would also be applied to the amount of interest that accrued the day prior, in addition to the rest of your principal amount.

As such, compounded interest is constantly tacked onto your balance and incorporated into your next interest charge. So, the longer you take to address interest, the higher your compounded interest balance can climb.

See the full guide here:How Does Student Loan Interest Work?

This is a sponsored post from LendEDU
This article may contain affiliate links.

How Dentists Can Start Their Own Practice While Repaying Student Loans

Dental school graduates have among the highest amounts of student loan debt compared to other graduate degree types, most graduating with more than $300,000. While that might seem like a lot, dental grads also have significant earning potential, which means that it's possible for them to repay their loans and still fulfill their dream of opening their own practice.

The key to successfully starting a dental practice is to plan for it. That means saving up, optimizing your credit score, and making yourself attractive to lenders so that when it comes time to take out a dental practice loan you will easily be approved.

Here are some smart steps dentists can take to get their finances in order and work their way toward starting or acquiring a dental practice.

Focus on Earning Steady Income and Improving Your Credit

‍Before diving in headfirst to start your own practice, it's important to take a step back and consider the benefits of building your experience as a dentist while earning money along the way. "It's hard to start up a dental practice right out of school for a few reasons," said Adam Glassberg, financial counselor with Chicago-based D3 Financial Counselors, who works primarily with young medical professionals. "First, it might be hard to market your services with little or no experience. Second, working as an associate will also put you in a better financial position."

In addition to earning income and developing more experience, the extra time spent working as a dental associate prior to starting your own practice will allow you to focus on building your credit score. According to Glassberg, that means doing things you likely already know you should do, such as making your student loan and credit card payments on time.

But it also means doing some things that you might not realize improve your credit, such as being mindful of keeping your total debt amount low.

"For example, you want to keep your total debt to less than 30% of your credit outstanding," said Glassberg. "If you have a credit card with a $10,000 limit, you want to make sure your balance on the card doesn't exceed $3,000. Any more than that, and your credit score could suffer." He also recommends that you keep your oldest credit accounts open. "Credit companies look at how long you have had access to credit, and so closing old accounts might have a negative impact on your credit score," Glassberg said.

Meet With a Financial Planner

If you're feeling a bit overwhelmed at the prospect of starting a practice and paying your student loans, it would also be beneficial to reach out to someone who can help you create a plan. A financial planner who specializes in working with health professionals is probably your best bet.

Glassberg believes it's critical that you work with a financial planner, since they help you consider things you might not have thought about. For example, he recommends that his clients save money in an emergency fund to cover any unforeseen expenses for up to one year before starting a practice. "It's important to have that emergency safeguard," Glassberg said, "because you can't depend on making money from your practice in that first year." A financial planner will also help you optimize your assets and manage your student loans in order to prepare you for applying for a loan to start or buy a practice.

‍Find the Best Student Loan Repayment Option

‍Dentists have several options to manage and repay their student loans, and it's worthwhile to look into each one to determine which is right for your situation. Here are a few options that you can consider for tackling your student debt:

• ‍Consider Refinancing Your Student Loans

Because practice loan lenders like to see that the dentists they lend to have more cash on hand, it is often a good idea for dentists to refinance their student loans to lower interest rates with longer terms. This will enable you to lower your monthly payments so you can start saving for your practice.

‍When you refinance student loans, you're taking out one new loan to replace one or more existing loans often receiving a lower interest rate than what you were previously paying. Private lenders like CommonBond, SoFi, Splash Financial or LendKey offer refinancing options that could save the average dentist thousands over the life of their student loans.

‍"If you can reduce the interest rate or extend your repayment term, you can lower your payments which would give you more cash flow in order to start your practice," said Glassberg.

‍Refinancing your student loans enables you to both lower your monthly payments and lower your debt-to-income ratio, which can be helpful when it comes time to apply for a practice loan.

• Explore Federal Student Loan Programs for Dentists

‍Refinancing isn't always the best option for every dentist, however. The federal government offers several programs specifically for dentists that private lenders don't offer. In order to be eligible for most of the government programs, dentists are generally required to work within Health Profession Shortage Areas (HPSA) or a Medically Underserved Area or Population, as defined by the U.S. Department of Health and Human Services.

‍A few of the government programs available to dentists include:

‍National Health Service Corps (NHSC) Loan Repayment Program‍

Under this program, dentists can receive up to $50,000 to repay their dental school loans in exchange for a two-year commitment to work at an approved NHSC site in a high-need, underserved area.

Army Dental Corps Programs 

If you serve as a dentist in the U.S. Army, you may be able to get up to $120,000 in student loan repayment assistance, as the Active Duty Health Professions Loan Repayment Program offers $40,000 per year for a maximum of three years.

‍State-specific options:

‍In addition to federal government programs, most U.S. states offer student loan repayment assistance or forgiveness for dentists who work in medically underserved communities. These options vary from state to state, so it's worth exploring the options available in your state.

‍If any of the situations listed above apply to your desired career path, then it would be worthwhile to explore some of the federal and state student loan repayment options available to dentists.

Apply for a Practice Loan

‍Once you have great credit, strong work experience, a robust emergency fund and have found the best student loan repayment option for your circumstances, you're ready to apply for a loan to start your practice.

‍According to Glassberg, this is when your hard work to save money will pay off: The more assets you have and especially the more liquid assets you have – the more likely you are to obtain a loan.

‍Here are some of the top factors to keep in mind when it comes time to apply for a dental practice loan:

‍Create a business plan

Before giving you a loan, lenders need to understand how you will manage and grow your practice, including how you'll run day-to-day operations and get new patients. Generally, lenders are wary of lending to you until they believe you have a proven business, so having a solid business plan to share with them will help the process significantly. This article in Dental Economics offers useful steps for dentists to take in creating a business plan.

Be prepared to share necessary documents and information with lenders

In addition to a business plan, when applying for a practice loan, you'll need to be able to share further information with lenders. This includes information such as the purpose of your loan, the amount you intend to borrow, debt service coverage, primary collateral, debt-to-worth ratio, management experience, and your credit score.

‍Get life insurance and disability insurance

‍It's common practice in the dental lending industry to require these policies to be in place as collateral for the loan in case something happens to the dentist. Insurance is a big factor in mitigating a lender's risk that a dentist would be unable to repay the practice loan due to death or disability.

‍Determine what type of loan you need and choose the right lender

‍Once you have all of these other elements in place, you'll be in a good position to apply for your practice loan. At this stage, you should determine the desired term of your loan –generally you can choose between repaying your loan in 7 or 10 years and select the best lender, depending on which offers the best interest rate and terms for your situation. Lenders that offer practice loans include Bank of America, US Bank and Wells Fargo. It may also be worthwhile to explore a website like Fundera, which can connect you with a variety of small business lenders and allow you to choose the best option.

‍In addition to these considerations, Glassberg recommends that dentists looking to start up their own practice continue working as an associate at another practice as they get their own practices up and running in order to help with cash flow, which certain lenders require. And, in some cases, acquiring an existing practice might be a better bet, according to Glassberg. "Because the practice is already up and running the terms of the loan could be more favorable since it is a lower risk loan," he says.

While paying down your loans and starting your practice might seem daunting – it's entirely doable. With a plan and some hard work, you'll be able to open the doors of your own practice in no time.

This is a sponsored post from Commonbond and may contain affiliate links.

Can You Refinance Student Loans After Consolidation?

Consolidation and refinancing can both be viable options when trying to simplify student loan repayment or lower monthly payments.

Combining student loan balances under one roof, either through consolidation or refinancing, has the potential to lower a borrower’s interest rate (in the case of refinancing), extend the repayment term, or both, which can reduce the monthly payment to a more affordable level.

Many borrowers, however, find themselves asking whether they can refinance student loans after they have already consolidated them.

In short, if you have previously consolidated your student loans—whether through the government or a private lender—you can still refinance your student loans if you are eligible.

Difference Between Student Loan Consolidation and Refinancing

Student loan consolidation may be referring to two different things in most cases:

1. Consolidating federal student loans via the Direct Consolidation Loan program

2. Consolidating federal and/or private student loans together via refinancing with a private lender

Federal Direct Consolidation Loan Program

Federal Direct Consolidation Loan is a program that allows you to combine outstanding federal student loan balances, either in full or in part, with the federal government. Private student loans are not eligible for consolidation under this program.

Borrowers can easily complete a consolidation of selected federal loans through a brief online request form through the Department of Education. All the provisions of federal student loans remain available to borrowers, including income-driven repayment plans, deferment, and forbearance, with a loan consolidation.

Consolidating Student Debt When Refinancing

Refinancing student loan debt is a different process that involves a private student loan lender, not the federal government. When refinancing, student loan borrowers have the option to combine one or more federal or private student loans into a single loan with a new lender—sometimes referred to as private student loan consolidation.

Refinancing is available through many private lenders, meaning interest rates, repayment terms, features, and total costs differ greatly. Refinancing can be beneficial to student loan borrowers if they are able to secure a lower interest rate than what a consolidation or their original loan terms offered. However, if you refinance federal student loans, you will lose any protections that came with the loans and access to federal repayment plans.

How to Refinance Consolidated Student Loans

Some borrowers may opt to consolidate their federal student loans initially, then later decide that they want to refinance to take advantage of benefits like a lower interest rate. In this case, refinancing can be done directly with a private lender even after a consolidation is done.

To refinance consolidated student loans, student loan borrowers need to simply find the private lender they would like to utilize, complete an application for the refinance, and once approved, make payments to the new private loan lender.

Most student loan lenders offering to refinance loans have an easy online application process, the ability to add a cosigner to strengthen the application, and several options for repayment terms.

You can compare student loan lenders and find your best match here.

How Often Can You Refinance a Student Loan?

Student loan borrowers can refinance their student loans as many times as they would like, so long as their credit and income remain strong. Lenders do not typically put restrictions on how often loans may be refinanced, although borrowers may need to move to a different lender if a refinance was recently completed.

As student loan interest rates shift, refinancing student loan debt may be a cost-effective strategy for reducing the total cost of borrowing. However, there are factors to consider before refinancing multiple times.

See the full article here: Can You Refinance Student Loans After Consolidation?


This is a sponsored post by LendEDU

Tackling Student Loan Debt

Almost all young dentists face confusing (and often conflicting) choices after graduation because of the significant amount of student loan debt they have from dental school. The average dental school graduate has more than $247,000 in student debt. That figure has risen nearly 40% since 2010.

"[Dentists have] been trained for years to focus on passing the next academic exam, completing a procedure correctly or passing a licensing exam," says Dr. Douglas Carlsen, founder of Golich Carlsen, a financial consulting firm for dentists. Carlsen retired from his own dental practice in 2004. "[Dentists] have not, in many instances, been prepared well for the real world of employment and possible business ownership," he says. "They have not been prepared for the world of consumer purchasing and financial planning."

The key, Carlsen says, is for dentists to get on solid financial footing so they can start to tackle their student loan debt. Here's how:

‍

Make a Financial Plan

Carlsen recommends that young dentists address debt by establishing goals they want to reach within a certain deadline. Include your partner, if you have one. Factors to consider include what kind of lifestyle you want to have, how much student loan debt you have, how much savings you want to have and what kind of practice you will be a part of in the next one, five, and 10 years, he says. Identifying these parts of your life will help clarify the amount you can dedicate to paying down debt while living your life.

‍The goal of the financial plan is to help you keep your expenses low. By reducing your spending, Carlsen says you could dedicate 40% of net income to pay down debt. "I personally know of dentists that have paid off $400,000 in less than eight years," he says.

‍Free budgeting apps, such as Mint and Personal Capital, can make it easy for dentists (or anyone else) to track their spending.

‍

Consolidate and Pay Down Student Debt

In general, dentists with good credit can consolidate and refinance their loans with a lower rate from a private lender. For example, Common Bond could save the average dentist thousands over the life of their student loans.

‍If qualifying for student loan refinancing at a lower interest rate is not an option immediately after dental school, Carlsen recommends consolidating federal student loans and using an income-driven repayment plan.

‍

Remember Your Retirement Fund

You'll want to balance student loan repayment with other goals, such as retirement. Nate Wenner, a CPA and certified financial planner who specializes in working with dentists, recommends dentists set aside at least 10% of their gross income toward retirement.

‍"After meeting that baseline level of saving, one can look to more aggressively pay down any debt which carries an interest rate higher than what you might expect to earn by investing over the next 10 years," he says.

‍Good financial habits can help dentists retire early, Carlsen says. He notes that the dentists who retired at 50 he knows have these characteristics in common: They bought a home and remained in it until retirement. They have saved more than 20% of their annual net income after their student loans have been paid off. They started saving for retirement by age 35 or earlier. And finally, they paid cash for everything except their homes and practices.

‍

Hold off on Buying a Home or Practice

Carlsen says the worst mistake he sees young dentists make is to buy a home too soon. "A young dentist should not buy a home until he or she is stabilized in their employment or practice situation," he says.

‍Don't rush into buying a practice, either. "I see many of the national brokers promising much higher income projections for practices for sale than what is prudent," Carlsen says. "There will be a plethora of practices for sale by baby boomer dentists in the next five to eight years. Take your time and find a practice that suits your style, not what others tell you to do."

‍Following these tips can help dentists pay off their student loans faster and set themselves up for an even brighter future.

T‍his is a sponsored post from Common Bond

A version of this story was originally published in Forbes.com.

How Student Loan Consolidation Positively Impacted My Credit Score

Many of us have student loan debt, and if you’re a dentist or physician your student loan amount may be pretty significant. Figuring out how to go about tackling them can be quite daunting; knowing whether to consolidate or refinance, choosing from the different repayment options, and deciding which is best for you.

On my own journey to pay down my mountain of debt I stumbled upon a little surprise. I discovered that a wonderful side effect of consolidating your student loans is a credit score increase. I was able to significantly increase my credit score by consolidating my loans.

Here’s how that works:

• One factor that determines your credit score is the number of lines of credit that you have open.  Remember that you get a loan for every semester of school and thus at the end of your four years (or however long your schooling is), you will end up with several student loans. As a general rule, If you have too many lines of credit, your score will go down.  By consolidating your student loans, you are replacing your many student loans with one new loan.  You will still have the same amount of debt, but the number of lines of credit goes down, thus increasing your score.

• A second advantage of student loan consolidation is that it will appear that you have paid off all of your other loans.  Any record of debt repaid is a good thing!  Depending upon how your loans are consolidated, it could read that your loans were refinanced or it could read that it was paid in full.  Either way, your credit score is helped.

• One final advantage of consolidating your student loans is that it can often lower your monthly payments.  This helps your credit score because the ratio of debt to income will go down.  

Consolidating your student loans is dependent upon the type of loans that you have.  For Federal Loans, consolidation is usually a great idea, but for private loans it gets more tricky as there are several private loan lenders to choose from (SoFi, Laurel Road, LendKey, Earnest, Splash Financial, etc). Do your research, speak with a trusted professional and choose the best option for you.

Refinance or Consolidate your Student Loans?

As young professionals, many of us left or will be leaving school with student loan debt. As our grace periods wear off and we enter repayment a lot of us find ourselves scouring the internet or asking friends and colleagues how they are going about tackling their student loans. It can be daunting going through the options - some of us have loans from undergraduate school and/ or graduate school. Some of us may have taken out private student loans, federal loans or a combination. Either way, we need to know the options for repaying these loans.

Student loan refinancing and student loan consolidation are two different tactics to help borrowers repay their loans. In some cases student loan consolidation is the way to go, and in other situations student loan refinancing is best. So what that difference?

Consolidation

Consolidation refers to combining multiple student loans into one loan. You may have taken out a separate loan for each semester of school and thus by consolidating you are combining all those different loans into one, which results in just one monthly payment instead of many.  This is designed to make repayment easy and typically refers to federal student loans. Since it applies to federal student loans you keep all the benefits that federal loans offer (loan forgiveness, income based repayment, etc). Consolidation however, does not lower the interest you pay on the loans. The interest you pay is calculated based on the average interest of all your combined loans. It is important to note that consolidation does not necessarily save you money - it simply combines all your loans to make your payments easier to manage.  

Consolidation is only done through the Department of Education (studentloans.gov)

Refinancing

Refinancing your student loans is a good option if you have several loans from several sources (private, federal, etc). This option does not combine your loans, but rather creates a brand new loan. Your new loan’s interest rate can be lower depending on your credit score, so it is important that this score is healthy. The great thing(s) about refinancing is that you will now have one single new loan instead of many and there is the potential to get a lower interest rate which can save you a lot of money over time.

Refinancing can be done through a private loan lender (not government). There are many options out there like SoFi, Laurel Road, Earnest,, LendKey, etc.

Which is best?

• If you have multiple private loans OR a single private loan with a high interest rate - Refinance

• If you have federal student loans and planning on getting student loan forgiveness or rely on Income based repayment - Consolidate

• If you have both federal and private loans and want a single loan with low interest rate - Refinance