Money Management Solutions: Dental Practice Case Study
Financial and money management expert Sandra Simmons describes how she was able to assist a dentist to handle debt and put him on the road to wealth and financial freedom.

Financial Difficulty: How do I fix my declining profitability and rising debt?

A dental practice I worked with was actually doing well, but expenses were out pacing income on a business level as well as the personal level for the practice owner. With almost $3 million per year in revenues and $1.5 million in debt the practice was just keeping its nose above water.

The challenge was to raise revenue, cut expenses and pay down debt at a rapid pace, while reducing the practice owner’s personal tax liability from 40% to a lower level.

Money Management Strategy #1: Cutting Expenses

The first action was to create a budget in the Money Management Solutions program to find out what it was costing to run the practice on a weekly basis, and where expenses could be cut.

Once an evaluation was done, the big culprit in rising costs turned out to be the dental supplies. There was no formal ordering procedure, and staff were shopping the catalogs and ordering whatever they wanted. To get this under control, a two-pronged plan was developed.

The first action was to institute new ordering policy. A self-carbon internal requisition form was designed for staff to request supplies be ordered. All requisitions are routed to the owner’s wife for review against on-hand inventory and other requests. The carbon copy is sent back to the staff member requesting the supplies with a notation of whether the request has been approved, approved with modifications, or disapproved. Ordering is now handled by one person rather than everyone ordering.

Second, a complete inventory of supplies was ordered, and excess inventory found tucked away in drawers and cabinets was scheduled to be returned for credit. This alone saved a substantial amount of cash.

Money Management Strategy #2: Raising Revenue

An income planning drill was done to identify areas of the practice that were non-viable, discover what services were profitable and easy to deliver, and discuss what new products or services could be added to raise income profitably.

The dental supplies were examined again to find out if the suppliers had raised their prices. Several vendors had increased prices and the retails needed to be adjusted in the dental practice.

Next, to address the 8 – 12% annual increase in the cost of doing business, the services were reviewed to see where prices could be raised without causing undue upset with patients. It was found that prices had not been raised on some items for over a year. Several services were raised immediately and yet were still competitive in the market. Lost income from keeping retail prices stable is a common mistake business owners make. Every consumer knows that the cost of living and doing business goes up each year. They are rarely surprised by price increases.

The Doctor/Owner was scheduled to get trained on a modern procedure that he had been wanting to learn for quite some time. The new procedure was determined to be “where dentistry is headed in the future” so the modest training cost could quickly be recovered within a very short time after introducing the new service in the practice.

The staff bonus system was based on revenues that were too low for the practice to be viable. The bonus system was revamped with a new, higher “break even” target set to qualify for bonuses. In addition, a bonus game was added whereby all staff and their spouses could play to win a group trip of their choice.

The promotional activities were evaluated to determine whether they were producing a good return on investment and where costs could be cut while improving response. Changes that were made included adding a monthly email newsletter to all patients. Here is what the practice reported after the first newsletter went out. “I had to send you our first e-mail newsletter. We already have gotten responses!”

Money Management Strategy #3: Reducing Debt & Implementing Long-Term Savings

Using the Money Management Solutions software, the weekly allocation of income included percentages to reduce debt, pay regular expenses on time, promote the practice and set-aside funds for a long-term retirement savings plan.

The increase in income from cost cutting measures, promotional activities and weekly income planning was immediate and profitability was on the rise. A mere 3 weeks after implementing the Money Management Solutions program, here is what the practice owner had to say, “Thanks for ALL the tips. We are putting things in place and already seeing results!”

Money Management Strategy #4: Setting the Course for the Future

In a few short weeks the practice was turning around and headed in the right direction. The regular weekly planning using the Money Management Solutions software maintained tight controls and the practice owner could clearly see that this was painlessly helping the practice stay on course toward a bright financial future.

The key to the success of the plan was the practice owner’s decision to fully embrace the Money Management Solutions program and keep the discipline in. Once that decision was made, the rest was simple.

Statistical graphs are being charted weekly and the decrease in debt and increase in cash reserves are a validation that the plan is working. Continuation of the actions taken to keep a tight control on costs, raise income and pay off debt is handled in less than an hour each week using the Money Management Solutions software, and the practice owner spends the rest of the week with his attention on treating his patients. He is sleeping well at night, no longer worries about money and is having fun in his practice again.

My estimate of how long it will take until the practice is free of the $1.5 million debt…14 months, provided the Money Management Solutions program discipline is kept in and used as intended.

You can speed things up considerably by using the tips in Dr. Brian’s new book Breaking The Profit Barrier – The Healthcare Practitioner’s Guide so check out the book!

If you would like a money management consultation regarding your dental practice or business contact Sandra Simmons at 727-448-1011 or email her at info@moneymgmtsolutions.com .

Lenders might be monitoring your money management behavior via your credit card spending — and certain purchases could cost you.

By BusinessWeek 

Most borrowers know a late payment or high outstanding balance can hurt their credit. But what about frequenting a massage parlor, retreading a tire or visiting a marriage counselor? Such activities count, too, according to a suit filed June 10 by the Federal Trade Commission in Atlanta federal court against card issuer CompuCredit.

Lenders, insurers, and other financial firms use credit scoring systems to make a host of decisions about consumers, including the interest rate on their mortgages, the limits on their credit cards and the monthly premiums for their auto coverage. Some rely heavily on FICO, a three-digit score developed by Minneapolis-based financial firm Fair Isaac, while others use proprietary models developed by statisticians. But companies don’t disclose what’s baked into their formulas, leaving many borrowers to wonder what factors determine their financial fate.

The FTC suit against Atlanta’s CompuCredit for allegedly “deceptive” marketing practices offers a rare look inside the opaque business of credit scoring. It reveals mechanisms that consumer advocates and politicians have long suspected exist — in which purchasing behavior, not just payment history, matters.

Punished For Purchases

The allegations, in part, focus on CompuCredit’s Aspire Visa, a subprime credit card for risky borrowers. The FTC claims that CompuCredit didn’t properly disclose that it monitored spending and cut credit lines if consumers used their cards at certain places. Among them: tire and retreading shops, massage parlors, bars, billiard halls and marriage counseling offices.”The company touted that cardholders could use their credit cards anywhere,” says J. Reilly Dolan, assistant director for financial practices at the FTC. “What they didn’t say was that you could be punished for specific kinds of purchases.” The Federal Deposit Insurance Corp. is also seeking $200 million in penalties from CompuCredit in the matter.

It’s not the first time CompuCredit has come under scrutiny from authorities. In 2006, the credit card issuer and another financial firm agreed to fork over $11 million to consumers and reform their marketing and billing procedures as part of a settlement with then-New York Attorney General Eliot Spitzer, who had launched a probe in 2005 after receiving various consumer complaints.

CompuCredit maintains that the FTC’s lawsuit is without merit, and defends its practices. “Every time a consumer accesses their credit, a new decision to extend a loan is being made,” says Rohit H. Kirpalani, CompuCredit’s general counsel. “These scoring models are commonplace across the industry.”

Video on MSN Money

Protection from credit card companies
If new rules proposed by the Fed are enacted, some of the credit card companies’ favorite sleazy tactics will be taken off the table.

With competition increasing, databases improving and technology advancing, companies can include more factors than ever in their models. And industry experts say financial firms increasingly are looking at consumer behavior, as CompuCredit did.The worry is that companies may tweak the credit scoring systems in unfair or biased ways, weeding out or limiting borrowers based on race, gender or sexual orientation. (In the case of CompuCredit, regulators are taking issue with the lack of disclosure, not specifically its use of behavior-based scoring.)

“We as consumers should become aware that behavior is used to determine our creditworthiness,” says consumer advocate Karen Gross, president of Southern Vermont College. “What CompuCredit portends is the (use) of information to create a more robust and potentially nefarious credit scoring system.”

This story was reported and written by Jessica Silver-Greenberg for BusinessWeek.com.

Published Aug. 8, 2008

If these actions weren’t so downright dangerous, they might be humorous. Are you making these mistakes with your hard-earned cash?

1. They never figure out how much money they actually need each week to do better than just pay their bills. They don’t have a budget set up.

The correct definition of a BUDGET is: the calculation of the amount of money needed for an area [organization or household] to function and achieve its purpose. If you are satisfied to just  pay your bills, and you don’t pay yourself first into some type of savings plan, you will make other people wealthy and you will stay poor.

Every supplier you pay is in business to make a profit. You should run your business and your household the same way: like a business that is expected to make a profit. The income target must include a profit or the enterprise will go broke and fail.

2. They don’t work out ways to make more money than they currently need, and then do whatever it takes to execute the plan.

By UNDER estimating the amount of money needed to do better than just break even, they typically set their income target too low and lose money by living on credit instead of going into action to raise their income. Anyone can find ways to make more money; it is often the “willingness to do whatever it takes” that is the problem.

There are two classes of wealthy people. The large majority of wealthy people are working all the time. They have a purpose they are pursuing, and it isn’t money. Money is a sub-product they expect from their work. Their goals and purposes are the driving force in their lives.

The small minority is often called the “Idle Rich” and they are bored to death. They have seen it all, and done it all twice over and there is no thrill left in life. Think about it. If you had done everything you dreamed of and owned everything you could possible want, and were spending your days sitting by the pool in some swank hotel nursing a beverage with a little umbrella in it, would you wish you had some productive work to do? I’d bet my next few paychecks you would.

3. They habitually spend more money than they make.

Using money to buy the “appearance” of having more money than you actually have is a dangerous activity. I call this type of spender a Gratification Groupie. This can catch up with you quickly and eventually drown you in debt. This causes constant worry about money and makes for lots of sleepless nights. Money truly cannot buy happiness. But doing something productive and worthwhile and knowing you are appreciated for it can make you feel like a million bucks.

Most truly wealthy people are not interested in appearing to be wealthy, they are too busy having fun helping others in life and making more money as a result of that. Rich people always pay themselves first, have cash stashed in several places, are always interested in being productive and expect their productivity to produce more income. They don’t worry about money, and they sleep well at night.

4. They don’t figure out what they need to buy in the future and then set aside a little money each week so they can pay cash for the purchase later.

Buying something with a credit card that you can’t pay off when the statement arrives is committing your future earnings to the credit card company. You are then working for the credit card company as an economic slave.

The correct way to buy things, especially big ticket items, is to set aside a little each week till you have the cash to pay for the item, and then go out and negotiate a big cash discount. The guy with the CASH IS KING!

I recently did this when I bought my current car. I found the exact car I wanted. It was 2 years old, had 21,000 miles on it and was still under warranty. The dealer wanted $29,500 for the car. I got it for $17,500 and got an extended warranty thrown in on the deal. Don’t buy new cars. The second the front tires move off the dealer’s lot onto the street, it becomes a “used car” and loses about 25% of its value.

5. They buy products and services based on WANT rather than on NEED.

Buying decisions should be based on how your purchase of the product or service can help you produce additional income for you. Honestly, do you want the latest cell phone that offers text messaging and email retrieval because your friends have one, or do you need it to be more efficient because you are out of the office traveling to close the next business deal?

6. They don’t put money into a long-term savings plan so they have it for use later in life.

If you are relying on other peoples’ future production to pay you Social Security payments so you can retire, that is really taking a gamble.

Despite the fact the government says the cost of living is going up 3 – 3.5% a year, the truth is that it is going up 8 – 12% a year. You have to make that much more income just to stay even. Why does the government say it is only 3 – 3.5%? Unfortunately for the senior citizens, it’s because they government has to raise Social Security payments each year by the cost of living increase they quote. The Social Security system is already bankrupt and those living on Social Security are headed in that direction by going in the hole 5 – 9% every year. Are YOU planning on retiring on Social Security payments alone?

7. They never develop multiple sources of income. If one source dries up they are in trouble financially.

The old saying “don’t put all your eggs into one basket” holds true today, especially for income sources. Look for products or services that you can add, or business ventures you can get involved in that are ethical, and have a great chance of producing a consistent income. The best type of income is “residual income” where you create something that continues to generate income for you while you are off doing other things.  For example if you wrote a book and sold it on the internet as a download where potential customers could buy it 24 hours a day around the world.

8. They get stressed out about how little interest their bank pays on savings accounts while they are getting killed with much higher interest debt by carrying balances on their credit cards.

If you have substantial credit debt, you are better off using excess cash to reduce the debt and stop the high interest payments instead of trying to earn interest from the bank. As you pay off your debt, you should also keep enough cash on hand to cover a few months of living expenses and the unexpected emergency.

Once the debt is gone, or will be soon, then start investing the excess money where you can get real growth. I use a Certified Financial Planner to invest my money for me so I don’t have to do all the research and trading actions. I let the expert do what he does best while I am busy making more income.

Now don’t get me wrong, I think investing in real estate is great if it provides more cash flow in than what you have to pay out. The truth is that any real estate is a liability as long as you have to make payments on it. Only when it is paid off does it become a true asset.

9. They worry about “the economy” in general.

I’m amazed that people are actually more worried about “the economy” than they are about their business or household failing financially. They worry about what the media is reporting about “the economy” which is something they can’t control, while never looking at how they are can affect the economy of their own business or household, which is something they CAN control.

A rise in unemployment is no reason to worry. Small business creation of new jobs far outweighed the loss of jobs in big corporations, according to the latest ADP report. A failing bank is no reason to panic. Banks get bailouts from the FDIC and other investors. No one is standing by to bail out your failing business or household. That is entirely up to you. So stash some cash in a safe, in a bank, or better yet, a tax deferred retirement plan, and sleep well at night while the bad news about “the economy” rages around you.

10. They expect to survive financially without taking full responsibility for controlling their financial future.

There is a very simple solution to money problems. Cut expenses, increase your income, and correctly manage what income you do get. It’s not only about how much money you make, it’s what you do with your money that determines your financial condition.

Correct money management is something educational institutions don’t teach. People get false information and bad advice about how to handle money. Then they make these silly mistakes, get into trouble, try to solve the problem using credit, create more trouble, and then go looking for debt relief.

Fortunately there is a proven, inexpensive, easy-to-install, easy-to-learn, easy-to-use money management software system that can reverse all the money management mistakes a person has made in the past, and keeps them from making those same mistakes in the future. It is an old-school system that your great grandparents used before the days of credit cards. Very wealthy people know and use this system today.

Sandra Simmons, President of Money Management Solutions, Inc. specializes in helping business owners and individuals manage their money to achieve financial freedom. For more information about her system, claim your complimentary copy of the Debt Reduction Solutions Guide.

© 2008 Sandra S. Simmons. All Rights Reserved.

I collect the credit card offers that land in my mailbox. You might think that is nuts, but I am always researching the latest come-on that my clients may be tricked into applying for, especially if they are looking for some debt relief.

Here is the latest one, no names mentioned. Just glance quickly at the overall message and get a sense of what you think they are offering. And then answer this question.

Is this offer a trick or treat?

It is designed to look like a spectacular long term 0% interest offer. Most people actively engaged in money management and seeking debt relief automatically assume they can get this 0% deal on a balance transfer from another high interest card.

But look again, read the fine print like I always do, and here is what the offer is really saying.

The 0% is NOT for balances transferred, but is for PURCHASES made on the card which adds to your debt. The interest rate on the balance transfer is 8.99% compounded daily, plus a hefty 3% charge for transferring the balance.

Read even further and you learn that the new debt you are carrying at 0% interest (the new purchases) must be paid off first, before they will apply any portion of the payment to the balance transfer at 8.99%. And of course, they always apply your payment to any finance charges first before applying what is left to reducing the principal. No debt relief there!

My opinion is that this is another cleverly worded offer, presented in a way that makes it appear that you are getting a great interest free, long-term loan. Just another trick to hook the consumer who didn’t bother to understand what is clearly stated in the credit card offer when you read what is actually there.

Successful money management includes understanding the correct actions to take with your money. Educate yourself by reading the fine print on all documents that concern your money so you clearly understand what they mean before taking action.

Sandra Simmons, President of Money Management Solutions, has years of experience helping business owners and individuals manage their money to achieve financial freedom. Claim your FREE Debt Reduction Solutions Guide

© 2008 Sandra S. Simmons. All Rights Reserved.