Dentists on FIRE: How 2 Dentists Saved $1 Million and Became Debt Free in 8 Years

An illustration of the first day in the office

I grew up spending my summers at my grandparents’ farm in Sidney, Illinois – population 973. (I was related to 846 of them.) So I felt quite comfortable as I drove past cornfields for the 20 miles from the interstate highway to my destination about two hours from Chicago. I was going to visit a couple of ADA Practice Transitions customers to learn why they had chosen to practice in a small Illinois town.

Eight years ago, this husband-and-wife pair of dentists purchased a practice in a small rural town. A year later, they opened a second practice in a similar town about nine miles away. They share their time between the two practices. One works three and the other four days a week to give them time to raise their two young children. Even though they are both still under 40 years old, they signed up with ADAPT to sell their practices to the right buyer. When I asked what was prompting them to sell, they said, “Have you ever heard of FIRE?”

They are referring to an acronym that stands for Financial Independence Retire Early (FIRE). They have been pursuing this lifestyle for the past 5 years and already are at a point where they have achieved their goals and can choose where, when, and how they work without concern for their financial well-being. They are debt free, having paid off their student loans, cars, home mortgage, and practice loans. All before the age of 40. Their goal has been to save and invest up to 75% of their income so they can support their lifestyle from their savings and investment returns.

You may ask why I’m telling this story on the ADAPT blog. These Illinois dentists found dentistry the perfect way to reach their FIRE goals. As I spoke with them, they confirmed that dentistry can be a great fit for the pursuit of FIRE. After all, dentists are naturally goal-driven. Many are drawn to dentistry because they want the flexibility and independence of practice ownership – and the rewards of that lifestyle align with FIRE.

What is FIRE?

Originally popularized in 1992 by Vicki Robin and Joe Dominguez in Your Money or Your Life, FIRE is about shifting how you think about money and work – and the relationship between the two. Rather than succumbing to “lifestyle inflation” as your income rises over time, you spend mindfully and well below your means.

(Learn more about FIRE from Tim Ferriss, Investopedia, NerdWallet, and Mr. Money Moustache.)

For example, our FIRE dentists think about their spending in terms of how much time it would take to earn that money. “Do I want a chai latte from Starbucks, or do I want to walk out of the office 30 minutes earlier?” one explained. Rather than thinking, “I make more now, so I should upgrade my house and car and lifestyle,” they have built a comfortable living that allows them the freedom to do the things they love, like traveling and going to restaurants.

“It’s not about sacrificing things that are going to kill your quality of life,” they explain. “You don’t have to live in a tent to avoid a mortgage!”

Rather, they live in a slightly smaller house – without an extra unused bedroom – that allowed them to essentially save the $80,000 price difference. And over time, the compound interest on that $80,000 adds up.

Likewise, when they were buying a larger vehicle for their growing family, they shopped for fully loaded minivans – then realized that a used Kia Sedona was “enough.”

By making these conscious decisions, they have saved 70% of their income and avoided the “hedonic treadmill” that so many people find themselves trapped on. After all, studies show that at a certain point after which your needs are met, more money doesn’t buy more happiness.

Our FIRE dentists agree, noting that the thing that makes them happiest is the freedom to work fewer hours and spend more time with family.“ There’s something thrilling about knowing you have the money to do something but choosing not to do it,” they say.

The secrets to FIRE

First, live in a town with no stoplights. Housing especially is cheaper, and there are fewer temptations for daily Starbucks and spending. They’re out of the rat race, yet only two hours from downtown Chicago and O’Hare Airport.

Their children have loved growing up in a small town where they’re part of a community. The primary schools are giving them a great education. As they reach high school, if the parents feel the children need more, there are larger towns just 35 minutes away. And since they’re financially independent, they can choose to live wherever they like.

Rural practices are exceptionally well suited for the FIRE-minded. As other rural dentists have told us again and again, small-town practices often have minimal competition, which saves on the need to advertise.

Overhead is considerably lower, and you’re more likely to own the building and even the land. Rural and small-town owners often make a comfortable full-time salary on a part-time schedule, allowing a dip into the FIRE lifestyle. One of our FIRE dentists works four days a week and the other works three, allowing them to balance child care with work.

See: Want a Lucrative Practice with Great Work-Life Balance? Go Rural!

Before they moved to their current town, they lived in suburban Chicago, earning associates’ salaries in a higher cost-of-living area – where they felt like they were just treading water financially.

One of the surprises to me was the unexpected leverage that these small-town dentists have with third-party payers. Those payers need to provide coverage for their customers. When you are the only provider in the area, the insurers are more willing to negotiate and provide higher reimbursement rates than they normally do in more densely populated areas. Because their practices are so strong and busy, they can choose to only accept PPOs who are willing to provide the reimbursement rates that work for the practices’ business model instead of the “take or leave it” approach that most payers demand. As a result, they have actively reduced their acceptance of a number of plans without any negative impact on their volume.

One of the common consequences of a long career in dentistry can be health issues. Let’s face it, dentistry can be hard on your body – musculoskeletal issues, particularly back and hand issues, not to mention general levels of stress. Dentists who successfully pursue a FIRE lifestyle can choose when they retire or stop practicing dentistry rather than having it dictated by their body. FIRE allows them to retire before their body demands it. And it provides a much better payout than disability insurance would.

The FIRE lifestyle isn’t for everyone, and increasingly, the movement is focusing on the “financial independence” part of the equation rather than the “retire early.” But if it sounds intriguing to you, look at what you’re spending and how you’re spending. Think about how much time you had to work to buy that mediocre drive-through dinner or the gadget that will collect dust after a few months. And then consider looking at small-town or rural practices.

If you find yourself craving financial independence and if you’re interested in living in Central Illinois, this is your chance to buy one or both practices. “You can just walk in, take our place, and have a machine that allows you to save. The formula’s already there,” these dentists say.