If you’re like most of us, the very idea of refinancing your debt in the midst of a busy career and home life is enough to give you heart palpitations! But the truth is that if you are carrying debt that is over four years old, you may be paying more interest than is necessary. You might be losing cash flow that could be put to work growing your practice, increasing reserve funds, or simply lowering your monthly overhead.
With today’s historically low interest rates, refinancing debt to free up cash flow can be a good business decision. Let’s say you could save approximately $1,500 per month by refinancing your four-year-old practice start-up loan at today’s lower interest rates. What could that additional cash flow mean for your business?
Technology Investment
You might use your new-found funds to leverage the purchase of new dental equipment or office systems that allow you to expand your services and make your practice more competitive. At the same time, you could take advantage of the IRS Section 179 tax deduction for business equipment purchases, making your investment work that much harder.
Enhanced Marketing
Reinvesting your added cash in a well-thought-out marketing program can potentially lead to more patients and procedures for your practice. Offer a cash reward to patients for referring friends and family members whoschedule an appointment. Advertise your specialty in the local community paper. Create a social media campaign that reaches out to potential customers on their mobile devices. If well-planned and executed, your expanded marketing efforts should generate further cash flow for your practice.
Retirement Funding
Who doesn’t need a little extra income to help boost their retirement account? With discipline, the added cash flow you realize each month from refinancing your debt can work to grow a nest egg for your future retirement. Consult with your CPA or investment advisor for guidance on the ideal investments for your situation.
Accelerated Debt Payoff
Some doctors take advantage of lower interest rates to accelerate their debt reduction program and become a debt free practice more quickly. Let’s face it – nothing increases cash flow like paying off debt!
To qualify for debt consolidation, be sure to maintain a good credit record and be prepared to demonstrate that your cash flow today can support the debt payment for which you are applying. Most lenders want to ensure you have adequate cash flow under your existing debt conditions, not the new debt conditions.
It’s all too easy to let the years slip by on “automatic” without investigating how we might improve our situation. Rather than assume your cash flow is as good as it can get, take another look at your financial obligations. You might find that consolidating your existing debt gives you the leverage you need to take the next step in your career.
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