Real Estate Investing

What is Inhibiting Your Financial Growth?

By January 15, 2013April 18th, 201910 Comments

Is there something inhibiting your financial growth? Is the dream to retire early dead to our generation? Do you know how to retire with lower taxes?

Albert Einstein called compound interest the 8th wonder of the world. From 1982 – 2000 that wonder was on steroids. This biggest bull market in history saw the Dow Jones Industrial Average rise 1500%. The baby-boomers were in their prime working years and not only benefited from this prosperity, but fueled it.


As the turn of the millennium came so did a bear market. Many of us entered our prime working years only to find little to no compound interest to be had in the stock market. For over a decade now, volatility has been high, but financial growth has been anemic to say the least. Where is our 1500% rise?

Currently, the baby-boomers are retiring in large numbers. They are fueling a new growth – a growth in Medicare and Social Security spending. The government has been a poor steward of these funds and knows these obligations are coming due.

In their search to find additional revenues to pay for these obligations, they have found a prime target in physicians and other health care workers. Every effort is being made to cut our reimbursement and increase our taxes. As if this double whammy of lower incomes and higher taxes wasn’t enough, the threat of inflation looms large in the not so distant future.


Rather than cross your fingers and hope this storm will pass, what can we all do to increase our fortunes? You might start by looking at what is inhibiting your financial growth what I like to call wealth decelerators.

  1. Burnout
  2. Inflation
  3. Taxes
  4. Spending Habits


Your ability to earn an income is your most valuable financial tool. That skill-set puts food on the table and allows you to invest for your retirement. Burnout is a real threat to your income and should be taken seriously.

In 2012, JAMA published an article on burnout that is a real eye opener. To summarize, physicians are more likely to experience burnout than other working adults with nearly half of all physicians experiencing one or more symptom of burnout. Several specialties far exceed this number with Emergency Medicine Physicians topping the list.

Physician shortages are a contributing factor to burnout and are projected to get worse. Couple this with the cuts in reimbursement and the temptation is to work longer hours, take fewer vacations, and delay retirement.

While earned-income may be a blessing, it is also a trap. It is the highest taxed income and it requires the largest investment of time than any other source of income. That is why earned-income is frequently referred to as the rat-race. Fifty and sixty hour work weeks for thirty plus years are not uncommon time burdens that physicians face.

While earning a comfortable living, each and every physician should also be looking for sources of passive income to supplement and someday even replace their earned income. The day that your passive income equals or exceeds your earned income is the day you are financially free. You no longer have to work for money. You can continue to see patients, if that is your passion, or you can choose to work part-time or even retire. Options are a beautiful thing.


For years, the Federal Reserve has been inflating the currency. Evidence of this can be seen in the value of the dollar. Decades ago, you could buy four gallons of gas for one dollar. When I was in college, that same dollar could only buy one gallon of gas. At the time of this writing, one dollar will only buy you a third to a quarter of a gallon of gas.

This is the effect of inflation – it is a silent tax on us all. While we didn’t create inflation, we can decide if we will become victims of it or if we will benefit from it. Just like the oil drillers who benefit from the higher cost of gas, real estate investors can benefit from the effects of inflation. Historically, as inflation rises, so do rents. This is why real estate is considered a hedge against inflation.


I once heard a tax-strategist say that she would always pay the government every dime she owed in taxes, but she simply refused to give a tip. Unfortunately, too many of us are leaving tips year after year. Most people don’t know that the bulk of the tax code has nothing to do with paying taxes. That’s right. The bulk of the tax code is about how to legally avoid taxes. It is in fact, one big stimulus package for people who do what the government deems important and necessary for society.

Providing housing for others is one of those things the government wants us to do. As such, they incent real estate investment through the tax code. Real estate is one of the most tax-advantaged investments you can make. How can you learn about the advantages of real estate? I use a tax-strategist and not just a CPA.

I am always surprised by how few physicians use tax strategists. Most simply employ a CPA who takes their receipts at the end of the year, crunch the numbers, and gives them a bill to pay. While this may make sense for employed W2 physicians, those who are self-employed need a tax strategist.

A good tax strategist will charge you nothing up front. They usually want to review your last two years of taxes to determine if they can save you any money. If they can’t, they will tell you. If they can help, they will tell you how much savings they think they can bring you and how much they will charge you to access that information and develop a plan for you for the future. You see, tax strategists look forward while ordinary CPA’s look backward.

If you don’t already have one, or don’t know how to find one, feel free to email me for a recommendation for a good tax strategist.


Lastly, our own personal spending habits can be a huge wealth decelerator. Keeping up with the Joneses is a wealth destroying past-time. By the time we finish residency, we have sacrificed for so long, that the natural tendency is to feel like rewarding yourself. Luxury cars for you and your spouse, a 4000 square foot home packed with expensive amenities and private school for the kids is not uncommon amongst our colleagues.

Couple these expenses with student loan debt and there is very little left over for retirement. Because each and every one of us will be responsible for funding our own retirement, these expenditures can become golden handcuffs that can sentence us to a very late retirement or no retirement at all.

While I have nothing against luxuries, I do advise that retirement savings come before the non-necessities. My recommendation is to save a minimum of 20% of your take home pay for retirement. If you invest that money wisely in income producing real estate, the day will come in which those properties can do the saving for you.

Minimizing and eliminating as many wealth decelerators as you can, will help accelerate your wealth and can bring you financial freedom much sooner than you ever thought possible.

What wealth decelerators threaten your financial growth?

P.S.When considering your financial growth, keep your inhibitors to a minimum. Having options that can help you retire early are a blessing!

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Dennis Bethel

Dennis Bethel

After 18 years of working in the trenches of a broken health care system, Dennis Bethel, M.D. extricated himself from medicine utilizing the power of passive income from real estate. Now he helps others conquer their number one financial fear, cut their biggest expense, and tame the greatest threat to their careers.


  • George says:

    This article really hit close to home for me. These four inhibitors to financial growth are just as relevant to physicians as they are to most corporate professionals trapped by these financial realities. However it’s important to note that not only can they be mitigated (spending habits being clearly within our control), but even used as assets as exemplified in the use of real estate as a hedge against inflation.

    • You are absolutely correct George. Wealth inhibitors are ever present for all workers, not just health care workers. I write from the perspective of a physician, but this website is for anyone and everyone who is looking to become more knowledgeable about real estate investing. Thanks for the comment.

  • Sam says:


    Great blog. Recently started reading about real estate investing. I am about to graduate from my fellowship and will be starting my first job in the summer. I will be an independent contractor receiveing a 1099. I had planned on maxing out solo 401k and a HSA for tax benefits. Do you still believe in traditional retirement accounts or is real estate where all your money is?

    • Sam,

      I like retirement accounts because they save me money on my taxes. I like self-directed IRA’s because I can invest in real estate inside of them. They are not limited to just stocks, bonds, mutual funds, and other paper assets.

      I am a real estate guy, so that is where my money is. I believe all physicians and other health care workers should own some real estate in their portfolio. Owning real estate provides for a balanced approach and true diversification. Unfortunately, most have all of their money in paper assets. This lack of true diversification can be disastrous.

      Thanks for the comment.

      • Mo Khalid says:

        Hi Dennis, does tax deferred IRA / 401K or SEP be invested for real estate if I want to purchase a house for down payment or part or most of the payment ? Thanks for the info.

  • Frank Dunne says:

    Great article Dennis. Could you e mail me some recommendations of tax strategists in the Northern Virginia area?

  • Mo Khalid says:

    Tax and Burnout are the two biggest issues preventing me from getting ahead financially. After being in practice for 25 years, working 50 hours a week with immense amount of paper and “running a practice” work which I hate, I feel trapped although I am making just enough to be in the top 5 % of earners in US.
    My question to you is that I am hesitant with the stock market at this stage of my life, although I have monies in mutual funds mostly in IRA accounts which realistically didn’t has been underperforming. Is it wise to rent my current house and taking out an equity for a bigger house as primary residence. My current house is paid off which is probably worth around 700K and hopefully I can pay off the balance within 5 years be all cleared. This would rent money would be an income for me in addition to my work income, I am in a geographic area in US where real estate value has stayed steady or climbing even during the housing crisis few years back. I know renting is huge headache but if I can have real estate companies deal with it with a commission then I can pull it off.
    Any thoughts or advise, including locating a Tax Strategist in DC metro area would be sincerely appreciated, thanks for the eye opening article.

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