Latest / The Chiro Money Show / 046 | Spend Now or Spend Later: Why Buying Back Your Time Might Be Your Best Investment
Transcript
- Chris: Welcome back to the Chiro Money Show, where we're helping chiropractors make better financial decisions so they can build stability in their finances and a lifestyle that they love. We're your hosts Chris Scheele and Scott Campbell, financial planners with Align Wealth. Scott Campbell: We've got some big life updates to share here, don't we, Chris? New location. Chris: Yeah, new location. For any of our our video watchers you'll you'll notice there's no blue wall. Scott's not gonna let me go too long without painting the Scott Campbell: YouTube. Chris: wall blue, but yeah. Yeah. Scott Campbell: I'll keep nagging you. I'll keep nagging you. You're giving me a hard time already about whether or not you should. The wall is too big, there's a bookshelf. Yada yada yada. Lots of excuses. Chris: Yeah, lots of excuses. Yeah. Scott Campbell: I gave you the can of pain. It went to it went to Vernon, so Yeah. Chris: That's true. Yeah. Yeah. So yeah, we are set we are officially settled in Vernon. so far so good. Scott Campbell: Great. Yeah. Has the smoke been clearing up a little bit here this last week or so? Chris: It's kinda in and out depending on the day, but Scott Campbell: Yeah. Chris: hasn't been too crazy bad over the last week or so. So yeah, still been able to get some trail runs in and spend time outside. Scott Campbell: Yeah. You you made in quick quick order you were able to kinda find a couple chiropractors to get in and see one you got out for a ruck with. That's pretty cool. Making making some good friends here already. Chris: Yeah, I went for a rock. Yeah. Yeah, making friends, getting tours of the trails. Scott Campbell: Nice. That's that's important. I I would I would be lying if I wasn't a little bit envious of of what's in your backyard now. Yep. Chris: Yeah, yeah. You'll be here soon enough to to come explore. Yeah. Scott Campbell: For sure. For sure. Chris: Next next Ultra we do, Scotty. It's gonna be it could be a different story. Yeah. Somewhere in BC, yeah. Let's go. Yep. Scott Campbell: Yep. Somewhere in BC. Yeah. Yeah, there we go. Right on. Well looking forward to the conversation today. You did the honors of teeing up a a solid topic for us, so why don't you tell us what we're gonna dive in here and talk about today. Chris: Yeah. Usually usually your job coming up with the topics here, but Yeah, you have been you you you could share your own life updates here, but yeah. Scott Campbell: I've been busy. I've been I've been going hard. six weeks of racing is finally behind me and it was a lot of fun. It was a lot of Chris: All Scott Campbell: fun. Chris: all in the build to Iron Man California. Scott Campbell: Yeah. Along with some good family camping trips and yeah, training has been kind of on and off with racing and camping and it's been just a busy summer and we're now just a couple weeks out from the start of kids going back to school and but hopefully can get back into some routine here for the next six, seven weeks and put in a solid build towards Iron Man in October. Yep. Chris: Yep. For sure. Alright, so let's get into it here. The idea for today is around this statement that money only has one job. It's to be spent. And it's kinda cheeky, but it's it's true more or less. It's like to in simplest forms, if we have money, it can either be spent now or it can be spent later. Right? Like that's all there is. And if we really wanna get into the now or the later, like yeah, obviously it can be spent directly by us. It can be given to family members or charities and they can spend it now, or the same Scott Campbell: Mm. Chris: thing can happen. It's like if you wait till later and you die with a bunch of money, it's either gonna go to family members or charity and they're gonna spend it later. So it's like it Scott Campbell: Yeah. We'd be we'd be remiss to to leave out the fact that a a portion of our our hard earned dollars are paid to the tax man who they they will take the pleasure of taking our some of our money and spending it as well. Yeah. We don't get to spend it all. Chris: Yeah. Yes, yes, yes. This is true. Yep. Yep. No. No. Let's talk. I was envisioning Scott Campbell: We'll talk about the fun side. Chris: I was envisioning after tax dollars, Scott. Which is not a tax Scott Campbell: Yeah. Chris: episode. We're not gonna get into compensation Scott Campbell: No. Chris: strategy and dividends versus salary and all that today. That's right. So money we already have, yep. And Scott Campbell: No. We're talking about spending money today. Yeah. Yeah, for sure. Chris: Yeah, specifically to chiropractors, we kinda wanna to relate this to Yeah, this idea of like how much are we doing the right things with our money at the right time? So, you know, do we know the season that we're in? Like Obviously there's you know, most chiropractors are gonna go through the a very similar trajectory as far as their career and life advancement. So it's like they're they're in school, they're accumulating debt, they're not earning any income. Then they're gonna come Scott Campbell: Yep. Chris: out, usually start as associate somewhere. Maybe that transitions into practice ownership. And as that yep, that's right. As that Scott Campbell: Yeah, buy a practice, start a practice. Yeah. Maybe take on some more debt. Chris: that potentially, yep. Then at some point that's gonna peak as they kind of hit their, you know, hit hit their years of like just optimizing and, you know, making the most out of their practice, their their probably ten years of experience as chiropractors, so they're n they're no longer like having to strive to know the job of a chiropractor. They also have the experience of a business owner now and they're getting more competent and confident with that, hopefully with a great team of financial people with them. And then they're going to transition from that peak earning years probably into maybe a practice sale or into retirement. And so it's like recognizing what what stage we're at and what the what the trade-off is with spending now or spending later in that stage. I I just thought was an interesting idea to think about from a little bit of a different perspective than we normally bring. Scott Campbell: And even s even s the idea of spending later. You work You work so hard over the course of your career, you build this nest egg, and sometimes we hear this too with r retirees where it's like they've worked their whole life to build this huge nest egg in a lot of cases. You know, if you've been a diligent saver, you have that kind of saving and investing mindset to like set yourself up for a successful retirement, and then they get there and they're like, All right, well, now I have two kind of things to figure out. What do I do with my time now that I'm not in practice? And now I need to start spending down what I've worked so hard to build up, and that can be a very s A very big psychological barrier to get over and actually start spending that money down in retirement versus the accumulation years, right? Chris: Yeah, one hundred percent. And the same thing can be said around like our ability to use that money for the things we want to do at various stages, right? Like obviously the younger and health and presumably healthier we are, the more op the more options we have for, you know, those physically demanding activities or adventurous things we we might want to do in life. If we put all that off till later and we're in our mid sixties, maybe we don't have the same ability to experience those those Thanks. Scott Campbell: Yeah. Not to mention too that you know, if you do have children and You're younger, you also have those years where, you know, we both we both experiences, right? Like we're we have young children, you know, their parents, us, we're we're their life. Like they want to spend time with us, they want to go on activities and have adventures and experience with us. But then, you know, you get to the point where maybe you're in your sixties and your children are, you know, either you know, in a in a they're adults now, right? They're doing their own thing, they're starting their own careers and maybe you still have a great relationship, but they don't usually have the time or ability to to have those same kind of level of experience. Experiences that you could have when you're in your say your thirties and forties with young children, teenagers, and that kind of thing, right? Yeah. Chris: Right. Yeah, totally. Yeah. So why don't I share kind of some idea or stories or examples of some of the the clients I was thinking of that when Scott Campbell: Mm-hmm. Chris: when I thought about this story or or this this topic, I should say. so yeah, couple that come to mind kind of have they've gone through that student phase, You know, it's a husband, wife, one's a chiropractor, the other one's an office manager, and you know, they've they've made it through the the student phase all good. They started out as a s he started out as an associate and then they started their own practice. Practice has has gr gone well, they've added a part-time associate, and then now they've actually moved l in the process of moving locations or have moved locations now to a a different space. And looking to add further associate hours. So Yeah. Scott Campbell: Yeah. They were kinda at capacity with their first space and they did a full build out of a brand new beautiful space that just opened up and now they have more space, ability to bring in more associates, grow their revenue further, et cetera, right? Yeah. Chris: Mm-hmm. Yeah, so like from an overall perspective, like I'd say they're they're crushing it. Like they're doing great. All they're they're they're checking all the right boxes, doing all the right things. And yet it seems when we we connect with them for our regular meetings, it's often like, you know, could we be doing more? Or like, are we putting enough towards investments? Are we are we paying down our debt fast enough? Could we pay off our debt faster? And that has to balance out with this like capacity issue. And it's not as far as like their their patient volume, but like themselves as human beings. Like they only have so much capacity and it seems like they're they're right up on the limit of that. Scott Campbell: Mm-hmm. Yep. Chris: Would you agree? Scott Campbell: Absolutely. And it's and it's a common I feel like it's a common theme with a lot of a lot of these types of clients that are in their kind of early to mid career, like they're in like the building, like they've started a practice, they're like it's growing, like things are going well. And it's it like I think sometimes they inherently know that things have gone well and they're and they're they're doing really good, but then they sometimes will probably reflect on like we could be doing more, like could be pay paying down the gr the debt more aggressively, could we be saving more, could be f we'd be further ahead, and they need the reminder sometimes from us to be like Like, because I I think I think from our viewpoint, we see we see the end result. Like we we can we see see so clearly 10, 15, 20 years out of where these clients are going to be and the trajectory that they're on, but they're living in the now and they kind of often just see like here's where we're at right now, and they need to be reminded that like you're crushing it right now. Like we can maybe maybe we can work on this balance aspect of life that we're gonna get into here next in terms of like you guys are going to be okay. Like really, and we talked about this before, like that's oftentimes what our clients want to know like am I gonna be okay? Am I set up to be okay in the future? Right? And we have Chris: Yeah. Scott Campbell: to find this balance of spending money now to make Chris: Mm-hmm. Scott Campbell: our life better now versus also saving and and you know setting yourselves up for the future. Chris: For sure. Yeah. So yeah, totally in that yeah, in that phase, most commonly I think in that growth phase where we're going from yeah, building a practice or growing our our practice, you know, as an associate, whatever, usually at that at that stage. It's hard to to make un unless we're very intentional, it's hard to make the argument for spend now. It's it's easy to say like I know this is a stage I have to be disciplined, I have to pay down debt, I have to start investing because I know the power of compound interest and and it regular investing. That's all good. And not trying to dissuade people from that. We'll get into that a little bit more here, but What what could money be spent w like what would be well spent money at that stage in in a career is anything that frees up our time. And any Scott Campbell: Yeah. Chris: like there's there's actually quite a few studies on this, but like trading trading our our money to like buying back our time in a way Scott Campbell: Mm-hmm. Chris: is a direct like in kind of directly leads to increased happiness ac across the board. Scott Campbell: For sure it does. For sure it does. Chris: And especially if if we're buying back our time with like trading off undesirable tasks or activities, right? Like I think of in my own experience like house cleaner, right? Like Scott Campbell: Yeah. Chris: I don't enjoy cleaning the house and it's it's a good exchange in value for me. Like to pay someone else to do it and it's done well. So it's Scott Campbell: For sure. For sure. Chris: like what what kind of things in that early stage of our career can we trade off? What what can we look at doing and the reasons could be, you know, there could be multiple reasons for trading off that time, but one of the one of the bigger ones that that I just kind of recognized and realized when prepping for this is like the longevity of of of your career as a chiropractor. So so easy to just like work, work, work in this growth phase of the career, but if we are doing that if if we're going too hard and it's sacrificing our future self, our future earning capacity, our future ability to to run a chiropractic practice, that might not be a great trade-off. So Scott Campbell: Mm-hmm. Chris: what can we do to buy back some of our time and energy and really our Scott Campbell: improve our longevity. Chris: Yeah, improve our longevity as chiropractors. It might be something like taking more intentional vacations where we actually get the rest that that we need and the coming back to the to the practice feeling recharged. Maybe it's working with a personal trainer to maintain a physical fitness or you know, hit some fitness goals that's gonna that are gonna help us to be in practice longer. And It's interesting this trade-off of like, you know at a time when we might feel like, I need to I need to invest more, I need to pay down more debt, to be like, maybe you should actually spend a few thousand dollars to take a a more intentional holiday or more regular holiday, or maybe you should pay a few hundred bucks a month for a personal trainer. It's like that seems so counterintuitive. But if we zoom out and look, okay, at the next 20, 25 years of your of your career as a chiropractor, if if that trade-off allows you to practice for longer, in better health, avoid injury, avoid disabil like a potential like short-term disability or longer-term disability that you from an injury or incident. and have a practice that's more saleable at a time in your career when you're looking to transition into retirement, you know, that could be money very well spent. Scott Campbell: Yeah. A another way of kinda thinking about this is like when we talk about investing and and saving whether be for short term goals or for the long term we often think about a certain percentage of your of your pay or your net income like how much should we be setting aside for the long term? Like is it 5%, 10%, 20%? Some some of our clients are eager to get to that. Like I want to get to 15, 20% of my income being saved for my future self as quickly as possible. And maybe that's where there's like maybe there's good reason here to scale that back to a lower percentage. Pay down your debt a little Little less aggressively, save a little less aggressively in those early years, like you're saying, Chris, so that you can buy back some of your time, focus more on being the best chiropractor you can be when you're at the practice because you have taken restful holidays, you're focusing on your health, your nutrition, you know, getting the gym, becoming an ultrarunner if you wish to as well, whatever your whatever your flavor is, right? But that all recharges you to then get further. Along in your career where you're not, you're you're you're avoiding that potential risk of grind, grind, grind, save as much as possible, you know, pay down debt as fast as possible, invest as much as possible, work as many hours as possible to grow your revenue to a point where maybe you get to this point where you you get burnt out and you're like, man, I've been grinding for 10, 15, 20 years now, and I just don't have the energy now to that I did when I was in my early 30s, that I that you know, maybe you're now in your 50s or 60s, and and you start. To you you miss that peak of maybe some earning like your your peak earning years to save and invest more, right? Because you're starting to get burnt out. Right. Chris: Yeah. Yeah. Yeah. So anything we can outsource or, you know, buy you know, has a a a valuable exchange as far as buying back our time or energy or allowing us, you know, to have that trajectory for longevity in practice and in life, we think is a is money well spent, more or less at any stage of this like typical career arc of a chiropractor. Wouldn't you say? Scott Campbell: Sure. Obviously it's th there's so many so many different opportunities one could find in terms of buying back time, whether it's in your own personal household, like you mentioned, like a house cleaner, like that's a just a a very common example. But like whether maybe it's like maybe you already have some CAs and support staff in the in the practice. Maybe there's other administrative tasks that I think it's quite often that we underestimate how much administrative kind of admin lands on our plate. Maybe you can find some sort of like virtual s virtual assistant that can help take some things off. your plate, like booking booking some travel, taking care of the little little ins and outs of like both the practice side and the personal side to to free up some of your time so that you can dedicate that to rest and recharge, spend more time with the family, decompress so that you can show up at the office as like as the bet again, the best chiropractor that you can be for as long as possible. Chris: I think the the so the thing to keep in mind with this is like we're not giving giving you per permission to go and spend, you know, unnecessarily at a stage in life where there's debt and you're trying to you know trying to start making some real progress. It needs to be well thought out and intentional. It's not yeah, it's not permission to to go and finance a new vehicle or Whatever, insert maybe not the ideal financial decision you're considering right now. Because Scott Campbell: Whatever. Yeah. Chris: we do have to balance this, right? And and that's kind of what that's the trickiest part is like we do have to going back to the start of the episode, spend now, spend later. That's that's all we can do with our money. So how do we make that decision of of what what meets the spend now and what actually moves the needle for us and what doesn't. And I think maybe correctly or incorrectly, so many of our clients and people we we interact with have this this idea instilled in them that like I need to save and invest for the future. I need to pay down debt and There is there is a lot to that. There's a lot of truth to that for sure. And we do have to keep in mind the opportunity cost of kind of missing out on that opportunity. And so Even if we look at like a couple hundred dollars being put towards our future future spending or IK aka saving and investing for for retirement, right? Like the the opportunity of cost of that, if we compound that over years and years, like it could have such an impact, to give a direct example, looking at $200 a month. If we, you know, let's say we're at a position where we're investing $500 a month and we're like, you know what? I I heard I heard Scott and Chris say like I gotta buy back some time, so I'm gonna cut that down to $300 a month. And at $200 Scott Campbell: Yeah. Chris: a month, I'm gonna spend that in some other way to to buy back my time. That's all good. Scott Campbell: And yeah. Chris: That that might be a good a good use of those funds, but we gotta be careful because if we if we did that over thirty years, that could have over three hundred thousand dollar impact in our future wealth. Scott Campbell: Right. Chris: compounding effect of that $200 a month earning 7% return over over those 30 years. Scott Campbell: Yeah, it's just a just an example of like yeah, that's a that's such a s a an a a good example. The way I like to think about this in terms of thinking about it strategically and actually have a plan and some guardrails around this is that I know we we come at it from a bias of ha of having a plan in place, but it's also having the perspective and for Chris: Yeah. Scott Campbell: us saying, All right, we can see the trajectory that you're on. Chris: Mm-hmm. Scott Campbell: If we were to buy back some over time and maybe save and invest a little bit less now, as we grow in our career, as our revenue gets larger in the practice, as our income grows, one of the hardest things that we need to do from a behavioral standpoint is getting what we like to refer to as the goalposts, not continuing to to be pushed out further and further out. And bet basically just means like lifestyle creep. Like as your income is growing, is that just being put back into increasing your lifestyle and spending more? Which basically Means that your nest egg needs to get bigger to support that higher higher cost lifestyle at retirement, So if we have this trajectory of revenue is gonna go up and income is gonna go up, maybe you're saving and investing a little bit less in your you know 30s call it because we know that once you get into your mid to late 40s, your practice is gonna be here, and if your lifestyle doesn't go up on the same trajectory from a spending standpoint, you should be in a position where I At that point, you should be able to very comfortably save maybe 20 or 30% of your income at that point while still having a really great lifestyle, still being in a position where you can buy back your time and focus on your health and all those good things. And you're setting yourself up for your like maybe your peak earning years, when I get to my 50s and 60s, I got associates in the practice, the revenue revenue is solid, I'm working like 20 hours in the practice, and I'm saving and investing a ton, That can all be done, but you need to have some guardrails and ongoing conversations about where that trajectory is going to put some parameters on what that can actually look like. Chris: Yeah. Yeah, for sure. One of the hardest things in in all personal finance and we all go through it of like, you know, our own version of keeping up with the Joneses or increasing our our lifestyle as our income increases. And I think one of the easiest ways that we can one one tool or like idea that we can use to kind of combat this pretty easily that comes from maybe a maybe it's applied to different industries a little bit easier, but it's like this idea of if you ha are living a comfortable lifestyle and you get a raise, what do you do with that raise? And so we could work this back to chiropractors. You know, all of our chiropractors we work with have a clear compensation strategy of how much income they earn per year, whether it's salary or dividend or it's you know whatever, but it's it's a very clear amount. Scott Campbell: Yeah. Yeah. Chris: If they get to the point where they can increase that, they give themselves a raise. What we Scott Campbell: Yeah. Chris: do with that raise is the most important thing. So if we can take 50% of that raise and invest that right off the bat, save and invest that, great. And then you have permission. The f other 50% of the raise, go and go and increase your lifestyle. You know? Go do it. Scott Campbell: Yeah. Or buy back more every time. Chris: Yeah. Or buy back more of your time. Yeah. Totally. Either or. Yeah, Scott Campbell: Yeah, for sure. Either either or combination of both. Yeah. Chris: permission for both if you've saved and invested the 50%. Scott Campbell: Yeah. Yeah. Chris: Fifty percent of the rays already. Yeah. Scott Campbell: 'Cause we've s we've seen it on the other end too, Chris. Like we you shared a story about a client, you know, they're in their early mid thirties, right? In terms of where they're at with their practice and they're worried about saving and investing enough and paying down their debt aggressively, etcetera. And we can see the we can see where this you know this game is going to end in terms of the trajectory that they're on. But we also also have clients in their you know, late fifties, early sixties where, you know, they're at the tail end of their career, they're thinking about selling the practice, and you know, we we hear the cost. Comments it's like I didn't I don't I don't have the energy that I used to. And these you know the two individuals that I'm thinking of like they have done a good job of taking care of their body and and you know focusing on their health and in some cases like you know buying back some of their time. But the the point here is that you do get to the point where it's like I'm starting I'm starting to feel the impact of being in practice for 25 years. I need my body to do what I do at the adjustment table and and earn revenue, And we don't want we don't we want to avoid that point where it's you're not thinking about that endpoint of peaking and then maybe declining to you know because your health is kind of maybe going down you don't have the energy can't be in the office as much as you as it used to be if you have a plan around that ahead of time where it's how can you focus on on making sure that you're at that peak point so the practice at a strong standpoint, the the financial systems are in place, the profitability is there so that you can set yourself up for having that practice be as as sellable as possible and profitable as possible to sell at that time. Chris: Mm-hmm, for sure. Yeah. Anything anything we can do to increase our consistency at, you know, the years leading up to that exit point where you're looking Scott Campbell: Yeah. Chris: to offload the practice or sell it to someone, like everything that all any energy that could be put into that, like that's valuable, valuable trade off. But Scott Campbell: For sure, for sure. Chris: if we've if we've run ourselves ragged and don't have the any capacity to to do anything more than show up and and treat our patients it it'll be harder and your asset might be worth less. And so that's Scott Campbell: Yeah. It'll be harder. It's gonna be much harder. Yeah. Yeah, for sure. Chris: a trade-off you you have to accept. The other last idea I wanted to share on this on this topic and kinda goes back to what we call our personal cash flow plans. And and a term in there that we we often use with clients in there is this term of guilt free spending. We we really believe that everybody should have some amount of guilt-free spending that they can go and spend on whatever they like. And this I think for for a lot of a lot of people this giving ourselves permission to just go and and spend a certain amount and and having a having a guardrail to stay within on a monthly basis, it just gives us that permission to go and have that fun and it's not as restrictive as, you know, maybe that stage in our in our career dictates. Right, like even even I think for a student, right? Like we're we're accumulating debt. We're we're we're not getting ahead. We're we're we're falling behind, but we're we're investing in our future our future self and our our ability, our our human capital, our ability to earn income in the future. That's a great trade-off. It's a great investment. I would argue that students also probably need some guilt-free spend money. So you can just go and Scott Campbell: Sure. Chris: go and spend some money and have some fun and blow off steam while they're going through such a you know challenging time of you know learning and and growing in their in their careers and capacit and and in life, really. having a personal cash flow plan. allocating a certain p percentage of that or amount of of that to guilt free spend at any stage in life is maybe also gonna be helpful for this idea of of buying back our time. Because I know a lot of people myself included, can feel guilty and have felt I have felt guilty, even going back to the the example of of the house cleaner. It's like, well well I can clean my house. Why would I pay somebody to clean my house? That's not the point. Just because you can do it doesn't mean you should do it. And i it might not land the same way for everyone, like, right? Some people want wouldn't call that a great exchange or a great trade-off. There's probably been times in my life where I I felt that way, but lately with young kids and everything we're building together, Scott, and what we're doing, like it's money well spent. Yeah. Scott Campbell: Hundred percent. It reminds me of a conversation that I just had with my wife Anya. She we have this section out front of our house that's kind of over has been kind of overgrown with some weeds and needs some landscaping done quite badly. And she was insistent that she could take care of it. She's like, We have all the tools, like I know you're busy with work and training Scott over the summer, but like I have time, like I can get out the you kids can play in the front yard, I can like dig it all up and like do a lot of this work work and like it'll cut down our costs on getting landscaping done and like Like we have all these camping trips planned, we don't need to be spending our summer doing this. that's gonna take you way more time than you're probably actually thinking it'll take. It's gonna take a lot of effort, like let's just spend the you know two or three thousand dollars, whatever a landscaper's gonna charge us to get that done properly and we can enjoy our summer. That's gonna be well worth the time to invest in that versus doing it ourselves. Right? Yeah. Chris: Yep. Yep. Scott Campbell: Just one of many examples of buying back time and and and and it's all trade-offs, right? Yep. Yep. Chris: Yep, for sure. It's all about trade offs. It's gonna be a new new tagline. Scott Campbell: Cool. We can incorporate that for sure. Chris: Yeah. Scott Campbell: Cool, man. Chris: All right. Scott Campbell: Anything else you want to know? Should wrap it there. Chris: I think we should wrap it there. Yeah. Scott Campbell: Okay, sounds good. Well, glad to see that you're all settled in and getting adjusted to life in in Vernon. Blue wall to come, hopefully. We'll see. Chris: Pending. Yeah. Scott Campbell: Blue wall pending. All right guys, thanks very much for being here. We'll see you all again next week.