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How Your Opportunity Costs Shrink Over Time

It's not every day you'll hear a financial person suggest you spend more, but in certain circumstances, that's the right thing. As my grandmother would say, “Ever since they invented death, nobody is safe in this life.” Nobody promises us we’ll actually live to retire, so make sure to enjoy at least some of your hard-earned cash today. Balance your future self’s needs and wants with those of your current self. But remember that this balance changes over time. Here's why.

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Your Crucial Money Moves for the Next Few Months

As a financial strategist, I'm constantly looking for ways to improve our personal and business finances, and then extracting from what I come up with ideas that can benefit others like you. Recently, the things I've been working on include trimming discretionary spending, finding ways to reduce interest on debt (e.g., refinancing our mortgage), and increasing our emergency fund. The ongoing pandemic-caused upheaval has brought financial and health emergency situations far too close to home for far too many of us. That's why I've tried to distill my thoughts on what the crucial next steps are for people in different circumstances.

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3 Simple Reasons You Should Grow Your Practice (and 15 Reasons Why You May Prefer to Not)

As a professional, whether in therapy or not, you have to choose whether to get a job in someone else’s practice, or go out on your own. The latter entails more risk and more work, but potentially far more rewards. Assuming that latter is what you chose to do, at some point you may have to make another decision – do you stay solo or do you grow your practice. If you already made that jump and grew your solo practice to a group practice, you may or may not want to keep all those employees. Here's what's involved, why it may be time to grow your practice, keep it as-is, or possibly shrink it.

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Make the Most of Your Employer’s 401(k) Match

A while back, one of my daughters made my day by asking me a question. A question may seem like an odd thing to make one’s day, but this one did… She asked me how to make the most of her employer’s 401(k) match. This made my day for several reasons. (1) She trusts me enough to ask financial questions (no small thing for a parent!). (2) She’s saving for retirement even though she’s still in her 20s. (3) She’s savvy enough to make sure she’s getting the most “free money” possible from her employer. Here's how I suggested she make the most of her employer's 401(k) match. If your employer matches retirement plan contributions, it should help you too.

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What Are Your Job and Time Really Worth?

When I started doing contract work on the side, I was shocked by how much more I made from that side hustle than I did at my day job. My first gig brought in almost three times more than my regular job! And yes, not only does this say something good about the gig, it also says something sad about my salary back then. Had you asked me then what my hourly rate of pay was at my job, I’d quickly calculate it for you since I’ve always been great with numbers. Only one problem… my answer would have been dead wrong. Here’s why.

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How to Maximize Social Security Benefits for Your Spouse

Social Security benefit rules seem to be designed for maximum complexity and confusion. With multiple benefits, requirements, and amounts depending on specific scenarios, it’s impossible to cover all of it in one go. Since the information on SSA.gov leaves something to be desired, here’s how to maximize your spouse’s benefits, especially important if your income isn't in the top couple of percentiles.

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When Interest-Free Offers Aren’t

I had just moved my family to the U.S. and bought a used Ford for $8000, financing $6000 of that with a 3-year auto loan with a 10.4% interest rate. Ouch! Salvation came in the form of an incredible convenience-check offer. That was then. Today’s convenience check offers are simply a thinly veiled invitation to get yourself into financial trouble by borrowing more against your credit than you would otherwise, thereby routing much more of your hard-earned cash to line the pockets of your credit card issuers.

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Managing Your Money in a Crisis

There’s no question. We’re in a major financial and economic crisis, worse than any most of us have ever lived through. In just 2 weeks, 10 million workers filed new unemployment claims. The Congressional Budget Office projects unemployment to exceed 10% during this 2nd quarter of 2020, and the economy may contract faster than a 28% annualized rate! If you’re still working, your employer may have cut your hours, and may be considering furloughing or even letting go employees. If you’re self-employed, clients may be staying away, cutting back, putting plans on hold, or outright canceling them as they try to stem the tide of red ink. Scary. But all is not lost…

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Your First Step Toward Retirement - a Step-by-Step Guide to a Plausible Budget

If you want to ever be able to retire, you have to start building the foundation now. Your first step is to know what income you’ll need in retirement. Here's a 4-step guide for creating a plausible retirement budget, an alternative method that lets you double-check your results, and 5 under-appreciated big-ticket items that risk your retirement success.

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If You’re Scared to Invest in Stocks, You’re Scared of the Wrong Thing

It was the early 90s, I was in my 30s and having to support a family of 4 on a $31,000 salary. Finally, I managed to scrape together $1000 to set aside for retirement. It was time to decide how to allocate the investment. Frankly, I knew next to nothing about any options beyond a savings account, so I spent dozens of hours at the university library reading the Morningstar Mutual Fund Directory to educate myself. It was an eye-opening exercise. It was immediately clear that unless I could set aside a lot more than I thought I’d ever be able to, I couldn’t expect to ever retire if my investments didn’t return a lot more than the interest of a savings account. That meant taking on more risk in the short and intermediate term, but less risk in the long run, by allocating most or all of my investments to stock mutual funds. Especially in the current situation, with the S&P 500 recently as much as 34% off its recent peak, and still more than 26% off that peak, investing in stocks seems scarier than it has been in a very long time. However, if you're afraid of investing in stocks, you're not afraid of the right thing.

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15 Coronavirus Pandemic Silver Linings to Brighten Your Day

I tend to be an optimist. Not a Pollyannaish one, but I always try to see the bright side of things. It’s part of how I stay focused on things I can affect, without letting the things that are out of my control paralyze me. Still, like almost everyone, I’m finding this a trying time. Whether its concern about those directly affected by COVID-19, or about what our economy will look like in a month, two months, six months, a year; or something as relatively mundane as whether my favorite neighborhood gym will survive to reopen its doors when the pandemic is over. To help cope with these dark thoughts, I put together a list of things to be grateful for, silver linings in a dark storm. I hope these will brighten your day at least a bit, like they have mine.

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Here’s How You’re Taxed on Money You Don’t Earn (and What to Do About It)

Without taxes, the government wouldn’t be able to fund the military that keeps us safe. More timely, it wouldn't be able to fund medical response to pandemics, medical research, or support for the economy in national or global emergencies. It couldn’t provide the bare minimum (less actually, but at least something) to the poor, the disabled, and the elderly. It couldn’t pay for maintaining our roads and bridges, and building new ones on occasion. There’d be no way to pay for regulatory bodies that protect the air we breathe, the water we drink, the food we eat, the markets we invest in, etc. Having said all that, there’s one specific problem with our income tax system that should be fixed before any more tax cuts get enacted. It’s when we’re taxed on money we don’t really earn. Here are two scenarios where this happens.

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Survive the Bear Market without Losing Your Mind or Your Shirt

First, let’s acknowledge that the COVID-19 pandemic has far more urgent and critical implications than what’s happening in the stock market. There are tens of thousands of people worldwide in intensive care, in comas, dying, and dead! As much as we hate to think about it, short of a vaccine being developed, tested, and massively deployed in far less time than most experts believe to be possible, those figures will grow by orders of magnitude! However, beyond trying to minimize the risk that we personally infect or get infected by others, and not hoarding hand sanitizers or toilet paper (Really?! Toilet paper?!), there isn’t much that most Americans can do to help the broader situation. All that said, our financial behavior in the coming days, weeks, and months will have a major impact on our long-term financial outcomes, and those of our families. This is especially so when it comes to planning and investing for your retirement (you're already doing that, right?). Here's how you can survive the ongoing market bloodbath without losing your mind or your shirt.

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18 Sensible (Financial) Coronavirus Response Ideas for Your Practice

If you haven’t been living under a rock for the past several weeks, you’ve been bombarded with stories about COVID-19 caused by the novel coronavirus. We’re all watching with concern, if not fear, a rapidly escalating health crisis with an expanding geographic footprint and ever-increasing numbers of people testing positive for the virus, people becoming severely ill, and people dying. My wife Risa and I were talking about what she should do around her practice as a result - should she close the office and do teletherapy only? Should she keep the office open and put bottles of hand sanitizer everywhere (if she can even find any after the panic-buying of the past few weeks)? I then wrote a whole article about sensible responses for your practice. Just one problem - I'm not an epidemiologist, and you can find online the same things I find there so what's the point of my writing it? Then Risa suggested that I concentrate on what is in my wheelhouse and offer you a financial coronavirus response plan for your practice. So, with thanks to Risa for the idea, here it is.

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Here Are 3 Ways Investing in Mutual Funds Can Cost You a Lot

I’ve been investing through mutual funds for decades now. It’s not the sexiest way to invest, I know. It also can have some serious drawbacks if you’re not careful and/or get unlucky. Here are 3 ways it can hurt your results, and what to do about it.

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The Legal Theft Called Private Mortgage Insurance (and How to Avoid It)

When we bought our first home, we couldn’t afford the recommended 20% down payment. Heck, we could barely afford to bring $10,000 cash to the closing table. We could have done what many people do in similar circumstances, and taken out a mortgage for more than 80% of the value of the home. However, that would have required us to pay for private mortgage insurance, PMI, which can cost up to 5% of the total costs of the mortgage, and only helps the lender. Here's why that's such a bad idea, and what you can do instead.

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Group Practice 101 (for Associates Too)

Several therapists I work with either own a group practice, or are considering expanding their solo practice to a group in the future. Many therapists I’ve talked with over the years were (and may still be) associates in someone else’s group practice. If you’re in either situation, here’s a roundup of resources for you…

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7 Budgeting Mistakes You May Be Making and What to Do Differently

We had just moved to the US. We were 30 and had two toddlers. My salary was $31k and my wife wasn't allowed to work. Budgeting wasn't optional. Almost obsessively, I’d review our budget over and over, trying to figure out what we could remove or at least trim. I’d try to convince myself that we could cut our grocery budget by $100 or even $50. Somehow, by the end of the month the total spent on groceries was the same as it was before. Lunch was a sandwich from home, or at most a fast-food “meal.” Dinner was often a few $0.20 packets of supermarket ramen noodles. When we discovered that we could get a cooked meal from the local hospital cafeteria for the same $3 as a Big-Mac Meal, that was a huge deal. Here's what I learned during our journey from there to our very different present situation.

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Use a Roth IRA to Counter the Costs of the SECURE Act

When I made my first IRA contribution of $1000 back in the early 90s, I got a $262 inflation-adjusted tax benefit. Had there been a Roth option back then, my ultimate benefit would have been $3800, more than 15-fold higher. Since their establishment, Roth IRAs have always been a sweet deal for most people (though only ~10% of IRA balances are in such accounts). However, with the SECURE Act just implemented, Roth accounts offer an even more important estate-planning tool. Here's why and how Roth IRAs could give you and your inheritors millions of dollars more than traditional IRAs.

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How the SECURE Act Hurts Your Retirement Planning and What You Can Do About It…

As lawmakers like to do, they recently tucked into a must-pass bill some last-minute changes to the tax code. These specific changes will hurt retirement planning even for the middle class. The so-called “SECURE Act” was inserted into a $1.4 trillion spending bill that had to pass to avoid another government shutdown. President Trump signed the bill into law on December 20. Here’s how the new law is supposed to help you, how it actually hurts you, and what you can do to minimize the damage.

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If You’re Renting Your Home You Need to See This

I was in my late 30s and still renting. I knew I was throwing money away each month. Hundreds of thousands of dollars down the drain by then. I knew I had to do something about it. But just thinking of scraping together a down payment and paying a mortgage on pain of losing the house seemed overwhelming. Then I did the actual math and realized I actually could afford to buy a home. A couple of months later, when I first stepped into the first home we owned, the feeling was indescribable. Now, doing the math to compare renting to buying in general, I show that (with a few important exceptions) if you're renting you need to seriously consider buying a home as quickly as possible. Here's the proof.

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Save Money on a New Car in 4 Simple Steps - A Definitive Guide

Since arriving here in 1992, I bought a grand total of 5 cars. Each time I bought a car, I learned something new. For example, I learned that it’s much better to buy cars new and drive them for at least 10 years. Next, I learned the importance of buying reliable cars that get good gas mileage. I also learned the critical importance of a good credit score. The most important thing I learned is that even if you're not a born negotiator, spending some time to educate yourself on the market for the car you want can save you thousands of dollars. Here's a step-by-step guide on how to do that.

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How a Side Hustle Lets You Reach Financial Independence Faster

There are three separate but related ways to reach financial independence earlier. Increase your savings rate, decrease your planned retirement budget, and/or increase your income while investing the new money. Any of these will work. The first two are harder to sustain than the third, but even that one isn’t easy. Here's a table that shows you in actual numbers what it would take.

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IRS Updates Affect Your 20% QBI Deduction

It's January 2020, so you (or better yet, your accountant) should be busy preparing your 2019 tax returns and starting to plan for tax year 2020. As I wrote about before, the Tax Cuts and Jobs Act (TCJA) went into effect in 2018, establishing a 20% qualified business income (QBI) deduction for passthrough businesses (sole proprietorships, LLCs, S-corps). The QBID lets you deduct 20% of your qualified business income, on top of the specific business deductions you can claim on your Schedule C or corporate tax return. However, the IRS considers therapy practices and other professional-service businesses as specified service businesses (SSBs), limiting your ability to claim the 20% deduction. For such businesses, the law established thresholds on taxable income where the 20% deduction begins to phase out, and limits beyond which it cannot be claimed at all. In a bit of welcome news, the IRS has updated these limits for 2019, and again for 2020. Here's how this could affect your taxes.

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Why Buying a New Car Makes More Sense than Buying Used

You’ve thought about it and ruled out walking, public transportation, Ubers, and even renting a car only when you must. None of that works for you. You’re getting a car of your own and that’s that. Your options are to (a) buy new, (b) buy used, or (c) lease new. Which makes the most sense? Many financial experts will tell you that buying a used car is your best bet. Here's why they're (mostly) wrong.

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Here’s How to Shock-Proof Your Retirement Plan (Once You Have One…)

Dad was several years older than Mom, and toward the end of their lives, in poorer health than hers. "Do you guys have a plan in place to take care of you if and when Dad passes away before you?" I asked. For obvious emotional reasons, she refused to even think about it. Less than two years later, Dad passed away and we had to scramble to make sure Mom was financially secure. Dad’s pension and social security benefits dropped more than 40% once he passed, while Mom's expenses dropped by only 20%. Shocks like this can derail your retirement plan, if you even have one. The following details some of the more likely shocks, and tells you how to keep your plan on track.

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Over a Trillion Dollars! The Costs You Pay for High Credit Card Debt

Credit card debt in the US recently topped a trillion dollars, $1.08T, according to debt.org. That’s over 26% of the $4T-plus total US consumer debt. On average, each household with credit card debt owes nearly $8400 on their average of four-plus credit cards. If you’re part of those statistics, do you really know all the costs you pay? Check it out…

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How to Safeguard Your Retirement Plan from the 7 Biggest Risks - Abridged Version

You spend a lifetime working hard, and saving as much as you can for when you no longer can or want to work (a.k.a. retirement). The last thing you want is to get to that point, only to have something devastate your retirement fund just as you're about to start drawing it down. Here are the top 7 risks, and what you can do to minimize them.

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You May Need a Lot More (or Less) than you Thought to Retire

The well-known 4% retirement rule says that you can expect to safely withdraw 4% of your retirement portfolio in your first year of retirement as your initial draw amount. Inverting that, you'd need 25x what you expect to need in your first year in retirement. However, new research points out that your personal situation can change your personal safe withdrawal to a lot more or less than 4%. Here's what that research says.

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Associates – You’re Asking the Wrong Question

If you’re a clinician working as an associate in a group practice, or considering joining such a practice, you’re probably asking the wrong question on how you’d be paid. It’s not your fault, since it’s based on how so many group practices have been operating for decades. Still, it doesn’t serve you well, and here I discuss why, and what you should do instead. If you're the owner of a group practice, the following can help you decide how to structure your offers and how to educate prospective associates about them.

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Here Are the States Whose Residents Are Really Best at Managing Their Money

CreditCards.com recently reported that the state whose residents are best at managing their money is South Dakota, followed by Montana and a three-way tie between Wisconsin, Maine, and Vermont for 3rd place. This ranking places Texas, Maryland, and Washington DC at the bottom of the pile. As a Maryland resident, I smelled something fishy here, so I started digging at the data. Here's what I found.

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How Soon Can You Reach Your Personal FIRE Point?

FIRE, the acronym for Financial Independence, Retire Early, connects with many people’s dream of “firing” their boss. Do you know how long it’ll be before you reach that point? If you're self-employed, how soon can you get to the point when you don't have to work, and can afford to only do whatever you enjoy doing (which can certainly include your practice)?

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Why a Roth IRA Is Almost Certainly Better for You than a Traditional IRA (and When It Isn't)

It was 1993 and I was a post-doc at Texas Tech. I had just had a conversation about saving for retirement with a grad student from UCSD. Although he was still in his twenties, he was already setting aside money and investing it for retirement. I guess I should be doing the same, I thought, and invested in a traditional IRA. Back then, the Roth IRA had yet to be established. Now that it is available, you would most likely be better served by a Roth than a traditional IRA. Here's why, and the few situations where it might not be so for you...

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Here's What You Need to Know About Business Credit Cards

As a small-business owner (and if you have a private practice, you own a business), you need a credit card. Whether it’s to pay for extra memory in that sleek new smart phone, place orders on Amazon, or just so you don’t have to carry a lot of cash or an unwieldy checkbook to the store when you buy supplies. The question is, should you use a personal credit card, or get a business credit card?

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3 Things You Need to Know About Advice from Financial Gurus (that They Won’t Tell You)

I love quotes with a delicious twist like “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” or “Always remember that you are absolutely unique, just like everyone else…” (apparently both mis-attributed, the first to Mark Twain, the second to Margaret Mead). Here’s another, that may have originated from Albert Einstein, “Everything should be made as simple as possible, but not simpler.” So, what do all these quotes have to do with advice from financial gurus? Simple (pun intended), finances are complicated, the right thing to do depends on your unique circumstances, and following gurus’ advice slavishly will frequently get you in trouble because you think you know something, but in your specific case it may just not be so. Here are some examples where advice that's great for most people may be the worst advice for your personal situation.

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When Is enough (money) enough? A simple step-by-step guide

If you’re a successful professional (or on your way to becoming one), you’re probably working too hard. You may not be taking the time to be with your family, taking vacations and recharging, working out, or simply taking some well-deserved down time. If this describes you, how will you know when you have enough? You can always aspire to more. If you’re like most of us, you haven't made your first million, at least not yet. But if and when you do, reaching the second million is much easier. Reaching the third, fourth, fifth, tenth, etc. becomes progressively easier. However, at some point, making the next buck makes no appreciable difference in anything you (should) care about. Here's how to avoid continuing to work too hard beyond when you need to.

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Easily figure out your average expenses (and a plausible budget)

Article after article on personal (and business) finance exhorts you to create a budget and a financial plan. You’re finally (reluctantly) willing to do it. But if you’re gonna do it, you really want to get it done already. Waiting with that budget for months to track your spending doesn’t cut it. You wish somebody would tell you at least if your spending is in line with your income, without having to go through every line of every statement of every account for the past year! Well, wish no more. Here’s a quick hack that will tell you exactly how much you spent in the last 12 months by just adding and subtracting a few numbers, and help you create a plausible budget from it.

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Three simple secrets to financial success (that don’t involve budgeting and forgoing a daily latte)

“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each” - Tim Gurner, Australian multi-millionaire. Deriding millennials for eating out too much isn't new, nor more true of them than other American generations. Any number of financial gurus have repeatedly suggested that people bootstrap themselves out of financial problems by brown-bagging lunch instead of buying a sandwich, forgoing a daily latte, or avoiding any other of a host of small daily or weekly purchases. However, that advice simply ignores our humanity. Here are three simple ways that don't involve denying yourself small daily pleasures, that are mostly within your control, and that will help you reach financial independence more quickly.

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A Simple Free Way to Reach More Clients

According to Business Insider, a large majority of economists expect a recession to occur by the end of 2021, with most of them expecting it in 2020. This is bad news especially for private-pay-only therapy practices, as client traffic will probably slow when the economy contracts, the outlook is gloomy, people get laid off, and wages stagnate or even drop. My work with therapists shows that rent is typically their largest ongoing expense, or close to it. This has therapists make significant decisions regarding their practice based to a great extent on the rent they’d have to pay. Covering rent becomes even more challenging and anxiety-provoking when the economy slows and client traffic drops as a result. But what if I could suggest a simple and (mostly) free way for you to reach double the prospective clients that you reach now?

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Achieve Financial Freedom by Asking Yourself This Before Buying Anything Significant

... and It Isn't "Do I buy or not?" As I shared previously in "Embrace Your Humanness – A Practical Guide to Having More," I would have been better off had someone shared with me this hard-won piece of financial wisdom when I was 30. It was November ’92, and I was looking at the first car I’d ever buy in the US, a 3-year-old 3.8-liter Ford Taurus LX. Buying it took most of my cash on hand, plus $6000 borrowed at 10.4% annual interest rate. The payments were almost 10% of my after-tax salary! I could have, heck, should have found a car that cost half as much, even if it meant buying a 5- or 6-year-old midsize. But I was hooked, and the used-car salesman reeled me in. Here's what I wish someone had taught me.

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Should You Buy or Rent a Home

I recently read a piece called “Buying vs Renting A Home (DEBUNKED),” where the author makes the case that renting is much better than buying for a variety of reasons mostly having to do with how little of your mortgage payment goes toward the principal for many years, and all the other expenses of home ownership. As a landlord myself, I’m all for people wanting to rent, especially my properties :). However, I believe most people in most situations would do better buying their own homes. Here's why.

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Make a Massive Difference in Your Life Through 1% Changes

When I moved to the US many years ago, I was married plus two, just out of grad school, and in debt. My salary was a whopping $31,000, and being over 11,500 miles from home, Ramen noodles frequently served as dinner— you know, the type that comes dried, powdered, and sells for under $0.30 a packet? When we discovered that a hot meal at a local hospital cafeteria was under $3, that became our new go-to place for lunch. Creating a plausible budget and sticking with it wasn't easy, so I was always on the lookout for opportunities to improve our situation. Fast forward many years, and our situation is frankly unrecognizable (in a good way). Here's what worked, and how.

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Is your Practice Model Setting You Up for a $300,000 fine? Ours was

It was about two years ago. My wife Risa, a Marriage and Family Therapist with a thriving group practice, met with a colleague. When she came home, what she told me was shocking. His group practice had just been audited by the state. The audit had concluded that his associates, who had been classified as independent contractor for years, should have been classified as employees. The state fined him $300,000! That was a wake-up call...

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Embrace Your Humanness – A Practical Guide to Having More

At first glance, personal finance may seem disconnected from running a practice, but it’s really all part of one (financial) system. How much you need to support your family informs how much you need to charge clients. Your ability to control spending at home translates to a similar ability in your practice. What’s left over after you cover business expenses determines what goes into your personal account. Here's a simple painless strategy for saving a lot more for the future without scrimping on your current budget.

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Do You Know How to Speak to Your Ideal Client?

Imagine that it’s morning and you’re sipping a delicious cappuccino (or tea, if you don’t share my coffee vice). You open your calendar to see what your day will be like. Oh look, your first appointment is with Jane. That’s so great. You love working with her because there’s never any BS. You don’t have to struggle to get her to share what’s going on. It doesn’t hurt that she’s such a nice person, you know, someone you’d have been happy to have as a friend (if she wasn’t a client, that is). After Jane, it’s Sarah. Another great client. Then lunch, followed by appointments with Tim and then Sam. Two more clients you love working with. After that, you have to catch up on some notes (sigh…) but not too many, and then you’re done for the day! What would it feel like to know that’s what your day will be like? What would it feel like if that was your day every day at your practice? How would you like knowing you’ll only be working with people who let you make the biggest difference with the least struggle? That’s what happens when you focus on your ideal clients. As a bonus, they’re also the ones most likely to want to be your clients.

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Second Tip to Get More Clients from Your Website – Add Relevant, Fresh, and Valuable Content

You’re walking along a familiar city street. You’re approaching a bakery you know and like. Still, you’re in  a bit of a rush so you’ll keep walking past it. Suddenly, your nose gets tickled by the amazing scent of freshly baked bread. You can’t resist and go in. What just happened? The combination of knowing and liking the bakery, and knowing and experiencing the scent of fresh bread overrode your initial intention to walk by. If your website can emulate that experience for your prospective clients, they’ll spend time there. Over time, assuming they find your fresh content valuable, they'll start trusting you as an authority, recommend you to others, and be more likely to reach out when they need your services. Here's what content's most likely to work.

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Working with a Coach – Why Do It and What It’s Like

Judy's been practicing for many years, seeing 25 or more clients a week on average, mostly from Medicaid (and spending too many hours chasing reimbursements). Despite all those hours of work and the difference she was making for her clients, she had a hard time getting ahead. She felt frustrated, upset, and resentful at how the system (including insurance providers, Medicaid, and even client expectations) kept her stuck with her head just above water financially, working much harder than justified by her income.

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A Year In: 9 CPA Tips on How the New Tax Law Can Save You Money

It’s been just over a year since the Tax Cuts and Jobs Act (TCJA) went into effect, establishing a 20% deduction on so-called qualified business income for passthrough businesses (ones where the income is taxed through your personal tax return). Since most therapy practices are set up as such passthrough entities, you can almost certainly take advantage of this 20% deduction as you work on your 2018 tax return. We certainly plan to :). Early last year, I wrote a short Q&A about how the TCJA would affect your private therapy practice. However, now that it’s been in effect for a full tax year, I interviewed our CPA to find out what they learned over the past year on the ways a therapist in private practice could benefit from the new tax law.

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First Tip to Get More Clients from Your Website – Show Up

A website doesn’t guarantee clients, but having no website (almost) guarantees a struggling practice. As I mentioned before, almost all therapy websites I’ve seen have major issues that prevent them from getting as many clients as possible. But our first deep dive tip talks to those of you who haven’t yet put up your own website. As long as you haven’t done that, how would most clients even find you? If you do already have a website live, use my checklist to make sure your site ticks all the boxes.

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How Solving 3 Problems in Your Practice Can Make Your Life Easier

Building and running a successful therapy practice isn’t easy. You have to figure out who your ideal clients are and what services you want to offer them. You have to choose how to set up the business. You have to find the right space, lease or buy it, and furnish it. Then, you have to build your referral network and set up your marketing to get clients to start calling and coming in. And all that is just the logistics. Once clients start coming in, you have to provide therapy. You know, sit in the chair for hours on end hearing people pour out their pain, day in and day out. My wife Risa loves being a therapist, but some days she comes home and she’s completely wrung out from all the pain she witnesses. If you’re a therapist, I’m sure you know what that’s like. Aside from the therapy part, these are all challenges that a good coach can help you solve. Today I want to tell you about three challenges that I helped one therapist (let’s call her Jane) overcome that made her life much easier. So much so that she recently told me, “Your help gave me the SPACE, the breathing room to get creative. I couldn’t stop the flow of ideas now if I tried! I have more money with less time spent… though I feel busier, with meaningful, nourishing steps toward my goals and dreams.”

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5 Numbers Critical to Your Private Practice Success

First, to be clear, the most important thing for the success of your private practice is obviously not a number. It’s the quality of therapy you provide your clients. No matter any numbers, if you aren’t a good therapist, current clients will leave because you’re not solving their issues, new clients will stop coming because word will get out, and your practice will languish. Justifiably. Having said that, being a great therapist isn’t enough. You also need to run your practice in a way that reaches your ideal clients and keeps them in therapy long enough for you to make a difference for them. So, assuming you do provide great therapy, here are 5 numbers critical to your success.

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10 Tips to Get More Clients from Your Website

If you have a practice, you have a website (you do, right?). However, almost all therapy sites out there have major issues. Here are 10 tips on improving your site so your ideal clients find and contact you. These include “search engine optimization” (SEO) that gets you ranked higher. If your site isn't optimized, you're whispering in a loud auditorium – not very effective. However, just showing up in search results doesn’t guarantee your ideal client will call. For that, he has to feel understood when visiting your site, which the rest of the tips address.

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To Slide or Not to Slide?

A common question many therapists struggle with, especially if their practice is private-pay only, is whether or not to offer sliding scale fees, and if yes, how much to charge. If you’re struggling with this yourself, know that there’s no single “right answer” for everyone, so whatever you choose to do is fine, as long as you’re comfortable with it. Having said that, here are the pros and cons to help you make an informed decision, and best practices if you choose to “slide.”

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Financial and Other Business Routines Can Save Your Practice

Do you feel overwhelmed by too many moving parts, too many reports, too many things to track in your private practice? Do your keep missing payment due dates and/or feel sure that many payments owed to you disappear and you never even know? When tax time arrives, are you sure your accountant hates you because you hand over to them a huge, messy pile of receipts, statements, and other assorted piles of paper? Business routines can help you tame the paperwork beast, and here’s your checklist, culled from over a decade of running multiple small businesses, including a Marriage and Family therapy practice.

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I Have Good News and Bad News for You

I love telling stories, and this time I have a few short ones to share that all combined in my head and led me to an important insight on dealing with the ups and downs of life in general, and our practices in particular.

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Best Way to Pay Yourself from Your Practice

You have your very own private practice, and even paying clients – congratulations! You’re officially the owner of a business with revenue (and hopefully profit too!). How do you pay yourself out of your profits? Is that the best way? Can doing it differently save you money? Here are some ways practice owners pay themselves, their pros and cons, and which one is best for what situation.

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Reframe Your Procrastination to Power Breakthroughs in Your Practice

Mark Twain jokingly attributed to Benjamin Franklin a celebration of procrastination – “Never put off till to-morrow what you can do day after to-morrow just as well.” Joking aside, I’ve come to appreciate my own instances of procrastination as a deep probe into what my mind shies away from. If you’re like me, when you find yourself procrastinating, it’s almost always because your subconscious mind finds the task overwhelming, unpleasant, or unclear. Here’s how you can reframe that procrastination from something you might be ashamed of to a source of breakthroughs, both personal and in your practice.

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Categorizing Your Business Expenses Wrong Can Cost You

A therapist I coach was making a couple of mistakes in how she categorizes her business expenses, which would cost her hundreds of dollars a year. Here’s what I suggested she do, which should put a nice chunk of change in her pocket. If you’re making the same mistakes, my advice may do the same for you.

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Rental Space Checklist - What your Private Practice Needs

It’s one of the biggest, if not the biggest expense in your business budget. Getting it right can attract more of your ideal clients. Getting it wrong can be a painful and expensive mistake from which it’ll be hard to extract yourself anytime soon. It’s renting the right space for your private practice. Here’s the 15-point checklist we used to choose rental space when my wife was still renting from others. I use the same list when coaching therapists today.

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Are You Setting a Trap for Yourself?

If you’re a member of online therapist groups, I’m sure you’ve seen plenty of threads that start off something like: “I’m looking for intake forms for my private practice. If you don’t mind sharing, please…TIA.” There’s nothing wrong with frugality, and I’m all for reducing business expenses. However, being frugal has its time, place, and appropriate targets. Your intake forms are not one of those! If you’ve been collecting forms shared by other therapists here and there, you’ve been setting up a trap that may well spring on you one day… when you’re audited for HIPPA compliance or worse, when someone sues you for breaching their health information privacy.

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Are You a “Walmart Therapist?”

“You get paid what per session?!” I asked my wife after noticing her low monthly payment from the group practice. “On average insurance pays them $60 so my split is $30,” she replied. “That’s outrageous!” It wasn’t her fault, and if you’re getting paid similarly ridiculous amounts per session, it’s not your fault either. You’ve probably become what I call a “Walmart therapist,” suffering from an extreme imbalance of power.

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5 Secrets You Can Use to Achieve Long-Term Success - Part 2

In the first part of this article, we looked at how acknowledging our emotional/cognitive limitations is a crucial, if perhaps non-intuitive part of your long-term financial success. I also explained why I disagree with financial “gurus” and much of their advice on buying homes and prepaying mortgages. In this part, we start with another non-intuitive but compelling factor to your success, follow with a system/process “secret,” and conclude with how and why opening your own practice can be a critical part of your roadmap to success.

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5 Secrets You Can Use to Achieve Long-Term Success - Part 1

If you’re a fan of Suze Orman or Dave Ramsey, this article will challenge you. My advice on how to achieve financial success is very different from what such financial “gurus” have to say, but I have good reasons for it as you’ll read here. While I don’t know of any way to get rich quickly without unacceptably high risk (e.g., playing the lottery or day trading), you can achieve long-term financial success. Good fortune (think great stock market returns or marrying somebody who’s already wealthy ;)) helps but isn’t up to you or me. In this two-part article I cover five things you can control in your professional and personal life that help achieve long-term success.

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7 Crucial Considerations When Renting Out Space to Others

If you see clients in person in your practice, office rent or mortgage is one of your largest business expenses. If the space is large enough, subleasing or renting out to others is a great way to offset a big part of that cost. When my wife Risa’s practice reached full-time, she rented a 5-office suite and subleased several offices to other therapists. Several years later, we bought and built out our own suite, renting space to six therapists. Several of them have now been with Risa for over nine years, moving with us when we established our own suite. Here are the most important lessons we’ve learned over the years on how to get the best renters, and how to keep them. Whether you’re considering becoming a landlord or renting space in someone else’s suite, this post is for you.

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The Surprising Reason Why Charging Higher Fees Helps Your Clients as much as It Does Your Wallet

Therapists in private practice are mostly driven by two commitments, not necessarily in the following order. First, to help their clients find relief from their traumas, emotional pain, and relationship problems. Second, to help their own families achieve a prosperous future. My commitment when coaching therapists is to help them realize that even when the two commitments appear to conflict, you can reframe them and see how not only are they not in conflict but are actually intimately aligned, like the pronghorns in the photo.

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Are You Leaving Money on the Table?

If like me you live in a high-tax state, you’re suffering the huge impact of the new $10,000 limitation on deducting state and local taxes plus property taxes. This means you probably get to keep just slightly more than half of the last dollar of your income! Now I get that reading about taxes is about as delightful for most of us as going to the dentist for a root canal job, but if you’re not diligent about maximizing your business deductions, you’re leaving a ton of money on the table which will be even more painful. So, grit your teeth (bad pun intended) and read on to avoid the pain of needlessly paying more taxes than you must…

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The Simple Mistake that's Costing You Thousands of Dollars Each Year

If you’re like most therapists in private practice, I can almost guarantee that you’re making this simple mental mistake that’s costing you thousands of dollars every year. If your practice is full, that may even be tens of thousands of dollars. What’s worse, beyond the simple loss of income, it’s forcing you to see too many clients, making it harder to keep bringing your best self to the chair.

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Are You Getting the Same Benefits as Employee Associates at Other Group Practices?

If you’re an employee associate or are considering becoming one, here are lists of benefits employee associates get at some practices. If nothing else, this offers a sanity check to see if you're incredibly pampered, taken advantage of, or somewhere in-between.

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Transitioning Your Group Practice from Independent Contractors to Employees

If you have a group practice based on independent contractors and are contemplating transitioning to an employee-based model, here are the steps we took to transition my wife’s practice to an employee-based model, including deciding on benefits for the staff, and best practices of managing the team through the change.

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Associates in a Group Practice – Independent Contractor vs. Employee

Many therapists in private practice at some point expand their practice by bringing in associates, either as independent contractors or as employees. If you joined such a group practice as an IC, or if you’re considering joining, there are certain things you should be aware of so you know your rights as a contractor, and know the possible consequences that risk your source of income if the practice owner misclassified you.

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Choosing the Right Group Practice Model – Independent Contractors vs. Employees

Not every practice has to become a group practice, but those that don’t will reach a ceiling of how much of a difference they can make, dictated by the limited time of a sole practitioner, especially if she also does all her own marketing, purchasing, appointment-setting, etc. If you want to expand to a group practice, you can add associates either as independent contractors or as employees. Whether you run a group practice or are planning to expand into a group practice, here are some critical things you must consider when choosing how to add associates.

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How Does Your State’s Median Income Stack Up (and Why It Matters)?

One of the most human things is to want to compare yourself, your town, your school, your state, your country, etc. to others. So when I saw this headline “This Map Shows the Average Income in Every State—and What It's Really Worth” I was intrigued. Why does your state’s median income matter to you, and where does it rank compared to the rest of the country?

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3 Things to Remember that will Help Reframe the Sliding Scale Discussion

Some clinicians have concerns about clients possibly claiming to only be able to afford a fraction of your full fee while driving a much nicer car than yours. This is a completely human thought, resulting from seeing sliding scale discounts as pitting your client’s interest (getting the best therapy at the lowest price) against your own (providing the best therapy while maintaining sufficient profitability). Here are some thoughts on how you can set things up to reframe the sliding scale discussion so it doesn’t trigger your own emotions.

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3 Things to Remember if You Struggle with Raising Your Fees

Setting rates is hard for any solo business owner. I still struggle with it myself. A few weeks ago, a new client asked for help with something he was working on, and I didn’t think he could afford my full rate. Ultimately, he asked for a discount for the first few hours and paid my full rate after that. So many therapists also struggle when it comes to setting their fees, agonizing that some clients may be left suffering because they can’t afford therapy. While such concerns prove your empathy, in the final analysis they serve neither you nor your clients. In the following, I point out three things that can help you win this struggle within yourself.

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Lessons from My Accidental Journey into Entrepreneurship

Have you ever found yourself in a job where you’re required to do things you don’t care to do, paid less than you’re worth and less than others in similar positions, underappreciated by your supervisor, and with no path forward? That’s exactly how I felt. Despite years of attempts to change things without leaving, or to find a position at a different institution, I couldn’t seem to get unstuck. After 16 years with a mostly stagnant salary, fear was stopping me from making the sort of radical change that was my only hope. This was not a situation unique to me, and my journey from that low holds some important lessons about entrepreneurship and starting your own private practice.

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What Does the new Tax Law Mean for Your Therapy Practice

The US tax code is infamous for its complexity, and the 2017 Tax Cuts and Jobs Act (love it or hate it) makes things even more complicated than before for therapists in private practice. Does the new 20% deduction apply to therapy practices set up as sole proprietorships? LLCs? PLLCs? S-corps? Is a therapy practice considered a Specified Service Business? If it is, does this mean you don’t get the 20% deduction? Does the 20% deduction apply to all your income from a pass-through business? What is a pass-through business anyway? Since my wife is a therapist in private practice and I’m a consultant in private practice, I’ve been researching all these questions and more, and want to try and make sense of this mess for all of us. Based on that research, and vetted by my own CPA, here are the most important implications for your therapy practice in just seven questions and answers.

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How to Make Your Kid a Tax-Free Millionaire

Year-end is a good time to think about your taxes, especially in a year that saw the biggest changes (like them or not) to our federal tax code in more than a generation. The famous (and often misattributed) quote goes, “‘Tis impossible to be sure of any thing but death and taxes.” (Christopher Bullock, 1716). More than 200 years later, medical researchers keep trying to disprove the certainty of the former, while Washington DC keeps proving that of the latter. A while back, I found a loophole that lets you legally help your teenager become a millionaire without his or her paying a dime of income tax, for less than $20,000! This loophole seems to be unaffected by the new tax law, and I can show exactly how to take advantage of it.

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Holidays Checklist for Your Practice

You know the old saying, "Can’t see the forest for the trees"? Holidays serve a really important purpose for us humans, beyond any religious or cultural reason. They help demarcate our lives, and give us an opportunity to stop, take stock, and see our context (the forest), rather than just the day-to-day details of our lives (the trees). So, what should you be doing this Holiday season, looking at your practice's big picture, to ensure next year is a success?

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Avoid Tax-Time Sticker Shock

Does writing checks for taxes out of your personal account feel like the government is violating your personal finances? For me, once money is in my personal account, I want to know that I can count on it to pay for the mortgage, groceries, and yes, even the occasional vacation. I don’t want to ever write a check to the US Treasury and realize that I just emptied out my checking account so I need to scramble to cover our expenses. Here's how I guided a client to address these concerns.

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Plug the Money Leaks in Your Practice

When you think about it, water can be a good metaphor for money in your practice. It flows in and out, once you use it it’s gone, and without it your business withers and dies. Unless you’re a business mega-star (I’m not), your business has a bunch of money leaks that leave your practice thirstier than it needs to be. Do you know where these money leaks are in your practice?

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Figure Out Your Perfect Office Space Solution in under 5 Minutes

Rent is the biggest budget item for many practices, so you need to choose the right space solution. My wife Risa started by renting daily office space and gradually worked her way up to where we now own our office suite and rent out excess space to other clinicians. This means that not only have we seen it all, we’ve experienced most of it firsthand. Based on that experience, we've come up with a few simple questions that will guide you in figuring out what your own perfect space solution will be.

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The Best Way to Pay Off all Your Debt

We’ve all been there. Student loans to help pay for tuition, a business loan to help rent an office space and furnish it before you see any paying clients, or credit card debt to cover expenses while you start building your practice – it’s tough to get your education and start a practice without incurring debt, and usually many sorts of debt. If that describes you, what’s the best way to pay off all that debt?

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Financial Myths that Can Hurt Your Practice – Expensive CEUs

Mark Twain is quoted as having said, “It's not what you don't know that kills you, it's what you know for sure that ain't true.” So, what is it that you know for sure that ain’t true about the business of your practice? Let's start with the CEU. You know, that pesky requirement that catches you unaware at the end of the year because you forgot to plan for it?

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11 more Ways to Make Your Solo Practice more Profitable - Services

These 11 tips are based on lessons my wife Risa and I learned on how to reduce our costs for business services while running her therapy practice and my consulting business. You can use these to cut your own practice's costs and increase your profits. For example, we see health insurance as an affordable means to prevent financial ruin, not a way to avoid paying for any health services. That lets us buy much cheaper coverage.

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Next 11 Ways to Make Your Solo Practice more Profitable – Financial Wisdom

Like my wife Risa, I’m sure you work very hard to make a difference for your clients, which makes it that much harder to focus on keeping your practice profitable. Here are 11 more tips to make smart financial choices that will help do that. This isn't about pinching pennies, but rather cutting where you can do so without being miserable, so you have more money to invest in bringing in clients, making a difference for them, and making your own life simpler and easier.

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First 12 Tips Guaranteed to Make Your Practice more Profitable – Your Space

From our experience with my wife Risa’s practice, I’m sure you often feel overwhelmed trying to not only make a difference for your clients, but also juggle all the hats you have to wear to make your practice profitable. Here are 12 tips to make smart choices about your space that will increase your profit. This is not about pinching pennies, but rather cutting where it makes sense so you have more money to invest in bringing in clients and making your life simpler and easier.

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You CAN Recover from Slowdowns in Client Traffic

It’s a fact of life – slowdowns in client traffic are a matter of when, not if. However, there’s no reason why such a slowdown should lead to financial or business ruin. In fact, it may be a blessing in (albeit very effective) disguise! When a slowdown come knocking at your door, if you respond by keeping a positive outlook and taking immediate and effective action, you may find yourself piercing its frightening disguise and seeing it for the opportunity it hides.

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Retirement Plans for Solo Practitioners

Retirement plans are an important topic for solo practitioners, which I plan to cover more fully in my upcoming video course. However, I don’t want to hold off

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Business Budget Sanity Check

For the purpose of this post, you’ll need to refer to my free “Set Your Rates the Right Way” worksheet. In the sheet, fill in the blanks on page 4 with your numbers, referring as needed to the sample sheet on the following page (if you have questions or comments, post those at the bottom of this related post and I promise to respond). After filling in your numbers, compare them to the sample entries. Unless you simply copied entries over, I’d bet a nickel your budget is very different.

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Why Free Isn’t Always so Great

It almost seems like you can get something free anywhere you turn these days. That’s because people don’t hesitate to accept something for free, where they may be very reluctant to pay for it. It’s no surprise that the threshold for saying “yes” to something is much lower if it’s free. If you’re trying to establish yourself in a new niche, offering something for free allows you to reach a wider audience, which is great. And if you make that giveaway really valuable, it helps you establish credibility with that audience, which is even better.

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Choosing the Right Business Entity Type

Business entity? Really? Don’t I have more urgent and important things to deal with? That would have been my response when I started my first small business. The problem with that response is that when you start a business, you don’t get to not choose a business entity type. Either you choose it yourself, or it’s chosen for you by default.

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Set Your Rates the Right Way

If you’re a mental health provider, grad school taught you all about how to be a clinician. You learned to diagnose and treat the seemingly endless variety of ways in which we humans make a mess of our emotions and those of our loved ones. Then, you learned how to implement all that knowledge in a clinical setting through supervised therapy, learning from teachers, supervisors, and mentors, perfecting your ability to provide therapy. What you probably did not study nearly as much (if at all) is how to run your practice as a business. One aspect, the one that determines how much money your practice brings in, is setting your rates.

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