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Are You In Over Your Head in Overhead?

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If material items are costing you happiness, it’s time to redefine what success means. This is the first article in a series about redefining success and achieving financial freedom written for EO by Megan Hottman, also known at The Cyclist Lawyer. Megan formed her own law practice in 2010 at age 29. As part of her life’s mission to help lawyers and entrepreneurs become healthier and happier people who take care of themselves and remain fully charged, Megan launched her latest venture, TrialAthlete.comCheck out the other two articles in this series, “Investing In You” and “How Low Can You Go?”

Consuming is killingI want to talk to entrepreneurs—and especially you lawyers—about your overhead.

Why is it that most of us lawyers are fixated on driving the car that we believe lawyers should drive? Owning the art that we think lawyers should own? Living in the “right” home that’s located in the “right” neighborhood? Wearing the “right” suits and only the “right” jewelry?

Let me be clear: If that painting or that car brings you pleasure, cool. If you can afford it and you love it, go for it. But if that expensive watch or townhome is putting you in debt and was purchased simply to impress colleagues or clients, then I don’t approve. If that pair of shoes or suit is how you’re presenting and defining success, then it’s time for you to rethink that definition. 

As Ryan Harris, Super Bowl 50 champion, said to me in a conversation on my podcast Maximum Enthusiasm, “Megan, that Cartier watch isn’t impressive to people who don’t know it’s a Cartier watch.” He was talking about National Football League players who blow big money on watches, raising the irony that a crazy-expensive watch isn’t impressive to people (like me) who have no idea what a Cartier watch even looks like.

Consumption is killing us. I believe that lawyers more than any other profession are choked with overhead pressures. We overspend and, therefore, must generate more to compensate.

How much joy does that add to our lives? Less than zero. Chasing business we don’t love and accepting clients we definitely hate causes our souls to corrode. Worse, it causes us to hate our profession.

That expensive art on the walls costs us everything.

Imagine yourself back when you were in law school. Perhaps your younger self is day-dreaming in the law library. You see your future self wearing a sharp suit, stepping out of a fabulous car and walking into a luxurious-looking law firm with an overpriced espresso drink in one hand and designer-brand briefcase in the other.

Now, how many of us started spending money we didn’t have during law school? We work so hard to create an image of what we think success looks like, that we drown ourselves in debt and overhead—perpetuating the negative cycle of selling our souls for work that we don’t love in order to get the money we need.

Check out the second article in Megan’s Octane series, where she delves into the nitty gritty of cutting your overhead in order to grow your sense of freedom.

Here is my experience share in a nutshell, lest you think I am preaching hypotheticals and have no substance to back up my position:

I graduated law school at 24. I was blessed with parents who paid for my college education, but law school was up to me. I worked during law school running my personal training and aerobic instruction business and received scholarships, but still had to borrow money for tuition.

I graduated in 2004 with US$55,000 in school debt. I made it my goal to pay it off within 10 years (even though as a judicial law clerk, I was making less than US$30,000 per year). It took me the full 10 years to get that debt paid off.

Five years after graduating law school, I started my own firm. I was 29. I had plenty of school debt left to repay and US$5,000 in the bank. But I also had a fundamental drive to own my day and take back my time. If my business failed, I figured I could go back to working for someone else.

As I saw it, I didn’t have much to lose—only a lot of freedom and control over my destiny (and daily commute!) to gain.

I read all the books about hanging one’s own shingle. I recall being struck by how many of them begin by saying “take out a business line of credit and use it to fund your start-up costs.” The books usually told me to go out and hire a bunch of people whom I would “need” and office equipment we would “need.”

I didn’t agree.

I decided against taking on any debt and opted to build as I went. No loans. I started from a home office and met clients in coffee shops for the first two years. Then I leased office space in an office four miles from my home (because eliminating my commute was a huge motivator for me to work for myself). After a year of leasing that space, I negotiated the purchase of the entire commercial property. This investment allowed me to pay rent to myself and to invest in real estate.

I’m happy to report—10 years after graduating law school—I paid off that law school debt, at just 34 years old.

A second goal for myself was to pay off my house by the time I turned 40. As a result of saving up, not overspending and making some lucky real estate investments early on, I was able to pay my house off at age 38.

I paid cash for my last three vehicles (always buying lightly used, never new) and I pay my credit card statements off every month. I am blessed to say that I have no personal debt.

I worked hard to get it that way and I work hard to keep it that way. I thank my parents for teaching me: Don’t buy anything you can’t pay cash for. Don’t ever pay interest on your credit card bill. If you can’t pay cash for it at the time, it should not go on your card.

I also credit my financial freedom to regular check-ins with myself. The reality for me is that debt or overhead cause me anxiety and stress. I don’t like knowing that the first chunk of my paycheck is already spoken for because I’ll have to pay off X, Y or Z every month. I sleep best at night when my overhead is low and when I have money in reserves to protect me in the event of an emergency.

Anyone out there feel the same? If you spend a moment envisioning your life without debt or stifling overhead costs, do you feel lighter? Perhaps more in control? Relief? Perhaps even, more successful?

Megan Hottman has raced three Ironman Triathlons and won state and national championships on her bike—all while running a successful law practice. She’s also known to lead circuit-training classes in the lobby of legal conferences to reinvigorate participants. Megan is an EO Colorado member who joined the organization in 2018. Read more from Megan at maximumenthusiasm.com.

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