Angela (00:00): Hey guys, welcome back to my channel, the
number one place for new and aspiring lawyers on all things law school, the lawyering life,
and the legal industry.
I'm so excited about today's video because we are talking about an insanely important
topic for new lawyers in particular, which is how to manage your money.
Because for new lawyers coming right out of law school, starting their legal careers for
the first time, you're talking about people in hundreds of thousands of dollars in debt
and making in some cases hundreds of thousands of dollars in income for the first time.
And so those two things colliding together oftentimes lead to very bad financial mistakes
and, and financial pitfalls.
And so understanding and learning what those are and how to get out of them so that you
aren't stuck in a career that you hate or in a life that no longer brings you happiness
is so, so, so important.
Angela (00:46): And financial independence and financial freedom
are very big components that feed into that.
And so if you are interested in learning about the biggest financial mistakes that young
attorneys tend to make and how to avoid them, then keep watching.
I'm so excited for today's video because we have Erol Atac a tech of the Armstrong and
Atac tech financial group LLC based out of Chicago.
He's a co-founder, he's a financial strategist working specifically with young lawyers who
are starting out at law firms.
So Erol, thank you, thank you, thank you so much for being here and welcome.
Erol (01:16): Hi, Angela.
Thanks so much for having me here.
Angela (01:19): Okay guys.
So it's important to know that this is not a sponsored video.
Erol cannot give specific financial advice to you guys as a general audience, but we
are going to be talking about really important financial factors that affect all young attorneys
as you move through your careers, as you begin your careers.
And so that's what the focus of today's video is because this is such an important aspect
of starting out your career as a lawyer.
Okay.
So first question, biggest question.
What are some of the biggest financial difficulties that you see young lawyers having on a consistent
basis?
Erol (01:51): The biggest financial difficulties that I've
seen young attorneys with, number one, and this may not be a shocker, student debt.
It's not uncommon to see associates with over $250,000 as student debt with also very high
interest rates.
And so the high interest rates oftentimes that I see, give me a panic attack because
the banks are taking more money out of their pocket than they perhaps should.
And so this could be an opportunity where you may be able to save thousands, tens of
thousands of dollars on student loans.
The second is savings for future.
Associates typically what I've seen work somewhere between 70 to a 100 hours, basically working
24/7 right?
And so they oftentimes lack the time and energy to focus the financial future as well as the
financial today to live it the way that they want.
A third, and I call this more of the Hollywood effect, more of the riches effect.
It's, it's where you start helping family.
You know, you may not necessarily come from a wealthy background as an associate, but
out of nowhere you're making somewhere one 150, 190, 200 and above, and then out of nowhere
you, you either help family parents, or you may be helping cousins, relatives that you
may have not seen for the past decade.
Angela (03:25): In addition to the biggest financial difficulties
you're seeing that you just talked about.
What are some of the biggest spending habits that maybe young attorneys do that get them
into trouble?
Erol (03:36): Yeah, so I don't know if this is a fun one
or a scary one, but essentially what I see is two major ones.
The first one, food delivery.
Ride share.
Erol (03:49): All of you out there who are associates, you
will be working ridiculous hours, day and night.
And so that oftentime means that you're not meal-prepping as much.
You don't have as much time to take maybe public transportation, or you're just eating
out a lot in general.
And so I have seen cases and scenarios, not just one, but multiple cases where someone
will spend 150 a hundred dollars a day on ride share and food.
Number two, saving up for big ticket items.
And what I mean by big ticket items, is like, it could be fun, it could be your home, it
could be a condo, it could be a car.
And what I oftentimes see is coming out of law school and starting at a big law firm,
typically you'll start making $190,000 with a $15,000 bonus.
That's a lot of money that you come into, right?
Erol (04:42): You work for it, you earn it, you deserve
it.
But then you'll end up spending maybe three, four, I've seen $5,000 a month on rent, on
a mortgage.
And what that in essence does is gives you less of an opportunity to plan for your future.
And I'm not just talking about planning for retirement, I'm talking in standpoint of you
may be creating an opportunity of creating your own golden handcuffs in your career.
Or you may not be taking advantage of savings for your future, where you may be missing
out on compound interest, which is the younger you start, even if it's at a smaller bit,
the more time it has, the faster it's going to be growing the older you get.
Angela (05:35): And that is so amazing that you are talking
about this specifically because I love talking about this topic, the, the problem of the
golden handcuffs of spending too much money, too early, of getting comfortable with a lifestyle
that's sort of an elevated one that you don't necessarily need or even maybe necessarily
even want.
Um, that puts you in this situation, not only like you say, not to be able to plan for your
future and to save money and to take advantage of compound interest and all of the things
that set you up for life, you know, 5, 10, 15, 50 years down the road.
Um, but also don't in the short term, don't give you the freedom to, for example, walk
away from a job that you don't want to be working at anymore.
So you know, in big law there's a lot of turnover, but there's people who stay, you know, 4 or
5, 7, 10, 15 years, when if they had planned correctly, they could have stayed for two
or three, paid off student loans and then go and get the job that they really want.
So talking about spending, saving, budgeting, what are some of the biggest misconceptions
that you see young attorneys having over and over with respect to these topics?
Erol (06:41): I have three for you today.
Number one is how much you spend on rent or mortgage.
So percentage of your income that should be going towards rent or mortgage.
What we're taught is like 30 to 33%.
Who gave us those stats?
Why is that the magic number?
Who created that rule of thumb?
Why does one size fit all?
It doesn't, that's the thing, right?
Number two, student loans, the name of the game is paying them off, right?
It's that thing that you got so that you could be an attorney so that you can practice and
do what you love.
Um, oftentimes the thing that scares me more than how much you owe is actually the interest
rate.
I've seen anywhere between 3% to 12%.
I've seen fixed, I've seen variable.
I get a bit of a panic attack when I see that interest rates are higher.
There are strategies to go about paying it off.
Erol (07:46): Some people want to pay it off super aggressively.
Some people want to play the slow game on it.
Some people are just like, yeah.
It's a preference thing and at the same time, one size does not fit all for that either.
Number three, tax considerations.
I'm not an, I'm not a CPA, I don't give tax advice, but I do know how income works as
well as savings for the future work.
So I see many young attorneys typically, let's just say $200,000 is what they're making,
um working at a big law firm.
But they don't take into consideration federal, state, local, food, um, sales tax, like all
these different taxes that could swing anywhere from 30% to 50%, maybe even sometimes more
depending on spending habits going to uncle Sam.
And so if we're strategic about how we save our money, we can be tax smart about our future
too.
Angela (08:51): And I think that's such a good point.
And I'll link in the description below a video I made, what I made versus what I spent for
my two, my first two jobs out of law school, cause one was a federal judicial clerkship
in Dallas, Texas and one was working at a biglaw law firm in New York city.
And I specifically talk about that, what you just mentioned that there's the differences
in the tax bases because just like you said, there are some states like New York, for example,
that we're not only going to pay federal tax, you're also paying state and city tax.
And then as opposed to living in Texas, for example, where we don't have state or city
tax.
And so that is a huge consideration.
It is really important.
Just like you say.
Well Erol, thank you so, so much for being here with us today.
I love all, uh, all things financial planning.
I think it just creates so many wonderful opportunities, um, in your life and especially
for young associates, uh, young attorneys just coming out of law school or working in
the first few years of their job.
This information is vital, vital to understand and to apply.
And so thank you, thank you again for being here.
Erol (09:52): Angeles.
It's absolutely been a full pleasure for me.
I've really enjoyed this and I think you put out such great and terrific valuable information
for those young attorneys, associates out there, and I'm honored to be a part of it
too.
So thank you.
Angela (10:06): Excellent.
And guys, I'm going to link in the description below all of Erol's contact information, a
description of the services that he provides to young attorneys in case you guys are interested
or want to reach out.
I'm also going to link in the description below some financial planning documents, sort
of a get-start guide, um, that is going to link to his website in case you guys want
to follow up and learn more.
And so, like I said, it's not a sponsored video, but it is such vital, amazing financial
advice that I want you guys to be able to have access to and to be able to apply in
your own lives.
And so it's been a pleasure Erol and we'll see you next time.
Erol (10:44): Thanks Angela.
Take care.