Pro Athlete SWR.....

[Delawaredave5]

Wow. I painfully fret over 3.0% or 3.5% or 4.0% SWR considerations - and then you hear of these stories.....

Seven costly pro athlete screw-ups - Yahoo! Sports

Almost 80 percent of National Football League players are flirting with bankruptcy two years after they retire, according to Sports Illustrated. NBA players aren’t faring much better. 60 percent of former National Basketball Association players end up broke within five years of retirement. Athletes squander millions of dollars due to bad decisions, lavish spending and poor financial planning.

 

[W2R]

Every now and then there is a story of a simple immigrant shopkeeper who began with nothing, worked long hours and saved, and ended up with millions.

To me, the lesson here is that good money handling skills are more important than income, for building wealth.

 

[easysurfer]

It's not how much money you make but how much money you keep.

I remember when I was a kid, hearing stories that boxer Leon Spinks had already spent his upcoming bout money before the fight.

 

[Htown Harry]

Sad, but not surprising.

I was amazed the other day to read the story of one of the local pro football players profiled in an off-season feature story. A middle-of-the-draft rookie who played special teams and caught a few passes on third down.

Poor guy will probably be the butt of jokes in the locker room - he hasn't touched his signing bonus and he's going back to college to finish his degree during the spring semester.

One interesting twist - before coming back to football in college, he was in minor league baseball for a few years before deciding he couldn't hit a curveball. I suspect the life lessons of long trips on a team bus and living on weekly meal checks gave him a perspective on the riches of major league athletics that few others have.

Makes me think back to when I was 22 or 23 and earning my first real paycheck. There's no way I would have handled being rich without making some colossal blunders.

 

[traineeinvestor]

Stanley and Danko described this pretty well in The Millionaire Next Door - good defence (spending habits) are at least as important as good offence (income) if you want to become a millionaire.

 

[ERD50]

OK, so it's pretty easy to write off their behavior to stupidity, inexperience, and the "rush" of all that cash & fame, a few too many hard tackles, but what I don't understands is - why the heck would anyone loan them money? Aren't the banks aware of these statistics? Same with movie stars and other performers - if they are so rich, why do they need to borrow more?

You don't really bother to declare bankruptcy if you spend all your money and you are paying cash. That simply makes you poor, you don't have debts to be 'forgiven'. If a supposed multi-multi millionaire wanted to buy something from me, it would be a real red flag if he/she didn't pay cash. Why would I want to loan money to a member of a group that consistently shows bad money skills?

Are the banks getting enough interest over time to offset this huge default rate? Seems unlikely.

I guess I've heard that the NFL is doing some financial education with these guys now, I wonder what it consists of. IMO, it should be straight and simple - pay your bills every month, don't take out any loans, even for a house, and don't 'invest' more than 10% of net worth in anything other than treasuries. Capital preservation is far more important than capital growth for these people. One more - any 'friend' that wants you to put your money in their investment idea is no friend, unless they hang around after you say "NO!".


-ERD50

 

[unclemick]

Here is a case where immediate annuities 'might' be prescribed as a medical cure for stupid.

Or perhaps not. Eh?

heh heh heh -

 

[Leonidas]

I guess I've heard that the NFL is doing some financial education with these guys now, I wonder what it consists of. IMO, it should be straight and simple - pay your bills every month, don't take out any loans, even for a house, and don't 'invest' more than 10% of net worth in anything other than treasuries.

Former co-workers work / have worked for the league in security and I've heard stories about the school they run for rookies to try and keep them away from scammers and thieves, but aside from how not to get ripped off I'm not sure how much sound financial advice they get on how to spend responsibly.

For several reasons the area where I live attracts a lot of pro-athletes and I've got to know several of them as neighbors or from school functions. They run the gamut from the rookie 2nd-string lineman who was my neighbor for a year (and was hosing money around like it came from a fire hydrant), to the former MLB megastar pitcher who lives in a mega-mansion about 1/4 mile away. I think the financially sharpest one I met was the guy who lived a couple of streets over who was an NBA playoff record holder for points scored. His one extravagance was a nice Mercedes coupe. After retiring in some other city he was living off some restaurants that he owned.

Other than the super-duper megastars, I think most of these guys are just like the average Joe when it comes to knowing (or not knowing) how to responsibly deal with their money. One difference being that they make a lot more than the average Joe, and they have a much shorter window of high-earning years in their career of choice. The money makes them able to make mistakes in a grander fashion than the rest of us.

Another the difference between us and them is the media attention they get, not just for their playing but just about everything they do. If the police get called to your neighbor's house over a domestic disturbance everybody in the neighborhood knows. If a super-star gets into a fight with his wife and the police get called, everybody in the country knows. It can make the conversations between dads at a school function a little weird - you don't ask the starting QB "how's it going" when he was all over the papers last week for allegedly assaulting his wife over a GF issue.

 

[haha]

Every now and then there is a story of a simple immigrant shopkeeper who began with nothing, worked long hours and saved, and ended up with millions.

To me, the lesson here is that good money handling skills are more important than income, for building wealth.

True, if a person is willing to scarifice his one and only life to pile up money for someone to spend after he is dead, or to secure a high ranking spot in the Misers' Hall Of Fame.

Otherwise, better to combine a high income with reasonable but not suicidal money handling attitudes.

Ha