Why do so many NFL players go bankrupt?

[saden1]

Originally Posted by Daseal

If I were an agent, I'd make it mandatory for my clients to have a financial adviser before the draft. I'm not great with finances, luckily my bank is always very good at helping me out.

If you're eligible for USAA -- there's not a single thing I haven't loved about the company.

I still think the most amazing thing, is the pure number of lottery winners who blow the money in no time.

The kind of people that become agents are the same kind that sell used car salesmen. They simply don't care or they see you as a meal ticket and the more they have to do for you the more they get paid. They are the sharks athletes should run away from, they are part of the problem not the solution.

[Schneed10]

Originally Posted by SmootSmack

A lot of these athletes put their trust in people they shouldn't. Even if they should, you should never put 100% trust in anyone else when it comes to managing your money. I've also seen a lot of these people invest money in their friends' businesses or even just business ideas. And if/when they try to get out of it they're faced with the guilt trip of "Aw man, you've changed. Forgot about us"

When it comes to trusting the wrong people, I agree, that's just as retarded. I mean how hard is it to simply leave all your money in a savings account until you've gotten yourself a little more educated on how to handle money?

If you piss it away you have only yourself to blame. Lack of foresight, lack of understanding, lack of thought put into it, lack of judgment when selecting money managers, it all comes back to the athlete.

[saden1]

Originally Posted by Schneed10

When it comes to trusting the wrong people, I agree, that's just as retarded. I mean how hard is it to simply leave all your money in a savings account until you've gotten yourself a little more educated on how to handle money?

If you piss it away you have only yourself to blame. Lack of foresight, lack of understanding, lack of thought put into it, lack of judgment when selecting money managers, it all comes back to the athlete.

What is a savings account?

[djnemo65]

I think Daseal's cogent observation that lottery winners succumb to the same insolvency suggests that we can't blame this all on hip-hop. Here's a really good article on some celebrities of yore who also went bust: Tales of the Broke and Famous by Stephen Schochet as submitted to things-and-other-stuff

[freddyg12]

Daseal's point about lottery winners pretty much points out the obvious in this to me; it is an extreme culture shock of sorts to go from low to mod. means to being wealthy. To some degree it doesn't matter what your socioeconomic background is, there are people from all walks of life who've become rich only to go broke. Even smart people who happen to make bad decisions.

Have you ever discounted somebody's success because they inherited the family biz or family money? Well compare that person's financial mgmt. to some of these guys. We tend to disregard "old money" people as being privildged, and maybe they are to a degree, but there's more to managing a lot of money than most low to middle class people understand.

Maintaining wealth is just as hard as achieving wealth. In football terms, it's harder to repeat as super bowl champions than it is to win that first one. Most nfl players, and I believe most of the general public, don't have a concept of what it takes to maintain wealth.

[Schneed10]

Originally Posted by freddyg12

Daseal's point about lottery winners pretty much points out the obvious in this to me; it is an extreme culture shock of sorts to go from low to mod. means to being wealthy. To some degree it doesn't matter what your socioeconomic background is, there are people from all walks of life who've become rich only to go broke. Even smart people who happen to make bad decisions.

Have you ever discounted somebody's success because they inherited the family biz or family money? Well compare that person's financial mgmt. to some of these guys. We tend to disregard "old money" people as being privildged, and maybe they are to a degree, but there's more to managing a lot of money than most low to middle class people understand.

Maintaining wealth is just as hard as achieving wealth. In football terms, it's harder to repeat as super bowl champions than it is to win that first one. Most nfl players, and I believe most of the general public, don't have a concept of what it takes to maintain wealth.

No, no. It's not at all. I have $100 million in the bank, I'll put it in safe investments. It earns 3%, so I make $3 million a year. I can spend $3 million a year and not lose any of my $100 million.

$3 million annually amounts to $250,000 monthly. I can have three big mortgage payments on three big homes throughout the country. I can buy a car each month. I can eat out whenever I want to. It's not hard to budget for that at all.

What's not easy is coming into $100 million. Every single intelligent person on this message board would handle $100 million A LOT better than these moron athletes.

[Redskin Warrior]

Originally Posted by Schneed10

No, no. It's not at all. I have $100 million in the bank, I'll put it in safe investments. It earns 3%, so I make $3 million a year. I can spend $3 million a year and not lose any of my $100 million.

$3 million annually amounts to $250,000 monthly. I can have three big mortgage payments on three big homes throughout the country. I can buy a car each month. I can eat out whenever I want to. It's not hard to budget for that at all.

What's not easy is coming into $100 million. Every single intelligent person on this message board would handle $100 million A LOT better than these moron athletes.

This is the same example i gave my friends & family that you can live off interest and not touch your initial money. I come from poverty still in poverty somewhat actually and i grew up and embraced the hip hop culture myself. By no means, would i blow the amount of money these guys blew. I was broke as a child but if i came up and earned, inherited multimillions of dollars my first thing to do is what can i do to NEVER BE BROKE AGAIN. To me that is common sense but we all know everybody doesn't have that.

[Schneed10]

Originally Posted by Redskin Warrior

This is the same example i gave my friends & family that you can live off interest and not touch your initial money. I come from poverty still in poverty somewhat actually and i grew up and embraced the hip hop culture myself. By no means, would i blow the amount of money these guys blew. I was broke as a child but if i came up and earned, inherited multimillions of dollars my first thing to do is what can i do to NEVER BE BROKE AGAIN. To me that is common sense but we all know everybody doesn't have that.

Exactly. I'd think those who come from a low-income background would appreciate money a bit more when they do get their hands on it.

[Mc2guy]

Originally Posted by Schneed10

No, no. It's not at all. I have $100 million in the bank, I'll put it in safe investments. It earns 3%, so I make $3 million a year. I can spend $3 million a year and not lose any of my $100 million.

$3 million annually amounts to $250,000 monthly. I can have three big mortgage payments on three big homes throughout the country. I can buy a car each month. I can eat out whenever I want to. It's not hard to budget for that at all.

What's not easy is coming into $100 million. Every single intelligent person on this message board would handle $100 million A LOT better than these moron athletes.

You better be prepared to live off less than that chief. Uncle Sam and the state want their cut, which of $3,000,000 assuming you are using interest or dividends, not selling equity is taxed at standard income rates, so there goes 35%, plus SSI, plus state tax, so there is 50% out the door up front.

Oh yeah, did you have that money with an wealth management firm like a Schwab or Jones or Edelman, whoops, there goes another 1-2% in asset management fees, plus the fees from the mutual fund managers where your money is actually invested, which is another 1% minimum.

Wow, your 3% return just turned into a loss, all for a measly $1.5M in net cash flow.

Is it any wonder "rich" people don't put their money in MMA's or CD's. There is no return, which is why most people of "significant" wealth, have personal investment advisors/staff to carefully invest in both securities and equity projects. Holding on to wealth is not as easy as it sounds.

I would be willing to bet if you took a random sampling of 1000 Americans, pulled them off the street and handed them a check for $100M; 75% would be broke in 10 years or less. Most people simply are not prepared to handle that kind of money.

[Schneed10]

Originally Posted by Mc2guy

You better be prepared to live off less than that chief. Uncle Sam and the state want their cut, which of $3,000,000 assuming you are using interest or dividends, not selling equity is taxed at standard income rates, so there goes 35%, plus SSI, plus state tax, so there is 50% out the door up front.

Oh yeah, did you have that money with an wealth management firm like a Schwab or Jones or Edelman, whoops, there goes another 1-2% in asset management fees, plus the fees from the mutual fund managers where your money is actually invested, which is another 1% minimum.

Wow, your 3% return just turned into a loss, all for a measly $1.5M in net cash flow.

Is it any wonder "rich" people don't put their money in MMA's or CD's. There is no return, which is why most people of "significant" wealth, have personal investment advisors/staff to carefully invest in both securities and equity projects. Holding on to wealth is not as easy as it sounds.

I would be willing to bet if you took a random sampling of 1000 Americans, pulled them off the street and handed them a check for $100M; 75% would be broke in 10 years or less. Most people simply are not prepared to handle that kind of money.

Investment ROIs on funds like money market or bonds are typically net of fees. And I was assuming gross income of $3 million, which even after taxes can support 3 houses and cars galore.

22% of America still approved of George Bush, even at his lowest approval point. There's a significant % who don't graduate from high school. I think it's fair to say a big portion of Americans aren't very intelligent.

I don't know about your 75% number, but I get your point. It's an indictment on the intelligence of the general populace more than anything.

If you piss through $100M in 10 years or less, I'm sorry, you ain't smart.

[Mc2guy]

The broader point I am trying to make is that your characterization of the broad populace as "not smart" is misguided and not a small amount arrogant. Financial management takes training, aptitude, patience, and foresight. To expect an average Joe off the street with no background to know how to manage large sums of money is a fool's errand, and it has nothing to do with intelligence. Just because I am trained in economics, finance and risk management, doesn't make me smart, it makes me educated...big difference.

Intelligence, by any definition, covers a broad swath of topical areas, with finance being but one. Einstein could not balance a checkbook, was he "dumb?" The fact that the vast majority of Americans are not Millionaires should be evidence enough that rich and intelligent are mutually exclusive.

[Schneed10]

When it comes down to it, this epitomizes the dumb meathead jock. It's a disgrace.

[MTK]

If you tossed a few mill at a bunch of us here, I'm sure more than a few would end up in the same boat as these athletes. People in every walk of life have money management issues no matter how much you make.

[Schneed10]

Originally Posted by Mattyk

If you tossed a few mill at a bunch of us here, I'm sure more than a few would end up in the same boat as these athletes. People in every walk of life have money management issues no matter how much you make.

I don't think the intelligent people here would.

You can't be both of reasonable intelligence AND prone to pissing away a few mill. Those are mutually exclusive.

Pissing away millions = stupid. Plain and simple.

That said, we do have stupid people on this site!

[freddyg12]

Originally Posted by Schneed10

I don't think the intelligent people here would.

You can't be both of reasonable intelligence AND prone to pissing away a few mill. Those are mutually exclusive.

Pissing away millions = stupid. Plain and simple.

That said, we do have stupid people on this site!

There's nothing "plain & simple" about this. While I agree w/your overall sentiment, that it is stupid to piss away millions, it certainly doesn't mean everyone that does so is stupid. There are so many variables that go into it.