Whatever You Do, Don’t Manage Your Money Like Many Professional Athletes

Photo by yoyo du 33

Photo by yoyo du 33

From Riches To Rags

Broke. Tapped Out.

Would it surprise you to know that some of the greatest athletes of the last 40+ years are now poorer than dirt?

I’m talking athletes like Mike Tyson, Johnny Unitas, Latrell Sprewell, Dorothy Hamill, Scottie Pippen, Evander Holyfield, and Michael Vick.

All of these famous, well accomplished athletes have made millions upon millions of dollars in their careers, and what do they have to show for it? Not a whole heck of a lot.

On a percentage basis, professional athletes are the WORST money managers.

I recently read the following statistics when it comes to professional athletes and money: Around 78% of NFL players and 60% of NBA players go broke within five years of leaving the field, according to a Sports Illustrated estimate made in 2009 (Source: UK Guardian).

Just look at the life of professional boxer Mike Tyson.

At the height of his career, here’s what Mike was able to accomplish. He was the undisputed heavyweight boxing champion of the world. He was the youngest man to ever win the WBC, WBA and IBF Heavyweight Titles. Finally, he was the first man to win 12 of his first 19 fights in the first round by KO. His estimated lifetime earnings range from $300-400 million.

Yes, you read that correctly, $300-400 million!

But then, the wheels came off and his life fell apart. Mike Tyson’s story reads like the Great American Tragedy: domestic violence, bad press interviews, the death of his father-figure trainer, a nasty divorce, a federal rape charge, felony possession of drugs, a DUI, and a bloody ear incident.

And, at one point after this whole mess, Tyson was worth less than $700. Now, how in the world do you go from $300 million all the way down to less than $700?

3 Ways To Go Broke Quickly As A Professional Athlete

When you investigate the lives of professional athletes who have gone from millions to bankruptcy, you can definitely see a pattern that led them down a bad financial path. If I had to pick three areas that led these athletes in the wrong direction, then here are the three I would list:

  1. Fast Living. Sex, drugs, and rock-n-roll. If you want to make millions of dollars and lose it all, then simply live fast and loose. In this way, you can lose your career faster, go to court, land your butt in jail, get divorced, and then pay millions in alimony and child support. Yeah, that’s pretty easy to do.
  2. Toy Gathering. Expensive luxury cars. Multi-million dollar homes. Massive yachts. These are the high dollar items that get many athletes in trouble. But, this is what happens though when young athletes go from financially poor to massively wealthy as soon as they sign on the dotted line of an incredible contract deal. They don’t know how to handle that kind of wealth. So, they run out and go on spending sprees. Plus, they end up spending more than they actually make on stuff that will sharply go down in value within a few short years.
  3. High Risk Investments. Getting investment advice from those people closest to you (family and friends) is always a bad idea. But, when you look at these riches-to-rags athletes, this is definitely what you observe – rich people taking investment advice from other people around them who are just plain money hungry. Bad restaurant deals are pretty typical with athletes. The restaurant business is a brutal industry and not a wise place to invest large sums of money.

Questions: Ok, so you’re not a wealthy athlete, but are you making some of the same mistakes as these athletes? Are you living a questionable lifestyle that will damage your finances at some point in the future? Are you buying a bunch of stuff that is dropping like a rock in value? Are you making any risky investments that will come back to bite you in a few years? What decisions do you need to make, today, in order to put yourself in a better financial position?

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Drawing A Line And Taking A Stand On Debt

Photo by TangoPango

Photo by TangoPango

The Line Must Be Drawn Here, This Far, No Farther

There is an incredibly, well-acted scene in the movie Star Trek First Contact, when Sloane (Alfre Woodard) is arguing with Captain Picard (Patrick Stewart) regarding his erratic behavior with the Borg (the feared alien race). She accuses him of acting out of revenge, much like Captain Ahab in the book Moby-Dick. Picard dismisses this revenge concept, explaining to Sloane the history of the Borg and the human race. Humans have had a continual series of retreats with these aliens. They have never really stood up to the Borg advances and taken a stand in battle.

Then, Picard passionately utters one of the best movie captain lines of all times, “The line must be drawn here, this far, no farther.” Picard meant business with the Borg this time around. He was drawing a line and taking a stand. There would be no retreat in this battle. It was “do or die” time in the captain’s mind.

You can check out a short 1:00 version of this scene, here:

Too Many Compromises, Too Many Retreats

Just like the alien Borg in the Star Trek Next Generation series, I believe, in life, we tend to allow people, financial companies, and governments to take over our lives, financially. We have sold our souls to the alien debt monster. We have made way too many compromises and way too many retreats when it comes to being in control of our money.

We have allowed people, circumstances, and credit card companies to sell us on the supposed benefits of using lines of credit to move us faster into the lifestyle we want.

We have allowed politicians and government agencies to convince us that the United States government debt load is not really as bad as it might look. They tell us that it’s all scalable and sustainable. Don’t worry about the numbers. Everything will be okay.

But, what has happened as a result of all these compromises and retreats on debt? American families are carrying an average debt load of over $15,000. This is a modest number, too; it’s probably way more than this when you factor in student loans . The United States government has a national debt load approaching $17 Trillion. There are hushed rumors that America is on the brink of financial collapse. Nothing good has come of debt in our governments, businesses, churches, or homes.

Drawing The Line On Debt

Once an individual, a married couple, a business man, a church leader, or a politician has that “aha moment” regarding the curse of debt, they tend to draw the line on debt.

Proverbs 22:7 tells us, “The rich rule over the poor, and the borrower is slave to the lender.”

With a little planning ahead, I believe most people could avoid the majority of debt problems, especially credit cards, car loans, and student loans. But, everybody gets in a hurry to raise their lifestyle. Gotta have the cool car, best college degree, and fancy house in the best neighborhood. Debt helps you get there faster on the front end, but it has a nasty bite on the back-end.

My advice is to draw a line in the sand on debt as early and as quickly as possible. Get a financial plan together and dig your way out of your debt mess before it’s too late and you’re forced into a bankruptcy or foreclosure.

Questions: Have you ever had that “aha moment” when you finally understood what debt was doing to you and your family? Have you ever drawn the official line on debt and said enough is enough? Are you working your debt snowball? Are you debt free?