Has Anyone Seen My $200 Million?

by Jason Dieter 24. May 2012

HelmetWhat's the first thing that comes to mind when you hear these names: Mike Tyson, Johnny Unitas or Lawrence Taylor? Or how about Evander Holyfield, Latrell Sprewell or Warren Sapp?

If you said that they are famous athletes of past generations, you would be right. If you said a few of them are Hall of Fame athletes in their respective sports, you would also be right. However, in light of what you are about to learn, the correct answer would be, they are all athletes who have filed for bankruptcy at some point in their lives. With that being said, the first question we 9-to-5-ers ask ourselves is, how is it possible that a person with all this fame and fortune can speed through his money as quickly as he gets up and down the court, throws a punch or runs the bases? Well, in the case of the athletes noted above, the reasons can be too numerous to mention.

In the meantime, let's consider a few facts:

  • 78% of former NFL players go bankrupt or are under financial stress by the time they have been retired for two years.
  • Within five years of retirement, 60% of former NBA players are broke.
  • Scottie Pippen, an NBA seven-time All-Star and Hall of Famer, made $120MM at one point in his career, only to retire $9MM in debt.
  • Mike Tyson made over $400MM in his prime only to lose it all in a nasty divorce, a Federal rape charge, felony drug possession and several DUI’s, among other not-so-memorable times.

Now, let’s take a step back and explore why these athletes, who often earn millions of dollars in salary and signing bonuses, get to the point of “losing it all” (or in some cases, most of it). Truth is, there can be many reasons, and they can intertwine.Big Spender

Let’s explore a few possibilities below:

  • Athletes often come from less-than-fortunate financial backgrounds and have no experience in handling the “big” money that is thrown their way at such a young age, nor do they take the time to educate themselves on becoming financially savvy. Additionally, they don’t understand the concept of investing their money for retirement.
  • Athletes make the mistake of thinking their careers will last forever, hence being employed longer. According to the NFL Players Association, the average career of an NFL player lasts only 3.3 years due in part to injury, retirement or getting cut.
  • Living lavish lifestyles. Pro athletes’ fortunes may dwindle down quickly because of expensive houses, cars, jewelry etc. High priced wardrobes, gambling, hanging out in night clubs and drugs can be contributing factors as well.
  • Athletes have also been linked to making bad investment decisions. Athletes may be lured into putting their money into tangible investment opportunities such as inventions, nightclubs, car dealerships and the like. These same athletes are considered financial prey to disreputable people who see them as easy targets.
  • In some cases, athletes will hire the wrong people as financial advisors to manage their money. Typically they will compound the problem by trusting that same person way too much.

So what lessons can we learn through the misfortunes and actions of the pro-athlete? For starters, it’s a fact that most athletes will not earn the same amount of money in post retirement as they do during their playing days. Hence, their highest earning period is often very short. However, no matter how much money we make or how old we are, we all need to save for retirement, emergencies and times in life when our income of tomorrow isn’t as much as it is today. In short, save money during the prosperous times to be ready for the lean times.

Also, before you hire a money manager or advisor, ask some basic questions and do your research. Is the person certified by a national accrediting organization or firm? Have there been complaints or lawsuits filed against him or her? Do they come with strong references? Most importantly, trust your gut. If they seem “shady”, they probably are.

Don’t invest your money blindly. Avoid risky investments or what may appear to be a risky investment. Remember, investing isn’t the same thing as gambling. You don’t want to be too risky with your money, and there is absolutely no such thing as a “can’t miss” investment.

It’s certainly okay to be loyal and generous to your family and friends. Besides, where would any of us be without them? However, it should not cost you your own personal long-term financial security. Don’t carry more than you can bear. Take care of yourself first and your immediate family second. After that, be careful, and use your judgment before you extend your financial security among others.

(Sources: Sports Illustrated, Kidzworld)

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Traveling Tips: keep the costs low and the fun level high

by Renee' Anderson 21. May 2012

Piggy Bank on Beach

Coming from a large family, vacation budgeting is something I learned young. Vacationing is about spending time with the people we appreciate, not about blowing all your cash in just a few short days. There’s no reason to break the bank over your summer vacation. If you’re traveling with people you enjoy, there’s a cost saver right there. A lot of your entertainment will simply involve playing games, laughing, and unwinding with good company…that’s all FREE! For example, instead of going to an amusement/water park for the day or going out on the town for the night, make up your own activities.

Here are a couple ideas to get your started:

Olympic Games

Set up teams before the trip to give everyone time to prepare with team names, uniforms, strategies, etc. There are plenty of games that can include everyone in a large group (relay-style events, timed puzzles, team sports). Be creative and prepared with a master score board (a big piece of poster board works well) and all of the props you will need.

Murder Mystery Night

Playing a murder mystery game is a great form of free entertainment. You can find guides online that are good for groups of various ages and sizes. Check out http://www.host-party.com/Home/Default.

And a few more things to think about...

1) Set a realistic budget and don’t go over it!

2) If you’re traveling with a group, share a room or house. It’s generally cheaper to get one big house that shares common space but has enough bedrooms for everyone. This way, you can afford a nice house for less money; just make sure you have your own personal space to escape to if necessary (like when you’ve had enough of crazy Aunt Susie for the day)!

3) Eat in! Bring as many non-perishable food items that you can pack, and then hit the grocery store when you arrive at your destination. If you are traveling with a group, take turns cooking, and have each person cook their “specialty” so you’ll get a unique, delicious meal each night. If there is a nice restaurant that you just HAVE to check out, go for lunch instead of dinner. Lunch will be less expensive, but you still get to experience the restaurant.

4) Look for coupons, either in an Entertainment book or online. Try doing Google searches and see what comes up for your destination. Following that same train of thought, if you’re staying in a hotel, ask for promotions and/or a room upgrade!

5) If you are flying somewhere, travel during low season and book early. This could save you hundreds of dollars.

Last but not least, don’t be uptight about your money while you’re on vacation. Stick to your plan, but enjoy yourself! It’s a VACATION!

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To Buy Facebook or Not to Buy Facebook? That is the question...

by Marylove Moy 18. May 2012

Facebook IconHistory was made today with the roughly $16 billion dollar IPO of Facebook (FB).

Is it another Apple? Microsoft? Google? Absolutely…..

So, should I buy it today?

I think only the gutsiest of individuals should buy it today, just because there is so much hype in the stock that it may well skyrocket initially and then trend down over the coming weeks.  I may be very well wrong (I frequently am). However brilliant Zuckerberg is, he is now at the helm of a publicly traded company; he is going to face shareholders and analysts who will question and criticize his decisions. They can be a tough bunch. Zuckerberg is no longer operating in a black box.

A safer bet would be to buy either a mutual fund, which focuses on social networking, or a broader based technology fund that in all likelihood will buy it. Mutual funds offer the diversification that can absorb more efficiently erratic stock price swings than holding a stock outright.

Remember Enron? MCI Communications? Woe betide to the poor individual who held these stocks outright; their personal wealth would have been more protected if they had held these shares indirectly in a mutual fund.

Don’t get me wrong…if anyone can chart the future and shape it, I believe it is Mark Zuckerberg and FB; I just think he will need some time first.

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