According to a Sports Illustrated article, approximately 78% of NFL players are seriously struggling financially after two years of retirement (whether voluntarily or not). That same article compares the life and lifestyle of professional athletes to lottery winners. For the most part athletes have short careers that provide them with a significant sum of money in a short period of time. Most athletes have gone from high school to scholarship-funded college athletics to the pros. Most do not have any budgeting or accounting background. I think we can all look back and think what we would do if at age 20 someone suddenly gave us all the money, notoriety, and possessions we could want. The problem is that, for the most part, all three generally last only a few years.
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I am not saying that we should take pity on those that are able to squander upwards of $100 million. But, again, lessons can be learned from their tales. I heard once from a man in Brazil, "it is not what you make, it is what you spend." For many, this recent recession has caused a hard look at what are really necessities.
Many athletes ultimately have used bankruptcy to curb their losses. Some of these include Deuce McAllister (failed car business), Lawrence Taylor (drug habit), Jose Canseco (houses/cars), and Michael Vick (investments...). When an individual has a lot of money, the investments, the assets, and the falls just seem to be bigger. However, for the average American, the stakes can be a matter of being able to make a $1,000 rent payment or being able to keep a car that is threatened with repossession.
I keep thinking to myself, how are these guys squandering this money away so quickly. Don't they have someone helping them to know that their money will run out? Doesn't anyone let them know that their careers in athletics is a finite and somewhat defined period? Doesn't anyone advise them that buying 13 Ferraris is not part of a strong investment portfolio? The answer is not that they don't have the advice. It is that they are surrounded by other people and ideas that make them believe in a world without spending limits and where money will easily fall from the sky (broadcasting, music production, car washes).
After high school, while attending De Anza College I worked part time for a company where each executive had a very nice car. Part of my job was to take the cars to get washed, fill them up with gas, and take them to the repair shop if needed. After driving a brand new $100,000 Mercedes it was difficult to climb into my 1983 Nissan 200SX with screeching brakes. I wanted to live the executive life so I bought a car I simply could not afford. It took me four solid years to make up for that mistake. To this day, I still drive the car I traded for after the mistake car (my wife always seems to get the nicer cars).
The main lesson I take away from the financial plight of the professional athlete is that the old saying is still true. Keep costs below pay. Save for a rainy day because the weather can change quickly. Lastly, although it is sometimes difficult, try to keep up with the Joneses. Just because someone has the new 60 inch 3D HDTV doesn't mean it is the best use of money. Financial freedom starts with responsible decisions.
Also, find a good, responsible person that you can discuss your financial situation and goals with on a regular basis. A financial advisor or accountant can help make sure you are on the right path. In case you do find yourself in a sinking path, bankruptcy may be the way to keep you afloat. Don't look at it as your last option. Take the time to consider all options before they are chosen for you.
If you are having financial struggles currently, contact the Henshaw Law Office today to see what options you may have.
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