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How and Why Athletes Go Broke (2009)

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Re: How and Why Athletes Go Broke (2009)

#161

Post by mobilefriendly »

lazerpants wrote: post #72
efa wrote: post #69

I don't know all the tax implications around huge salaries like these, but every time I read one of these stories I always wonder why they don't just stick their money in t-bills or CDs. Something completely risk free that will get a modest return. If you have 20 million in the bank do you really need to invest in high risk stuff to try to double your money? The problem is everyone they've ever known comes out of the…

This is why there should probably be an early age pension system for these athletes. The major sports leagues could certainly afford it (and it would lower players upfront salaries some).

All the US pro sports have generous pension programs.

Re: How and Why Athletes Go Broke (2009)

#162

Post by QittyQat »

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

I have a very vivid recollection of 8th Grade Civics units on personal finance, budgeting, and tax management. In this unit we were awarded a salary through a lottery system and had to learn to live within the means of our salary. Students would pair up and find homes to live in by reviewing ads in the newspaper. We would have to learn to set aside money for savings, groceries, and for fun. We also learned how to invest in the stock market and also filled out the paperwork to file 1040EZ tax returns.

This was all in 8th grade public school in Virginia around 2001. I thought this was normal, and it saddens me to realize the inequality in education across the nation.

Re: How and Why Athletes Go Broke (2009)

#163

Post by grahamburger »

QittyQat wrote: post #162
pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

I have a very vivid recollection of 8th Grade Civics units on personal finance, budgeting, and tax management. In this unit we were awarded a salary through a lottery system and had to learn to live within the means of our salary. Students would pair up and find homes to live in by reviewing ads in the newspaper. We would have to learn to set aside money for savings, groceries, and for fun. We also learned how to inv…

I'm pretty sure your experience is pretty normal for the US. Lots of people forget that they had several classes that taught basics of personal finance, few people actually didn't have those classes.

Re: How and Why Athletes Go Broke (2009)

#164

Post by ACow_Adonis »

jstanley wrote: post #17
ggm wrote: post #13

In many situations, people who are identified as being at risk have somebody else placed in control of the finance, by court action. Brain injury patients for instance. Hmmm.. hang on.. whats the major risk factor in the football circuit again? Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some…

> Seriously: the recruitment of minors for major league with giant cash benefits should require them to sign a consent form for arms-length management of their capital for some time period, and give them the income stream not the capital. No, thanks. It's their money, let them have it. If they want it to be invested on their behalf, that's fine. But it should be their choice. How would you like it if your employer to…

In my country, that's called superannuation.

You get some choice where its invested, but in short, you can't spend it on anything that benefits you materially here and now. 9.5% minimum is taken out of practically every non-casual working position.

In general, it's defined contribution, not defined payment (barring some of the older pension plans which are going to have some tough decisions ahead).

Flaws of the system aside, I'm generally in favor of the idea myself.

Re: How and Why Athletes Go Broke (2009)

#165

Post by magnetic »

hinkley wrote: post #138
ChuckMcM wrote: post #55

Earlier quoted context omitted.

Agreed, look at it from their perspective. They haven't been around a lot of money before, they don't have a lot of friends who have been around a lot of money either, so they don't really know even what questions to ask to understand the people who are arguing to be their financial advisors. Perhaps major league sports would do well to help train their athletes in the basics of financial management in order to help…

It is sobering math to figure out that a million dollars is only about $25k a year for the rest of your life. A million bucks will make the rest of your life easier as long as you don't 1) spend it all and 2) don't make yourself unemployable (injury, bad PR, etc)

How are you computing that?

Perhaps you are forgetting that an investment still grows while you are withdrawing from it?

Here is a calculator that helps you compute how much you can actually pull from it: https://www.money-zine.com/calculators/retirement-calculator...

If you set the initial variables to:

- Retirement age 40 - Life expectancy 83 - Annual Return 7% (typical of stocks) - zero out everything else (no pension, no social security)

You get about ~$74K a year.

Even if you started retiring at age 25, you'd still be pulling ~$71K a year.

Re: How and Why Athletes Go Broke (2009)

#166

Post by civilitty »

screye wrote: post #54
MrFantastic wrote: post #41

Earlier quoted context omitted.

The education system depends on student loans. Financial education would make people question the value of a college education.

College education pays back multiple fold though. Instate tuition for top public universities is not that high, and helps you gain skills and even more importantly build a network that is certainly worth the investment. Sure, there are many soft fields where job opportunities are sparse. But, a degree @ state tuition is certainly worth it for a good number of majors.

You're just making the GP's point for them. If you're focusing on public universities and ignoring private universities with their $30-40k/year tuition (federally subsidized, of course), you're already questioning the value of college education. Most students are not even taught to question the common assumption that expensive private universities are better than low cost public ones.

Re: How and Why Athletes Go Broke (2009)

#167

Post by cm2012 »

grahamburger wrote: post #163
QittyQat wrote: post #162

Earlier quoted context omitted.

I have a very vivid recollection of 8th Grade Civics units on personal finance, budgeting, and tax management. In this unit we were awarded a salary through a lottery system and had to learn to live within the means of our salary. Students would pair up and find homes to live in by reviewing ads in the newspaper. We would have to learn to set aside money for savings, groceries, and for fun. We also learned how to inv…

I'm pretty sure your experience is pretty normal for the US. Lots of people forget that they had several classes that taught basics of personal finance, few people actually didn't have those classes.

I didnt

Re: How and Why Athletes Go Broke (2009)

#168

Post by mattm »

Baeocystin wrote: post #140
pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

Do you have any book recommendations? I have some younger relatives graduating from college soon, and although they are bright, I worry about their financial sense. I talk to them regularly, but something more concrete would likely also help.

"Fail Safe Investing: Lifelong Financial Security in 30 Minutes" by Harry Browne

"The richest man in Babylon" was also a good read for me early on. It's told in a story format.

"Your money or your life" is also good for the principles although it's a little outdated.

Re: How and Why Athletes Go Broke (2009)

#169

Post by mattm »

mobilefriendly wrote: post #153
Spooky23 wrote: post #143

Earlier quoted context omitted.

That’s a unique spin. It’s not about infantilizing. Hockey players also make a lot less, with fewer big payouts and thus fewer big flameouts. Personally, I think the unions should help guide these guys. New money leading to bankruptcy is a universal story, not unique to any race. Athletes are particularly vulnerable to scammers, as they spend a lot of time isolated by coaches with a small group of people. Self dealin…

Hockey players make more than football players.

And the average NHL career is only a few years like the NFL.

Re: How and Why Athletes Go Broke (2009)

#170

Post by Spooky23 »

mobilefriendly wrote: post #158
Spooky23 wrote: post #150

Earlier quoted context omitted.

Social Security is perfectly sustainable. The problem with is the demographic bump of the baby boom and use of it as a political football during the 60s and 70s when benefits were spun up, followed by the congress reducing funding by capping payments.

Payments have always been capped (maximum taxable earnings), your history is factually wrong. Congress spends the surplus but the only actions ever taken by Congress on the revenue side of Social Security have been to increase taxes paid into the system.

The cap didn’t increase with inflation, which impacted collections.

In effect the payroll tax was spun up in the 80s and used as government revenue via special bonds. But as the surplus as waned due to increased payments, the cap didn’t move and the government’s spending power to bridge the gap was reduced by our post-2001 perpetual war.

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