How and Why Athletes Go Broke (2009) • Hacker News Board

Re: How and Why Athletes Go Broke (2009)

#181

Post by sowbug » Sat, Feb 10, 2018, 2:52 AM UTC

vostok wrote: post #136

baddox wrote: post #129

Earlier quoted context omitted.

I don’t think your perspective is very useful, because you seem to be assuming that all commercial transactions are zero-sum, since you describe both parties believing they are the only ones benefitting from the transaction. If I buy a $5 sandwich at a deli, it’s not the case that I think they’re suckers for valuing $5 more than the sandwich, and I doubt they think I’m a sucker for the inverse. Clearly, what’s really…

I'm more relying on my experience in trading with Goldman and other banks than I am assuming anything. I also don't see where I said anything about zero sum games.

FWIW, I read your comment the same zero-sum way. Perhaps it was because you used the term "the price" as if there's one price and any deviation from that value represents error.

If I have three shoes, I might correctly place little value on the extra, while a person with only one shoe might correctly place a lot of value on it. My selling the shoe for anything more than $0 is rational, and the other person's buying the shoe for anything less than the price of a full pair of shoes is also rational.

Re: How and Why Athletes Go Broke (2009)

#182

Post by pzxc » Sat, Feb 10, 2018, 2:57 AM UTC

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 believe you are completely incorrect, but fortunately the tide is turning. This article points out that 17 states now require personal finance education in high school, but 20 years ago only one state did (Illinois). http://www.businessinsider.com/high-schools-teaching-persona...

I certainly did not have it myself, and my K-12 years were from 1985-1998 in Indiana (public school). We had an accounting class. We had a government class that taught how a bill becomes a law and all that. We even had a home economics class where we learned how to make pillows and pigs-in-blankets. But no personal finance whatsoever, and certainly no economics until college.

I distinctly remember approximately 15 minutes of relevant personal finance education in all my primary school years, when one math teacher went off-curriculum at the end of a class to show us the magic of compound interest. (It blew my mind)

Everything else, from balancing a checkbook (no that wasn't taught in accounting) to filling out tax forms to how credit cards work was either taught by my parents or self-learned through social context.

You do realize how many poor college students have been taken in by credit card offers that used to be right on campus to sign up gullible freshmen, don't you? Fortunately I think that has fallen out of practice (it got enough publicity that colleges now realize it makes them look bad, I think). But for how many years have millions of 18-year-olds fallen into this kind of trap?

You think any of those people had personal finance classes? I seriously, seriously doubt that. I think the vast majority of Americans (until recently) did not have any such formal education on how to navigate money in the real world.

I don't have any idea the prevalence of this kind of education in other countries, though.

Re: How and Why Athletes Go Broke (2009)

#183

Post by WalterBright » Sat, Feb 10, 2018, 2:58 AM UTC

WalterBright wrote: post #126

kpil wrote: post #121

Earlier quoted context omitted.

If you put that kind of money in a savings account, the bank will call you twice a day until they have made you move the money into something more profitable (for them.)

Your bank will stop calling you if you threaten to move your account.

BTW, any sane business would put their best salesmen on dealing with their wealthier clients, and those salesmen will know that haranguing customers on the phone is hardly the best way to sell them.

Re: How and Why Athletes Go Broke (2009)

#184

Post by brewdad » Sat, Feb 10, 2018, 3:00 AM UTC

majormajor wrote: post #79

Kluny wrote: post #49

Earlier quoted context omitted.

Really, taking their adult autonomy away is the first step? How about education? This might be anecdotal, but I feel like we don't hear these athlete bankruptcy stories as often about hockey players. Why? Because they're all white, not black. Putting a kid through junior hockey is expensive and hockey players tend to come from privileged homes with much better financial education than young black football players. Th…

Seems pretty anecdotal. Hockey tends to get less press in general than baseball, so I know of a lot more broke white baseball players than broke white hockey players. There's some broke white golfers out there too, that's another money-requiring sport. Any broke Formula 1 race drivers or tennis players? That's where you'd really look for athletes coming from wealthy families, I think.

Anecdotally, I majored in economics at a large public school with a (at the time) national championship caliber hockey team. All of the players on that team that made it to the NHL attended the same classes I did. Most did come from privileged backgrounds but at least one grew up in the projects of Toronto. The coach strongly encouraged his players to take at least a few classes that would give them some financial grounding.

Re: How and Why Athletes Go Broke (2009)

#185

Post by wutbrodo » Sat, Feb 10, 2018, 3:04 AM UTC

ChuckMcM wrote: post #112

test6554 wrote: post #62

Earlier quoted context omitted.

It's not their responsibility though. The player could take a course on their own initiative.

Its true they could. I think of it like auto repair shops. Here is something really valuable to your daily life, and you want it taken care of properly, but how do you verify that the person you are talking to is honest and trustworthy? You could buy the factory service manual for your car and read it cover to cover, with digressions into the parts which are assumed to be known by anyone servicing a vehicle, and then…

> In my experience in the Bay area with people who suddenly have more wealth than their friends and family ever did, there are two ways that people seem to split. Either they start splendiforus spending because they are "rich" or the start calculating what sort of 'burn rate' they can support drawing down at a rate of anywhere between 2% and 10% of their net worth.

Wow that's depressing as hell. I've seen the spending side of things, but for a long time out of college I was making more money than anyone I knew and also spending towards the bottom of the distribution. I think I was 25 when my average return started covering my cost of living.

My family didn't have much money growing up (due to medical reasons) and my parents don't really know much about managing money, probably because they both come from upper-class backgrounds where family money just seemed "taken care of". So I have to confess I'm not really sure where the financial irresponsibility of the sorts discussed in this post comes from. I'm tempted to say that it's a simply matter of high time preference, but that's a really self-serving explanation, so I'm not quite satisfied.

Re: How and Why Athletes Go Broke (2009)

#186

Post by tim333 » Sat, Feb 10, 2018, 3:06 AM UTC

WalterBright wrote: post #105

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…

The best thing a person can do in such a situation is to put the money in a savings account, and then set about learning what to do. Nobody is going to have their best interests at heart but themselves. If you want to have money, you have to learn to manage it yourself. There's not really a choice about it. Also, hire a properly licensed CPA. Make sure to listen to his advice on taxes. Don't give him a financial ince…

Savings accounts don't do great over the long term. The safest thing is usually just to buy real estate as long as the prices aren't stupid.

Re: How and Why Athletes Go Broke (2009)

#187

Post by grahamburger » Sat, Feb 10, 2018, 3:11 AM UTC

pzxc wrote: post #182

grahamburger wrote: post #163

Earlier quoted context omitted.

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 believe you are completely incorrect, but fortunately the tide is turning. This article points out that 17 states now require personal finance education in high school, but 20 years ago only one state did (Illinois). http://www.businessinsider.com/high-schools-teaching-persona... I certainly did not have it myself, and my K-12 years were from 1985-1998 in Indiana (public school). We had an accounting class. We had…

Just because it's not required doesn't mean it didn't happen.

> You think any of those people had personal finance classes?

Yes, I'm almost certain some of them did. All the education in the world won't make good decisions for you when you once you set out in your own. We've been teaching kids sex ed for decades but we still have STDs and unwanted pregnancies.

You really never had any other math teachers assign problems related to compound interest, investments, credit cards, savings accounts? I was in school just 2 years later and these problems were very common in the math books we had.

Re: How and Why Athletes Go Broke (2009)

#188

Post by [deleted] » Sat, Feb 10, 2018, 3:15 AM UTC

tim333 wrote: post #186

WalterBright wrote: post #105

Earlier quoted context omitted.

The best thing a person can do in such a situation is to put the money in a savings account, and then set about learning what to do. Nobody is going to have their best interests at heart but themselves. If you want to have money, you have to learn to manage it yourself. There's not really a choice about it. Also, hire a properly licensed CPA. Make sure to listen to his advice on taxes. Don't give him a financial ince…

Savings accounts don't do great over the long term. The safest thing is usually just to buy real estate as long as the prices aren't stupid.

[deleted]

Re: How and Why Athletes Go Broke (2009)

#189

Post by brewdad » Sat, Feb 10, 2018, 3:16 AM UTC

talmand wrote: post #109

potta_coffee wrote: post #78

Earlier quoted context omitted.

Just about every high school has a football team, equipment is often paid for via fundraisers/carwashes etc if it's not in the budget. Hockey is generally not a high school sport, young people have to pay to participate and do so completely on their own time outside of school.

So it's just as possible as football, but the locals decide to not offer hockey in the same way? What if predominately black high schools in large cities started demanding hockey teams?

Football can be played/practiced on any large grass field in any climate any time of the year. Hockey requires an indoor facility with expensive chilling and maintenance equipment if you want to play outside of a few northern cities for a few months out of the year. Inner city Houston kids will never have access to hockey facilities in any significant numbers.

Re: How and Why Athletes Go Broke (2009)

#190

Post by closeparen » Sat, Feb 10, 2018, 3:17 AM UTC

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…

>everyone should have the right to basic understanding of personal finances and basic economics.

This is silly. Living within your means is like doing the dishes or the laundry. When someone "doesn't know how" or "needs to learn how" it's not that they're missing or failing to comprehend information. Even if they lack it, it's trivial to acquire. The relevant entities are discipline, habit, and values. This is not something you can learn in a lecture, only by doing.

If you're just clueless about personal finance, the worst thing that happens is you pay for tax prep services (something many of us do anyway to save time).

Going broke or getting up to your eyeballs in debt is either an arithmetic error (don't try and tell me schools don't teach subtraction), a failure of self-control (if your income should be enough for you situation), or a symptom of insufficient income for your situation. I'll venture a guess that most of the time, it's the latter.