Big Money Makes You Poor

Written by Claire Colvin

A quick windfall sounds like the answer to so many problems. But for some pro athletes, hitting the big time can put them right into the poor house.  I’m the first to admit I’m not a sports fan.  I’ve probably shared in a few “look at the dumb jocks” comments in my time, but even I was surprised when a friend pointed out these stats in an article on Sports Illustrated:

• By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

• Within five years of retirement, an estimated 60% of former NBA players are broke.

How is it possible with all of the money they had to start with? The stats for lottery winners are no better.  Large sums of money don’t seem to be very good for your bank account.  It’s so easy to point fingers, to quote “easy come, easy go” to be tempted to laugh at their misfortune.  But I wonder if you or I would do any better in their shoes?

Where did it go?

Think back to the first job you had after college.  Remember what you made? What your apartment looked like? Do you remember what you planned to do when the real money started rolling in?  How are you finances now?  Most of us, myself included are rich compared to our 21 year old selves.  Yes, we have more responsibilities now but we also have more resources.  So why didn’t things turn out quite the way we planned?

Economists will tell you that the vast majority of the time expenses increase along with, or sometimes a little ahead of increases in revenue.  When we get a raise often the first thought is “Sweet now I can spend more” rather than, “oh good, more for savings/ paying down debt/ investing for the future.”

I don’t know if it’s human nature or our own naïveté but so many of us are quick to reach forward. Debt reduction specialist Dan Foreman, writer of The Dollar Stretcher is always telling his subscribers that the exact opposite of this behavior is the way to financial freedom.

“Start with the bill with the highest interest rate and pay that off first,” he tells his readers.   “Once that is paid off, take the whole amount of the payment you were making and it apply it to the debt with next highest interest rate.”  Instead of taking the difference and spending it, stay at the same income to pay of debts faster.  It’s so simple on paper isn’t it? It gets so much more complicated at the mall (or on eBay if you prefer.)

Richer than you think

The current ad campaign for one of our local banks says “You’re richer than you think” that’s so true.   There are days when I don’t feel rich – especially when I’ve had a costly repair job because I ignored the warning signs – but the truth is, I am rich.  I ate three times today.  I own a car.  I have a place to live that’s clean and quiet and safe.  I have people who love me.   It’s a lot.   You don’t have to be  a pro ball player or a lottery winner to be wealthy. In fact, you might come out ahead if you’re not.

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5 Responses to “Big Money Makes You Poor”

  • Alice says:

    Yes, they do make compromises that I can never consider or make. It is harder for a rich man to enter the Kingdom of Heaven than for a camel to go through the eye of a needle. I see God has made things right for me, because I am right with God. I gave my finances over to God a long time ago, and He covers me in the blood of the lamb every single day. Right now, on a every level, I am better off in every way,than this person I know who once played football for the Miami Dolphins! I am happy and blessed and much better off than I know or even could have imagined! I have my family and my friends and God gives me the increase every single day. I thank-you my Jesus – Thy Kingdom come, thy will be done on earth as it is in Heaven – world without end Amen.” I am so grateful in Jesus’ name.

  • abdeerahim says:

    To whom it may concern,
    Well, my note is that once one talks about an issue, s/he thinks that what they do say does not fully reflects the notion inside. To say it differently, a look from one angle does not give you all the facets or views of the thing under scrutiny. This will doubtlessly be illustrated by the sober truth that saying that money is not everything requires admitting that it is something without which life will be absurd and ful of saddness. To cut the matter shot, the issue has no end as long as some of its facets are still hidden.
    looking forward hh…

  • John says:

    One of the major problems is taxes. Most of us live on the net paycheck after taxes. Anyone switching to getting their hands on the funds and then having to pay the federal government, or their state gov. later rarely sets enough aside. One of the sports guys who just went to Miami instead of NY saved an estimated million per year by choosing that southern state! This in addition to all the things you mentioned really makes an impact

  • Edwin Pacheco says:

    I agree with the article when it says that you are richer than you think. I would much rather be poor and have family than alot of money and no family. My wife and I have lost her step daughter,mother, my father , my grandfather, and my aunt and uncle, in the last 5 yrs. The house is one thing but my wife told me that the people cannot be replaced. Which is so true. And I think you really know who your friends are . I guess you see who true friends are when the money disappears ..

  • Tiffany says:

    The real problem is the mental of these young athletes. They surround themselves with yes-people who cater to all of their desires. I will say personally I do not feel sorry for the athletes. Too many before them have struggled with this very issue yet the athlete continue to fall for the same old trap.

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