On January 31, 2011, CNBC.com reported in “NFL Players Gone Bankrupt” that dozens of football players can’t seem to manage their millions. Despite their median $900,000 annual salaries, an estimated 80% of NFL players squander their fortunes in the years following their retirement. In 2010, former Pittsburgh Steeler lineman Dermontti Dawson filed bankruptcy, along with New York Jets backup QB Mark Brunell.
In most instances, the players made bad investment choices, spent frivolously, became victims to predatory financial advisors or let friends or family take care of the finances. Professional athletes are inundated with investment pitches. Overspending, greed, and high salaries can make money disappear for anyone. Bankruptcy can happen to anyone faced with overnight wealth. Players have just a few years to earn enough to last a lifetime. Sports talent depends on youth. Sometimes when people make a lot of money too quick, they do not realize that there will be a time in the future, when they can no longer command the high salaries or find the job opportunities. Being young is not forever, and as someone gets old, the competition mounts with younger players. Players are also pressured to lead a luxury lifestyle and have little free time to focus on finances. Their demanding professional sports require them to travel and practice. Because they are busy all the time, they think they will never run out of work.
For the ordinary person to learn from NFL players who have lost fortunes, stay away from bankruptcy and leave money for family or the future by researching all investments and not overspend when times are good. Every financial institution wants a person’s money. When a person has done research on the best choice, do not let an advisor persuade differently. Even a simple decision to close a matured CD can end up in financial losses when a banker convinces someone to keep money at an institution longer for a few percentage increases. It is the power of greed. Earning a few dollars or even thousands of dollars will not mean much when the investment ends up a loss. The brain organizes information in a way that leads to errors in finances when it is too concerned with outside news for immediate satisfaction rather than inside gut to underestimate skill.
When a person makes a bad investment choice, s/he should accept a temporary loss to redeploy capital. Sophisticated people end up in bankruptcy because they take on more risk to avoid pain. The need to celebrate joy immediately becomes more significant than the risk.
To stay away from bad investment choices that lead to bankruptcy in New York, take time to research and not let human behavior take over. Before filing bankruptcy, consult an experienced New York bankruptcy attorney.