Why do boxers go broke? Part IV of the wide-ranging interview

Yes

 

Still you think this guy is giving great advices?

How about instead of putting your moneys in chest and dividing it each month for rest of your life.
Just put them bank and live with your interest

Don’t know how anyone from finance field, can think this a was good article.

 

You make a really good point. Also boxers can become trainers or commentators or maybe promote after they retire, but he's not trying to be exact in his interview.

It is widespread a lot of boxers go broke after they retire and same with football players too. He doesn't get exact figures, but he does make good points.
Like how a boxer can get 4 million in a few years and think they're rich and get a mortage for 20 years and then end up broke.

 

True he got some points in there and basic message is right. Keep track of your money and spend wisely.
But some of his calculations and advices are just weird

Biggest mistake athletes make is that they just spend, without thinking about their money.
Then just someday when you aren’t getting any more money, you realize that you haven’t saved nearly enough to sustain your lifestyle.

It’s about using it smartly and keeping track of your own finance. That is what many athletes or lottery winners fail to do and just think they can spend and spend, without keeping track of their finance.
That is also why many of athletes get massive back taxes.
They don’t keep track of their own finance.

 

That's not the main point of the article. It's obvious you can't go broke if you don't live beyond your means.

Nobody will go broke if they keep living in a 450 sqft apartment, pay $450 rent a month and keep driving a 1992 Hyundai while they have $3 million in the bank.

The "trainer" (whoever he is) points out how people how make their first million think this is just the beginning and the money will just keep on coming. So they overspend, buying a $2 million house (which comes with property taxes). And end up being broke once the money stream abruptly ends.

I especially like his idea of comparing the boxing income over one's prime years vs. the lifetime income of a median income worker, working from age 20 to age 65.

Regarding your idea of putting $4 million in the bank and earning interest on it: You have to pay taxes on the interest. If you make 4% on $4m that's 160,000 in gross income. Deduct taxes, health insurance and other deductions and you're living on a net income of $80-90k net. All the while your principal $4 million is subject to inflation! Inflation is eating away at your capital stock each year. Depending on where you live in the US (L.A. vs. some cheap rural place) this can mean a very middle class lifestyle.

And that's exactly what the "trainer" is telling his boxers. Live within your means. Just because you made a million dollar purse in your last fight doesn't mean you can live it up like a millionaire on MTV cribs.

 

Exspecially that comparison is ******ed, because him ignoring interest income, makes whole calculation wortheless.

 

I dont care what kind of rough life you've had prior to becoming a succesfull rich boxer. If you've made over $100mil throughout your career and end up poor, you're an idiot and deserve to be poor!

 

Exactly! Not sure why someone would buy a house in cash if they can make more on the interest on that money. As the saying goes " y use your own money if u can use someone else's"

 

Thanks for this thread.

 

uhmm.. You never heard of the hundred cases of professional athletes that went broke with your genius assumption?

They buy a million dollar home on a mortgage, pay $25k a month based on last year's income. Then their contract runs out, the money stream is gone and they're broke with a mortgage on their neck. Depending on the state law they're subject to they can or can not walk away from the mortgage.

For a guy with zero financial education buying full cash is the smartest move they can make.

I bought my house w/ 100% cash, I guess I'm stupid :deal

 

I don't understand the "50% taxes" part.

If a boxer earns $600,000 and pays 50% of taxes, and after that 70% for his crew, he doesn't earn $144,000 but more like $90,000.

:huh

 

His points make a lot of sense and go beyond "boxerz are dumbZ waddoyo expect lul".

 

fighters spend 70% of their earnings on managers, trainers etc? **** that lol.

 

Uh. Get 7% on ur money and pay 4% on the loan. Ur up 3% on the deal. I think u took what I was saying to literally. If u gain $2000 a month on interest and ur mortgage is 1200, u keep ur money and let someone else pay the mortgage using the interest on ur money. When did I say they are supposed to buy a million dollar home?

There's no need to be a smartass.

In ur case, u could have kept the cash that u used for ur house and let the interest on that money pay the mortgage. When I said to use someone else's money, I meant use the interest paid to u to pay the mortgage.

 

I guess is like:
20% to manager, 10% to trainers & staff
Then 30% to taxes

With that alone he only gets 490,000 out of every 1mil