NBA former 1st round pick in the poor house

[Abu3baid]

A former NBA player was working at McDonald's 9 years after being a first-round draft pick Full Story Here

Quote:

Harrison played four years for Indiana and made slightly more than $4.4 million. However, the 7-footer struggled in the NBA, and after averaging just 5.9 points and 3.5 rebounds per game in his first two seasons, his playing time dropped.

We all have made decisions in our life that we regret, and usually the best course of action is to just pick up where everything has turned ugly and move forward and hope to make better decisions in the future.

This might be the case for Harrison, who was basically on top of the world drafter in the 1st round of the NBA.  This is a dream of many with only a few achieving it, and at 4.4M over a 4 year period it is not too shabby at 1.1M per year, and after taxes lets just say it's around 750K per year.

Did he take care of his parents and all of his family and some of his friends?  Maybe.  Was he just too young to run into that kind of money?  Maybe.  Can he get his life back together?  I hope so.

His plight should be a lesson for future professional sports hopefuls (among others, as this is not the first time I have read about this). I propose the following for them.

1.  Don't live like the super rich right away. (i.e. don't buy a 300K car, 3.2M house) because if you ever had to work another job you will not be able to afford the loan you are taking.

2.  Don't give out money to your family and friends like you have unlimited resources.. give them money for sure, but they need to know that you aren't going to fulfill their desires right away

3.  Finish college asap

4.  Keep good company, and don't do drugs

5.  Try and limit the amount of kids out of wedlock as this will seriously cost you money, plus it is not healthy for society

6.  Hire a financial consultant

I'm sure there are other good suggestions out there, these are just the ones I could think of for now.

[Al B Tross]

All good suggestions. I'd move #6 to #1 (or perhaps #2 if you'd consider adding "Pick on person in whom you have 100% trust to serve as an advisor/mentor.")

[Shindig]

This is one of those topics that sets me off sometimes; rant ahead. It's a very common thing among anyone who grew up poor and comes into money, whether it's through professional sports, the lottery, winning a lawsuit, or whatever. A common thought process -- and totally understandable, given the circumstance -- for folks is that "saving" isn't really in the budget, because it was hard enough paying for necessities and an occasional want out of the old regularly incoming amount. Despite the NFL and NBA having pretty good employer retirement plans (I'm sure other sports leagues do, too), the participation rate is very low (and, I suspect, even lower among those who would best benefit from it). And very few people -- of any income level -- can process that finance is different by scales. Yes, the budget priorities when you live paycheck-to-paycheck are different from someone making above-median income. See also the number of people who try to apply household budgeting concepts to the national level. On top of it, especially with professional sports, it's hard to keep the salary secret from anyone you'd prefer to do so. And now you have plenty of friends you don't remember and family you've never met asking for money -- and who would be more than happy to tell a tabloid that you're ignoring your friends and family now that you're rich (good luck convincing anyone this isn't someone you'd associate with if you were poor, either). This isn't limited to athletes who grew up poor, either: some relative Tiger hadn't heard of (or, if he had heard of, didn't know) asked for a house to be bought for him, and went to the press when it was refused. At least in our cases, there isn't much of a consequence to ignoring these requests, if they even happen. Someone might make an angry post on The Facebook, directed at you, and the responses (plus the post itself) really only help tell you who needs to be un-friended. There's the added problem that friends and family aren't just asking for handouts, but come in and ask for money to "invest" in various schemes -- hey, I'm going to open this restaurant. You've had my cooking; it'll be a huge success and will bring you money for years to come (spoiler: this rarely succeeds, regardless of the owner's cooking ability). Or hey, lend me some money to buy Apple stock (or whatever's hot at the moment), I'll pay you back and we'll both profit from it (spoiler: borrowing money to buy stock is rarely a good idea; lending it to someone for that purpose even more rarely). Or get me started flipping houses. Or whatever other "get rich quick" schemes folks come up with, and now see a way to easily get the money to bankroll the start of it. Or the indirect loaning of money, often not something the athlete is aware is happening. I wonder how much athlete (and other newly rich) debt is co-signing on loans. For those unaware of this practice, when a lending institution has determined that someone is unlikely to repay a loan, they don't loan them the money. One way they can try to get the loan anyway is to convince you to take out the loan instead, on their behalf -- essentially, by co-signing, you're telling the bank that you'll pay off the debt if the other person doesn't. Why you should think you know more than a bank about who is or is not a good credit risk is beyond me. As to your points. 1&2 should be obvious. And while I think college is a great thing for many people, many of the athletes who can make it to the show -- and a good number of those who don't -- haven't really gotten through the prerequisites to college. Of course, their schedules are busier than most other students, but the bank and employers don't (and shouldn't) take this to account. Ultimately, if they aren't staying in the big leagues, it would be great if they went back, got an education with the money they saved, and then were able to support themselves. 4 would be nice, but it can be hard to do. 5 is the one part of the mentality -- athlete or otherwise -- I just don't get. Unprotected sex is such a turn-off to me, and when I hear these stories, I react as if it were on purpose before I remember that these are accidental for lots of these guys. And even then, I have trouble thinking of a child conceived by unprotected sex as being fully accidental. Even in bad schools, people know how reproduction works, right? It's #6 that's going to get the rant from me. Finding someone to give financial advice is difficult enough for anyone, but for someone struggling with points 1&2, I don't even see how it's going to happen. The term "financial advisor" is so incredibly broad, and the set of things that someone calling themselves that can legally suggest to you is absurd to me. Essentially, if you're going to hire someone to advise you financially, you need to be absolutely certain that they're both competent (which, if you could do, you might not need to hire one in the first place) and that they aren't a salesman with a different job title. The number of times I've heard that someone hired a financial advisor who proceeded to sell them so-called Whole Life Insurance, or told them to [i]not[/i] use their workplace retirement plan and instead go with some other investment, or who sold them mutual funds with a 5% front-end load and a usurious expense ratio. I suspect the phrase "fiduciary duty" isn't in the vocabulary of too many people in the population at large, much less in any given subset that would need the advice. One of my favorite stories about Carson Palmer -- a star professional athlete, although not one who grew up poor -- is that he allegedly sets a budget of $100,000 for himself each year, saving the rest of his income so that when his professional career is over. Of course, a budget that high is far more than most of us will have, but it's far less than he could spend if he were more myopic. But other than that, I have no opinion on the matter.

[Abu3baid]

@Shindig nice post! Your comments on #6 is the exact reason I didn't make it number 1.. It is difficult enough for normal people finding good financial advisors, and I stand to believe that at the NBA level the scammers are a dime a dozen. However, I think if you have a good hold of #1-5 then you will most likely put yourself in a good position to make the right decision. ie if you get through school maybe you'll learn a thing or two about business and finance? Or maybe if you have good people around you you will get good advice on advisors they are using for example? I actually wonder if the NBA has specific advisors that have already been vetted over the years who they work with and can suggest some of them to you as a rookie even? I agree about the family part and not being able to say no, but these guys have to really know who their real friends are vs those trying to make a buck off of them. Good post!