Friday, September 18, 2015

Young NFL 'Veteran' Teaches that Income Minus Spending = Savings Available for Long Term Wealth Creation

We hear lots about professional athletes squandering millions, but at least some have their heads screwed on right when it comes to financial issues.

These spend-less-than-they-earn savers and investors are the smart players focused on the long term. Thus, they exercise good judgment during their limited playing years and while they are making lots of money. And from day one, these long term oriented common sense athletes spend far less than they earn and invest the remainder.

They travel the common sense financial route simply because they know that their financial needs will last for many decades after their 'game is gone' and they are no longer being 'paid to play.'

A good and healthy financial life lesson for one and all is contained in Why NFL player Ryan Broyles lives like he made $60,000 last year, and not $600,000:

"The NFL season started last week, and there’s a player who has been in the news since the preseason because of his relationship to money. This isn’t another tale of a player who made millions and lost it all. It’s about a player who has only been in the league for three years, but regardless of how many more years he plays, he is living a lifestyle that will keep him wealthy for the rest of his life.

Ryan Broyles, who was a wide receiver for the NFL’s Detroit Lions between 2012 and 2014, spoke . . . . about his spending habits, his work ethic and the importance of keeping a budget. . . .

The 27-year-old Broyles made over $2 million from the Lions between 2012 and now. But he keeps to a budget of $5,000 a month in total spending. Of course, that’s a lot of income for most people, but spending less than you earn, if you’re able to, is smart in any income bracket....

When he was a child in Oklahoma, his parents didn’t have a lot of extra money, but he said (his parents) taught him a strong work ethic. He mowed lawns when he was 8 years old to earn money to go on team basketball trips. In high school, he worked at an Albertson’s grocery store as a bag boy and worked as a referee for kids’ sports leagues. “I’ve always worked for my money, and seen it as something I needed to cherish and not take for granted,” he said.

Broyles played four seasons for the University of Oklahoma, and was the NCAA’s all-time leader in receptions when he left for the NFL. He was drafted in the second round by the Detroit Lions, and received a signing bonus of $1.15 million. His salary in 2012 was $390,000. It was $557,000 in 2013, $570,000 in 2014 and would have been $600,000 this year, but before the first game of the season he asked to be released from the team so he could try to play for a team on which he’d play a larger role.

Before leaving the Lions, they paid him a $50,000 workout bonus and a $181,614 reporting bonus that his agent had negotiated for him.

Broyles has had some bad luck with injuries so far in his career. He entered the NFL with a torn ACL in his left knee — an injury from a college game, then tore the ACL in his right knee during his rookie year. He then ruptured the Achilles tendon in his left leg in 2013. He is healthy now and working out and staying fit as he awaits word from his agent about which teams are in the market for a wide receiver.

At his rookie symposium, where the NFL prepares recently drafted players for the life of a professional athlete, he and his fellow players were told about the high number of athletes who eventually go bankrupt. He said a lot of players in the room were thinking about playing football, as he was, but he was also thinking about how to make his signing bonus last.

He said his situation was a little different from other players because of the ACL injury he sustained in college. “A switch went off in my head: An injury can end my career. That triggered me to think about life after football,” he said. . . .

His goal is to spend $60,000 a year, so his monthly budget is $5,000. The budget, which he says is post-tax money, is allocated like this: 50% on fixed expenses like mortgage and car payments; 30% on variable expenses like food and gas; 20% toward savings.

He read that a mortgage should be 28% or less of income, so his is $1,600 — about 30% of the $60,000 budget. . . .

He also has a Trailblazer that’s fully paid for. Add in insurance and a few other expenses, and he’s at a little over $4,000, which gives him some wiggle room in keeping his spending under $5,000 a month.

He and his wife, who have a 3-month-old son, live in a house they had built in Dallas in 2014.

After talking with Broyles for over an hour, it was clear that he and his wife make conscious choices about how they spend.

They eat out at restaurants just once or so a week. . . .

He pays his credit cards off every month."

And so on.

Summing Up

That's a great common sense life lesson from Ryan Broyles, a 27-year-old NFL 'veteran.'

The problem is that common sense isn't very commonly in use these days.

Nevertheless, and despite his youth and perhaps career ending injuries, Mr. Broyles has been diligent about planning and preparing for his family's future financial needs.

Now let's hope his ACL and Achilles injuries don't prematurely end his playing career.

But even if and when his playing days are over, Ryan Broyles will be able to take good care of his family's financially obligations.

Wouldn't it be nice if we all had our financial heads screwed on right from the teenage years forward?

That's my take.

Thanks. Bob.

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