How Do So-Rich Athletes End Up So Broke?

Posted on October 21, 2011

By Rodney Anderson
At this moment, the world of pro sports is giving us so much enjoyment (go, Rangers!) and so much foolishness (c’mon, NBA!) Before our attention turns fully back to the World Series … According to a presentation made by the NBA players union to its own members a few years ago, 60 percent of NBA athletes are broke within five years of their post-basketball lives. This is newsworthy right now because of the NBA lockout … but it’s instructive for all of us as we try to handle our money wisely.
With guidance from an article on MintLife – and with my own personal experience dealing with professional athletes and their finances – we see the guys making the same mistakes over and over again. For instance:

*The ‘Keeping Up With The Joneses’ Mindset: You don’t have to be a millionaire to make this mistake; many of us do this despite much more modest incomes. This isn’t just about whether Scottie Pippen (who eventually filed for bankruptcy) needed his own corporate jet; this is also about whether you need the fancy gym membership or the custom wheels on your car or yet another pair of shoes. For most of us, being “glamorous’’ doesn’t pay off.
 *The Notion That Investments Must Be ‘Fun’ Or ‘Sexy’: In so many cases, athletes want to invest in something “cool.’’ They want their names on a restaurant, for instance. There is nothing sexy about a smart, conservative savings plan. But for most of us, that is the best option. And if we educate our young people as to the benefits of investing that way, they will have a lifetime of savings. An IRA that is opened in a person’s early 20’s might just look pretty “sexy’’ to him some 40 years later.
 *The Use Of Buddies For Advice: How many of us have given financial advice, legal advice, mortgage advise, to a friend or family member … even if we weren’t quite qualified to do so? Athletes frequently make this mistake, opting to lean on an old coach or some pal from the neighborhood to oversee their financial decisions. Especially true in their cases because they can afford the finest guidance: Seek out the finest guidance. For the rest of us? The Rodney Anderson office fields thousands of phone calls every month from families who need financial advice as it relates to home loans, insurance, refinancing and the like. I’ve got 27 years of experience and I am one phone call away at 1-800-EXPRESS.
 *The General Lack of Preparedness: OK, a pro athlete sometimes gets his first massive contract in his teens. He’s short on education and short on preparation and maybe those qualify as his excuses. But most American parents demand that their kids get A’s and B’s in school and yet despite our age and experience and educations, we don’t get A’s and B’s with our own finances. What’s our excuse?
MintLife lists an assortment of athletes who have gone bankrupt … A sampling:
*Lenny Dykstra, Baseball … Under $60 Million … among the alleged issues: Gambling.
*Mark Brunell, NFL … $60 million to $80 Million
*Kenny Anderson, NBA … $60 million to $80 Million
*Derrick Coleman, NBA … $80 Million to 100 Million … Spent most of his money improving Detroit neighborhoods and then came the decline in the real-estate marke there.
*Mike Tyson, Boxing … Over $100 Million
*Scott Pippen, NBA … Over $100 Million
*Antoine Walker, the ex-Dallas Mavericks player … Over $100 Million … Just signed to play in the D-League for the Idaho Stampede for $25,000 a year.

As one of those gossip magazines you see at the supermarket checkout stands likes to say, “The Stars Are Just Like Us! And they are in the sense that too often they fail to spend within their means, they fail to educate themselves about their money, and they fail to seek sound advice. When it comes to their homes, and to yours – the largest purchase most of us will ever make – please seek that sound advice and call us at 1-800 EXPRESS. Because in this area, you don’t want to be “just like them.’’

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How You Can Find Yourself Despite ‘The Lost Decade’

Posted on October 17, 2011

By Rodney Anderson

There is little sense in bemoaning the fact that home prices have dropped in the last few years – dropped so drastically that the Wall Street Journal is calling it “The Lost Decade.’’ There is, however, sense in learning from our recent history … and then working, as a homeowner, to benefit from it.

My Quick Six on the subject of The Lost Decade in home ownership:

1 The headline in the Wall Street Journal reads, “Home forecast calls for pain.’’ And it goes on to say that the “pain’’ might continue until 2015.

The lead paragraph from the story: “Economists, builders and mortgage analysts are predicting the weakened U.S. economy will depress housing prices for years, restraining consumer spending, pushing more homeowners into foreclosure and clouding prospects for a sustained recovery.’’

That is ugly in almost every way you look at it. Almost.

2 More hard numbers (and then I promise you, we’ll get a little bit rosier here): On a national basis, home prices are expected to drop 2.5 percent this year, and expected to rise just 1.1 percent annually through 2015. As it stands, prices have already fallen 31.6 percent from their 2005 peak.

As the No. 1 mortgage originator in the United States, I can speak to 2005 – which was definitely a “boom time’’ for housing. Additionally, I can speak to a potential recovery. And, most importantly, I can speak to what you as a consumer can do about it now.

3 The Journal suggests that consumer spending will see shrinkage. Consumer spending is, of course, the largest single driver of the U.S. economy. A certain level of frugality is understandable and it even shows wisdom: If you don’t have equity in your home, you aren’t motivated to be a spender.

As much as we all want dollars circulating, I am also such an advocate of increasing our financial education that I would encourage some level of frugality for those without equity in their homes.
 

4 Stat: One in five Americans with a mortgage owes more than their home is worth. This is a trend that should wake us up in regard to what our house represents. It’s no longer an “investment’’ as it once was … as I will explain in a moment.

Oh, how much equity is gone? The Journal says the number is $7 trillion. That’s $7 trillion of homeowners’ equity having been lost in the bust.

5 And … stat: Homeowners’ equity as a share of home values has fallen to 38.6 percent from where it was in 2005, at 59.7 percent.

6 So, how do we take all the hard, ugly statistics and make them work for us?

Know that in the last few months, interest rates are at 50- and 60-year lows. There has been a slight jump in recent days – all the more reason to lock in now, because once they are at 50-year lows, there’s really no reason to lose monthly money while you wait on the possibility of another drop.

And know this: For qualified buyers with fairly long-term plans, owning a home remains central to the security and well-being of a family. However, your home does not represent “security’’ in the form of an “investment’’ that figures to grow greatly. “The Lost Decade’’ has erased that reality, and you should erase that mindset. Home ownership is about “security’’ now because it represents a lifestyle, a choice as a place to seek comfort and to raise a family.

That’s the part of home ownership that will never be “lost.’’

 

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‘Doctor In The House’ Supports ‘Common Sense’ Medical Debt Responsibility Act Of 2011

Posted on October 6, 2011

By Rodney Anderson
As a successful family doctor and now as a United States Congressman serving his fifth term, Dr. Michael C. Burgess (R-TX26) has made a lifetime full of heroic decisions. Dr. Burgess is also uniquely qualified to make a decision regarding the Medical Debt Responsibility Act of 2011.
“I support the bill,’’ says Dr. Burgess, a co-sponsor of my bill that would clear paid medical debt off a citizen’s credit report in 45 days rather than seven years, thus allowing a qualified American access to credit. Previously, “I did not realize a demerit lingers (for years). … This makes a lot of sense, and it is common sense.’’
Dr. Burgess left his Denton-based practice shortly after being inspired by the tragedy of Sept. 11, 2001.
“It made me question my place in the world,’’ Dr. Burgess tells me. “I’m a doctor, probably helping people. … but at the same time, am I really changing anything? So 9/11 had a very profound effect on me.’’
Several months later, Dr. Burgess was sent by his constituents to Washington. Dr. Burgess, who served as an advisor in John McCain’s 2008 Presidential bid, is the author of the fine book “Doctor In The House,’’ in which he offers “Prescriptions’’ to solve our health-care woes. (See Dr. Burgess’ op-ed piece in the Washington Times this week to understand what a powerful and important voice he offers.)
And just as he has a solution to that problem due to his front-row seat in medicine and politics, I have the same. That’s why we’re so proud to have him as a co-sponsor on The Medical Debt Responsibility Act, a bipartisan bill that costs taxpayers nothing yet can fuel a resurgence in healthy credit, housing and jobs.
According to my research, 40 percent of consumers have at least one medical collection. The average person has been subjected to 4.8 medical collections. That average person has owed about $456. We know that the way people pay their medical bills, with all the complications and the mistakes – 20 percent of all claims include an error — is not reflective of the way people normal pay their bills. Most of us pay our bills every month in a timely, organized fashion. But medical debt collection is not timely and not organized.   And FICO discriminates against those who fight through the red tape to eventually pay their bill but continue to suffer years of consequence. American citizens shouldn’t have to pay the price for the disorganization. And with the support of people like Dr. Burgess and other thought leaders – and with the support of people like you — The Medical Debt Responsibility Act will pass.
Because of his medical background, Dr. Burgess has been a strong advocate for health care legislation aimed at reducing health care costs, improving choices, reforming liability laws to put the needs of patients first, and ensuring there are enough doctors in the public and private sector to care for America’s patients and veterans. He’s an important voice in our government and your support of this work is critical. Click here to find your Texas representatives, to tell us your medical debt story and to sign a petition of support. Please contact your elected officials in Washington and let them know that you agree with Dr. Burgess and with me and support The Medical Debt Responsibility Act.
“This makes a lot of sense,’’ Dr. Burgess says, “and it is common sense.’’

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The 5 Steps You Must Take Before Taking On A Business Partner

Posted on October 3, 2011

rodney wingmanBy Rodney Anderson

Are you ready to go into business for yourself? Are you ready to take on a business partner? You might just be … but only AFTER you follow my Five Steps To ‘Marrying’ A Business Partner:

1 Review their credit report

Your credit score is your financial DNA. If your partner has a poor credit score, you may be about to shoulder an unfair load. Are there bad habits here? Is there a bad history here? When it is time for your business to borrow money – a virtual inevitability – bad credit on the part of your partner might mean you don’t get the loan … or it might mean you have to take on the loan yourself. You deserve to know what you are getting into in this department.

2 Review public records for tax liens or judgments

These can be serious issues with long-term consequences … on the verge of being consequential to you. His or her tax liens might just become YOUR tax liens. Your partner should be ready to discuss your findings, just as you should be ready to discuss your own issues.

3 Have any co-signed debts disclosed

Co-signing for someone else seems like a lovely and generous gesture … until the bills don’t get paid. Assuming some other person is going to keep your credit clean is a huge and dangerous assumption. I generally urge you to avoid such involvement … and I strongly urge you to research your new partner’s history here. If he/she is on the hook for a co-signing, in another business or with a family member or whatever, you may be getting hooked in, too.

4 Elect a CFO

This is a first-step-level decision. Who is organized? Who has the time to commit? Who has the experience in this area? It’s a tough job; which partner has a necessarily tough attitude?

5 If your partner is divorced, check that decree line-by-line

Is this over-the-top? Not if you view your investment as important, substantial and worth keeping! Does your partner’s divorce give the ex-spouse any rights or power that could damage you and your investment? When you marry your business partner, you need to be fully aware of his previous partnerships and how they might affect you, your credit and your business.

There is a great deal of satisfaction in owning your own business, in being self-employed, and in building a business with a trusted partner. But the numbers show that 80 percent of new businesses fail in their first year of existence, and I know that following these Five Steps can help keep you out of that 80 percent.

As I address in even greater detail in my book Credit 911, your business partnership is, in so many ways, just like a marriage. Both partners need to know what they are getting into, and need to know that “love doesn’t conquer all’’ – unless along with that “love’’ there is full financial disclosure by all involved.

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Do You Have To Be A Jerk To Get Ahead?

Posted on September 28, 2011

By Rodney Anderson

A new study is out that, if you remove all the fancy talk, essentially says, “Jerks Make More Money Than Nice Guys.’’

Is this true?

Let me handle the fancy talk first: Men who are scientifically classified by a personality test as “highly disagreeable” tend to make roughly 18 percent more annually (an average of $9,700 more a year!) than men who scored as “most agreeable,’’ according to a paper in the Journal of Personality and Social Psychology.

The research combined the results of four long-term studies that sampled a total of 10,000 workers – so a pretty deep cross-section. Each study measured levels of “agreeableness,” from “most agreeable’’ (men who, for instance, value their relationships) to “disagreeable’’ (more aggressive types who seem largely interested in themselves).

And the findings: Not only are highly disagreeable guys paid more, according to the study, but also their “aggression’’ at work causes them to be viewed more positively. And then they get that raise.

Now to my personal findings, having been in the corporate workplace for 27 years, having dealt with executives and talent in the media world, having dealt with politicians in Washington on a one-to-one level:

There are cases when “the aggressor wins.’’ There are cases when the squeaky wheel gets the grease.

But are aggressors and squeaky wheels necessarily “jerks’’?

What’s that old saying about eliminating all doubt that you are a fool by opening your mouth? Just being assertive and vocal and squeaky isn’t enough to get ahead. “Getting noticed,’’ frankly, is a factor. But the Rodney Anderson staff conducts itself in a way that is modeled after something one of my mentors told me many years ago.

“Don’t worry so much about how much money you make,’’ my friend Mary once told me. “Concern yourself with how many people you help. And the rewards will take care of themselves.’’

I truly believe in that philosophy and it has served me and my clients well for 27 years. There might be some financial rewards in being a jerk. But there are greater rewards inconducting business and conducting friendships in another way.

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Are You Falling Into ‘The Mortgage Gap’?

Posted on September 27, 2011

By Rodney Anderson

If you lose your job, does it mean you might also lose your home? Are you among the supposed “millions at risk”?

According to a new survey from insurance and financial services firm Country Financial, 68 percent of homeowners say if they lost their jobs, they wouldn’t be able to make mortgage payments for more than nine months, and many would fall short well before that.

What’s the average time of being unemployed right now? About 10 months, and that creates what AOL is calling “The Mortgage Gap.’’ And you need to take steps to ensure you don’t fall into that gap.

It’s worth noting that the median unemployment length is closer to five months. So half the people are in half as much trouble … But The Mortgage Gap means one-third of Americans could only make payments for three to six months. More than a quarter would be able to cover their payments for less than three months.

This raises a question: Is there a “danger’’ in buying a house? And the answer to the question is:

Not if you use wisdom in pursuing the biggest purchase you will ever make.

The danger comes when you:

*Buy a house you cannot afford. There is no need to keep up with the Joneses.

*Neglect the importance of an emergency fund … important whether you are buying a house or not.

*Don’t understand the concept of a budget and of “paying yourself first.’’

There is money in your home right now in the form of a refinance, and that is where some of the greatest wisdom is positioned. We’re now at 60-year lows in mortgage rates. Waiting for the rates to go lower is not wise, given the money you are losing out on every month by waiting.

The easiest way to find money in your home … refinance!

If you are concerned about “The Mortgage Gap,’’ contact your mortgage company. Get sound advice like that available at 1-800 EXPRESS. Our staff at Rodney Anderson makes us the No. 1 mortgage lender in the United States, and we’ve got 27 years of experience. Ask about the various options available.

And if you are Moneywise enough to be preparing to find more money in your existing home? Make that same phone call, a call that can prevent future trouble and put money in your pockets at the same time.

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Your 6-Question New Mortgage Quiz

Posted on September 20, 2011

By Rodney Anderson

Amazingly, we are now at 60-year lows for mortgage rates … giving you all the more reason to call 1-800 EXPRESS to examine the viability of that new home loan or that refinancing.  What you need right this moment is a No. 2 pencil to take The Six-Step Pre-Mortgage Quiz … and what you’ll need after that are the correct six answers. Let’s see if you can pass the test!

Question 1: Do you have your paperwork in order right now? In its own file, ready to show us?

It’s Advance Preparation, and this is actually something we can all do to pre-prepare: As soon as you decide to apply for a loan, you should put the necessary paperwork together. What do you need? Your last two paystubs, your last two years’ W2’s, your last two bank statements, your last two years’ tax returns. And if you are self-employed, a P&L statement.

Want to really be ahead of the game in terms of organization? Assemble these papers right now, whether you are in the market for a new loan or not. It’ll just take a moment and you will find yourself completely pre-prepared!

Question 2: Do you understand that when it’s right, it’s right?
You’ve got the right lender. You’ve got the right rate. Now lock them both in! Get that paperwork signed and back to the mortgage company right now. I see a number of clients who have cost themselves money over the course of months or even years because they delayed their decision because of a $50 fee here or there. In one gentleman’s case, he wanted to haggle over $$50 but in doing so failed to get around to the refinancing of his loan for three years! Not wanting to pay that $50 cost him $400 per month for 36 months — equalling $1,440.

Question 3: Do you demand good communication — and communicate in return?
This is advice I give to you as you work with any service provider: Can you reach them by phone? If you leave a message, do they call you right back?

You’ve got to be able to reach them. But they’ve got to be able to reach you, too. This is no time for you to go into hiding, or on vacation without a phone. Stay in touch!

Now, this is the responsibility of both of us. You must find that mortgage company that makes itself available to you. Do they answer their phones? Do they return your messages? Do they make appointments with you on their schedule or on yours? Don’t take that last point for granted; your mortgage company shouldn’t be demanding that you visit their office on their time. You should be able to do so when it is convenient for you.

Question 4: Do you have a calendar?
As a borrower, you should ask for a window during which the closing will be done. The lock-in of the rate should reflect that. Get specific answers here. I hear about lenders allowing a deal to linger undone for 60 or 90 days. … This is not acceptable.

Question 5: Do You exercise your right to shop wisely?

Is it OK to “go shopping’’? You bet. It’s not really worth your time to click on some random internet button that shuffles you to some random call center where the person on the other end of the phone isn’t really a lender, doesn’t at all know your area and won’t be answering the phone next time you call. But “going shopping” is wise in this regard: You are not obligated to deal with your present loan company just because that’s where you send your monthly payments now. Your obligation here is only to yourself — an obligation to find a qualified lender.

Question 6: Can you overcome the temptation to procrastinate?
I know this is our National Pastime, but days go by and months go by and you might be losing thousands of dollars by delaying what is an inevitable good move. Rates are at 60-year lows. The market is attractive. And saving our money to secure our present and future is as important as it’s ever been. The time to make one exploratory phone call to 1-800 EXPRESS is now!

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Tips to Lower Your Monthly Mortgage Payment

Posted on September 15, 2011

video platformvideo managementvideo solutionsvideo player

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Reflecting On 9/11: In Terms Of America’s Finances, Did The Terrorists Win?

Posted on September 13, 2011

By Rodney Anderson

A decade after 9/11 … in terms of our finances and your finances … did the terrorists win?
Once we get beyond the emotion of the terrorist attack on 9/11 – a difficult thing to do as we reflect now at the 10-year anniversary of that tragic event – we find a bottom line from 9/11.
How has it changed our lives? More specifically, how has it altered our financial lives? Is our present economic instability related to 9/11?

I’ve pinpointed six specific areas that suggest, sadly, that we are worse off than we were a decade ago. And that 9/11 is a reason.

1 The investment world has never been the same. The U.S. financial system is a roller coaster … in the last decade a couple of recessions and maybe a third on the way … Wall Street is part of that. And Wall Street is, right now, a dark alley many of us are scared to stroll down.

Are we not now more “risk-averse’’ in America than ever before? Ask yourself that question? Are YOU more risk-averse than ever before?

2 The destruction of fiscal discipline in Washington. That phrase is a direct quote from one expert on the subject … and look at the way we’ve spent money, maybe had to spend money, in the last decade. More military commitments. More defense against terrorism.

We’ve scrambled wildly to protect ourselves and even to protect the rest of the world. Afghanistan, it is said, has cost us Two Trillion Dollars. We all support the concept of a strong defense. We need to evaluate the fine line between “reacting’’ and “overreacting.’’

3 Where the money could’ve gone. Take that Two Trillion Dollars and put it … anywhere else. Another number: $150 billion a year. That’s what we spend on Education? Creation of jobs? You know, if we spend two trillion dollars on financial education of the sort we offer in Moneywise, that education would result in jobs!

How different is our country today if we are allowed to spend two trillion dollars differently?

By the way: We engaged in war while also lowering taxes. That felt good … but it’s not very fiscally sound.

4 Analysis to paralysis. I’ve got a great deal of experience with power-brokers in Washington and I think we can see that in many cases, even our elected Thought Leaders have been scared off truly taking action – smart action. We see that in the lack of bills even being passed. When it comes to sports teams getting ready for their drafts, my long-time sportswriting friend Mike Fisher (covering the Dallas Mavericks over at DallasBasketball.com) calls this “analysis to paralysis.’’ In football, it’s those 15 months spent studying a player – and then the 15 minutes of indecision once that team is “on the clock.’’ In Washington, it means over-thinking, over-worrying, and it has led us to do a lot of nothing.

Are our leaders trying to lead? Or are they just trying to get re-elected?

5 The dollar is weak. The jump in the price of gold is significant in this way: It means we don’t trust the dollar. Believing in gold means we don’t have much else to believe in.
Right after 9/11, we made money too easy to borrow. We created bubbles. The bubbles burst.

The dollar is weak, and that means our standard of living is, relatively speaking, lowered.

Mark my words: Another bubble is coming. It’s a gold bubble. And then we won’t be able to trust it, either.

6 In a way, the terrorists succeeded. It saddens me to say that. Because I’m admitting that evil “won,’’ at least for the moment. But “the moment’’ has lasted a decade.
But is there any debate that today, 10 years after 9/11, we as a nation are worse off in terms of our financial structure? Credit. Value of the dollar. Unemployment. Housing. Personal debt. And our government debt, which I believe can be tied directly to 9/11.

We are much worse off than before 9/11.

There is a positive here: We can learn from this. There will be another life-changing event; that’s life. How we react to it next time around might determine the financial state of the U.S. for the ensuing decade.

Now some questions for you:

Are you more risk-averse than you were a decade ago? Are you better off than you were before 9/11? As much as it pains you, do you agree that in terms of the dollars-and-cents impact on America, one result of the terrorist attack of 9/11 is that the terrorists won?

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IS YOUR HOUSE MAKING YOU SICK?

Posted on September 8, 2011

By Rodney Anderson

I once asked a personal trainer friend of mine if he could judge a person’s mental state on their physical appearance. That is, when a client came into his gym, could he interpret their body language and know whether they were carrying an excessive amount of stress.

“Rodney, absolutely,” he said. “It’s as noticeable to me as their workout itself.”

Now along comes a study from a more official source than even a personal trainer: The Wall Street Journal reports on the results of a scientific study that ties the threat of losing your home with the threat of physical illness … and that as a result of foreclosures, emergency room visits are up, diabetes is up,  anxiety is up … and in the report published by the by the National Bureau of Economic Research, there is even a tie made to an increase in suicide attempts.

I know it can be argued that it’s a stretch to make a direct correlation from a foreclosure to a hospital visit. But logic certainly dictates that there are stopping points in between. And before we push ourselves to the point where we need to be in the care of a medical or psychiatric professional, those of us in financial trouble — whether it’s the possibility of foreclosure or anything less serious than that — let me recommend some prevention as the cure.

America is obviously involved in a housing crisis, and when we combine that with our troublesome unemployment rates, people are facing the possibility of losing their homes. But even foreclosure doesn’t mean “the end.” And well before that, there are preventative measures to take.

Get approved with a reputable mortgage company. Work with a Realtor who is working for you. Operate within a budget that doesn’t cause your American Dream to overextend you. Arm yourself with an education … because the more answers you have at your disposal, the less stressful it will be when questions arrive.

Your home isn’t supposed to cause you discomfort. It’s supposed to be your nest, a place of security, your place to raise your family. The more education you carry, the less stress you carry.

 

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