Congratulations, Malachi! And behind Door #22, heeere's

[Nicknack]

A house isn't wasted money. That's recoverable equity. And unless there's another housing crash (not too likely in the Sacramento area and many others), he could even gain a nice profit. The pension fund contribution could pay off later, too.

Not exactly. If he sits tight for a few years, yeah, but not so good if selling after owning the house for just a year or two. Those realtor fees suck... I suppose he could list his house "For Sale by Owner" to escape the 6%. If he were my kid, I'd tell him to rent. The second contract, go ahead and buy.

 

[TheCusian]

Yeah but he's only making noneofourbusiness© so he probably will end up living in a smaller noneofourbusiness©.

His car? He probably will get a tricked out noneofourbusiness© there goes another chunk of his noneofourbusiness©.

Taxes on noneofourbusiness© will be at least 50% of noneofourbusiness©.

Does he buy his Mom a new noneofourbusiness©? More noneofourbusiness© out of his pocket.

 

[Nicknack]

After first contract...

After second contract...

 

[HOFCeluck]

Im not very comfortable passing judgement on the life decisions of kids I don't know.

But you know

 

[cuseinchina]

$1M over a two year period is what he's going to net, so how is he going to save all that? And where can you get 5% interest these days?

I think you are both slightly over-estimating taxes, and ignoring the long-run rate of return on global stocks and bonds. 5%/year is doable.

 

[SaltLakeOrange]

Maybe he shouldn't buy himself and his parents a house . Maybe he should rent an apartment and allow his parents to continue to live off of the jobs that have provided for them thus far. If he takes the view that he is entitled to a certain NBA lifestyle now that he has entered the NBA rather than taking the view that he is entitled to what he can afford, he will have problems living on what he is about to earn.

Well, I think he should hire a very good financial planner!

 

[ssbriefcase]

You're probably being sarcastic, but rent in any big city is going to set him back $2500-5000/month. What's your mortgage payment, about $400?

If he's paying that for rent in Sac, he's living large.

 

[721Comstock]

If he's paying that for rent in Sac, he's living large.

I just did a 5 minute Google, 1st page of Sacto apartment rentals (from high to low) run from 6800/mo down to $2500/mo.

 

[IthacaMatt]

You're forgetting taxes and agents fees. Plus I believe the nba takes a piece for retirement fund and union fees. In the end he's well under a million a year. Unless he makes a Second contract this isn't looking like a smart move.

He's starting at $1.1M. After those expenses, he'll have between $400-500K/year. Nice, but it might only last 2 years.

 

[CusefanATL]

If making over a million two consecutive years isn't life changing, that money has been massively mismanaged.

life changing, sure, but absolutely not set for life no matter how well managed it is.

 

[IthacaMatt]

If he's paying that for rent in Sac, he's living large.

I typed that before we knew he had been traded to Sacramento. A 2 BR in New York is about $5-7,.000/month. San Francisco, Boston, DC, Chicago are all right in that ballpark. I think $2500-5000 is a fair average for an apartment in a major league city.

 

[OttoinGrotto]

life changing, sure, but absolutely not set for life no matter how well managed it is.

Is that the standard? Set for life? Sheesh.

 

[TheCusian]

He's starting at $1.1M. After those expenses, he'll have between $400-500K/year. Nice, but it might only last 2 years.

He should save like he's only got two years and train like he'll be a 15 year pro.

No guarantees anywhere.

 

[ssbriefcase]

I just did a 5 minute Google, 1st page of Sacto apartment rentals (from high to low) run from 6800/mo down to $2500/mo.

I did the same with looking at the median 2 bedroom, is $1,300.

 

[Brooky03]

Let's say he nets $1.2M total for his first two seasons, after taxes, fees and essential living expenses. That's some substantial 'jump-start' money.

If he flames out and doesn't get a second contract, he's a 22 or 23 year old guy with a mil in his bank account and a years worth of college classes under his belt. He could almost certainly play for a while in a foreign league for something in the ballpark of $100 or $200k per year (or more) while taking online classes towards a degree. That's a better start in life than most get, and that's a better starting salary than your average college grad will see. Yeah, he'll be living in a foreign country and travel expenses could rack up, but seeing the world isn't always a negative thing.

Even if he flames out and decides to ditch basketball, he has a million dollars to go back to school with or maybe start a business with. Again, not a bad deal.

If he plays well and gets a second contract, this first contract becomes irrelevant because he'll move into the 'life-changing' money category, in that he'd probably never have to work a 'normal' job for the rest of his life.

 

[CusefanATL]

Is that the standard? Set for life? Sheesh.

i think you are underestimating the ability to spend the $1 mil he is about to net by a long shot.

 

[SaltLakeOrange]

i think you are underestimating the ability to spend the $1 mil he is about to net by a long shot.

THIS!

 

[Dave85]

First Year
$1,159,300

Second Year
$1,211,400

There's no job in Trenton where a twenty year old is going to make that kind of money. Although New Jersey just raised its minimum wage to $15 yesterday.

 

[OttoinGrotto]

i think you are underestimating the ability to spend the $1 mil he is about to net by a long shot.

No, we have a difference here in terms of what "life changing" money means. I'm saying "life changing" money is not equal to never having to work again.

 

[IthacaMatt]

I think you are both slightly over-estimating taxes, and ignoring the long-run rate of return on global stocks and bonds. 5%/year is doable.

Top federal rate of 39%, top California rate of 13%, plus agent fees and NBA union dues/contribution to retirement plan. Then the cost of living.

 

[IthacaMatt]

There's no job in Trenton where a twenty year old is going to make that kind of money. Although New Jersey just raised its minimum wage to $15 yesterday.

Well, that's not the point of comparison, is it? If he had gone 8 spots higher, he would have doubled his money. That's what we are comparing against, not what he would have made flipping burgers in Trenton.

 

[CusefanATL]

No, we have a difference here in terms of what "life changing" money means. I'm saying "life changing" money is not equal to never having to work again.

did you read my post? I said "life changing, sure - but not set for life money"

 

[IthacaMatt]

No, we have a difference here in terms of what "life changing" money means. I'm saying "life changing" money is not equal to never having to work again.

Yes, this will change his life in the short term, but it's like those people who win $1M in the lottery, quit their jobs, take a vacation, give gifts to friends and family, and BOOM, they're broke a couple years later.

 

[CusefanATL]

life changing, sure, but absolutely not set for life no matter how well managed it is.

OttoinGrotto fyi

 

[SU2NASA]

First Year
$1,159,300

Second Year
$1,211,400

And if he waited and went top-10 next year he could have more than made back his investment in the first year.