Lending Club Blog

The Tale of Two Ballplayers

To show the effects of lifestyle decisions on the state of your personal finances, I’d like to discuss two people I know who had many of the same opportunities. Both were excellent baseball players whom I played against in Little League and high school.

Both players were drafted by professional teams in the mid-1990s and received signing bonuses of about $300,000. The first player, Bob (names changed), handed the money over to his father to manage his finances for him. The second player, Dave, decided to manage the money himself. Bob’s father, a banker, allowed Bob to spend a small portion of the bonus on a new car and invested the rest. Dave showed no such restraint and started living the life of a high-profile player.

Bob’s salary started at $250,000 and went as high as $800,000 during his 7 years in and out of the major leagues. Dave’s salary and tenure were in the same range. Though neither player was a star, both had respectable professional careers and lasted longer than many other prospects, who often see little time in the majors.

Bob’s conservative spending and heavy investing has left him with more than enough money to continue his spending habits for the rest of his lifetime. Dave, on the other hand, basically lived from gigantic paycheck to gigantic paycheck during his entire career. As a result, he has two strikes against him. Not only is he used to spending considerably more than Bob, but he also has little in the way of savings to live off of, now that his career is winding down. Dave never was a great two-strike hitter and I fear that he will have trouble in his current financial situation as well.

You might have little sympathy for people making many hundreds of thousands of dollars per year, but remember that careers in professional sports are often limited to just a few years. By forgoing college to pursue their careers, many players must rely on their career earnings to provide for a lifetime’s worth of expenses. Players do receive retirement medical benefits with just one day of service and a pension with 43 days of service. According to Cash Money Life, the minimum a player, eligible for a pension, will receive is $1,000/mo, and it maxes out at $180,000 for players with 10+ years of service time. Pensions begin at age 62.

It isn’t just the opportunities that we are presented with in life that dictate our finances; it’s also what we do with them. It would be easy to assume that someone playing professional baseball at the highest level would have few financial concerns. In reality, the rule that it’s cash flow, not income that dictates financial success holds true in all cases. Those with short careers should try to live not only within their means, but also to spend like someone making the equivalent amount of career earnings over a full lifetime of work. If you work half as long for twice the money as someone else, your spending should be roughly the same if you want to achieve similar results. Saving large amounts throughout a short career would almost certainly increase your chances of success.

Sunday, January 11th, 2009 at 6:46 am

Comments (2)

  1. This is a common story among pro athletes, musicians, movie stars,
    and others who receive a windfall of money during their
    professional careers, which usually only last a few years at most.
    Many spend money like the paychecks will continue for the rest of
    their lives. The NFL and MLB both have mandatory rookie “training
    camps” where they are required to sit through a financial seminar.
    I don’t know how effective they are as I have never attended one
    and don’t personally know anyone who has, but I think the governing
    bodies and player’s associations are doing the right thing by
    making this mandatory. Thought provoking article, and I appreciate
    the mention.

    January 11th, 2009 at 9:59 am

  2. This is a great article. It illustrates many of the principles that
    it takes to make it in the world of personal finances. I am a
    personal finance coach and I have had the opportunity to coach
    students all over the country. Many students say that their main
    problem is that they do not make enough money. this is rarely the
    case. It is typically not about how much you make but how you
    manage what you have. This story could be true as well for those
    making a lot less money.

    January 12th, 2009 at 2:49 pm


Types of Loans 101

Growing Your Business By Using Capital

9 Reasons to Open an IRA

6 Reasons to Get a Personal Loan

See more
Lending Club Awards
  • Archives z

Recent Posts

Types of Loans 101

There are many types of loans out there and… Read More »
September 16, 2016

Meet Patrick Dunne — Lending Club’s Chief Capital Officer

Patrick Dunne, Chief Capital Officer,… Read More »
September 8, 2016

Growing Your Business By Using Capital

Smart small business owners don’t wait to consider borrowing… Read More »
August 19, 2016

9 Reasons to Open an IRA

Retirement: a word that often comes with many connotations.… Read More »
August 5, 2016

6 Reasons to Get a Personal Loan

While it would be great if we all had enough… Read More »
July 29, 2016

Lending Club and the Marketplace Model

Some of our investors have observed the funding environment… Read More »
July 28, 2016

A Recap: Credit Strength on the Lending Club Platform

We are proud of our… Read More »
July 14, 2016

A Message to Investors from our President and Acting CEO

Today, our President and acting… Read More »
May 19, 2016

Lending Club Receives Tribeca Disruptive Innovation Award

Disruptive innovation comes in many… Read More »
April 29, 2016

Lending Club Business Financing Review

One of the biggest challenges of owning a small… Read More »
April 27, 2016


We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w