What am I missing here??? Pay your debt!

[darealstunna]

http://www.tmz.com/2012/12/01/allen-...osure-auction/

A.I. 's manision in Atlanta is about to be foreclosed on.

Why don't player's who make a good amount of $$$, just pay off the house when they buy it instead of having a mortgage?

The mansion was 4.5 million, pretty sure A.I. had that laying around somewhere, no?

Do players do this often? (Pay a mortgage instead of buying outright)

Just curious?

[dbackschamp2001]

Many players don't think about the future. They would rather have fun blowing their money than think about the future.

[MI Rob]

They would rather make it rain on dem hoes.

[Orangejello727]

Its a mix of being naive and not thinking. Many players come back later to talk about their mistakes.

Antoine walker opened up about bad investments and gifting too much to pillage his 60 million.

Derek Coleman went public as well.

On another note. Kevin Garnett for the longest time had a weekly allowance as he hired an accountant / adviser to make sure he never pillage his money. Worked out good for him.

This stuff happens to those who run into a lot of money very quick. The adjustment is hard and they make the mistakes. Same goes for lottery winners.

[darealstunna]

Just ridiculous to have a mortgage when you can pay the thing off and never sweat it. Just pay the yearly taxes and insurance.

I find it hard to believe that no one around him (mom, dad, friend, cousin, agent, teammate) never talked to him or if it ever came up?

How about cars? Was he paying monthly on that too?

Maybe he used Rent-A-Center?

Poor money management...very unfortunate. WOW

[hhmag70]

There could be tax benefits to not paying cash for such items as homes. In that stratosphere of income level I have no idea. A quality advisor that does not rip them off would be the best investment they could make.

[Nicnac]

no one has corrected the OP yet? Just because you have the money does not make it logical to pay off a big-ticket item when you can make much smaller payments and move it later...

So, say he paid the 4.5 million cash. The housing market crashes and the house is worth 2 million. Then what kind of idiot is he?

[DanShakespeare]

Originally Posted by MI Rob

They would rather make it rain on dem hoes.

Agree 100000000%

[btimm]

Originally Posted by Nicnac

no one has corrected the OP yet? Just because you have the money does not make it logical to pay off a big-ticket item when you can make much smaller payments and move it later...

So, say he paid the 4.5 million cash. The housing market crashes and the house is worth 2 million. Then what kind of idiot is he?

I know when I initially financed my house five years ago, it was at 5.25%. I saw that meant over the life of the 30-year fixed loan that I would pay the banks 2.5x the purchase price of the home.

There is no way whatsoever that it is beneficial to not pay for a home outright. Further, if you buy a house for $4.5MIL and it decreases in value to $2MIL, do you think the bank says, "Oh, it's okay, you don't owe us anything more than the current value of the house." Ummm, no. I suppose you could default if you have no morals and sense of accountability, but that shouldn't be an option unless you flat out can't make ends meet anymore, not that it is profitable to default.

[premium1981]

Originally Posted by Nicnac

no one has corrected the OP yet? Just because you have the money does not make it logical to pay off a big-ticket item when you can make much smaller payments and move it later...

So, say he paid the 4.5 million cash. The housing market crashes and the house is worth 2 million. Then what kind of idiot is he?

No one has corrected this guy who tried to correct the OP yet? The housing market down the road has absolutely nothing to do with you buying or mortgaging a property today. The market can always go up or down.

[darealstunna]

Originally Posted by Nicnac

no one has corrected the OP yet? Just because you have the money does not make it logical to pay off a big-ticket item when you can make much smaller payments and move it later...

So, say he paid the 4.5 million cash. The housing market crashes and the house is worth 2 million. Then what kind of idiot is he?

One with a house

One of the earlier posters mentioned the level of $ stratosphere these guys are in with multiple houses, etc. I guess I have to take that into consideration when thinking irresponsibility and the short sightedness by these athletes.....

I know if I made millions a year, for a short period of my life, I would buy property to own, not rent. Then I won't have to worry about a mortgage later. But that's just me.

[Nicnac]

Originally Posted by btimm

I know when I initially financed my house five years ago, it was at 5.25%. I saw that meant over the life of the 30-year fixed loan that I would pay the banks 2.5x the purchase price of the home.

There is no way whatsoever that it is beneficial to not pay for a home outright. Further, if you buy a house for $4.5MIL and it decreases in value to $2MIL, do you think the bank says, "Oh, it's okay, you don't owe us anything more than the current value of the house." Ummm, no. I suppose you could default if you have no morals and sense of accountability, but that shouldn't be an option unless you flat out can't make ends meet anymore, not that it is profitable to default.

Hey? That is not at all what I was saying. Look, many Americans, and especially the wealthy, don't buy houses to stay in them for 30 years. So, let's stay on this topic. He buys the house for 4.5 million, stays in there are year or two. Is that worth 4.5 million cash? Perhaps. Perhaps not.

[Nicnac]

edit: Yah... the rich pay things off. They don't make payments with interest. I'm just saying a house in this economy, and a 4.5 million dollar house you don't plan to keep forever is probably not such a simple 'pay cash and be done with it issue'.

[Orangejello727]

Originally Posted by Nicnac

edit: Yah... the rich pay things off. They don't make payments with interest. I'm just saying a house in this economy, and a 4.5 million dollar house you don't plan to keep forever is probably not such a simple 'pay cash and be done with it issue'.

especially if you have a boat load of money!

We arent talking about an average income joe here. We're talking about a guy that raked in million. ONly makes sense to buy it if you have the stash!!

The only thing I can factor in here for not paying off a home is the contingency of running bankrupt and not having access to property. Dont some states have a law in place that a residence cannot be touched by creditors if you fail to pay up?

[Chaz]

Originally Posted by Nicnac

no one has corrected the OP yet? Just because you have the money does not make it logical to pay off a big-ticket item when you can make much smaller payments and move it later...

So, say he paid the 4.5 million cash. The housing market crashes and the house is worth 2 million. Then what kind of idiot is he?

Same kinda of idiot that is buying RG3 and Andrew Luck autos right now when next year you can get them for half the price. But the idiot who does that only has a stupid piece of cardboard rather than a mansion that is paid off and will only increase in value eventually. That's a smart person not an idiot my friend

[cruiserdaddy7]

Originally Posted by Nicnac

no one has corrected the OP yet? Just because you have the money does not make it logical to pay off a big-ticket item when you can make much smaller payments and move it later...

So, say he paid the 4.5 million cash. The housing market crashes and the house is worth 2 million. Then what kind of idiot is he?

He would be an idiot who owes a 4.5 million $ note on that home. He will be foreclosed on and creditors will put liens on what you have. The fact he bought instead of renting elsewhere says he planned to stay in the home. With amortization schedules they way they are with mortgages he would have paid half the original cost in payments/insurance/taxes in the first 5 years(in payment not principle). Buying was the smart move but spending like an idiot else where didnt do him any favors. Who needs a million in jewelry?

[uberfatty]

This is simple and I can't believe no one has brought it up yet (or if they have, sorry for missing it):

If the mortgage interest rate is lower than your rate of return from investing the cash instead, then it's better to take on the mortgage and invest the cash.

Earn more than the interest rate of the mortgage, pay it off in the future, and come out ahead.

[MikeMamba]

Originally Posted by uberfatty

This is simple and I can't believe no one has brought it up yet (or if they have, sorry for missing it):

If the mortgage interest rate is lower than your rate of return from investing the cash instead, then it's better to take on the mortgage and invest the cash.

Earn more than the interest rate of the mortgage, pay it off in the future, and come out ahead.

Yes, but you really think athletes are smart enough to do this?
Actually, I'm sure the accountants and financial advisors they hire tell them to do this, they agree to it but never pay of the house because they don't invest rather they just spend it on new whips and more houses. And occasionally strip clubs.

[Trueduckfan]

These players dont always have as much money laying around as you think. Alot of them try to make investments while some blow it like idiots. When they sign a contract for 20 mil they arent getting that much all at once.

They might get a bonus up front and start making some soon after but the rest comes over the length of the contract and then they get taxed very hard. They also get taxed with a luxury tax in every city they visit on the road during the season which is pretty rediculous in my mind.

He probably bought a few houses to try and make money on down the road and with the housing market and whatever hes spent or lost out on in other investments that could have gone sour like the rest of the world lately and decided to cut his losses on this one and hold onto what he has if he needed it more than waiting out the housing market over the next decade.

But who knows, maybe he just forgot while busy counting hundred dollar bills in his jacuzi while sipping on crys-tal and getting his toes sucked by models.

[ManInTheMirror]

Originally Posted by MI Rob

They would rather make it rain on dem hoes.

That sounds delicious.


Posted from Blowoutcards.com App for Android

[carl2001]

^blowout app???

[asujbl]

Originally Posted by Trueduckfan

These players dont always have as much money laying around as you think. Alot of them try to make investments while some blow it like idiots. When they sign a contract for 20 mil they arent getting that much all at once.

They might get a bonus up front and start making some soon after but the rest comes over the length of the contract and then they get taxed very hard. They also get taxed with a luxury tax in every city they visit on the road during the season which is pretty rediculous in my mind.

He probably bought a few houses to try and make money on down the road and with the housing market and whatever hes spent or lost out on in other investments that could have gone sour like the rest of the world lately and decided to cut his losses on this one and hold onto what he has if he needed it more than waiting out the housing market over the next decade.

But who knows, maybe he just forgot while busy counting hundred dollar bills in his jacuzi while sipping on crys-tal and getting his toes sucked by models.

This isn't true...

But your point is valid.

Alot of money is deferred and alot is already committed to payment of estimated taxes (and all athletes pay estimated taxes to get to their liability without penalty), agent fees, accounts, etc...

Whatever someone makes in a year you can immediately chop in half.

Iverson obviously, at some point, has 4.5 million available - but it's not necessarily as easy as people think to just up and pay that amount using cash.

[Orangejello727]

Originally Posted by uberfatty

This is simple and I can't believe no one has brought it up yet (or if they have, sorry for missing it):

If the mortgage interest rate is lower than your rate of return from investing the cash instead, then it's better to take on the mortgage and invest the cash.

Earn more than the interest rate of the mortgage, pay it off in the future, and come out ahead.

Well you have to factor in capital gains tax and net it back. That coupled with how garbage the ROI have been as of late, it still wouldnt make sense.

If you pay $500k in interest by financing vs making $800k on interest through investment, you still lose half of that ROI to gains tax! You are better off paying the principle.

But you're right. If you were making a killing on investments, why not leverage your debt. Obviously he wasnt doing that because he has nothing to pay his debt off with, showing he had no investments.

[pac213up]

Here is why.

Ben Stein: Invest or Pay Off Mortgage?