Financial Training Camp

There was a great article in the Washington Post which talked about a financial education program Joe Gibbs is starting up initially with the Redskins but hopes to expand league wide.

The article mentioned a story about how Joe Gibbs made financial mistakes, how he recovered from that and the financial lessons he has learned. That reminded me of a book Joe endorsed, hence the picture for this post, which talks about some of the challenges we all face.

And yes, it is well worth reading and I highly recommend it.






Here is my edited version of the Washington Post Article by Mike Wise.

Joe Gibbs helping Washington Redskins players to gain the financial savvy he lacked when he was younger

Joe Gibbs spent most of two days at Redskins Park on June 1-2 meeting with many of the team's key veterans, two of their wives and about 20 players in all.

"I wanted to give back," Gibbs said in a telephone interview. "I just thought this was something I could do for the players."

Joe Gibbs talked money with the Redskins early last month. For help, he enlisted two university professors with Harvard MBAs.

He humbly spoke of how, during the early 1980s in Washington, Gibbs lost his personal fortune because of financial ignorance. How he felt helpless when several of his former players -- some in contract disputes -- confessed to him about making bad business decisions that negatively affected their careers. And how every team in the NFL needs the kind of OTA that recently transpired in Ashburn: a free-of-charge financial seminar Gibbs partnered with Strayer University to put on.

Is it needed?

According to a 2009 Sports Illustrated story, 78 percent of all NFL players go bankrupt or are in financial duress just two years into retirement.

As Gibbs learned a long time ago, banks don't discriminate at collection time.

About the time he won his first of three Super Bowls and started to become the most revered sports figure in Washington's history, Gibbs got involved in an Oklahoma real estate deal that went belly up. He lost everything because he didn't understand his liability if another person signed on his behalf.

"It probably took [his wife] Pat and me four and a half years to pay off our debts," Gibbs said. "I just didn't know anything, like the difference between a simple partnership and a LLC."

Hence, Gibbs's brainstorm a couple of months ago: Instead of one NFL-sponsored seminar players could sign up for at a certain time of year, why not bring the class to the training facility?

The next step was getting the owner and the coach to go along, which they willingly did.

"Joe asked us to support this program, and we're happy to oblige," Redskins owner Daniel Snyder said through a team spokesman. "Anything that helps players we're in full support of."

What were some of the topics covered?

"Something as simple as creating a budget, how to put away money properly, looking at our window of earning opportunity, or what kind of questions to ask financial advisers, how to set up a business to reduce your liability in case things go wrong."

"Gibbs said: 'I'm not going to charge you anything. We're not recommending any investments. We don't want to ask you for anything. This is a gift.' "

The gift of having something to fall back on once the cheering stops, the gift of not making the same mistakes a young, impressionable man made in his first steps on the way to Canton because he didn't know how to protect his assets.

"I'd really like to talk to the league and the union about doing something like this leaguewide," he said. "Just makes sense."

As usual it's hard to argue with Coach Joe Jackson Gibbs.

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1 + 1 = 2

That simple equation, one we all learn as kids, is the basic formula anyone needs to remember when talking budgets.

I was originally going to post about one of my new years resolutions, Reducing Debt, but then I realized that before anybody starts talking about reducing debt, one needs to address his or her own budget.

And just like resolutions, budgets should be specific, tailored to your life style, and have goals.

If you make a resolution, or approach the idea of having a budget, by saying “I’m going to make a budget” and stick to it; though noble, I believe is opening the door for failure.

Here’s why.

Lets say you plan on making a budget to go on that Caribbean Vacation you love to go one each year, and or to save enough to one day buy a house.

Hopefully, if these are some of your top priorities, every time you pull out that plastic or cash, you will think, “do I really need this” or “will this help me reach my goal?”

Which gets me to the basic components of the formula.

Needs and Wants:

Needs are what you have to spend. Fixed costs, bills and expenses that you need or know you will have to pay every month.

Some people put these into basic categories of Food, Shelter and Clothing. However, there are usually more than just these three. Such as; Utilities, Loans, Taxes, Transportation, and don’t forget those once or twice a year bills such as insurance payments.

Wants are those things that add enrichment, entertainment, and pleasure to our lives. Wants is where your goals really come into play. Your top want, top goal, should be what you really want to obtain, what you are really saving and spending your money for. Not your bills. Not your budget.

A budget is nothing more than a tool, a means of balancing and prioritizing all your needs and wants in such a way so that 1 + 1 really does = 2.

So, where do some of us get into trouble?

Well, one area is separating needs and wants. Example: Housing. A basic need. But do you pay for a luxury condo, or split rent with others in on a 2 or three bedroom apartment, or even (hopefully temporarily) live with parents or relatives. Example2: Transportation. Walking vs. Biking vs. Public Transportation vs. Porsche. I think you get the idea.

Budgets are not easy. They require us to make choices. They require us to look at ourselves, our habits and life styles. They require constant attention and yes, sometimes become quite a balancing act. But they are necessary. It is these reasons that people often view budgets as limiting; and therefore not necessarily a good thing.

But they are good, and in the end, not limiting but rather enabling and liberating!
When making a budget, and sticking to it, adjusting it as needed, it is important to view it as a means to an end. And, just as we are all different, so too are budgets. Budgets should be tailored to what is important to you and what you value and how you live.

So, what is my budget?

Here are the top level categories. I have each with sub categories but here are the top.

Housing:
Groceries:
Transportation:
Bills & Utilities:
Shopping:
Education:
Time Outs:
Misc Taxes:
Savings:
Debt:

Unfortunately, that last one has crept back into my budget and the topic of one of my New Years resolutions and future post(s).

Until next time, and with all things…

Be good, do well, have fun.

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