I do not think loan sharks even charge that much!
As read on The Sunday Times May 30, 2010 – NBA Player told to pay 85% interest (Left)
85 per cent interest charged on a personal loan from Allstar Capital is perfectly legal in Nevada.
The article carried a report on a National Basketball Association (NBA) player Eddy Curry. He has a US$60million (S$84.3million) contract that includes a US$11million option for next season. If you (like me) have not heard of this basketball player who earns this fabulous amount of money, it is totally understandable. Why? His total playing time in the last two seasons: 10 games (That’s an amazing pay for a highly paid cheerleader?)
A judge in New York ordered Curry to pay US$75,000 a month plus interest on his personal loan and had a lender seize 3 of Curry’s car as he was late in his loan repayments.
Lessons to be learnt from this article, clichés as they may be?
It is not how much you earn; it is how much you save!
Despite his salary, this player took a personal loan of US$570,000 from Allstar Capital in 2008. He also owes a fellow NBA player Juwan Howard US$350,000.
The reasons which may go toward explaining his situation? He has 12 cars including a Rolls-Royce (1 for each month of the year?), a personal chef that is paid US$6,000 a month, spends US$1,000 on television and satellite television and gives US$16,000 a month to his relatives (I need a relative like that!).
As the article rightly sums it up, he makes a lot, spends a lot and owes a lot.
Despite me jokingly saying Eddy Curry is a highly paid cheerleader by the courtside, he must be a really good basketball player to get to where he is. You may also be a really good or highly paid engineer/doctor/lawyer/singer/actor/employee (anything in the world) but your efforts may count for nothing if you do know how to manage your money.
Get educated financially (reading this is a good sign!). I am not even talking about going through Financial Reports of companies, reading Prospectuses and all the financial jargons of Finance and Investments (*yawn*).
Start with basic Personal Finance of insurance, savings and investments. It is not that hard. Learn to budget and keep track of your expenses to know how you are utilizing your money and whether you have positive or negative cashflow. Learn simple asset allocation so you do not have all your money in one basket where a scam or financial meltdown means starting from zero. Learn to avoid falling victim to scams or unscrupulous investment/financial advisers by understanding simple finance and investment principles.
It’s about knowing that when a loan offered to you comes with a interest rate of 85%, you hold on to your wallet and dash out of the door immediately!
It is simple mathematics, really! Simple mathematical formula of: A-B
If “A” = Income and “B” = Expenses
If A is greater than B A-B = Positive = Financial Security
If A is lesser than B A-B = Negative = Financial Worry
And it doesn’t matter if your “A” is $20,000 per annum or $20million per annum.
Keep these in mind. Keep learning. Keep growing. Wishing you every success on your Financial Journey!
If you have any feedback or enquiries, feel free to leave a comment. Alternatively, you can email me at mywealthmodel (@) gmail.com