Save Like a Pro: Financial Advice From Famous Athletes

by Jorge Santiago

What do you think happens to the millions of dollars paid to today’s professional athletes? Do you assume that all of them have fat bank accounts? If so, you’d be wrong. Unfortunately, many of these heroes of the gridiron and diamond squander their earnings. In fact, 78 percent of former NFL stars go broke within two years of their retirement, and 60 percent of NBA stars also find themselves in financial ruin once their stars have faded, according to a historic 2009 Sports Illustrated article.

As the Sports Illustrated article reported, the main causes behind these massive financial losses include bad investments, excessive spending, divorce, and mismanagement of funds by trusted advisors.

But then there are the sports figures who manage to keep their accounts in the black, such as Shaquille O’Neal, Phillip Buchanon and Derek Jeter.

How do these athletes manage to accomplish what their peers have failed to do? For Shaquille O’Neal, it’s simply a matter of doing his homework before investing, appearing in movies and television programs, endorsing a variety of products, and maintaining his own fashion lines in major department stores such as Macy’s and J.C. Penny. Despite spending $1 million in less than an hour after signing his first professional contract, O’Neal’s ability to invest intelligently and stay out of major debt came from simply saving his money. As O’Neal himself advises, “Let’s just say you got $100, you break it in half—smart people put $50 away and don’t touch it. Now you still got $50 left. But the really smart people, the people that know that one day you’re never gonna play again, they save $75 …”

Former NFL star Phillip Buchanon learned his lesson about finances the hard way. After signing his contract, Buchanon’s mother demanded that he pay her $1 million for everything she’d done for him. Instead of giving her the money, Buchanon bought her a house, which ultimately caused him “financial strain.” In his book “New Money: Staying Rich,” Buchanon advises new millionaires to do the following:

  1. “Draw a line between wants and needs.” Setting limits is imperative to avoiding the common financial pitfalls, such as giving away money and buying family members expensive things.
  2. “Watch out for takers.” Similar to setting limits, Buchanon advises new professional athletes not to give money to people just because they think you have it to spare. Setting up boundaries is fundamental to ensuring that people don’t take advantage of you.
  3. Surround yourself with people you can trust. Differentiate between true pals and fair-weather friends, as the real ones will want to ensure your well-being.

Another example of an athlete who has secured his financial future is 20-years baseball veteran Derek Jeter. This Yankee utilized a method similar to O’Neal’s, using his personal brand to start a business. He partnered with Simon & Schuster to publish books, and become a brand development officer and partner at the company Luvo. Jeter’s publication and business, “The Players’ Tribute,” is a way for Jeter to combine his own interests and experiences while providing professional athletes with an outlet for the release of information about their own careers or personal lives. By diversifying his sources of income and creating a new publication that filled a gap in the reporting industry, Jeter was able to maintain his financial position following his retirement.

If it is starting to look like your professional sports career isn’t going to pan out, fear not—by taking the financial advice of these former athletes, you can still save money with the best of them. Be sure to stop by any office of The Milford Bank to get more advice about achieving your financial goals.

Buying a Condominium? Carefully Assess the Related Association Fees First

by JoAnn Sabas

Are you like many customers of The Milford Bank who are looking to downsize from a large single-family home or start small with a first home? Then perhaps a condominium is right up your alley. If so, you may be becoming familiar with homeowner’s association agreements, which list mandatory fees for maintenance, capital improvements and other items for these housing units. These documents can be quite complex and detailed to ensure a uniform appearance among the many members’ homes.

What this means is that you should look beyond the price tag on your condo when determining whether or not you can afford the overall costs. Remember, some of the association fees may not be expenses you would necessarily incur as the owner of a single-family home. So, to avoid unforeseen costs that could put your financial stability at risk, let’s take a look at both typical inclusions and things to be wary of in these agreements.

To begin, standard homeowners association agreements generally charge maintenance fees for property aspects that are communal, such as landscapes, elevators, swimming pools, clubhouses, parking garages, fitness rooms, sidewalks, security gates, roofing and building exteriors. Depending on the neighborhood, the cost of living and the quality of the residences, these fees can range anywhere from $50 a year to several thousand dollars each month. Highly valued properties or locales excluded, you could generally expect something in the $200 to $400 range. In addition, a homeowner’s association may levy one-time fees, commonly referred to as “special assessments,” on members to cover major expenses, like the repair of a roof or a new HVAC system.

Conversely, here are some potential costs that could sour the deal for you:

  • Pre-existing conditions. Review your association’s rules before diving into the purchase of your condominium. You may find that you’ll be held responsible for a prior owner’s failure to maintain the unit. To avoid a nasty surprise upon moving in, confirm that your property is already in line with all association building, maintenance and appearance guidelines. After all, you don’t want to get started on the wrong foot with your residence’s governing body. Buying into an undisclosed problem will likely cause tension with board members or neighbors from the get-go. Also consider your own personal attitude when it comes to adhering to regulations about the type of flowers you can plant or colors you can paint. Some homeowners place great store on such freedoms; if this is you, be sure to read the fine print.
  • Fee assessment and funding. Does the association have catastrophe insurance, or will you be expected to pay out of pocket for damages caused by a flood, hurricane or tornado? How does the association determine fee increases in general? Can you obtain minutes from previous meetings? Is a record of dues and fees kept and maintained, and is it accessible? What do the association’s financial reserves look like? Consider that 70 percent of association-governed communities are underfunded, with most only being 52 percent funded. These are all questions to have answered before, not after, signing on the dotted line.
  • Amenities. You are going to be on the hook for amenities such as clubhouses, tennis courts and pools whether or not you use them.

The Milford Bank is in the business of ensuring the future financial health of our clients. Never hesitate to consult one of our financial professionals before making a home-buying decision.

The Milford Bank is an Equal Housing Lender.

Why You May Soon Be Seeing Yet Another New Chip in Your Credit Card

by Patty Gallagher

When it comes to finances, concerns about privacy and security are not always top of mind for consumers performing a common action like making a purchase. And maybe they should be, since today’s customers frequently shop using plastic—most commonly a credit or debit card, which can be directly linked to their bank accounts. Trusting customers swipe their cards and type in their PIN numbers not realizing that their transactions, which contain their personal identification information, might not be secure.

Following the theft of millions of customers’ information in 2013, when a major data breach at Target affected 40 million customers who had used their credit or debit cards between Nov. 27 and Dec. 15, banks and credit card companies decided to increase the level of security for credit and debit card users by installing a chip into each card.

This chip, called a radio frequency identification (RFID) chip and installed in EMV cards, or cards that meet the international standard of chip security and technology, produces a one-time code for each transaction. The card number is not recorded, as was done in the past—just the transaction code—reducing the ability of thieves to obtain card information.

Yet, as with any security technology, hackers have found ways to undermine the RFID chips by studying the radio frequency used and the fluctuations in the chip’s power source, scanning and then rewriting the chips to reflect their own data.

So, now what? Well, according to an article published by Science Daily on Feb. 3, MIT and Texas Instruments researchers have developed a new RFID chip that is almost impossible to hack. This newly designed chip will circumvent hackers by providing a power source within the chip (to mitigate any fluctuations in power) and memory cells that retain the information the chip is processing at the time the chip begins to lose power. As the chip will remember the data it was processing, hackers will not be able to rewrite or reroute the chips to reflect their own data.

One downside of this newly developed secure RFID chip is that it will mean longer checkout times for the consumer, as the chip will have to power on and store the data being processed every time the chip is activated.

In an era filled with constant threats to credit and debit card security, these technological advancements couldn’t come at a better time. While the level of privacy expected by bank and credit card customers may not have changed, the lengths to which financial companies have to go to secure personal information has undoubtedly increased. As hackers become more proficient at stealing personal information, banks, including The Milford Bank, will continually seek new ways to protect their customers. As new technology is developed and rolled out, we’ll keep you posted!

What is the ROI of a College Degree?

by Lynn Viesti Berube

Attention high school grads: are you heading off to college in the fall but not quite sure what you want to study?

You are not alone.

According to recent statistics, as many as 80 percent of college freshman walk onto campus for the first time without having chosen a major. Moreover, upwards of 50 percent of those who do choose a major early end up switching majors at some point—often two, three, or even four times!

This article will give you several of the most rewarding majors in terms of return on investment (ROI), in order to help guide you in a smart direction financially, and can also show you what you can do with each degree. After all, college is expensive—why not make the most of it!

Without further ado, here are five of the best majors to consider in terms of ROI:

  • Economics

Pardon the bad pun, but economics majors really are getting an “economic” college education. The ROI of an economics degree from a public university is 182 percent—the highest on this list!  In terms of actual jobs and salaries, the median income for a corporate economist is over $115,000, while the average salary for an investment operations manager is nearly $143,000. Economics majors may see sustained job growth in this sector going forward.

  • Information Technology

Few industries are growing at a faster rate than IT, and that trend should continue through at least the next decade as mobile networks continue to expand, and healthcare IT becomes more prevalent. IT majors possess a skill-set that can be utilized in many facets of business.  The ROI for IT majors can range anywhere from 126 percent for web application developers (a position with incredible demand), to 169 percent for IT managers.

  • Math

According to the Occupational Outlook Handbook, math majors may have a tremendous number of opportunities available to them once they graduate. Math occupations are expected to grow by 28 percent over the next decade, and any position that requires complex computation likely requires a math major. From accounts payable/receivable managers to actuaries, many math majors earn well over 100 percent ROI with their degree.

  • Engineering

The last two majors on this list comprise the fastest growing set of majors across college campuses. Over the last five years, science and engineering degrees grew by over 19 percent (compared to 9 percent among other majors). The world simply needs more engineers, whether it’s electrical engineers (median salary of $92,000), civil engineers ($82,000) or chemical engineers ($76,000).

  • Biology

While behavioral science has seen a staggering 89 percent growth over the last five years to pace the sciences discipline, biology is the much better long term investment for students. The average salary for a behavioral science major is just $34,000—well below jobs that are available to those with a biology degree—such as health and safety supervisor ($72,000), clinical research associate ($72,000), and laboratory manager ($85,000). All three of those positions offer an ROI in excess of 100 percent.

For more advice on how to get the most out of your college education, stop by any office of The Milford Bank!