Fallen Stars: Allen Iverson

The story of former NBA basketball player Allen Iverson could have been a classic example of the American dream; a rags-to-riches tale in which a gifted but troubled kid from Hampton Victoria rose to the very top.

Unfortunately for Iverson, it didn’t end well.

Despite earning $155 million in wages during a glittering 15-year career that saw him bag the NBA’s coveted Most Valuable Player award and make the NBA All-Star list 11 times, Iverson has fallen on hard times, so much so that at his divorce hearing in 2012 he declared that he didn’t have enough money “for a cheeseburger”.

That’s right. A cheeseburger.

Entertainment website Bossip have put together this great summary of the seven reasons that Iverson went broke.

And while it all sounds slightly insane and out of this world, the story actually offers some great insights about what not to do with your money. Here are three lessons regular people can learn from the rise and fall of Allen Iverson.

  1. Don’t be reckless with money

Iverson was notoriously reckless with his cash.

From supporting a 50-strong posse at the height of his fame (MC Hammer could have warned him), to dropping ridiculous sums on houses, cars, gifts and jewellery, he spent his money as fast as he could earn it.

And he earned it pretty fast.

But like all good things, his glory days of earning had to come to an end. By 2012, his monthly income had fallen to $62,500 but he had expenses of over $360,000, mainly to creditors.

Which goes to show that no matter how much you’re pulling in, it’s important to live within your means and spend less than you earn, otherwise that reckless spending will eventually catch up with you.


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  1. Don’t be financially ignorant

Despite a pay cheque that would make a banker blush, Iverson didn’t do much with his money except spend it.

He didn’t invest in shares, top up his retirement savings, or put anything away for the future, and ultimately it cost him everything.

Let’s do a little rough maths. $150 million in wages over a 15-year career means that Iverson’s monthly pay cheque averaged around the $830,000 mark.

Investing just one month’s pay in shares, for example, would have generated him over a million dollars in profit over 10 years assuming an average annual return of 9 per cent.

Imagine the potential if he had just sorted out a savings plan or taken the time to learn about investing.

And while the numbers might be different, the concept is the same for the rest of us. Don’t put off taking an interest in your money and investing for the future, because one day it might be too late.


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  1. Don’t fall victim to short-term thinking

Later in life, Iverson became infamous for his disastrous form at various casinos across the USA.

These sessions would often see him rack up losses of over $1 million in a single evening, a ridiculous amount of money by anyone’s standards.

But Iverson also gambled in other areas of his finances, such as with lavish property purchases at questionable times that resulted in millions of dollars in losses.

The thing is with gambling, no matter if it’s at the casino or speculating on investments, eventually the house will always win.

It’s a much better bet to take a long-term view and invest in great assets for the future, rather than hoping to get lucky and make a fast buck on the next big thing.

Finally, if all this sounds a little depressing, don’t feel too sorry for the troubled star.

In one piece of financial good fortune, Iverson signed a life-long deal with Reebok at the height of his fame that entitles him to a $30 million trust fund when he turns 55.

Not a bad ‘get out of jail free’ card.

Image: Keith Allison, via Flickr