An Open Letter to Trent Richardson on His Financial Problems

I was born in Pensacola, FL in 1990. So was Alabama’s former star running back turned NFL player Trent Richardson. Stories are all over the internet about how his friends and family spent $1.6 million of his money over 10 months as his career fell apart this past year. While others lived high on his dime, he spent as little as $300 over two weeks.

I went to Pensacola High School, the arch-rival of Trent Richardson’s Escambia High School across town. When somebody has success from Pensacola, everybody gets excited. When they struggle, people in Pensacola love you anyway. In that spirit, as a fellow Pensacolian, I want to submit this open letter to Trent Richardson. I will show how he can secure his finances against the leeches who have been living large at his expense. Hopefully it will inspire others who are struggling with friends and family who believe that your money is their money. I’ll first describe Richardson’s career and financial situation for those unfamiliar with his story, followed by my letter.

Quick Summary on the Stunning Career Arc of Trent Richardson and His Financial Situation

Trent broke many records in high school when he played for the Escambia High Gators. Escambia High School is also the home team of career NFL rushing leader Emmitt Smith, with whom he elicited comparisons. In one game, he ran for 419 yards and six touchdowns. The national attention he received from his incredible play led him to sign with the Crimson Tide at the University of Alabama. There, he rushed for thousands of yards and dozens of touchdowns, lead the team to two national championships, and almost won the Heisman trophy. I personally watched him dismantle my beloved Florida Gators with his powerful running style at a home football game in Gainesville.

This incredible college success led NFL scouts to call him the next Adrian Peterson. The Cleveland Browns drafted him third overall. He had some success in his first season with the Browns, but the team traded him the following season to the Indianapolis Colts. Trent Richardson had limited success with the team. He eventually played for the Oakland Raiders and Baltimore Ravens briefly, but is not currently on an NFL roster.

The Browns gave him a guaranteed contract worth $20.5 million. At one point, the Colts owed him $3.1 million, and the Raiders owed him $600,000. At a minimum, Trent’s total career earnings are $24.2 million. After taxes and agent fees, he probably took home something between $10 million to $12 million, so let’s use the $11 million midpoint of that range as an estimate.

Trent’s problems are in large part due to his family and friends. His brother earned a personal assistant salary of $100,000 a year until Trent did a financial review in late 2015. Trent has said that at one point, he had 11 Netflix accounts and 8 Hulu accounts taken out in his name. When he looked at his bank statements, he noticed bills for bottle service, Amazon.com, and more, despite the fact that he doesn’t even drink.

He bought an $850,000 house in Cleveland when the Browns drafted him. Almost a dozen people followed him, who all lived rent free. He also rented a house for his mother nearby. When the Browns traded him to the Colts, his family and friends living at his house didn’t help him move and forced him to hire expensive movers to get his things to Indianapolis, where he also bought an expensive house to accommodate all the people around him. He also bought a $350,000 house in Pensacola for his grandmother. Trent Richardson is clearly a very generous man, but people around him also clearly like to take advantage of his kind nature.

He regularly doled out $10,000 at a time when folks would come to him begging for money to avoid a car repo or house eviction. He paid for five funerals at a cost of $12,000 each when people cried saying they couldn’t afford to pay for them. If he lost $1.6 million in the past 10 months from the spending of friends and family, his total losses are likely three to four times that amount. After all, the Browns drafted him in 2012. Even though that spending figure is for 10 months, I will assume that he lost $1.6 million each year over four and a half years to simulate his current financial situation. If he took home $11 million total, that would leave him with $3.8 million. Enough about his story; it’s time to talk to my Pensacola neighbor Trent.

…

Dear Trent Richardson,

In the past several years, you’ve seen people’s true colors. The folks who truly care about you haven’t come for your money or your fame. The friends and family still around you despite having to sever the cord of financial support are the ones who matter. A life is not defined by success on the football field. You may yet have a shot at playing in the league again.

Even so, if you never play another down of NFL football, you make a huge impact in young men’s lives. Of this I’m sure. Whether that’s starting out as an assistant coach in the weight room at the University of Alabama, as a head coach of a high school football team, or something outside of football entirely, I believe God has an awesome and powerful plan for your life. Because of this promise, I’m focusing on the financial implications of where you’re at now. You can support your immediate family for the rest of their lives comfortably. All you need to do is follow the steps I’m going to recommend.

First, you need to cancel almost every single account that you have. Every credit card, bank account, line of credit, car loan, and mortgage that is currently out in your name needs to be gone. It’s okay to keep one credit card for convenience purposes, but it should be one that carries no annual fee. Furthermore, you should keep a credit limit on this card of less than $10,000 to prevent any unauthorized users from running up huge bills, like they probably did using high credit limit cards marketed to people with high incomes like American Express. No matter what anybody tells you, anything more than one credit card puts you at major risk of losing the rest of the money that you have.

You should only have one bank account with one institution. The government insures your money up to $250,000, and that’s the max that should ever be held at the bank because the rest should be in diversified Vanguard index funds. By eliminating all your current bank accounts, you get rid of all the automatic deductions your friends and family have set up. By closing all these bank accounts with their high fees and fancy bank managers, you stop the bills for bottle service. You stop the car payments. You stop the auto-debit of your second cousin’s utility bill.

Everything has to go, along with the accounts and professionals who cared so little about you that you got to this point. This includes any lines of credit a bank has offered you. They couldn’t care less about you or your family; to them, you’re a number. The only reason they want to lend you money is because they can charge you big interest rates to make big bucks off of you. So tell every bank that you don’t want their loans or their money, and settle up any outstanding accounts that you have.

Eliminate every car loan that’s out in your name. If you have multiple cars, sell them until you own only one. Cars lose a ton of value right up front, so if you can make sure your car is at least five years old with over 50,000 miles, you’ll save a ton of money. Some of the stories I saw had people coming to you for $10,000 to keep their car. If they’re spending that much on a metal box with wheels, they’re just out to live large and their sob stories are total crap. You can get a functional car for $2,000-$3,000 to drive around town. If your partner or other family members want wheels, offer them yours if it’s available. You’ll find out how much they really need the help if they take an ECAT bus across town to use it.

Many football players who grew up poor have goals to put their moms and grandmas in nice houses to thank them for all the hard work they put in raising you. I get this and commend you for your selflessness. My mom put in a ton of work raising me too and I’d probably want to thank her financially as well if I ever got access to a lot of money. However, at this point you have to tighten the belt big time and budget. You bought a $350,000 house in Pensacola with five bedrooms for your grandma. This is the only house you should ever own going forward.

Every other home in Cleveland or in Indianapolis that you bought needs to be sold if it hasn’t been already. Houses are terrible investments. After deducting the property taxes and maintenance expenses, most houses destroy wealth. You should simplify your life. You can negotiate aggressively for an agent who will sell your home for a 4% to 5% commission. Since the housing market has recovered a lot since you bought most of your houses, you might be able to break even and get rid of all the mortgage payments.

In terms of the house you still own in Pensacola, it’s fine to keep it. The property taxes are probably around $2,000, and the maintenance expenses are likely below $5,000 a year. When your grandma grows too old to live by herself at home, the government will subsidize care at a nursing home through Medicaid if she doesn’t have the money to pay. And you’ve paid more income tax in the past five years than most people do in ten lifetimes. You’ve paid big money to support programs like Medicaid, Social Security, and Medicare. You should allow the government to pay for your grandmother’s needs.

If you own the home, that’s good. With five bedrooms, it’s big enough to house you, your mother, brothers, and whoever else you want. If you gave it to your grandmother directly, then you should ask her to meet with a lawyer. She should leave it 100% to you in her will. If you don’t do this, then the same people who’ve been bleeding you dry will demand their cut when she passes. They’ve already shown that they care about money more than you. You’ve already paid for this house yourself, so it needs to stay in your possession. In fact, you could ask your grandma to gift the house back to you tax free. Just talk to any accountant in downtown Pensacola. They can help accomplish this for you in an afternoon.

After all this simplification, you got one house, one car, one credit card, and one bank account. You got your finances under control, and you got all the leeches off the payroll. You got yourself protected against bills coming to you in your name, so now it’s all about how much money do you have, what do you spend, and who do you trust to help you manage it.

My estimates are that you have about $3.8 million left. This is more than enough to allow you to do anything you want for the rest of your life. My first advice is about the guys who are currently managing your money. Every advisor you have needs to be fired. If they let you get in this situation, they didn’t do their job. You said that your guy told you people were taking your money. However, he clearly didn’t care until his high fees were under threat from you running out of money. He didn’t push you to take a hard look at your finances until it was almost too late.

My bet is that you have a typical NFL financial advisor who recommends high-fee financial funds. He probably charges 1.3% a year on your portfolio on top of other fees in the financial funds you own. I bet that he outsources all your tax stuff, legal needs, and other financial management to third-party professionals. I’ve written about how to pick a financial advisor extensively on my website. Over five years, a typical Merrill Lynch, Morgan Stanley, or other fancy financial advisor aligned with a national Wall Street bank can cost you 10% of your account balance in fees. So if you got $3.8 million left, if you leave it with your current advisor he’s probably going to get $380,000 out of you in the next five years. Get rid of him.

Now that you fired your financial advisor, who should you turn to for help?  You should be skeptical of everybody that says they’re out to help you. You should be suspicious of me! Ask me how much money I stand to make off of you if you listen to me. Ask the same question to anyone seeking to offer you financial help. I make $0 if you go with Vanguard Personal Advisor Services. If you go with ultra-low cost investment managers Betterment or Wealthfront, I earn a tiny commission (like something around $50).

Vanguard will give you a lot more service and charge a little bit more. You won’t have someone to meet with face-to-face since Vanguard has a big office where all the advisors take calls. They charge 0.3% of your portfolio a year for helping you make and implement a financial plan and budget. I’d probably go with them since you will want a full-time professional you can call to help with your finances.

Another idea is that you go with Betterment or Wealthfront for their lower fees. The problem is you will handle more on your own. They’ll make all the investments and manage them for you using low-fee index funds. They manage taxes through smart re-balancing, which helps you pay much less to the IRS. They won’t help with budgeting or financial planning though, outside of an occasional consultation with a Certified Financial Planner.

To be honest, I bet if you called up Betterment or Wealthfront, they would agree to provide all your financial planning needs in exchange for using your name and story to publicize their services to reach a broader audience. Just because you aren’t on an NFL team doesn’t mean you can’t still earn money from endorsements directly and indirectly. After all, your name in the state of Alabama and the Florida Panhandle is still legendary and always will be. You could probably go sell Alabama physician mortgages and make a six or seven figure income still.

If you hire Vanguard, Betterment, or Wealthfront, your total fees over five years will probably be about 2% of your portfolio value. Instead of paying the same guys who screwed up your finances, you can pay one-fifth as much money and get superior service. If you have $3.8 million left, instead of losing out on $380,000 in the next five years, you’ll only pay $76,000, leaving more money for your own family.

In terms of figuring out how much you can spend each year, you only have to take what you have left and divide it by 25. You would probably benefit enormously from signing up with the company You Need a Budget to track your expenses. They only cost $50 a year, and will help keep your spending on track. So to use this rule with your hypothetical $3.8 million portfolio, you can spend $152,000 a year for the rest of your life. That’s an extremely comfortable living for a family in the Southeast. If you lived in California or the Northeast, that money would not go very far.

Each year, call your investment company and ask them to sell $152,000 of investments. They would then deposit that money in your bank account. Then, do not touch your portfolio the rest of the year. Allow your chosen investment management service to take care of everything for you. As far as you are concerned, you do not have any money except for what’s in your bank account for the rest of the year. As far as your friends and family are concerned, you’re dead broke (though technically, that’s not true). If anyone asks you for money in any way, have them call your financial advisor if you feel bad about telling them no.

You likely have a lot of earnings in your future. Obviously, football coaches still get a salary. If you work with a small business or allow a restaurant to use your name, you’ll make money from that. Take half of all your future earnings and put them in your investment account with Vanguard, Betterment , or Wealthfront. The rest you can do with as you please.

If you follow this advice, you will be one of the biggest success stories in the history of football. Your financial troubles will never be the story on ESPN again. When the second installment of the popular 30-For-30 documentary Broke comes out, ESPN will not feature you, except as a soaring example of how athletes can take control of their own finances.

I hope to see you around town sometime in Pensacola. My buddy told me he saw you bowling once at Cordova Lanes on Airport Blvd. You were really kind, posing for photos and signing autographs. Though I never met you in person, I’m proud of the way you represent our city on the national stage. Contact fellow Pensacolian Alfred Morris, who played his high school ball at Pine Forest High. He is probably one of the most frugal players in the National Football League.  Alfred really seems to be an expert at budgeting his money.

If you read this and wanted to reach out, I’d love to hear from you at [email protected]. You can also find me on my Facebook page Millennial Moola, where you can leave me a message. I’m just a personal finance blogger and don’t have an active license to practice financial advice. Therefore, any thoughts I give you are free. In the meantime, I wish the best success for you personally and professionally as you rehab in Pensacola for one more shot in the NFL.

All the Best,

Travis

MillennialMoola.com Founder