Relax, Just Go Bankrupt like a Pro!

I recently watched an old interview of Warren Sapp. For those who are not into football, Warren Sapp is one of the all time greatest defenders in the NFL. In this very contentious interview, Warren kept his financial business close to the vest. Although the interviewer was pressing him about a number of things, I was particularly struck by the discussion of his bankruptcy. It is cliche at this point to note how common professional athletes go broke. However, Warren didn't carry the manner of someone who had been humbled by losing all of his money. It wasn't until I connected his investments from another segment of the interview that I had to question my assumptions about the old story of "Pros going Broke".

Please note, this interview has strong language and may not be suitable for everyone.

As Warren would explain, he uses annuities for investing. The interviewer explicitly calls out the costly overhead of this style of investment especially for someone his age. However, I was struck by this overall approach. I think of annuities as a retirement investment. And suddenly a light went off. When you are in bankruptcy, the government generally can't go after retirement accounts. Think 401k or IRA. So I did a bit of quick digging, and I found an amazing article showing that you can protect your money in bankruptcy using annuities.

Now, I have no idea if Warren Sapp has actually purposefully used an annuity to put his money into before filing for bankruptcy, but I was immediately reminded that you should never judge a book by its cover. Often the standard "statistics" quoted online don't paint the full picture. In fact, they can often lead you to an entirely incorrect conclusion. #liesdamnliesandstatisticsyaknow Putting this all to one side. It brought back memories of my own past. As a young kid, I was a straight arrow. #eaglescout4life #wasbeingvaledictorianworthit I would have looked disapprovingly at such behavior but then I entered the real world after college, and I realized my idealized thinking was flawed.

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)

Yes, legal discussions have repeatedly acknowledged that no one should feel any obligation to pay more taxes than the law requires. And I could go so far as to say that no one should pay more in bankruptcy than is required. But this principle can actually be taken even further. In the field of mathematics, there is the principle of relaxation. Philosophically, the person trying to solve a problem may "relax" the rules and take a "penalty". While you may not be resolving the original problem, solving a very similar problem can be highly beneficial. Another way of looking at this is that you may choose to break a rule if the penalty is not too high!

Now this may seem like a very radical point of view, but it honestly is not. Many people have suggested such things in the name of sports. Back during the 2010 World Cup, Luis Suarez, Uruguayan Striker, stopped a certain goal from being scored by using his hands. As events would have it. Ghana missed the ensuing penalty, and they were knocked out of the world cup on penalties in overtime by Uruguay. This incident caused immense debate, but those who were indoctrinated in the concept of Relaxation would have immediately realized the Suarez broke the rules and was punished under the letter of the law. The punishment was still not enough to ensure that Ghana would successfully win the match. As such BBC reported that Ghana still has not forgiven Suarez for the incident. If we are to believe this report, it would seem that Ghana failed to learn the ultimate lesson. If they wanted to exact justice in their eyes, they needed to convert the penalty and lobby FIFA for rule changes to make the punishment even more sever. As long as the punishment does not sufficiently fit the crime, you can't blame someone who chooses to break the rules knowing the punishment will not be enough to deter them. Likewise, you can't really complain when people pay the least amount in taxes that the law allows and in some cases, they may be paying less than the law allows knowing that the punishment is not stringent enough to stop the behavior.

All of this leads back to a younger version of myself. The version that would have been utterly pissed off at Suarez. The version that would have made assumptions without real evidence of intent about how Warren Sapp was using the bankruptcy system to get one over on the system. Life is a game. We often don't get to make the rules of this game, but it's on each of us to learn the rules and play them to our advantage. If you end up winning the game, you can use your won influence to change the game, but there seems to be a large chunk of people like my younger self who refuse to learn the game, so that we can rise to the level of being able to change it. #lesstalkmoresavingmoredoingthisisthepowerofthehomedepot #youtubecomments #denzelistherealequalizer

#irreverentnoise #relaxationisthekeytolife #bankruptcyaintnothingtobeashamedof #somepeopleinbankruptcyarerich #dontjudgeabookbyitscover