Mar 17, 2025
Despite their multimillion-dollar salary packages, professional athletes often face financial struggles after they leave the field.
That’s according to real estate mogul Grant Cardone, who recently posted a video on YouTube explaining why.
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“Many ball players go broke after they retire, not because they retired but because they didn’t plan for their retirement that you knew was going to happen anyway,” the 66-year-old entrepreneur and investor says in the clip, “and they spend a bunch of money on bulls–t.”
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According to Craig Brown, a partner at NKSFB Sports Business Division, an astonishing 78% of professional athletes face bankruptcy within just three years of retiring.
In one famous example, NBA basketball legend Allen Iverson reportedly filed for bankruptcy in 2012 after lavishly splurging on jewelry and luxury gifts for friends, according to Style magazine, illustrating Cardone’s argument about reckless spending habits.
Unfortunately, the temptation to stretch budgets and go into debt isn’t limited to multimillionaire athletes. Here’s how ordinary American families are falling into a similar trap.
America’s growing debt trap
Despite the rising cost of indulgences, families haven’t cut back on spending but instead covered the gap between their income and desires with credit.
A full 36% of American consumers said they were relying on debt to fund a vacation, according to Bankrate. Meanwhile, 51% of people admit to spending beyond their means to impress others, according to LendingTree.
Consequently, the nation’s collective pile of debt has been expanding in recent years. According to the Federal Reserve’s latest Household Debt and Credit Report, consumers collectively have $1.21 trillion in credit card debt and $1.66 trillion in auto loan debt at the end of the fourth quarter of 2024.
Put simply, the average family is more exposed to financial shocks and a sudden loss of income.
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With this in mind, Cardone says he sets a strict guardrail on unnecessary and recreational expenses. Here’s how his model works.
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Passive income only
“I buy bulls–t from passive income only,” Cardone explains in the video.
Fortunately, his extensive portfolio of real estate investments gives him plenty of flexibility. Claiming to own 7,000 apartment rental units, he says his annual revenue from a single 250-unit property is roughly $6.6 million.
Cash flow from this revenue stream is what he earmarks for indulgences.
“How stupid can you go? You can go as stupid as your cash flow,” he says.
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A similar framework could ring-fence your personal finances, too. Reducing consumer debt and accumulating a six-month emergency fund could be the first steps. Meanwhile, a tight budget for active income can help you manage necessary expenses such as groceries, rent and transportation.
Investing excess cash flow in assets that generate passive income could give you room to indulge.
For example, dividend stocks like Realty Income Corp (O) offer a 5.86% dividend yield. Investing $10,000 in this stock could deliver $585 in annual passive income, which you could either re-invest or spend on gifts for family members or a short weekend getaway.
Cardone’s approach prioritizes necessary expenses and puts a firm limit on temptations, which is a pragmatic way to achieve financial security.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
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