Nov 25, 2024
Former Minnesota Vikings star running back Adrian Peterson has been ordered by a judge in Houston to turn over numerous personal assets to help repay an estimated $12 million-plus in debt, according to USA Today.
Surprisingly, the NFL legend finds himself in this position despite being one of the highest-paid running backs of all time during his illustrious career from 2007 to 2021.
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“AP, bro, you made $100 million,” a shocked Shannon Sharpe said during an episode of sports talk podcast “Nightcap” on Sept. 15, referring to Peterson’s career earnings as a player.
After the USA Today story was published, Peterson issued a statement through his publicist saying the debt originated from a loan to buy equipment for a business he co-owned and that he was led to believe it would be repaid from the business. He added that, as majority owner, he was named as the guarantor. However, the publication reports that documents show Peterson sought the money to help pay off other loans.
Hall-of-famer Sharpe suggested to co-host and fellow NFLer Chad “Ochocinco” Johnson that Peterson may have reckless spending habits. Sharpe referenced an extravagant 30th birthday party hosted by Peterson in 2015 that reportedly featured camels, lemurs, belly dancers and a palace-shaped cake.
“Dude thought he was Tarzan for real!” Sharpe exclaimed.
You can't outearn bad spending habits
Boosting income is generally considered a silver bullet for money problems. However, bad financial habits can outweigh the good that can come from high earnings.
This may be why many high-income families across America find themselves in financial stress. According to data from PYMNTS, 48% of Americans who earn over $100,000 a year reported they were living paycheck-to-paycheck. For those earning over $200,000 a year, the proportion was only slightly better at 36%.
A $200,000-plus salary should be sufficient to live comfortably in most parts of the country. However, some consumers feel pressured to overspend. More than half (51%) of Americans admitted they’ve overspent just to impress others, while 56% of this cohort said this need to impress people pushed them into debt, according to a survey commissioned by LendingTree.
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By controlling spending and living within one’s means, consumers can avoid this vicious cycle of lifestyle inflation fueled by social pressure.
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Bad debt can rapidly escalate
Peterson’s story highlights the dangers of bad debt.
According to USA Today, court documents reveal that Peterson took a $5.2 million loan from a lending company in Pennsylvania in 2016. Prohibitive interest rates and legal fees helped that initial loan balloon into a total liability of $12.5 million as of February.
Ordinary Americans can’t access multimillion-dollar loans from specialized financiers, but poor financial habits can still get them in trouble. As of 2023, 23 million Americans had an unsecured personal loan with an average outstanding balance of $11,500 and average interest rate of 11.48%, according to an analysis by MarketWatch Guides.
Meanwhile, household credit card debt ballooned to $1.17 trillion in the third quarter of 2024, according to the Federal Reserve Bank of New York. As of August, the average interest rate on a credit card is 21.76%, per the St. Louis Fed.
Paying off these expensive loans and credit cards to get rid of the burden of a monthly payment could help stabilize a household’s finances and place it on the path to wealth accumulation rather than destruction.
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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.
