WSOP Windfall... What is a boy to do?!?!

[Kneel B4 Zod]

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Take 50K, learn to daytrade. Take it slow, learn as much as you can. There are lots of great resources/boards on the web.

I'd buy real estate with the rest, buy a nice car and pay off debts.

Congrats btw.

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This would be an example of bad advice.

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I'm guessing you're refering to the daytrading? You can make great money if you know what you're doing.

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he was probably referring to your whole post

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So you're telling me that renting, buying a POS car and not paying off debts are better alternatives?

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renting could be better than buying, buying a nice new car can be a bad financial move, and not all debts should be immediately paid off. it all depends.

[Jurollo]

FWIW this is the post I made in BFI, with extra info.

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Hey all,
I recently posted this in the El Diablo forum and was told to repost here. So here I go. If you need any more information then please ask as I don't know exactly what info you folks will need. I want to learn about this stuff so I can do it on my own and am fairly zealous about the process so I look forward to book recommendations as well.

I am a 23 yr old college grad who currently is renting a 1BR in Boston till Sept 1. After that I don't really have a problem renting for a little while longer, I enjoy the city and dont have any real need to buy a house immediately. I have $19,000 in college loans left sitting @ 4.75% interest and besides that am totally debt free.

Along with the $244k I won at the WSOP I have another $100k+ in winnings this year so I looking at around $380k or so net income before taxes. My main goal right now would be to knock that number down a bit with some tax deferred accounts, but unfortunately I think I might make too much for some of the options out there.

I plan on investing approximately $150k-$200k of my winnings right now and would like to use it for the future rather then the here and now. I am employed right now part time as well and make about 30k outside of poker, which I file as income from my own business (as it is contracted work). That pays for bills for the most part and I use my poker money for savings. My main goals here are to:
A) Decrease my tax liability
B) Build for early retirement
C) Increase my attractiveness for a mortgage (As a self-employed poker playing 23 yr old I am not candidate #1 on mortgage company's lists)

Also I have a credit score in the high 600s if that makes any different. Thanks.

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[DeezNuts]

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Take 50K, learn to daytrade. Take it slow, learn as much as you can. There are lots of great resources/boards on the web.

I'd buy real estate with the rest, buy a nice car and pay off debts.

Congrats btw.

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This would be an example of bad advice.

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I'm guessing you're refering to the daytrading? You can make great money if you know what you're doing.

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he was probably referring to your whole post

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So you're telling me that renting, buying a POS car and not paying off debts are better alternatives?

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Pretty much, yes.

[Aloysius]

Benal - you just recommended a "nice new car purchase" as a good investment per the OP? I mean, hate to pile on, but wow. You are surely smarter than this.

-Al

[ArturiusX]

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Take 50K, learn to daytrade. Take it slow, learn as much as you can. There are lots of great resources/boards on the web.

I'd buy real estate with the rest, buy a nice car and pay off debts.

Congrats btw.

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This would be an example of bad advice.

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Its good advice if you consider poker coming to an end. I play both poker and day trade, and I'd hate to think how worried I'd be if I was pure poker.

[TheMetetron]

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Jurollo,

Buy a relatively cheap home you'd like to live in for the next five years. Put at least 10% down. Others may tell you less, f them, stay overwater and buy peace of mind and resistance against spewing cash. Google "home equity line of credit." Put a bunch in that - it's ready cash. Then get a 30-year or interest-only loan on the rest. Keep your living expenses low. Do not buy an expensive house. They're only good if you get a ton of utility out of living there or if you suck at saving money. Home > townhome or condo for appreciation. Watch out for HOA dues and condo association dues.

Consider buying a duplex, but don't buy one in a slum and try not to buy an old one unless it's quite underpriced due to paint-and-carpet issues.

You may be able to put 40K+ aside per year into an IRA as a professional gambler. Very much worth finding out.

And never assume your hired advice - lawyer, accountant, real estate agent, financial planner, etc - knows what he is talking about.

Matt

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Lest everyone think I was being overly negative, I tried posting earlier that this was an example of good advice, but 2+2 was being 2+2. The part about people you pay not necessarily knowing wtf they are talking about is true more often than it should be.

[TheMetetron]

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FWIW this is the post I made in BFI, with extra info.

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Hey all,
I recently posted this in the El Diablo forum and was told to repost here. So here I go. If you need any more information then please ask as I don't know exactly what info you folks will need. I want to learn about this stuff so I can do it on my own and am fairly zealous about the process so I look forward to book recommendations as well.

I am a 23 yr old college grad who currently is renting a 1BR in Boston till Sept 1. After that I don't really have a problem renting for a little while longer, I enjoy the city and dont have any real need to buy a house immediately. I have $19,000 in college loans left sitting @ 4.75% interest and besides that am totally debt free.

Along with the $244k I won at the WSOP I have another $100k+ in winnings this year so I looking at around $380k or so net income before taxes. My main goal right now would be to knock that number down a bit with some tax deferred accounts, but unfortunately I think I might make too much for some of the options out there.

I plan on investing approximately $150k-$200k of my winnings right now and would like to use it for the future rather then the here and now. I am employed right now part time as well and make about 30k outside of poker, which I file as income from my own business (as it is contracted work). That pays for bills for the most part and I use my poker money for savings. My main goals here are to:
A) Decrease my tax liability
B) Build for early retirement
C) Increase my attractiveness for a mortgage (As a self-employed poker playing 23 yr old I am not candidate #1 on mortgage company's lists)

Also I have a credit score in the high 600s if that makes any different. Thanks.

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I'd be inclined to immediately pay off that debt.

[Temp Hutter]

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1. Definitely file as a pro and max out your SEP IRA (or Individual 401k depending on what is best for you). This is $45k that goes in before taxes and grows tax free. You can withdraw at 59 1/2 and pay normal income tax on the money.


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Why "file as a pro" and pay the extra self employment taxes? Even once he hits the max on social security he still has to pay both halves of medicare on the whole thing. I would not be so sure that the retirement benefit outweighs the extra taxes.

OP - Don't forget that any buyins for the rest of the year are tax deductible. That means the WSOP ME will only cost you approximately $6,500 after taxes. (this is an estimate without knowing the exact tax rate for MA and your tax bracket).

[Jurollo]

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1. Definitely file as a pro and max out your SEP IRA (or Individual 401k depending on what is best for you). This is $45k that goes in before taxes and grows tax free. You can withdraw at 59 1/2 and pay normal income tax on the money.


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Why "file as a pro" and pay the extra self employment taxes? Even once he hits the max on social security he still has to pay both halves of medicare on the whole thing. I would not be so sure that the retirement benefit outweighs the extra taxes.

OP - Don't forget that any buyins for the rest of the year are tax deductible. That means the WSOP ME will only cost you approximately $6,500 after taxes. (this is an estimate without knowing the exact tax rate for MA and your tax bracket).

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That was my initial thought about the SEP IRA, while it is tax deferred I am still going to get slammed on the self employment if I file as a pro, rather then just filing my consulting funds as my primary income with lots of gambling winnings.

[TheMetetron]

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1. Definitely file as a pro and max out your SEP IRA (or Individual 401k depending on what is best for you). This is $45k that goes in before taxes and grows tax free. You can withdraw at 59 1/2 and pay normal income tax on the money.


[/ QUOTE ]

Why "file as a pro" and pay the extra self employment taxes? Even once he hits the max on social security he still has to pay both halves of medicare on the whole thing. I would not be so sure that the retirement benefit outweighs the extra taxes.

OP - Don't forget that any buyins for the rest of the year are tax deductible. That means the WSOP ME will only cost you approximately $6,500 after taxes. (this is an estimate without knowing the exact tax rate for MA and your tax bracket).

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That was my initial thought about the SEP IRA, while it is tax deferred I am still going to get slammed on the self employment if I file as a pro, rather then just filing my consulting funds as my primary income with lots of gambling winnings.

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I'm not so sure you are going to end up getting a choice in the matter. They may consider you pro regardless especially with online winnings of 3x your "normal job". How have you done in past years?

Also, there are a ton of things that can be written off when filing as professional that can't as a recreational player. Airfare, hotel, 1/2 of food while traveling for tournaments. Computers, monitors, software, home office space, etc.

It isn't like I have a choice (if I tried to file recreational the IRS would laugh at me and send me a bill) but even if I had a choice I'm not so sure recreational would be better. After $90k or so the added SE tax is very, very small. Don't forgot that 1/2 of that is deductible as well.