Talking money with Oakland Athletics' Sogard(Read article summary)
NerdWallet talks with Oakland A's star Eric Sogard about how his family manages their budget, sticking with his long-term financial goals and the importance of financial planning.
The face of major league baseball wears glasses? That was very nearly the case when, over the winter, the Oakland A’s bespectacled second baseman Eric Sogard finished second in an online fan poll for the #FaceofMLB—besting the likes of former league MVP Buster Posey. Not bad for a guy who broke into a regular starting role just last year.
Eric caught our attention at NerdWallet for two reasons: his wearing glasses gave rise to the nickname “Nerd Power,” and it turns out he’s a great example of a professional athlete who’s financially responsible. On the eve of the 2014 season, we chatted with Eric and his financial planner, Brett Dimas from OFS Wealth, about the lessons he’s learned about money, some of the first big purchases he made (including one pricey pup), and how he’s working today to set his family up for the future.
NerdWallet: When you were a kid, how did your mom and dad first teach you about money? Do you remember your first money lesson growing up?
Eric Sogard: It was a pretty basic one: money doesn’t grow on trees. My brother and I didn’t really have an allowance. If we wanted to buy anything, they taught us that we had to earn it, save up for it. That was the big lesson.
Did you have a first job, like a paper route, or put up a lemonade stand or anything like that?
Sogard: No, unbelievably I haven’t worked one job other than playing baseball. My parents were amazing like that, letting us really focus on sports and school, which was nice.
Did that focus ultimately pay off in a scholarship to college?
Sogard: Yeah, I got a little baseball scholarship [to Arizona State University], but also an academic scholarship because I had good grades in high school.
Was that really important to your parents, that you guys were able to land those scholarships?
Sogard: Absolutely. Growing up, sports were a huge part of our lives—we were always playing—but my parents stressed that, “You gotta get good grades and keep working hard in school.” And sure enough, the scholarships were one way that proved to us it paid off. I may never have been able to go to ASU if it wasn’t for that. I truly wouldn’t be where I am today without my scholarships.
What did your parents do while you were growing up?
Sogard: My mom was a pharmacist and my dad was a stockbroker before he was diagnosed with leukemia in 1989; he never went to work after that, but he would do some day-trading after that.
Given his financial experience, did he teach you any specific lessons, about money or investing?
Sogard: Yeah, he’d teach us that there’s always investment opportunities out there—you never know when people will come to you asking for money to invest—but just always look into it deep, really have your heart in it if you’re going to do something.
After you signed your first good-sized contract, did you treat yourself or buy something extravagant for yourself or a loved one?
Sogard: It was tempting to, obviously, when you see that amount of money in your bank account for the first time—you want to go out and buy everything you want. But no, I had my sights set on buying a house, and I was able to do that and pay that off with my signing bonus [about $400,000]. This was in 2009, so the housing market in Arizona was starting to go down and we were able to get a good deal on a foreclosure. I took a good chunk of my signing bonus and just paid that house off immediately. And it’s been a great decision: I’ve been able to rent it out since then, and it’s been a cash flow coming in, which has been great. As I look back on it now, that’s the smartest thing I’ve done.
How did you resist going any more extravagant than that?
Sogard: I think having my mind set on the house, understanding how much that was going to cost, how much of my money that was going to take up, I kind of had to hold back in other areas. I’m sure there were probably a couple other things I didn’t need to buy. One thing I can think of: My girlfriend and I—thankfully, my wife now—we bought a dog from the mall. That dog probably cost us a good $1,700.
What kind of dog?
Sogard: It was a beagle. [laughs] Yeah, that was my big splurge.
So during the season, do you rent a place near Oakland?
Sogard: This past offseason, not even a month ago, we purchased a new house in Arizona, and Brett has helped me a lot throughout this process. But yeah, we rent a house up here. It’s actually one of my former teammates’—he was traded, so his place is open for the season. It kind of works out perfectly for both of us.
When we were talking with Brett last week, he mentioned that the financial planning he does at OFS is an “opt-in” service. Eric, what led you to opt in?
Sogard: When you sign, you’re really with the agent at first. Once I got up to the big leagues, and started making more money, it’s nice to have someone to help you keep track of it, really set a budget—because when you see that money in there, you think you can buy things here and there and feel like they’re not going to leave a dent or anything. But in the long run, you’re going to have to plan and save up.
I’m curious about the day-to-day, do you have a spreadsheet or an app to keep track? How do you keep to the budget? Do you keep your receipts and dump them all in Brett’s lap and say, “Help me figure this out”?
Sogard: We usually get together with Brett two or three times a year and go over everything that’s coming in and everything that’s going out and where it’s going out, just so we can see if we’re on the right page. And if we have to cut back, we do in the areas where we believe we can. And if there’s room we can go out and get a couple more things.
Brett Dimas: All the spending comes through one account, and those expenses get itemized between business expenses, personal expenses, tax-deductible expenses. We’ll categorize it all, so when I meet with Eric, we’ll sit down and go through that report and say, OK, here’s a recap of all your spending, broken down by different categories. We’ll review that, and if things don’t look in line with the budget we set three months ago, we’ll adjust. And then, big-picture-wise, on an annual basis we’ll always do one major review where we’re looking at the entire financial plan, including the net worth statements, to make sure the net worth is growing at an appropriate rate, and that’s kind of like our report card to make sure we’re on track for financial success.
Have there been times where Brett’s maybe called you up and been like, “Heeyyy, sooooo…”
Sogard: Thankfully, he hasn’t made that call yet.
Dimas: They’re pretty responsible, they’re not too hard to get under control.
Sogard: There’s still been a couple times, though, when we’ve sat down and I didn’t realize we were spending that much on a monthly basis, and it just kind of opens my eyes and my wife’s eyes that we didn’t think we were going too crazy but there’s probably some place where we could cut back.
Eric, is there anything you do on the side to educate yourself about finances. Is there anything you read or watch or follow online that helps you stay on top of that stuff?
Sogard: I’m a fan of the Wall Street Journal, getting what I can from that. When working through these things with Brett, whether it’s taxes or these home purchases, I try to be involved as much as I can so I can learn along the way instead of just letting him and his team handle it all.
Dimas: One of the things I try to make sure of is that clients are educated along the way, so I’m not just pushing all the buttons without input from my clients.
Do you talk about money with teammates? When you got started, did you look around the clubhouse for a veteran to ask questions about this stuff?
Sogard: I’ve definitely gone to guys who have a few more years in the league than I have. We’re all in the same situation as ballplayers, we all have the same goal—we want to continue to make money and invest smartly. These guys, I can always go to and ask questions, just kind of pick their brains about things they’ve done.
More specifically, what do you guys talk about? Investment ideas? Or just things you’re working on with your respective advisors?
Sogard: A lot of it has been more on the real estate side. Some of them own three or four, six or seven properties. It seems to be one of the favorite ways to go.
Do they also rent them out, to keep that steady income stream?
Sogard: Yeah, exactly. They’re definitely making money off it.
That’s smart. Hanging around the locker room, are there any mistakes you’ve heard of people making? Especially when they suddenly sign a big contract—where you’re like, “Wow, that doesn’t sound like a good idea.”
Sogard: Yeah, you’re going to see that around the league. You have guys who see this money in their account and they’re going to go out and buy whatever they want. I’ve heard stories of guys going out, their first year in the big leagues, and buying a car and then a house in the offseason. You’re not going to be playing this game forever—you could stop playing this game in the next year, and you’re hit with all this debt.
We’re playing only six months of the year, and those other six months we really have no income. If you’re going to go spend all the money you make during the season, you’re going to be stuck in the offseason, thinking of what you have to do for money because you blew it all. Having someone to help me along, to set a budget, was very helpful.
What are your major financial goals right now?
Sogard: Right now, buying this new house, getting that paid off, and with the other house as a rental that’ll be helpful. And we’ve set up a college fund for our four-month-old baby girl, Saydee; we wanted to get that started early. And just continuing to save up for the future, so when I stop playing this game hopefully my family and I will be financially comfortable and I won’t have to worry about getting back to work.
Brett had mentioned that after this season you’re arbitration-eligible, meaning there’s the potential to go to the next level in terms of compensation. What opportunities intrigue you?
Sogard: My wife and I definitely want to become more involved with charities; that’s something we haven’t really hit on much yet, but it’s something we look forward to. You know, the more success you have in this game, the more opportunity you have to help others who are less fortunate.
What sort of charities or causes would you like to get involved with?
Sogard: With me wearing glasses, and that being a big part of me, I’d like to find a charity that works with children and helps them with their vision. Also, with my dad being a survivor of leukemia, I’d like to find a leukemia charity we could work with.
Dimas: We’ve talked about a timeline for charitable giving. The next step would be to open a donor-advised fund and have it work through there. So, essentially, he would have his own foundation under the umbrella of a donor-advised fund, and we would start reaching out to charities to find something that Eric would be interested in—Eric and Kaycee [his wife] too, because Kaycee’s really involved in a lot of this.
Something like 78% of former NFL players are bankrupt or under financial stress within two years of retiring, and 60% of former NBA players are broke within five years of leaving the court. What do you think of when you hear stats like that?
Sogard: It’s crazy. It opens your eyes that you need to be aware that any one of us playing this game could fall into that trap as well. I think having six months off during the year really helps open my eyes for the future. I hope to play for as long as I can and not have to work after I’m done playing, and getting paid for only six months and then having six months with no pay kind of helps me realize that if I’m not going to work again, I’m going to have to save up quite a bit.
Dimas: We’ve talked about that, and “living within your means” is what he told me, and I think that’s a really good lesson. It doesn’t matter how much money you make, but being able to live within that—you could make $100 million a year, but if you spend $120 million a year you’re eventually going to end up broke.
So, just generally, what does the term “financially responsible” mean to you?
Sogard: Just have control of your money. Make sure you’re saving for yourself, and make sure there’s more coming in than going out. I think really just understanding your needs and buying in relation to your needs, and not just buying in relation to what you want.
You’d mentioned earlier the players you’d heard of who run out and buy a car first thing. In the A’s players’ parking lot, how does your car stack up? Are you still driving the car you had in college, or did you step it up a bit?
Sogard: Well, we bought a car last year, a Tahoe, but that’s more my wife’s car because she’s always driving the kid around. So, believe it or not, I’m still driving the 2000 Lexus that I was driving in college.
That’s living within your means and then some!
Sogard: There you go!
If you’ve ever had a question for a financial advisor, or could use a little help with your own budgeting decisions, head on over to NerdWallet’s Ask an Advisor platform, where you can get free professional advice.
Also, be sure to follow Eric’s adventures throughout the season on Twitter @EricSogard.