As a New York Mets fan, I’ve had my share of disappointment. Today, and every July 1st until 2035, are reminders of that. For those who are confused, Bobby Bonilla Day started July 1, 2011, and is an annual celebration ending on July 1, 2035. Don’t be fooled, this is not a good kind of celebration.
Bobby Bonilla was a six-time all-star who played for the Mets. He was traded away in 1995 but brought back in 1999. While injured for a good part of the baseball season, he did not meet player expectations when he was on the field. The Mets agreed to buy out his contract rather than keep him on the roster. At the time he was owed $5.9 million over the next two seasons. In typical Mets fashion, they agreed to defer payments until 2011 and make 25 annual installments at 8% interest. Do you see where this is going?
This is a perfect example of why we need to pay attention to interest. In this example, the Mets are paying Bobby Bonilla $1,193,248.20 annually from 2011 through 2035. The total amount being paid is $29,831,205. Professional athletes get paid well while playing, but he’s getting an annual salary from the Mets until he turns 72. Who needs investing or financial managers when you can turn $5.9 million into $29.8 million? Granted, it’s over a period of 25 years, or 35 years from when the Mets released him, but it’s still a pretty good deal.
At the time, the Mets probably figured they would take that money and make some good investments so they would come out ahead. The Mets owners at that time were close with a gentleman named Bernie Madoff who was investing their money and produced big returns. We all know how that ended. Since then, Bobby Bonilla Day has become an annual joke.
Interest can cause a balance owed to skyrocket. If you are carrying balances with your creditors, the interest will accumulate and compound until those accounts are paid off. Making minimum payments or not paying at all will lead to a lengthy repayment period, resulting in paying back much more than you originally owed. If $5.9 million can become $29.8 million with interest, $5,900 can become $29,800 after interest over a period of years. Remember, the interest rate on credit cards can exceed 15% and if you have poor credit, car loans can also carry a higher interest rate.
If you are struggling with debt and find yourself staring at increasing balances, it’s important to take action. There may be fewer or more costly options as the debt increases. The team at Zimmelman Law PLLC has helped thousands of New Yorkers eliminate their debt with dignity. Take that first step to eliminating your debt today.
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