2010 World Series of Poker is well under way as the grueling day after day progresses. Players are scrambling to win chips from their opponents in hopes to be the last player standing at the end of the massive 13-day poker tournament. This year’s main event tournament was amassed by the second largest number of players in live poker tournament history with 7,319 players and $8.9 million going to the winner of the tournament. It’s very exciting for poker players in the world and fortunately for non poker players like us, a few money lessons can be derived from these poker tournaments. I came up with 4 lessons that can be learned from this year’s WSOP tournaments.

1. Bankroll Management

A good poker player will have a smart bankroll management plan. A bankroll is the amount of money a poker player will always have available to play poker with. With this money, he will use to purchase buy-in tournament fees into various poker tournaments. He will also use this money to play cash games.  With a smart bankroll management plan in place, the poker player will never ever go broke, unless he plays out of his bankroll plan. As long as he is within the means of his bankroll, he should be able to play poker forever without going broke. For instance, a good bankroll to have is about 100-250 times the amount of the highest buy-in fee for a poker tournament he is willing to play. The World Series of Poker Main Event tournament buy-in was $10,000. In order for any given poker player to be able to play in this tournament by directly buying into the tournament, he should have somewhere between $1,000,000 – $2,500,000 in his poker bankroll.  In the same way, he can play a cash game with maximum buy-in of $10,000 at the table to comfortably play without worrying about going broke. Poker is a game of skill and luck and professional players find ways to minimize luck and maximize skill. By playing within the bankroll, they minimize the risk and luck factor involved in the game. With this bankroll management practice, a poker player will never go broke. Refer to Boku87 Challenge for his bankroll strategy. Boku87 is an online professional poker player at Pokerstars who challenged himself to earn $100,000 from his $5 bankroll.

In the same way, we need to have a proper “bankroll management” with our money. We can do this by budgeting our everyday spending items carefully, and never spending outside of our budget limits. Once we spend outside of our spending budget, we’re allowing luck to factor in the system, which allows our budget to become less stable. Use a budgeting tool to help you limit on what you spend. If you budgeted yourself $500/mo for credit card purchases, do everything you can do to ensure you don’t exceed that amount in credit card purchases. You can download a free budgeting spreadsheet I personally use myself.

2. Patience Patience Patience

A poker player can not be judged on how good of a player he is after just one cash game session or one poker tournament. It only takes couple hours to learn the game of poker, but a lifetime to master it. A poker tournament is very similar. A single tournament can last well over 10 hours. The WSOP main event this year is played over 13 days, with each day lasting for over 10 hours. After only a couple of days, fatigue can definitely affect the way a poker player plays his game. Imagine just sitting there in your seat for hours and hours playing a card game. It can get quite boring and tedious and monotonous and will become a challenge to maintain a sharp mind to make optimal decisions hand after hand.

The same principle applies with your savings. Money doesn’t grow like wild weeds in your yard. But your savings will grow when they are properly taken care of.  It takes time though. If you put $1,000 in an online savings account such as Discover Bank or Ally which has an annual return of about 1.3% or so, you can expect to double your initial investment in about 55 years. If you are saving for your retirement, you are looking to save for about 30+ years. If you’re saving for college tuition for your kids, you will end up saving for about 18-20 years. The bottom line is that saving money takes time and patience. Keep working at it and stick to your original plan. The winner of this year’s WSOP will reap the rewards after 13 days of grueling poker. You, however, will reap your rewards in your future by being patient.

3. Avoid Emotions

Have you seen any WSOP coverage on ESPN lately? Have you observed the faces of poker players? They’re all emotionless, especially during a hand. Poker players must put all emotions aside when playing cash games or tournaments. If they allow their emotions to persuade their decisions, they will make decisions that they would not normally make, ultimately allowing them to bust out of the tournament or losing all their money in their cash game session. Seeing hundreds or even thousands of dollars move from one player to another player for many hours can have dramatic emotional effect. Good poker players are able to put their emotions aside and make sound decisions based on their poker experience, odds and probability, and their skills.

One thing I always used to do back when I was really into trading stocks was buying and selling according to my emotions. It cost me a lot of money trading this way. If I saw a stock falling, I would sell in panic. If I saw a stock rising, I would buy more in excitement. My emotions got the better of me. When you’re dealing with your money, whether in trading stocks or savings or personal budgets, you have to leave your emotions aside. Make sound decisions based on what’s reasonable. Don’t let your emotions influence your choices, especially when you’re shopping.

4. Short Term Goals

One thing a good poker player does is set short term goals and change gears in their gaming strategy as they reach their short term goals. If the poker player plays with the same strategy throughout the entire tournament, other players will catch on, allowing them to become vulnerable. If they don’t change gears in their strategy, they will lose all their chips to their opponents. Setting short term goals throughout the tournament will allow the poker player to change their playing strategy accordingly, ultimately confusing their opponents.

When you’re saving up for a big purchase, you need to set short term goals as well. If you need $10,000 in two years to upgrade your home or build a deck or need money for a down payment on a house, it can get a little overwhelming when you look at the final number of $10,000. But if you set goals in between, then it might become less intimidating. Set goals of saving $1,250 every 4 months and then re-evaluate. If you need to change your gears after the first 4 months, then do so to reach that ultimate goal of $10,000.

It’s definitely some exciting time of the year for poker players. It’s every poker player’s dream to win the Main Event of the World Series of Poker. What would you do with $8.9 million dollars?

Just like everyone else during the housing boom last decade, I went ahead and purchased a home that I could not afford. Back then, like everyone else, trying to get a loan approved was easy with no problems at all. As a single guy, my plan was to have a couple roommates to live with me to help offset some of the monthly payments associated with owning a home, namely the mortgage. With the mortgage rate at 6.75%, my mortgage  payments was at a skyrocket high of $2,250/mo with my net monthly income barely hovering around $3,000/mo at the time. How I got approved for the loan, I still have no idea. In fact, I still curse at the bank that originally approved me for that loan. However, having two roommates in a 3-bedroom townhome definitely helped me not only offset that huge monthly cost, but also help me save a few bucks a month at the same time!

Fast forward a few years and a mortgage refinancing at 5.5%, I now make enough money to be able to afford this home, without the help of any roommates. Although I still have one roommate currently,  I can live comfortably on my own without the help of my roommate’s money. I still allow him to live with me because the money is good. It’s like having a discount on my mortgage payment.

I can do this now since I am still single. I told him that once I get married, he must move out. The money I collect from my roommate does get included into my source of income and does account for in my budgeting. I have been depositing most of my savings every month in a high-yield online savings account such as ING Direct. However, the money I will save through my roommate’s rent can no longer be accounted for when he does in fact move out in the future so I will definitely be missing that. Until then, I will be embracing the money I will be saving every month.

]]> http://www.moneygreenlife.com/save-money-with-roommates/feed/ 3 http://www.moneygreenlife.com/how-to-save-money-with-loose-coins/ http://www.moneygreenlife.com/how-to-save-money-with-loose-coins/#comments Tue, 16 Feb 2010 16:09:59 +0000 Charles http://www.moneygreenlife.com/?p=300

If you’re like me, I hate to carry loose change around. Whenever I need extra coins to pay for an item in exact amount, I always ask my girlfriend if she has a quarter or a nickel and she never fails me. Women have it so easy since all they have to do is throw the change into their purses and be done with it. Guys, on the other hand only have their pants pockets to put their change in. Couple that with your wallet and cell phone, your pockets are unattractively and uncomfortably bulging out, hindering the way you may walk, not to mention the clanging noises made from your coins. It’s just not a comfortable situation to be in.

At the end of the day, I put all my coins in a jar or some kind of collection plate where they are easily accessible for future use. I think over the past 10 years, the total value that accumulated is almost $1,000. That’s a lot of  loose coins. With the recent state of the economy, it seems like every penny matters. What good ‘ole Mr. Franklin said couple hundred years back seems true and logical nowadays, “A penny saved is a penny earned.”

I’m currently in the market for a new laptop and a new LED TV, so this money will help me offset the costs. I know it’s still my money, so technically speaking, I haven’t “saved” any money, but it sure does feel like it to me. It’s almost like finding a $20 bill in your pant’s back pocket.

Now, when you’ve collected as much coins as I have, you need to figure out how to cash in these coins. One easy option is to go to a grocery store where they have a Coinstar machine. These machines are very easy to use. All you have to do is dump all sorts of coins in there and it automatically counts the value for you. Then they give you cash, of course minus their fee which is 8.9 cents for every dollar counted. So for my case, if I have exactly $1,000 in coins, they will give me $911 back. If this fee is too much for you, another option Coinstar provides is to convert your coins into gift certificates for select retailers, such as Amazon.com. In this case, the conversion is 100%.

Additionally, you can always go to your local bank and have them convert them for you for fee. Not all banks provide this service so make sure you call them first.

Perhaps, you can start “saving” money by collecting your loose coins today.