Credit and Bankroll Management
Alright heres a little intro to my question. All of my poker playing life, albeit brief, I have been playing outside of my finacial abilities. I have never played so high that I felt I was the sucker or couldn't beat the games, but regardless I was out of my bounds financially and when I would go in slumps, even brief ones, they would make significant hits to my bankroll.
Now right now I work a crap assed little job for the summer between school and I make 10 bucks an hour and hate every minute Im at work.
I've played live 5-10 before and from what I saw at the tables, the competion was NOT that stiff. FOr instance, at Brantford, its the second lowest game spread, and although there are some good players, a lot of them seemed like theyd be fish even at the 2-5 tables.
Now I'm not saying I'm anything special when it comes to poker, but I am VERY confident, that I could grind out 10 bucks an hour playing 5-10, if not a little more, and have a lot more fun doing that than I do at my current crappy job. The only thing holding me back, is that I dont have the bankroll.
I feel like to play good at 5-10 and be able to take the ups and downs, Id need about $3000. However, I don't have that kind of money as I have other expenses and just cant save for poker right now!
So my question is this, does it make sense to get a Student Line of Credit and use some of it for a bankroll? Id be eligible for about 8000 a year since Im a fulltime student, with an interest rate of something like 6%, where I only pay interest monthly, and the payments on principal dont have to be made until a year after Ive graduated. So I would be elgigible for more than enough to give myself a healthy bankroll, and Im confident I could make money playing 5-10. I'll be getting a Line oF Credit regardless to cover various school costs, but Im wondering if its ok to use part of it for poker.
With the interest rate so low, and the principal payment not due until a year after Ive graduated, this SEEMS like an excellent way to get some immediate capital for my bankroll. However, I just feel like there is something fundementally wrong with playing poker with a loan.
What does everybody think about this? Is this a legitemate way to start a bankrolll, or is gambling with borrowed money always a bad idea?
Now right now I work a crap assed little job for the summer between school and I make 10 bucks an hour and hate every minute Im at work.
I've played live 5-10 before and from what I saw at the tables, the competion was NOT that stiff. FOr instance, at Brantford, its the second lowest game spread, and although there are some good players, a lot of them seemed like theyd be fish even at the 2-5 tables.
Now I'm not saying I'm anything special when it comes to poker, but I am VERY confident, that I could grind out 10 bucks an hour playing 5-10, if not a little more, and have a lot more fun doing that than I do at my current crappy job. The only thing holding me back, is that I dont have the bankroll.
I feel like to play good at 5-10 and be able to take the ups and downs, Id need about $3000. However, I don't have that kind of money as I have other expenses and just cant save for poker right now!
So my question is this, does it make sense to get a Student Line of Credit and use some of it for a bankroll? Id be eligible for about 8000 a year since Im a fulltime student, with an interest rate of something like 6%, where I only pay interest monthly, and the payments on principal dont have to be made until a year after Ive graduated. So I would be elgigible for more than enough to give myself a healthy bankroll, and Im confident I could make money playing 5-10. I'll be getting a Line oF Credit regardless to cover various school costs, but Im wondering if its ok to use part of it for poker.
With the interest rate so low, and the principal payment not due until a year after Ive graduated, this SEEMS like an excellent way to get some immediate capital for my bankroll. However, I just feel like there is something fundementally wrong with playing poker with a loan.
What does everybody think about this? Is this a legitemate way to start a bankrolll, or is gambling with borrowed money always a bad idea?
Comments
You will have to pay it back, if you loose your stack, you are SOL and still no bankroll.
My advice, DON'T.
http://www.opgh.on.ca/
http://www.olgc.ca/knowyourlimit/
Dude, a Bankroll is money that is available ONLY for poker (sports betting, horses etc) that you do not need to live on and can afford to lose. Once you have the worry about borrowing paying interest and HAVING to make money with it, it will affect how you play and what you do.
So now you borrow 8K, lose 2K because of bad beats, bad play, bad luck, bad cards whatever. PLUS you probably quit your job so you could "make 10 bucks an hour" playing poker. Leaving you with 6K for school. All 8K will have to be paid back. Now if things actually go good, then the whole thing was redundant. As a former gambler full time if you ain't got the roll DON'T.
Mind you I was playing the horses but it still applies.
To borrow money from a bank to play is a recipe for disaster, especially if you are in school. If you can't save money for poker how can you pay back the loan? If you lose the money (real possibility considering swings) how do you pay back the loan?
Cut back on your beer and stuff and start squirrelling the money away. If its something you really want to make a run at, make the sacrifices to do it.
Good luck with your decision, but, to me, its a simple one. No.
Like I said in the original post, it always felt like it was a bad idea to gamble with borrowed money.
I guess the way I was looking at it though is that people take out loans for business capital all the time, and poker, if approached that way, can be treated as a business, so if I thought there was a very good chance I could profit from the venture, the loan would be worth it. Especially with 6% annual interest and no principal due until after I come out of school, hopefully into a decent paying job in the Aerospace Engineering field.
However, thinking further, Im the kind of person who likes to be prepared for the worst, and even though it would be pretty unlikely I'd go broke, it's still possible, and if that did happen I'd be stuck bad. So its probably better off that I not, regardless of wether or not I think its a positive EV move.
So thank for all the replies.
Debt is not a concept to toy with, especially in a continuing society where credit means everything, and if you have a bad rating good luck securing future assets, such as a home or a car. Unfortunately we cannot deduct interest payments for tax purposes, for corporations believe it or not debt is welcomed, but once again it has to managed very carefully.
I hope you get the idea of all these replies, do not use a loan for poker! Enjoy school while you can, when you get a steady income, you can put away a portion of each pay to a poker bankroll for you to maneuver with.
Good luck with school and at the tables....but we all know luck is an unsystematic risk, and in the long run it becomes smaller and smaller..right, but how long is long  :D  (sorry thats my economics/finance classes coming back to me)
Sorry, i wrote my response as you posted yours. Interest on loans for a business are tax deductible, they conserve cash and therefore worthwhile(sort of). For a loan to be valuable your return on it must be more than in cost you(ie: return > 6%) but there time value of money issues, risk profiles etc...in case you are interested.
If I were to use say $3000 of available loan to fund a bankroll, at 5.75% interest annually, my annual interest payment would be $172.50, or less than $15 per month.
So theoretically, if I could ensure* that I could make more than $172.50 a year at the 5-10 tables, would that then not make the loan a +EV move?
*obviously this word is the problem. However Ive gotta say, Im pretty certain that 17 big bets over the course of an entire year of grinding those tables wouldnt be difficult.
To play the devils advocate.
How many hrs would you play poker a month?
Now, compare that to a $10/hr part time job.
If you worked 10/hrs a week you would make roughly $5200 ignoring taxes and EI(depends on how your taxes are set up) a year.
You would want to make more than that playing poker. 10hrs of poker/week for a year(52 weeks) to make $172.50, thats roughly $0.33/hr.
It comes down to opportunity cost. Exchanging one payoff for another, giving up something of value now for somehting of value later on.
Im sure my little scenario has many flaws, as I have never used a cash flow statement for poker purposes, please feel free to comment or add as needed.
That would be an interesting question. How much would it cost to play poker for a year considering risk etc...compared to an average job of lets say 45K/yr(how much would you have to make playing 5-10 or even 10-20) I would love to see an estimate on these, for anyone who is interested.
This is what makes me think that this could be a worthwhile possibility. I would only have to make $.33/hour to make the loan a break even move. Thats roughly 1/30th of a big bet. So, at the tables, I would only have to earn 1 big bet every 30 hours over the course of the year to break even!
Being very confident I could make significantly more than that, this would at least SEEM to be a very +EV scenario to me.
It sounds like you've talked yourself in a circle.
Im just saying, it seem to make sense. I wont do it though because as much as it seems to be a +EV move, Id still feel like Id crossed the line. Theres just something unsavoury and wrong feeling about gambling with lent money.
Also, as for making a living, thats not my goal. Im a student and I dont work in the winters. This would just be a way to bring in extra cash on the side. I wont have a job anyways in the winter since my course load doesnt allow me to commit to any fixed work schedule.
However if you are a proven winning player with very little monthly expenses you might be able to make it work.
How long have you been playing holdem?
Have you been keeping accurate and honest records? (EVERY winning and losing session)
Can you play well during a losing streak. ( because there will be losing streaks that could last for a month or more)
If you havnt been tracking your results or if you have been playing holdem for less than one year I would say DONT DO IT.
Wait untill you have logged 2000 hrs at the 5-10 tables and have averaged a profit of $10-$15 per hour  over those 2000 hours
Had I been smart about my winnings I would have the bankroll to play 5-10 and more, Id say over the 2 years Ive played at low stakes, 1-2 and 2-4 online and small buy in tourneys, Ive made around $7000 profit. Nothing huge but not bad by any means either.
However my mistake up until just recently was that poker money and non-poker money were the same thing. And instead of saving winnings to put towards bankroll, I would spend the winnings. For intance, I won a 20+2 tourney on UB last year and 1t place got me 2500. I kept 500 in my account and cashed out 2000 which was then spent on various expenses and some frivolous splurge purchases.
This stupid money management is the reason Ive never had a proper bankroll to play with. I never learned how to seperate my bankroll from the rest of my money.
No.
Where do you plan on playing rake free?
I for one don't see any problem with drawing from your poker winnings for frivolous spending if you want. Â After all, it's your money. Â Just be aware that you can't have it both ways. Â If you're constantly pulling from your roll, then obviously you're not going to have sufficient bankroll to move up in stakes. Â I'm a fresh grad (fortunate enough to be gainfully employed with a good job), but I have plenty of student debts to pay off. Â I tend to build my roll to the point where I still leave enough in it to play the stakes I know I can beat, and then periodically pull out a chunk to pay down some debt (I think I'm getting old, but it seems like the responsible thing to do). Â I have no illusions about going pro, or drifting into stakes beyond my BR to try to make the big score. Â If I want to think about moving up from the stakes I'm playing now, then obviously my first concern will be to build my roll to a point where I think I could be comfortable playing at the next level. Â Then of course I monitor my results and my play to see how I'm doing with the jump... Â
As a side note, I'm pretty thankful I didn't know how to play poker when I was a student (I only maybe started to pick it up in my last yr, but just as casual fun). Â It seemed I had enough distractions to keep me from studying without it...
if you truly are a solid player, and have stats to back it up, do it.
im guessing you still live at home, or your parents are supporting you, so you have very few fixed costs.
my point is, you can go broke and still maintain a decent quality of life
and honestly, 3k may seem like a lot to you now, but once you graduate and jump into your lucrative career, you can pay it back in no time
my advice though is to take your loan and make a bank draft for the exact amount you need for school, so you are not tempted to play with the balance should you go broke..
in conclusion, youre young, take a shot long buck!
While I didn't play poker, I certainly played cards while a student. Just ask Moose about our Friday afternoon Euchrefests.......
My point was that he shouldnt try to play for a living if he isnt an experienced winning player. I have seen many young overconfident players think they can make an easy living by beating up on the soft 5-10 games in the area. I was guilty of this thinking myself when I first started playing holdem 7 years ago. I learned the long and hard way that it is a mistake to play for a living without sufficient experience, skills and bankroll.
Since he hasnt logged at least 2000 hours at the 5-10 tables he has no where near enough experience.
If he cant prove through detailed record keeping that he can beat the game for at least 10-15 dollars an hour..... he dosnt have the skills.
IF he has to borrow money to play then he obviously dosnt have the bankroll.
My advice to ryan is to - keep your job too pay the bills
- keep playing holdem and start tracking your results
- build you bankroll
- improve your game (books, forums, find a mentor)
- evaluate your results in a year
We are, collectively, the most conscientious poker forum on the internet, I'll bet.
ummmm, pardon?
I'm sure there is better things to cut back on......milk, water, vegetables??????
all kidding aside, I agree with the masses.....I would never play with money I am not willing to lose.....if it's something you really want you will tend to find a way to convince yourself that you should do it...step back and listen to the forum.....it's a very bad idea.
I would also start charging you $450/month rent, $350/month food, $25/month cablle, $25/month phone and $100/month incidentals to help you stay focused on your goal.
That's $950/month, or in poker terms, only 190 BB at 5/10.
In other words, I agree with the masses here, DO NOT use your student loan to fund your bankroll. Never quit a job unless you have another job lined up, and poker is not a job.
Good luck, I hope you make the right decision.
Of course I was also unhappy, burned out and didn't like the post acquisition culture. I took a chance and resigned to try something else. It was easy because I made some financial moves to keep me floating for a good while. It all paid off, I'm still way in debt just like most people but I'm much happier. I'd suggest building more equity. It must be very tempting for you but patience, one long game and all that.
Oh yeah and I still play poker on the side and it's been a good hobby paying a small hourly rate. Most everyone here has a full time job or is in full time study.
Now what if the results are poor? Back to checkers (solved), hit the books and/or drop down in levels?