I Wish I Knew Then What I Know Now

Thor Hansen, the godfather of Scandinavian poker, won a bunch of money one time in a poker tournament. In his interview he was asked what he was going to do with the money, nearly a million dollars, and he replied that he would pay off some debts. What about the rest of the money? With that beaming Thor smile he chuckled and responded, “they’ll have to wait.”

The natural fluctuation of poker leads most people down the path of money mismanagement. Poker players are infamous for their disdain for the hundred dollar bill. Most of us carry more hundreds in our pocket than the rest of the bills in our wallet combined when the average American is walking around with less than $100 on them at any given time. When we win everything we touch, we spend money like it’s going out of style, and we feel good about our winnings. The problem with this paradigm is that we should always be playing our best, and big wins or big losses should be part of our natural swings and small enough to not affect our bankroll much. When poker players lose, it’s harder for them to step down in lifestyle and save money, which often leads to the end of a bankroll.

These swings are especially exacerbated in tournament poker. Tournaments are extra swingy, leading to brief periods of flushness followed by long droughts of broken dreams. If a player spends too much when they’re rich, then they will not have enough bankroll to make it through the inevitable downswing coming down the road.

In 2011 I began the greatest run of my poker career during the WSOP main event. I finished 12th in the main for $607,000, but I had less than one-third of myself, because I was managing my bankroll properly. I took a couple months off after the WSOP, and came back in late September guns blazing. Playing entirely on my own action, I won the first event of Bellagio’s Festa al Lago. Flew to Cannes, France for WSOPE, won the first side event I played, going back-to-back wins for the first time. I booked a third and first in November, a fifth in December, a win in January, two chops in February, and a third in March. Easy game right? Since then I have a bunch of dumb cashes and one dumb win, losing 16 of 17 months, and all that cash I had stashed is gone.

Back in the day when I was getting started and building a bankroll, I ran my bankroll as a business asset and paid myself hourly as an employee. I sought to always play my best and wanted to reduce fluctuation in my personal finances. I paid myself $20 per hour, plenty to live well on, and the extra went to my bankroll. This way when I lost I could still pay myself $20 an hour if I lost for a month and not stress out about it.

I wish I had stuck with that method and intend on getting back on it immediately. I should get a raise for increases in performance and expected value (EV), perhaps a bonus for a big score, but I shouldn’t have spent most of the money that I’ve spent after a big tournament score. I’ve done better in recent years, spending big tournament scores on assets like commodities and real estate that can be liquidated for a profit rather than liabilities like luxury items.

Now I find myself in a place hopefully at the bottom of a downswing, the biggest one of my career, needing to liquidate things to reload my bankroll. As I sell things, I am smashed with regret and realization that I lit way too much money on fire on things that I didn’t need or could have done cheaper. In 2008 I bought a brand new jet ski for $6,500 because I could. Used it probably 30 times in the past five years, sold it for $3,000. At this moment I’d rather have that $3,500 than 30 trips on that jet ski, especially considering that the old jet ski I had previously which cost me $300 was rarely used in that time frame and is still worth about $300. I could have purchased a nicer ski but not something brand new, sold my old ski, and had just as much fun for way less money.

Poker players are notorious for spending more money than we should because our perspective on money is skewed. When we have thousands of dollars in our pocket, using one of those bills to acquire something seems irrelevant. Less than $100? That’s basically free, because $100 doesn’t matter. We win and lose so much money on a regular basis that our valuation of a Benjamin is extraterrestrial. Those hundreds add up, and like any leak in a poker game, this life bankroll leak breaks many poker players.

The guys that have been around forever understand this and live well within their means, knowing that a bankroll must be protected like a child, and is the only source of job security that professional gamblers have. No bankroll and you can’t work for yourself, you have to hope to get backing and then win enough after paying off backers to have your own bankroll again. Playing for yourself is always better than playing for somebody else if you are a winning player. Keeping a bankroll healthy enough to stay in action is directly correlated to how much money a bankroll manager spends on dumb things they don’t need.

It’s all about balance. Live life well and frugally regardless of whether you are rich or poor. Use your surplus bankroll to invest, setting yourself up for passive income and growth of your net worth. Don’t waste bankroll on things you don’t need because someday you’re going to need that bankroll way more than whatever toy you bought. Saving now will set you up for real money later, and then when you’re so rich that $6,000 isn’t even a ding to your net worth, go buy that jet ski. Until then you’re better off renting. ♠

Bryan Devonshire has been a professional poker player for nearly a decade. With over $2m in tournament earnings, he also plays high stakes mixed games against the best players in the world. Follow him on Twitter @devopoker.