I have a love/hate relationship with golf.
On one hand…
It’s fun to spend a Saturday morning ferociously taking aggression out on a helpless little ball with an incredibly engineered stick. Couple that gentleman-like-manliness with some suds (beers) and buds (your 3 best friends), and you have yourself a great start to the weekend. (Scenario A)
On the other hand, that’s hardly how golf goes.
After driving 45 minutes to the nearest course with an available tee-time and dropping $65 minimum, you spend the next 5 hours profusely sweating and pretending to care about the conversation you’re having with Earl – the grandpa that was assigned to your foursome because your best friend was too hung-over show up. Combine that with the confidence you lost in your athletic abilities and the disappointment in your wife’s eyes once you arrive home and say, “honey, I’m exhausted,” and you have yourself a dreadful start to the weekend. (Scenario B)
My most recent golf adventure began as Scenario A (just me and my best friend), but took a CRAZY, UNFORGETTABLE turn that nearly sent me into bankruptcy.
You see, I love to gamble.
Actually, let me rephrase that. I love to gamble on things that I can control – hence why I have never purchased a lottery ticket. If I have no affect over the outcome of the event of which I’m betting on, I have no interest in participating.
So, when my buddy asked me if I wanted to wager “a little something” on the golf round, I was completely up for it because I was in control (or so I thought).
The opening proposal was very harmless. “Let’s bet $1 on every hole,” he said.
I quickly analyzed the odds of the various outcomes, found the maximum loss to be $18 and concluded that the bet would likely result in one of us becoming $6-$12 richer.
I responded, “That bet sounds more boring than women’s basketball!”
My temporarily sexist and chauvinistic tongue followed up with another idea, “Why don’t we bet $1 on the first hole and then double the bet each hole after that?”
My overconfident self assumed that the maximum possible loss would be “a few hundred dollars” while the most realistic outcome would result in one of us becoming $36-$72 richer.
It felt like a more reasonable bet that would keep both parties interested until the end.
The Golf Round
Hole 1 – $1
Hole 2 – $2
We tie. (no money exchanged)
Hole 3 – $4
We tie. (no money exchanged)
Hole 4 – $8
Hole 5 – $16
At this point, I’m up $7 and we’re having a blast. The sun is out and the booze is flowing as quickly as the money that’s exchanging hands. In a state of inebriation, we decide to “just finish the round” and “figure out who owes what at the end.” So, that’s exactly what we did.
After shaking hands on the 18th green, we headed into the clubhouse to begin tallying our scores. During the final 3 holes, I entered melt-down mode so I was prepared to write him a check. The question would be for how much. The ensuing conversation went something like this:
Him: “Dude, you’re not going to believe this.”
Me: “Haha, what’s the damage?”
Him: “I don’t think you want to know.”
Me: “Just let me have it. The bet was my idea and a Lannister always pays his debts.” (I tend to quote Game of Thrones in stressful situations)
Him: “You owe me…$238,201.”
Needless to say, we were in disbelief. How could something that seemed so small and insignificant turn into such a life-changing figure?
So, we did the math:
Pretty incredible, isn’t it?
If this story was true, I would hope that my friend would ultimately let me off the hook and not mortgage my life. But, while the story may be exaggerated, there is an important lesson that can be taken away.
Wait, there’s a point to all of this?
When you’re just starting out and investing small sums of money into a retirement account, it’s easy to see your funds as “insignificant.” I used to question how giving up $50 now was going to impact my life 40 years from now. But, thanks to the glory of compound interest (and the rule of 72), your small contributions today will have a substantial impact on tomorrow. If you ever question this mathematical phenomenon and want to decrease your savings, remember how quickly money can accumulate over 18 holes of golf and apply the exponential growth to your rest of your life.