Here are a few wealthy celebrities who showed us how not to manage your finances. The fame wave takes many public figures by surprise and, without guidance and a plan to save their money instead of spending it, a lot of celebrities have to face the fact that their luxurious life is much more expensive than they thought and eventually admit to bankruptcy.
Due to the recession, during 2008 and 2009 almost 73% people with assets worth more than $1 million had to file for bankruptcy. Also, according to Sport Illustrated, 78% of former football players go bankrupt within two years after ending their careers. If you want to find out who these wealthy celebrities who went bankrupt are, keep on reading!
The beloved American actor filed for bankruptcy in 1996, after making public the fact the he owed $11.2 million after getting divorced from one of his wives. Plus, the fact that some of his investments failed to produce any profit didn’t help either. A few years after this incident, in 2011, Merrill Lynch Credit Corp. filed a foreclosure lawsuit against the actor and his Florida properties.
Second on our wealthy celebrities went bankrupt list is Tammy Wynette. Also known as the queen of country music, she was married four times during her life, suffered from cancer, but became very famous in the ‘60s and ‘70s, thanks to her special voice and a red carpet marriage (she was married to country music superstar George Jones). All these problems, her poor health and a set of bad investments lead her to declare bankruptcy in 1988.
For you, ‘80s enthusiasts and Miami Vice fans, the fact that Don Johnson filed for bankruptcy shouldn’t come as a surprise, considering his enormous spending sessions. In 2004, the famous actor had to admit bankruptcy after City National Bank asked him to return the $1 million that he owed them. Apparently, Don Johnson borrowed the money to boost his own company, Timber Doodle Glade Equity Venture LLC, but this proved out to me a bad business.
In order to protect his Aspen, Colorado home from being taken by the authorities, the actor filed a Chapter 11 petition in the name of his company, which allowed him to keep some of his assets. Unfortunately, there are many other wealthy celebrities who did the same thing Don did!
Who would’ve thought that the man who freed America filed for bankruptcy? And not once, but actually twice! Although he was a very ambitious man, not all his businesses were successful, so after borrowing money from his family and getting loans from various banks, he had to admit failure and file for bankruptcy in order to protect some of his assets like his house and his parents’ house.
Although Lincoln never became one of the wealthy celebrities, he was an American president and the fact that he failed so many times in his life should be a lesson about perseverance.
If you don’t know who Willie Nelson is, you must not be very interested in American history. The legendary country singer proved out to be quite a spender and this fact lead him to file for bankruptcy in 1990, when he owed the IRS $16.7 million in unpaid taxes and fees. According to his accountant, they redirected the many to tax shelters that proved out to be illegal, causing a massive hole in Willie’s account.
Although he’s a rebel, Willie decided to pay off his debt, so in 1991 he released an album called “The IRS Tapes: Who’ll Buy My Memories”. Fortunately for him, the album was a success, so he was able to redirect all the money made off of it to the IRS. Plus, he also auctioned some of his memorabilia and finished paying his tax evasion fees debt by 1993. For more wealthy celebrities who had to file for bankruptcy, keep reading!
Another one of the wealthy celebrities turned regular people list is Mike Tyson. The Mike Tyson story is very predictable, let’s face it. You have a world renowned boxing champion who lived a life of pleasures and decadence and the result can only be a massive fall, financially, emotionally and socially speaking.
Believe it or not, Mike Tyson made $400 million during his career, but everything vanished quickly as soon as the boxer started living a luxurious life, full of expensive cars, night clubs and illegal drugs. If you add an expensive divorce, you get the perfect recipe for bankruptcy. In 2003, Tyson declared bankruptcy and a total debt of over $27 million.
For M.C. Hammer, life was good during the ‘90s. His hit song, “U Can’t Touch This” brought him numerous MTV and industry awards, which could’ve only meant one thing: he was getting rich. Unfortunately for him, his most expensive purchase would also be his biggest enemy. Although he earned more than $30 million, the fact that he bought a $12 million mansion with a paid staff of about 200 people, plus entertaining an entourage of 40 individuals made him run out of cash very soon.
He realized that he could no longer sustain this luxurious lifestyle and filed for bankruptcy in 1996, when his total debt was $13 million. Currently, M.C. Hammer works as a pastor and lives in a ranch house in California. Isn’t this the living proof that even wealthy celebrities need to be humble?
Also known as “the King of Pop”, Michael Jackson was named the most successful entertainer of all times and entered the Book of Records for this reason. However, his happiness was not meant to last: in 2007, after failing to pay a loans taken for his home, The Neverland Ranch that he had purchased in 1988 for $17 million. A few years later, due to the fact that his home required a lot of maintenance (aside from the house, he also owned a zoo, an amusement park, a movie theater, its own fire department and the list goes on).
Feeding all the animals, paying all the employees cost Michael about $10 million a year. Plus, the superstar was quite the spender: in just one shopping trip he spent $6 million, as shown in a documentary focusing on his life: “Living with Michael Jackson”. Unfortunately, signing a nearly $1 billion contract in 1991 wasn’t enough and the start had to file for bankruptcy in 2007. If you think wealthy celebrities never go bankrupt, think again! Even superstars like Michael Jackson get carried away with fame and forget how to manage their fortune.
This is a special case, since Donald Trump himself never went broke, but some of his businesses did four times: in 1991, 1992, 2004 and 2009. Fortunately for him, each business was a corporate company, which allowed the billionaire to keep all his assets even after going broke so many times. Usually, when this happens to a corporate company, it’s regarded more like a restructuring of debt method than a total collapse.
However, not anyone can file for bankruptcy: the US law says that you can’t ask for that when you are a very wealthy man who could very easily pay his debt. In order to get some of these bankruptcies approved, Donald Trump had to give up some of his most beloved businesses: Trump Airlines, a mega-yacht and 50% stake in the Grand Hyatt Hotel. Despite everything that happened and all his losses, Trump still has a huge fortune, worth $2.7 billion. Who said wealthy celebrities don’t get in trouble?
For Stephen Baldwin, things turned bad overnight. He purchased a $1 million home and, due to the recession, discovered that he actually owed $2.3 million in expenses linked to his home. Unfortunately, many US citizens have the same problem after purchasing a luxurious property that seems like a steal, at first. In 2009, Stephen Baldwin filed for bankruptcy. In the meantime, although he starred in a few movies, he never went back to his usual lifestyle.
Wealthy Celebrities Mistakes -Conclusion
As you can see, these wealthy celebrities chose to spend money on anything else other than an accountant or a financial adviser. There are many ways to save money even if you are rich: fame comes and goes, stock markets crash and entourages get old. Bottom line, having a lot of money is useless if you don’t know how to invest it! My advice to everyone out there reading this would be to be careful about your income and investment because, once your money is gone, it stays that way!