Celebrity Financial Failures

By Reyna Gobel | June 22, 2009 AAA
Celebrity Financial Failures

When we consider how much money celebrities make, it's amazing to think that they also have financial problems, but if you have all the money in the world, it just means you have more ways to spend it on the road to bankruptcy. Manage your finances well, and you'll avoid the fate of these celebrity-sized money missteps.

1. Avoid Donald's Debt Downfall
Donald Trump may have thousands seeking to be his apprentice in order to learn his business skills, but they'd be best off learning his skills by reading his bankruptcy paperwork; Trump has declared business bankruptcy three times.

The lesson? Grow your company slowly without over-reliance on debt. After all, what's the value of running a billion dollar company, if you've got one of the world's largest corporate debts?

2. Practice Six Degrees of Due Diligence
Kevin Bacon and Kyra Sedgwick
lost nearly everything in Bernie Madoff's Ponzi scheme. It's said that they only have their home and their checking accounts left.

The lesson? Don't trust one person with all of your money without understanding why your money is growing so fast. Ask tons of questions and diversify your investments into different investment vehicles. Don't discount saving money in savings accounts and money market accounts. You always want some money in an insured, liquid account, so you won't lose everything if the stock market takes a nose dive.

3. Show Real Estate Restraint
Jose Canseco, Ed McMahon, Wyclef Jean, Evander Holyfield and Michael Jackson
are just a few of the celebs whose homes have been foreclosed on or are in danger of foreclosure.

The lesson? When you have sporadic income, either because you don't know where your next $10 million paycheck is coming from or you're a salesperson who relies on commission-based income, buy a home that costs less than the most expensive home you can qualify to buy. Then, pay your mortgage off as soon as possible.

4. Learn from Sir Paul's Prenup Blunder
Paul McCartney
had a lot of financial trouble with his divorce from Heather Mills. Because of the absence of a prenup, Heather Mills walked away with nearly $50 million. However, with his net worth in the 100s of millions, Sir Paul's poor house can still be a castle. But for the rest of us, we should at least consider the Kanye West lyric, "We want prenup", to protect our assets before marriage.

For more information on how to avoid these blunders in your life check out: The Biggest Stock Scams Of All Time, Create A Pain-Free Postnuptial Agreement, You Can't Live On Love, Should You File For Bankruptcy? and Bank Failure: Will Your Assets Be Protected?

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