Don't Go Broke Like These CelebritiesSubmitted by BCR Wealth Strategies on June 13th, 2017
It can be hard for some of us to believe that celebrities with millions of dollars and access to some of the top advisors and managers can go broke. So how is it that some of these individuals lost it all? Let’s take a look at a few examples:
- M.C. Hammer: Estimated income of $30+ Million in a couple of years
- Had a paid staff and entourage costing $500,000 per month and built a home costing around $30 Million. 
- Mike Tyson: Estimated income of $400+ Million over the past 30 Years
- A long list of expenses including two Las Vegas homes, exotic pets (like Kenya, Storm and Boris his pet tigers), and taxes due to the IRS and British Tax authorities led to bankruptcy filing in 2003.
- Nicolas Cage: Estimated income of $150 million acting between 1996 and 2011
- Extravagant purchases of a castle, 30 motorcycles, luxury vehicles, a lawsuit, and $6.5 million in back taxes ultimately led to Cage’s bankruptcy filing.
There is one theme that resonates in these stories. Getting a grip on your spending requires discipline. Most of us won’t ever be faced with debt like the celebrities above, but there are steps you can take to help keep yourself out of similar situations.
- Monitor your expenses: take time to see what your spending looks like every month. Some people prefer to keep track of their expenses on homemade spreadsheets; others prefer to utilize technology to help like Mint.com or WalletHub.com
- Create a Budget and itemize expenses: Once you know how much is going out each month, create a budget to stay on track to meet your goals. Place your expenses into categories (auto, home improvement, restaurants, savings, fun, etc.)
- Monitor and Update Your Budget: Once your budget is in place, go back and look at each category to figure out if you’re spending too much in some areas. You will need to revisit your budget to fit your lifestyle as it changes over the years.
Budgeting does several things that are beneficial. It helps you:
- see where your money actually goes (not just where you think it does)
- monitor your purchases for people who have stolen your credit card
- stay on track to meet the many goals in your life
- learn to live within your means.
Nobody wants to end up like Hammer time, so make life easier and create a budget, then stick to it.