Celebrities are just like ordinary people. They need to support their families and pay their taxes. Despite the exceeding sums of money celebrities make, they sometimes overuse credit limit and owe money to the IRS. And, just like ordinary people, they sometimes make bad money decisions. Among the most notorious there are expensive home renovations, costly divorce or an unfortunate investment decision.
Let’s look at the top stars who went broke and what made their fairytale life turn into the debtor’s prison.
Celebrities like Nicolas Cage or Pamela Anderson may have spent beyond the limit, but ordinary Americans are keeping their pace as well. The amount of bankruptcy filings in the USA has risen to a total of 1 million in 2017. Moreover, when asked if they have as much as $500 to spend for an emergency right now, 60% of Americans can’t grant that.
Surely, people have got used to a lender-borrower relationship if they have tough financial times. They would check this small personal loans online website and get an assistance easily and fast. But in order not to live from paycheck to paycheck one must take a reality check, cover the debt and acquire some good money habits.
- Johnny Depp
Johnny Depp was considered to be one of the highest-paid stars in Hollywood. For years and years he would earn his fortune, but it took a lot faster than that to waste those millions. Reports about his lifestyle compared with his spending pattern showed his ignorance towards limits. He would spend hundreds of thousands of dollars on exquisite cuisine, impulse purchases (like a yacht), and ill-fated projects (like a personalized music label) every month.
He, then, sued his managers blaming his monetary failures on them thus being involved in a costly court case. The same went down with his divorce. It ended with him having to pay a $7 million-worth settlement.
- don’t spend more than you have
- don’t go to the court.
- Michael Jackson
The “King of Pop” adored by millions of people around the world made millions back in the day. 15 Grammy awards and 1 billion of albums sold made him one of the richest in his time. Despite his generosity as a philanthropist, he managed to accumulate a pile of debt which he never repaid while he lived.
As well as many celebrities he got himself into debt by spending too much, forcing him to take loans but failing to pay them off. He was also involved in several infamous lawsuits that spoiled his image and made him pay settlements.
Michael Jackson was considered to owe $400 million before he died. He was planning to make money while touring, but he deсeased sooner. Thankfully, one of the Jackson estate’s piece of Sony/ATV, was bought by Sony Corp for $750 million, making half a billion debt into half a billion cash.
The lesson: always pay off your loans.
- Mike Tyson
Having worked hard for twenty years, Mike Tyson has managed to earn $400 million. The money went away much faster. He would spend a tenth of his whole estate on luxurious purchases monthly. He is notoriously known for buying a Siberian tiger. He got himself in prison ruining his image and on top of that, he had to pay a $9 million divorce settlement.
As if to worsen his state, he used to buy jewelry on credit. Despite the fact that he made $30 million a fight, he still owed to his managers, trainers, law firms, and the IRS. Eventually, when filing a Chapter 11 of bankruptcy he owed $23 million.
The lesson: don’t waste money when you’re young.
- Pamela Anderson
The Baywatch star was one of the most well-paid among the cast. She received $50.000 for an episode and did 110 of them. She also gained her income from worldwide syndication. Despite her beauty, profitable marriages and fame, she was wanted by the IRS for tax evasion. She, eventually, owed over $2 million in taxes whereas constantly spending money on plastic surgeries and home renovations.
However, being on the other side of the divorce process, she received a big settlement and made good money for The Baywatch reboot.
The lesson: when planning home repair works, calculate smartly unless you want to end up like Alisa Milano, spending $5 million renovating a $3 million house.
- Nicolas Cage
Having appeared most in the shows featuring celebrities who lost all their money, Nicolas Cage teaches people the most important lesson of all: pay your taxes.
Whereas constantly receiving $20 million dollar checks in 2000’s and making almost $200 million for his own movies he still managed to owe the IRS. The $14 million he owed was the tax on the 15 properties he had all over the world. Yet, he was quite the antique expert having managed to spend tons of money on a nine-foot tomb or a pet octopus.
He is now forced to make cheap movies that will never make big box office sales. He has already released 13 of them and it still owing to the IRS.
The lesson: the more you put off to pay taxes, the sooner they will blow up in your face.
People always want to experience celebrity life. They need to remember to only take after their persistence, hard-working character, and strong motivation. Wealthy people don’t always make the right choices and they surely didn’t make money by spending them. Learn from celebrity lessons and develop smart money habits early on.