filemaker 11 Its not an unusual tale. People earn millions, but still find themselves having to file for bankruptcy. Today, we look at 10 celebrities in the slideshow above who have gone bankrupt, why they did so and the lessons we can learn from their unfortunate stories:
Why have these celebrities gone bankrupt?
Whilst we have identified many “reasons” why these bankrupt celebs have suffered their downfall, this is probably better described as an “excuse”. In reality, each and every example is due to one thing: lifestyle. In all cases, the principle reason is due to overspending compared to income.
Let’s look at some examples.
Shane Filan – “Irish Property Market Crash”
Shane Filan, the Westlife singer, declared bankruptcy in 2013. In an interview with the Daily Mail, Shane Filan describes the heartbreak at not being able to afford a £29.99 Spiderman toy for his son. His bankruptcy is blames on the failure of his property investment company which suffered as a result of the Irish Property Market crash. This makes you feel quite sorry for poor Mr Filan.
However, this is not why he became bankrupt. Whilst the crash certainly would have hurt him financially, I would argue that it has more to do with the following which was noted in the same interview:
“…his most stupid purchase was buying a helicopter back in his hey day, but only flew it for half an hour with a pilot. Other buys included a Ferrari, a Porsche, and an Aston Martin DB5 which have now all gone.”
Somehow, I don’t think that the problem was the Spiderman toy!! Instead, greed and irresponsible spending seemed to play a much more significant role!
Burt Reynolds – “Failed restaurants / divorce”
The actor Burt Reynolds files for bankruptcy in 1996. According to his Wikipedia page:
“Despite much success, Reynolds’ finances were bad, due to a messy divorce from Loni Anderson, and failed investments in some Florida restaurant chains.”
Again, whilst these two events would not have had a positive impact on Burt Reynold’s finances, there are greater problems here.
On August 16, 2011, Reynolds foreclosed on his Florida home, when he could not pay the $1.2 million he owned on his Florida home.
For me, owing $1.2 million on a home following bankruptcy (a 4-acre waterfront Florida estate) indicates that Mr Reynolds’ lifestyle may have been slightly beyond his means. An ABC news article seems to support this theory:
“He runs up bills and ignores them,” a source familiar with Reynolds’ financial state told ABCNews.com. “He owes millions of dollars to people. It’s a sad state of affairs.” Again, overspending seems to be the problem.
What can we learn from these celebrities who have gone bankrupt?
The lesson is simple. However much income you have, if you don’t live within a budget where you spending is less than your income, you will not prosper financially.
Bankruptcy is a complicated occurrence that often takes place because of a variety of different factors. If you want to learn more about what causes bankruptcy for non-celebrities then you should consider seeking an MA in Economics online. Many of these degree programs involve fascinating research projects related to the issue. One such project is being led by Mahmud Yesuf, who seeks to analyze bankruptcy data and answer a number of questions on the subject, like if it can stall economic recovery, or if programs like Medicare were able to effectively reduce bankruptcy. This knowledge is important for anyone who wishes to improve their financial management skills.
I think an article that was previously posted on moneystepper should really help you understand the importance of both building and maintaining wealth whilst staying within a budget. Check it out: