Celebrities in Debt: What We Can Learn From Their Mistakes
While celebrities have the talent to make money, some severely lack the ability to keep it. Whether its poor purchasing decisions, failing to recognize their limits, or just plain stupidity, celebrities are just as prone to falling into debt as you or me.
Here are three examples of celebrities in debt whose problems could’ve been avoided with some simple financial planning:
1. Nicholas Cage
During the 1990’s and early 2000’s, Nicholas Cage was spending money like crazy. He had starred in more than 30 movies between 1981 and 1991 and no doubt felt his success justified numerous lavish purchases, including a private island in the Bahamas, a Gulfstream 1159A turbojet, multiple mansions, and two castles! The high-cost of maintaining these properties, coupled with $14 million of unpaid taxes, quickly sent him spiraling into debt. Cage was forced to sell off most of his possessions including his prized comic-book collection and the skull of a T-Rex.
When we are successful, it’s natural to want to treat ourselves. After all, we deserve a little reward for all the hard work we do. That said, there comes a point where “treating ourselves” turns into “putting ourselves in debt”. Nicholas Cage is a text-book example of the impulsive over-spender. He could have completely avoided financial hardship by simply planning for the future and not over-indulging in the present. Enjoying your success is fine, but make sure you’re putting the majority of that new money towards something worthwhile, like retirement or an emergency fund.
2. Stephen Baldwin
The youngest Baldwin brother, Stephen Baldwin found moderate success in the film industry during the 90’s, but quickly faded into obscurity. By the time the 2000’s rolled around, Baldwin had resorted to making reality show appearances in order to pay the bills. Unfortunately for him, Celebrity Mole and Celebrity Apprentice didn’t quite pay well enough for him to maintain the Hollywood lifestyle he had grown accustomed to. In 2009, Baldwin’s debts got the best of him and his house went into foreclosure. Shortly afterwards, he and his wife were forced to file for bankruptcy.
Stephen should have been able to realize his unstable income would make owning a lavish home nearly impossible. Avoiding foreclosure and maintaining your mortgage isn’t rocket science, but it does require a little bit of planning and budgeting. Before buying a house, you should always determine what your total monthly costs will be. This includes your mortgage payment, insurance, homeowners’ dues and taxes. Just because you are approved for a loan doesn’t mean you can afford it. Know your limits, and stick to them. Believe me, you’ll be much happier in the long run.
3. Kim Basinger
In 1989, Kim Basinger thought it was a good idea to buy the town of Braselton, Georgia for $20 million. That wound up being a terrible idea. Partnering with the American Pension Fund, Basinger planned on turning the small town into tourist destination with a small movie studio. The acquisition of the town came at a poor time for Basinger, as she was being sued by Main Line Pictures for pulling out of the movie Boxing Helena. In 1993, she was ordered to pay out $8.1 million in damages to the studio. Shortly afterwards she was forced to sell her shares of the town and declare bankruptcy.
Basinger’s situation is actually pretty similar to a lot of the stories I hear from people struggling with debt. I can’t begin to tell you how many people I have spoken to make silly purchase decisions when they’re in debt for thousands and thousands of dollars. While Basinger wasn’t in debt at the time she bought the town, she was aware of the pending lawsuit and reparations she’d have to pay. Learning how to properly prioritize your expenses is pivotal to good financial health. Before making any major purchases, you should always make sure your debts are paid in full. Remember, a smart sailor doesn’t set sail when they see thunder clouds on the horizon.
It’s important to remember that anyone, regardless of how successful or wealthy they are, is susceptible to financial hardship. Staying in control of your finances boils down to a few simple principles that many people just simply choose to ignore. Whether it’s because their blinded by their success, ignoring the problems that exist around them, or just general laziness, people can wind up in debt quickly if they don’t pay attention. Facing your debt head on, cutting down on frivolous purchases, and saving money are all little things you can do to ensure you remain financially stable.