The lifestyle of the rich and famous isn’t as secure as you might think. Once you make it big and the millions start rolling in, there are plenty of responsibilities and temptations that can quickly send your magnificent fortune spiraling down the drain. These celebrities who went broke are prime examples that debt and poor money management can affect anyone and everyone. Learn from their mistakes, and take their stories as motivation to begin cracking down even harder on your own budget and debt relief plan.
Do you have “good” debt? Think student loans or outstanding balances on cards you keep open to raise your score. While a little debt in small doses can benefit your credit with the right payment plan, it can quickly become problematic and, at worst, unmanageable. To avoid the common pitfalls, make sure you get serious about paying off as much as possible as soon as you can. This means having a strict budget, paying more than the minimum on everything whenever possible and looking for ways to make monthly expenses more affordable. For those with student debt, loan refinancing can help free up finances each month by trading all your principals for one larger loan. With a lower rate, you’ll be able to dedicate your finances to other areas of your life as well. A little breathing room can help you begin to restructure your budget and get debt-free faster.
Mike Tyson
Tyson had a lot more than just money problems in his life. The heavyweight champion fighter had to file bankruptcy, do time in jail and go through rehab before he started to turn things around. In addition to unpaid taxes, Tyson also had balanced owed to personal trainers, lawyers and others who had helped him throughout his career. He’s bounced back since then, but his experience shows that lifestyle and money go hand-in-hand. Falling behind in some areas ultimately causes you to suffer financially, too.
MC Hammer
After producing the smash hit “U Can’t Touch This”, MC Hammer quickly generated millions and was riding on easy street. Unfortunately, his extravagant lifestyle left him with more than half of his fortune in the negative. A mega mansion with over 200 staff members and private horse stable dwindled the singer’s budget until he had to file for bankruptcy in 1996. For some people, bankruptcy is the only way to get rid of staggering debt without losing their home or facing permanent financial ruin. It’s not the right choice for everyone, but for the people whose situations don’t have many other options, it can help them recover.
Dennis Rodman
Dennis Rodman became a millionaire playing basketball, but now he’s accused of being a shoplifter. Recently, Rodman was caught on security footage in a Newport Beach, CA, yoga studio allegedly assisting a group with a theft. The 400-pound, $2,500 amethyst geode was meant to be stolen while Rodman distracted the studio’s sole on-duty employee, but it failed when one of Rodman’s cohorts dropped the crystal and it shattered on the floor.
Rodman denies the allegations, but the owners of the studio insist he has not only attempted to steal the crystal but also taken various other items from the establishment. If Rodman is anywhere near the situation he was in in 2012, which left him broke according to his lawyers and unable to pay $800,000 in backed child support, then it’s likely things won’t be improving anytime soon. What can we learn from Rodman’s downfall? Nothing makes up for poor money management except learning better habits. Debt recovery is a slow and often painful process, but taking a consistent, honest path is the only way to true financial liberation.
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