If you’ve followed the news over the past few weeks, we’ve seen yet another celebrity debt scandal – in the rapper known as 50 Cent. Celebrity debt scandals aren’t that unique as we’ve seen them for years. Whether it’s a celebrity that just can’t break the cycle of debt or a business that’s gone belly up, they always seem to grab the headlines.
Foolish decisions aside, I think there are lessons we can learn from celebrity debt scandals to help us manage our money better.
50 Cent, aka Curtis Jackson, is the latest celebrity to face debt problems. The rapper recently filed for Chapter 11 bankruptcy thanks to lawsuits he’s facing for posting unsavory videos online of a rival’s girlfriend. Once purported to have a net worth of several hundred million dollars, 50 Cent is seeking protection from the multimillion dollar lawsuits he’s facing.
Potential spending issues aside, 50 Cent is seeking business protection. Chapter 11 filing will allow him to reorganize his business as opposed to having his possessions liquidated such as in Chapter 7 bankruptcy. This does not mean he’s broke, per se, rather he does not have the funds necessary to pay back all of his business interests.
Politics aside, The Donald’s ego is seemingly as big as his fortune. But, did you know that Trump has filed for the same Chapter 11 protection not once, not twice but four times over the life of his business? Often considered a business titan, many of the bankruptcies have resulted because he overleveraged his business.
Simply put, he took on too much debt. Debt can be used as a justifiable leverage to help further yourself financially. When used wisely, it can work out great. When done foolishly it can lead to more debt, and that has been the case with Trump on each occasion. Fortunately for Donald, his persona seems to rescue him every time.
Get offers for lower-interest rate debt consolidation loans here on ReadyForZero!Check your rate using ReadyForZero's free debt consolidation tool. People have saved thousands by consolidating higher-interest debts using a single, personal loan, this will not negatively impact your credit. Check Your Rate Now
Whereas Donald Trump declared bankruptcy thanks to leveraging his business ventures, Mike Tyson’s bankruptcy resulted from poor spending decisions. Tyson made $400 million over two decades only to throw it away on lavish parties, Siberian tigers and fast cars. Tyson was also notorious for having people around him who greatly took advantage of him, likely only adding to his financial problems.
Interestingly enough, Tyson was able to use the same Chapter 11 protection that 50 Cent and Trump have used.
One Good Lesson and A Takeaway
Not all celebrity debt scandals reveal deadbeats – there are some who work to repay their creditors. One recent celebrity to do so was Michael Vick. While Vick availed himself of the same advantaged protection of Chapter 11, he took repaying his near $18 million dollar debt seriously – by living with a budget.
Yes, it could be argued that he, and the others, had or have an advantage, but it shows, at least in the case of Vick, that if he can live by a budget then anyone – celebrity or not, can. I think it also points out some other lessons, such as:
- Just because you have money doesn’t mean you know how to handle it
- Those we expect to manage their money well don’t
- You’re the only one who will care about your money the way you do
We may laugh at some celebrity debt scandals, and rightfully so in some occasions. However, we can also take lessons from them to help us on our own financial journeys.