We recently discussed the trials and tribulations of the Real Housewives to illustrate a simple point: It doesn’t matter how rich you are, or how much money you’ve made. You can still go broke. Today, you’ll learn about a few of the most famous celebrities who blew through massive amounts of cash.
I hear lots of people say they don’t save money because they don’t “make enough.” The reality is you’ll never feel like you make enough, and if you make a ton of money, you can still spend it all, if you’re not careful.
That’s why I preach the importance of developing good money habits early in life. If you learn to save 15+% of your income when you make $12 an hour, you’ll definitely save even more when you make $120 an hour.
Some people never learn this lesson, though. Some people make millions and millions of dollars only to blow it on stupid things. And some stories of financial ruin actually make quite good yarns, even if there is an element of schadenfreude involved.
Allen Iverson, 2001 NBA MVP and 4-time scoring champion, earned over $154 million in his playing days from the NBA alone (that includes game time and practice). A.I. was known for his “independent” manner and occasional “bad” attitude.
In addition to his $154 million salary earnings, Iverson made millions more in endorsements, including a $50 million contract with Reebok he signed back in 1996. That’s a whole lot of money.
But it’s all gone, because A.I. has no idea how to be fiscally responsible. The gory details of just how bad he is with money came out in recent divorce filings. His inability to stay in control is pretty incredible given that Iverson still pulls in $62,500 per month.
Despite an income ranked well within the top 1%, The Answer hemorrhages nearly $300k per month. How can he spend that much? Well, $10,000 goes to clothes, $5,000 to restaurants, and $1,000 to dry cleaners, of course! He also owes nearly $900k to a jewelry store he never paid.
According to a former teammate, Iverson even bought new clothes in every city he went to. That’s right, he didn’t carry luggage. He just bought new clothes every couple of days. Maybe it’s not surprising A.I. ended up penniless.
Kim Basinger, an 80’s blonde bombshell best known for her roles in Batman and Never Say Never Again, filed for bankruptcy in 1993. You also might remember her for role as a trailer park mom in the rap classic 8 Mile.
The story of her bankruptcy is interesting because much of her financial troubles stemmed from a decision to purchase a small town in Georgia called Braselton. This $20 million cash outlay helped make her destitute only four years later, after she backed out of the box office bomb, Boxing Helena. Kim’s decision to leave the project resulted in a $8.1 million settlement, propelling her into bankruptcy – and she lost Braselton! The horror!
MC Hammer was a popular rapper back in the ’90s, when garbage bag pants were cool and people were generally a little funkier. He had a number of hip-hop singles, including the classic “U Can’t Touch This,” which sampled Rick James’ “Superfreak,” and the lesser known “Pumps and a Bump.”
Hammer has been quite famous for being broke ever since the VH1 original movie based on his life, “Too Legit: The MC Hammer Story debuted.”
Hammer’s rise and fall was incredibly fast. It took him only six years to go from on top of the world to on top of nothing. That’s because Hammer bankrolled a 200-person staff, to the tune of $500,000 per month (WHAT?)
He made $33 million off of just one album, “Please Hammer Don’t Hurt ‘Em,” but success was fleeting. “U Can’t Touch This” proved to mark the pinnacle of his career, and Hammer filed for bankruptcy in 1996.
At the time of his bankruptcy, Hammer owed two lawyers over $450k each, and the IRS nearly one million dollars. This is not to mention an unpaid bill to John Deere for $5,519, of course.
Another famous NBA player who went broke is Antoine Walker. He was a star with my hometown Boston Celtics for a number of years, and made over $110 million in his career. But by 12 years later, it was all gone. He even had to sell his Miami Heat championship ring to pay back the debts.
Walker is one of the more vocal players about his financial troubles.
He’s also one of the more sympathetic figures, at least in my eyes. According to Walker, part of his financial difficulties came from bankrolling a lavish lifestyle for his friends, including buying plane tickets, meals out, and drinks. Walker also invested in a number of business ventures that went belly-up.
But some of his moves are just plain dumb. For example, at the time of his bankruptcy, Antoine owed more than $1 million to various casinos. He also claimed to spend $400/month on “pool maintenance.” Hah.
Walker has been forced to play for the NBA equivalent of peanuts in Puerto Rico, and now that’s even over for the 6’9 big man. What will a broke, washed-up former Boston Celtic do now? Who knows.
Burt Reynolds is an old-time actor who has had more than his share of financial troubles. Burt is perhaps best known for his lead role in “Smokey and the Bandit,” but you might recognize him from his part in “Boogie Nights.”
Burt has been unable to keep his finances in line for many years. People magazine wrote a story on his bankruptcy back in 1997, which Burt attributed to bad investments in Florida restaurant chains. He also co-owned a USFL team named the “Tampa Bay Bandits,” inspired by the old Smokey and the Bandit film (hubris, Burt?)
More recently, in August 2011, he had his $1.2 million home in Florida foreclosed upon, after missing more than 9 months of mortgage payments. It seems Burt still hasn’t quite figured out how to balance his own checkbook.
Perhaps the most famous boxer of all time, Mike Tyson is simply an icon. He may be most famous to my generation, though, for going full-Dracula on Evander Holyfield back in 1997.
Iron Mike also squandered the most money out of all the individuals we discussed today. Tyson made a reported $400 million over 20 years, and by 2003, it was all gone. Poof.
Remember, that’s more money than you, or I, can ever dream of. $400 million can fuel a lifestyle beyond the reach of all but the most fantastically wealthy. Imagine if your bi-weekly paycheck, instead of “$2,000,” listed “$200,000.” That’s how rich Mike Tyson was.
So where did it all go? Well, there’s $8,100 on tigers. There’s $308k he owed to a limo service. There’s also the $410k he spent on a birthday party. How about the $173k diamond-studded chain he picked up from a jewelry shop in Las Vegas without paying (the owner said he was “good for it”)?
Some aspects of the Mike Tyson story seem familiar. There are friends who took advantage of him, bad business ventures, and real estate purchases that went south at one point or another.
But the size of the fortune he amassed, and lost, is truly staggering. His boxing career led to $400 million in earnings, but it culminated in $27.3 million in debt, according to his bankruptcy filing.
Develop Good Habits When You’re Poor, So You Stay Rich
There is something very important to learn from these stories. You can be fabulously wealthy, beyond your wildest dreams, and still end up broke. That’s why saving money when you have little of it is so important. You’ll be used to taking a portion of your paycheck and investing it, so you’ll always have a safety net, even if you never make six figures. And as long as you live within your means, you’ll never end up broke and bankrupt like one of these celebs. Skip the pet tigers and you’re off to a good start.
Readers, have you heard some of these stories before? Did you think it would be possible to go broke after making $200 million?