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Lifestyles of the rich and financially illiterate.

by:
Laurie Campbell

The great Samuel Clemens – otherwise known by his pen name Mark Twain – once said: “Do not put off till tomorrow what can be put off till day-after-tomorrow.” He was certainly a man of his word. Clemens failed to properly manage all the money he made as America’s greatest humourist in the 19th Century. He faced a crippling personal debt load by middle age.

With a large, lavishly decorated mansion in Hartford, Connecticut, and a long list of failed investments, he packed up with family in tow and high-tailed it to Europe for many years. But alas, he could not outrun the threat of bankruptcy. Only through a gruelling, three-year world lecture tour was he finally able to pay off his debts and enjoy peace of mind.

Well, at least Clemens did the right thing. He is but one example of many talented individuals who, suddenly thrust into the limelight of celebrity, make oodles of dough, then squander it in heartbreaking fashion.

Look farther back in time and you’ll discover the tragic story of Wolfgang Amadeus Mozart, arguably the greatest composer of all time, whose talent brought him riches and the courtship of kings and queens in the mid to late 18th Century. But Mozart fell heavily into debt by age 30, and when he died at just 35 he wound up buried in an unmarked pauper’s grave.

Come forward in time to our era and other examples of free-spending celebrities abound. Indeed, there ought to be a new reality show called Lifestyles of the Rich and Financially Illiterate.

You may remember news from some years ago about the country and western singer Willie Nelson. The taxman came down on him for unpaid bills. The IRS raided Nelson in Texas, seizing everything, including his 44-acre ranch, gold records – even his kids’ bronzed baby shoes. Then quite a story unfolded. Willie maintained all the trouble resulted from mismanagement of funds by his accountant. But it soon became obvious that the outlaw musician’s lavish spending factored greatly into the accounting equation.

He financed the salaries and expenses of a huge entourage. One of his buddies, Paul English, was listed in The Guinness Book of World Records as the world’s highest paid sideman drummer. Meanwhile, reports had it that Willie freely distributed personal cheques to fans who stood outside of concerts asking for money. Of course, it didn’t help that the rough-edged singer self-admittedly smoked enough marijuana everyday to drop a bull elephant.

Fortunately, in the end, Willie’s talent and popularity helped him dig himself out of the hole. Fans rallied to his support when he released his mail-order album, The IRS Tapes: Who Will Buy My Memories? Money from that initiative – plus what he made endorsing the fast food chain Taco Bell – helped him settle a tax bill nearing $17 million.
Other celebrities have come to less fortunate ends. Boxing champion Mike Tyson is a stellar example (in fact, many boxing champions are stellar examples in relation to ill-managed finances).

Consider that at age 20, Tyson was the youngest heavyweight champion in history. He earned $300 million in his heyday, sometimes making as much as $30 million per fight.  But he spent it almost as fast as he made it, throwing money after mansions, cars, parties, clothing, motorcycles - even Siberian tigers. He spent foolishly on jewellery, too. In 2002, he purchased a $174,000 gold chain laced with diamonds. Then news came that he couldn’t afford to pay for the item, which became part of the multi-million dollar debt described in his 2003 bankruptcy report.

Today, sadly, Tyson reveals that he lives paycheque to paycheque.  ”I am totally destitute and broken,” he reported in 2010, adding that he now manages to keep going only through the love of a good woman.

Well, amen to that.

The stories only go to show that if not making enough money was the real problem in most matters of personal finance, then we’d have to rewrite history for the likes of Clemens, Mozart, Nelson and Tyson. The truth is what it has always been. Money is only a tool, and nothing of quality ever gets built when the tool is not properly employed.

As we constantly point out at Credit Canada, it is almost always one’s attitude toward money that determines financial security in the long run.

As the saying goes, a fool and his money are soon parted.

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