Free Ebook.


Enter your email address:

Delivered by FeedBurner

« The Best Way to Make Your Resume Stand Out | Main | Entertainment Book Savings Update »

September 02, 2009

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Whatever the reasons are, I think it's pretty pathetic! I think mostly they live large and don't think of the consequences. Like you said, they think the money will just keep pouring in. It's pretty sad when this happens to self-made millionaires, though. Like I'd understand if some heiress had no clue about her finances and kept spending since she grew up rich, but someone who was poorer once should have a better grip on reality. I don't really sympathize with these people... I pity them.

I have from time to time thought about what I would do if I was handed a million dollars, no strings attached. I would think about savings, paying off the house, cars, vacation, etc, then it would be gone pretty quick. I then would say boy, if it was only 2 million, or 3 million. I think we all fantisize about having a huge amount of money and we would probably be rash and buy those things we want without looking at the long term.

I appreciate Dave Ramsey's frequent advice to those who get a huge inheritance or life insurance to let it sit in the account for 6 months so that you can have a plan and make wise choices.

I think the human brain befuddles when salary earned and purchases bought contain too many zeros. The symbols of status and wealth are money pits.

Celebrities surround themselves with YES people and these YES friends are not good advisers

I think part of it is that it's fairly easy to keep track of spending when you make 30K a year but 30 million is beyond what most people can wrap their heads around. Many of them probably overspend without even realizing their doing it because it's hard to believe you can really spend that much money it's such a big number.

Look at the movie Entourage... it's easy to see people blow their money.

On the other extreme you have types like Warren Buffett who still lives in the same house after 50 years!

-Mike

sometimes making too much money too fast is more of a curse than a blessing because there is a way that the cashflow deceives the owner that the world is his and he will never run broke. it rarely happens that way and they normally end up broke later in life with nothing to show for it, just bitter sweet memories and a lot of heart ache and regret

I can see how it it could happen...I think it comes from losing sight of who you really are, from being seduced into thinking that once you make more $ you are a different kind of person who "of course" needs/deserves the type of lifestyle you think other people like you have.

The thinking goes like this for example, "Someone like me *should* be able to afford cable, pick up the check more often, treat my BF/GF to a vacation, fly first-class, live in a better neighborhood, drive a nicer car, own a 2nd car, vacation in Europe and the Caribbean, hire an assistant, support young artists by buying their work, own a vacation home in Paris, remodel my Manhattan apartment, rent time on a private jet, and buy my own magazine. AND someone who makes as much as me shouldn't have to worry about money (the most deadly illusion!))

I'm sure this is worse if everyone around you is reinforcing this kind of talk.

And I'm also sure that everything Annie L spent was viewed by her and those around her as "reasonable" or even "essential". (ie renting a jet saves her time and is important for her personal security, owning vacation property is a good investment and she needs to travel to Europe to relax/work, supporting other artists by buying their work is her responsibility as a successful artist herself, remodeling her apartments is entirely sensible given the real estate market in NY and the fact she has to live in NY to work etc etc).

I think the "advisers" should show their clients in their initial meeting some examples of these types of stories and make a game plan to minimize it happening. The earlier the better to prevent crazy out-of-control spending from becoming the habitual norm.

I would establish a nest egg/wealth preservation strategy so that when the big money ends (for whatever reason) the client would still have a pension of sorts to live on.

I would teach them about "realized income" (per the "Millionaire Next Door") and point out that every time they buy some high ticket item they're basically going into business with the government (due to taxes) and having to earn twice as much as the ticket price which does nothing for their net worth.

I would show them how things like car collections may look good on "Cribs" but financially with depreciation, insurance, upkeep, etc. are doing nothing but draining their finances.

Since, big money doesn't last for ever I would encourage alternative streams of money with a big focus on safety and low upkeep.

I think education along this line would be a good start for those coming into big money.

I think you've hit the nail on the head there. One recent British example is Kerry Katona. At the height of her career she was pulling in millions a month. Now she's bankrupt, a coke addict, had her home foreclosed and is even having to fight to retain custody of her children.

A terrible shame, and with just one fundamental cause: Total ineptitude when it came to personal financial management.

I think fame and celebrity today are a trap. These people start to think that they can walk on water. That nothing bad will ever happen to them. That they are indestructible. That they are, dare I say it, more powerful than God. And given the adulation that society and the media give them, it should come as no surprise. Of course, bad things can happen to everyone, these people are destructible, and there is an all-powerful God. Eventually, reality sets in for these people.

Don't forget that wealthy people tend to attract spongers, especially in the form of family members who the individual in question may not feel comfortable saying no to.

Frankly the fame and big paychecks probably don't matter. Rich or poor these individuals simply never learned how to manage their money and were destined to blow whatever they had.

It's not what you make, it's what you keep!

For every horror story in the news there is an unnamed millionaire that got rich working a boring job spending less than they earned.

There is a phrase that sums it all up..."MONEY DOES NOT COME WITH INSTRUCTIONS"

The comments to this entry are closed.

Start a Blog


Disclaimer


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.

Stats