It's Still Not What You Make But What You Spend

Here are a few more examples of the fact that no matter how much you make, if you spend more than that, you're going to be in financial difficulty. From Fox News:

In fact, they say, Britney [Spears] may be on her way to joining the ranks of rapper MC Hammer and members of the R&B group TLC — celeb acts that spent too much, too fast and saved or invested far too little, and wound up filing for bankruptcy.

Michael Jackson knows this story all too well. He's defaulted on a $23 million loan, and if he doesn't pay the full amount — plus $212,963.83 in interest — by the end of January, he could lose his beloved Neverland Ranch.

Twelve years ago, the female R&B group TLC was also forced to file for bankruptcy, despite selling a staggering 23 million records.

In the 1990s, after reaping over $33 million from the international hit "U Can't Touch This," MC Hammer hired a whopping 200 employees, added $2 million worth of marble, two pools and three waterfalls to his home south of Oakland, Calif., and bought 17 cars and a stable of thoroughbred race horses. But there wasn't enough money coming in to justify the lifestyle. Hammer released an album, "Inside Out," in 1995 that was widely panned. The album floundered, peaking at No. 119 on the Billboard charts. Shortly afterward, Giant Records dropped the crooner from its roster. Thirteen million dollars in debt, Hammer filed for bankruptcy on April 3, 1996.

Then, as a contrast, here are some who are doing it right:

With these cautionary tales in mind, some celebrities invest first, spend later. The 29-year-old singer Usher may have an estimated net worth of $35 million, but he's keeping plenty of it in the bank. Sure, he rides around in a $500,000 chauffer-driven Maybach. And his mansion in Atlanta is no small affair. Yet Usher told Forbes that he's spent less than 10 percent of his total earnings. Instead, he's opted for fixed-income investments, blue-chip stocks and real estate.

Rapper Jay-Z owns a stake in the New Jersey Nets, co-owns the Rocawear clothing line and is president of Universal Music Group's Def Jam Recording. Sean "Diddy" Combs has interests in Bad Boy Records, the clothing lines Sean John and Sean by Sean Combs, a movie production company and two restaurants. And Def Jam Records co-founder Russell Simmons owns a management company, a clothing line called Phat Farm, a movie production house, TV shows, a magazine and an advertising agency. The three men are worth approximately $547 million, $358 million and $340 million respectively.

Seems like the "bad boy" rappers may be the smartest financially, huh?

Anyway, the point here is one that I've made over and over again -- no matter how much you make, whether it's $50,000 a year or $50 million, you have to spend less than that amount or you're going backwards financially. Come on, people, control your spending!

Comments

[Way-Below-Average Joe]

So if Joe spends $25K and Bob spends $50K, Joe should have more money than Bob, right?