Rich Is Often an Illusion

Ah, to be rich and famous. That’s what most people tend to think when we watch entertainers or sports celebrities. But be careful what you wish for, because so often that’s an illusion and an image, and nowhere near the reality of their lives.
Here are a few examples just from the last two weeks:

Serge Federov of the Washington Capital is being sued by Citizens Bank in Michigan for over $2.1 million dollars, claiming he defaulted on two loans.

Michael Vicks, the now jailed Atlanta Falcons quarterback, just filed for bankruptcy on over $50 million of debts versus $10 million of assets. It includes everything from a Royal Bank loan of $2.5 million (yes, I was wondering the same thing) to business loans backing a bunch of losers in everything from liquor stores to restaurants. And Vicks actually had a 10-year contract for more than $130 million before he self-destructed. At least he gets free room and board these days at Levinworth.

Mike Tyson earned over $200 million in his career and has been flat broke for years, even before his bankruptcy filing in 2003.

According to a story in Fortune magazine, singer Michael Jackson is hanging on by his fingernails because a hedge fund recently re-mortgaged his Neverland ranch for the umpteenth time. Supposedly, his equity in the Sony music publishing library has also been maxed out by borrowing against the equity some time ago. Yet over his lifetime, Jackson has earned more than $500 million and right now his debts way exceeds his assets.

Who cares? Well, for starters, it’s lesson number seven hundred plus of how dangerous it is for our kids to make these people our heroes and role-models. That poster of “whoever” in your kids’ room could well be the same person in handcuffs or bankruptcy court one day.

For us adults, it is another reminder that gross income is meaningless. Oh sure, more income should make our financial situation easier. But then, even two-thirds of lottery winners file for bankruptcy within 10 years. It is never about the income but about how much of the money you get to keep.

All these examples, and a ton more, are of people with an incredible gross income and it all slipped through their hands – and millions more after that. How much of what you’re spending is on credit or with borrowed money? How much of your spending is on image, a new car, the expensive vacation, the plasma TV or fancy restaurant?

If you can’t control your income, you can certainly control your expenses. Sometime today, just add up roughly how much interest you’re paying each month to make other people rich and ripping yourself off from keeping that huge amount of money going out the door each month. After all, knowledge is power and we cannot change what we do not acknowledge.

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