If you’re trying to get by on a student loan, or minimum wage, then you might find it unbelievable that anyone worth millions could ever end up with debt problems. But all you need to do to find evidence that this does happen is dip into the newspapers or go online. There are many celebrities and members of the Forbes Rich List who have gotten into deep water with debt. They might not have had to resort to bad credit loans or no credit check loans like us mere mortals but just how do rich people get into debt?
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The cost of divorce
Divorce is difficult for everyone but when you’re worth millions it can get pretty nasty – and very costly. Prenuptial agreements provide some protection (although not in every country) but there are lots of celebrities and rich folk who have found themselves getting into debt to cover the cost of a big divorce. When you add cheating into the mix then the expense of divorce tends to sky rocket – just ask Tiger Woods whose divorce settlement reputedly cost him upwards of $100 million.
Forgetting to pay your taxes
It seems that the more you earn, the less you want to hand over any of it to the taxman. While most people accept that losing a chunk of your income to tax is pretty much just part of life, some of the rich and famous just don’t want to – that is, until the heavy hand of the taxman gets them by the back of the collar. Pamela Anderson is a prime example of a very rich – but delinquent – taxpayer; she managed to run up tax debts of $493,144.68 in 2010. Even after that was settled it emerged that she had previously been hit with a lien for $1.7 million in 2009 and owed yet more in 2012.
Missing your rent payments
Although it’s not unheard of for people to run up debts trying to make – or when missing – rent payments you wouldn’t expect it from someone who was once one of the world’s highest paid stars. However, Lindsay Lohan found herself in trouble last year after ‘forgetting’ to pay the rent on her London flat and running up debts of $100,000+. At the same time as her former landlords pursued her in court, her former boyfriend also publicly accused her of owing him around $30,000 after she allegedly made off with, among other things, his Rolex watch.
When you’re earning lots of money it makes sense to invest it, right? Well, as the saying goes you should never invest what you can’t afford to lose and there are some very famous examples of people who have got into trouble with debt as a result of bad investments. Actor Nic Cage, for example, fancied himself as something of a property mogul. However, after a series of poor purchases – including a castle in Bavaria – he was left with debts of $18 million precariously secured against his Bel Air home.
Lavish lifestyles of the rich and famous aren’t exactly headline news. However, it’s the wild overspends – with no budgeting – that often get even the most successful people into trouble. 80s/90s singer MC Hammer is one of the most famous stories of rags to riches – and back to rags again. With 17 luxury cars, a private jet, 21 racehorses and an ‘entourage’ costing $500,000 a year even his $50 million earnings couldn’t keep up and in 1996 he had so much debt he was forced to file for bankruptcy.