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7 Celebrities That Went Broke (and what we can learn from them)

Posted October 27th, 2009
by Staff


Credit card bills piling up? Mortgage payments seem too high? Still owe your brother-in-law for that botched .com investment a few years ago? You’re not the only one. Having financial issues is just part of being a human. And we like to take every opportunity we can to remind ourselves that celebrities are, indeed, human.

Some notable human celebrities include…

7. Donald Trump

He doesn’t part his hair forward, he parts his face back.

Financial mogul, business magnate, and television personality Donald Trump has seen his fair share of financial woes over the years. Despite early success managing his father’s company, the Trump Organization, the effects of recession in 1989 served a devastating blow to Donald. Some say that his hair never recovered.

What the hell happened? By the early 90’s Trump had accumulated a staggering$3.5 billion in business debt (casinos, hotels and loans) and $900 million in personal debt (golf clubs, hair products and women). The construction of his third casino, the $1 billion Taj Mahal, was primarily financed with high-interest junk bonds. In ’91 Trumps increasing debt finally got the best of him, and the Trump Organization was forced to file bankruptcy.

What can I learn from this? For the love of God, don’t take out loans that you can’t pay back. Although Trump got back on his feet around 1997, the recent financial crisis has once again reared its ugly head in the direction of The Apprentice star. In December of 2008 he failed to pay a $40 million loan to Deutsche Bank. In court, Deutsche Bank offered Trump a verbal kick in the balls, noting that “Trump is no stranger to overdue debt.”

Donald’s current wife, Melania. She’s totally with him for his personality.

In February of 2009 Trump Entertainment Resorts filed for Chapter 11 Bankruptcy. That’s it. It has to be said. You’re fired.

6. Ed McMahon

Yep, he did Publisher’s Clearing House for a while too

“If you spend more money than you make,” said Ed McMahon, “you know what happens.” Yes, Ed McMahon, we do. A year before his death (he passed way in June), the Tonight Show sidekick went public with his increasingly dire financial situation. His multimillion dollar Beverly Hills mansion had gone into foreclosure, and things were looking pretty grim.

What the hell happened? McMahon’s bankruptcy stemmed from the classic case of just spending too much damn money while at the same time making very little damn money. After years of little work and big expenses, things began to pile up for the comedy icon. Between the mortgage ($4.8 million), the lawyer in his daughters divorce case ($275,168), and medical bills (a whole lot—he was 86), it was getting out of hand. Donald Trump offered to purchase McMahon’s house in order to keep him afloat, but McMahon eventually refused.

Heeeeeeeeeeeeeeeeeeeeere’s bankruptcy!

What can I learn from this? You don’t need the $4.8 million house in the hills. Or, in your case, you don’t need to dish out another $500 so you can have a television in your bedroom. Strict monthly budgets conceived after strenuous studying of one’s income and expenses are important—toys are nice, but not filing for bankruptcy is even nicer.

5. Willie Nelson

He didn’t spend it all on pot you know

Generally country singers seem to have a whole lot to bitch about. Their wife left them, their dog died, their best friend slept with their mother, their voice sounds the same as every other country singer. But around 1990 country music legend Willie Nelson had something real to write a song about: he owed $16.7 million in debt to the IRS.

What the hell happened? Willie claims that he came to owe so much because of bad advice and bad investments (you should just see what you can get him to agree to when he’s high), and he later sued Price Waterhouse for mishandling his finances. Much of Nelson’s property was seized and auctioned off—but this is where it helps to have good friends (and fans). They helped by taking up collections and buying all of his property so that eventually, when he got back on his feet, he could buy it back from them. Nelson did a full schedule of road shows and sold an album, Who’ll Buy My Memories: The I.R.S. Tapes through an 800 number.

What can I learn from this? Make sure the person handling your money knows what they’re doing. It takes a lot of trust to put your hard earned cash in the hands of another, and it oftentimes leads to bad blood.

4. George Foreman

There is a price for getting your ass whooped by Ali.

When it comes to celebrities, athletes might be the most susceptible to fortune loss. Once out of their prime and off the team, money flow comes to an almost complete halt. That’s exactly what happened to George Foreman, who retired for the first time from boxing in 1977. It’s tough to keep up your lavish lifestyle when you’re only job is remembering to water the germaniums.

What the hell happened? The same thing that happens to tons of athletes happened to Foreman: the dude was out of money. With his savings dried up he was unable to make the minimum payments on his credit cards, bank loans and his mortgage. So he took a page out of Rocky’s book and hopped back in the ring. At 45 Foreman became the oldest man ever to become heavyweight boxing champion of the world, a feat that secured his name in boxing history and helped pay off his overwhelming debts.

Dinner for one…again.

What can I learn from this? It’s never too late to bounce back. How many boxing puns can be used here? Even if you’re back’s against the corner, you don’t need to be knocked out by debt! You can fight your debt and win! Wow, that’s actually all we’ve got. Foreman went on to become a highly successful entrepreneur, endorsing the George Foreman Grill, which you probably made your dinner on last night.

3. Gary Coleman

Whatchu talkin about, IRS?

Gary Coleman was once one of the highest paid child actors of all time, starring in sitcom sensation Diff’rent Strokes. But things went awry years later when he realized he was short on dough (and stature) and that he might have to file for bankruptcy. Apparently it’s tough for a thirty year old black man who looks like he’s seven to find work. Who would have thought?

What the hell happened? In 1989, Coleman sued his parents and former manager over misappropriation of his $3.8 million dollar trust fund. Awkward! Four years later he won over one million dollars in the settlement, but that wasn’t enough to keep Coleman from freefalling into the financial ruin cavern. Coleman filed for bankruptcy in 1999, claiming that it was the early mishandling of his money by his parents and manager that led him to have money woes. Even though he had, you know, already won that cool million.

Because when you think financial security, you think Gary Coleman.

What can I learn from this? Your family and your money should never, ever, ever mix. It always leads to trouble. Billy Joel (the sixth best-selling recording artist in the US) fired his ex brother-in-law after financial inconsistencies and my brother owes me twenty bucks for the pizza I bought last week.

2. Michael Jackson

Goin broke makes you look like….

Come on, really? Michael Jackson? Do you know how much he must have made over the span of his 40+ year career? Not enough, apparently. Although it may be hard to conceive, Jackson didn’t live within his ridiculously large means, and he left a lifetime of financial problems to his family when he died in June.

What the hell happened? After a long, prosperous career, The King of Pop’s kingdom, Neverland ranch, was taken from him in 2008 due to money problems. Jackson reportedly spent over thirty million dollars a year on clothes, toys, decorations and little boys (too soon?) for the ranch, and that kind of careless spending caught up with him. Marc Schaffel, a former adviser to Jackson, said Jackson failed to pay back numerous loans, and that when he’d ask for money, he’d often use code words to indicate the amount he wanted, like “super-size it.” Schaffel also said he once handed Jackson $100,000 in cash in an Arby’s bag, marking the first time anyone had ever been given something good in an Arby’s bag.

That clock counted down the time left before they had to vacate the property.

What can I learn from this? Don’t fall into debt, because you never know if you’ll have the time to climb out of it. Jackson was supposed to start a series of 50 concerts on July 13th, each of which would earn him $1 million.

1. Thomas Jefferson

Not only did our third president do well throughout his career in American politics (we appreciate the Louisiana Purchase), but he was also born into one of the wealthiest families in the United States. Thomas Jefferson was a thinking man, the author of the Declaration of Independence, a political philosopher, an architect, and the founder of University of Virginia. But money still got the best of him.

What the hell happened? When Jefferson’s father-in-law died, he and his brothers-in-law divided up his estate evenly before any of the debts on it could be settled. And it turned out the debts were more than any of them could handle. Jefferson did his best to sell land to earn money before the American Revolution, but by the time he received the payment the paper money was worthless because of the inflation of the war. The only reason creditors didn’t seize his estate, Monticello, was because of Jefferson’s role in American politics.

What can I learn from this? No matter who you are, money can bite you in the ass. After Jefferson’s death in 1826, Monticello and all his possessions, including 120 slaves (Christ!), were auctioned off. This helped pay for his $107,000 in debt, which by today’s standards equals right around an assload.

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  • Posted November 6th, 2009 by poorcollegestudent at 2:17 pm -

    I never knew a lot of these guys went broke. Jefferson, wow? But about MJ, I think he is still in a lot of debt even after his death.

  • Posted June 3rd, 2010 by Chelsie at 3:19 am -

    I never knew a lot of these guys went broke. Jefferson, wow? But about MJ, I think he is still in a lot of debt even after his death.


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