From those we consider idols or role models to those we abhor or even consider social misfits, our world is full of celebrities. Most of them are heating the news headlines every day if not creating a buzz on social media. While most of the news is usually about their life in general, you won’t fail to hear about their financial statuses and net worth every now and then. It’s always Big News if a famous personality makes a fortune out of a mega-deal or goes bankrupt from a sour deal!
Either way, such news must get to us. There are specific points where you might ask, how come such people end up plunged in debt after claiming a seat amongst the rich and famous for quite some time? One could only argue that even the extremely rich aren’t expendable or immune to the effects of poor financial planning and ill-advised moves. Debt is inarguably among the biggest causes of their downfall, and it happens so fast to some people.
Before we spill the beans any further, here are seven reasons why celebs go into debt so fast.
1. Wanting Financial Management Skills
Most celebrities tend to make fortunes over a short time. The timeframe in which they accumulate such wealth denies them the experience of knowing how to manage such wealth. Once they have accumulated massive wealth over short periods, they lack the experience of handling money over time. The next thing you know, the celebrity is declared bankrupt or drowning in debt.
This is even truer if the celebrity comes from a place of poverty. If you are in the showbiz economy, it’s essential to educate yourself on money matters to know how to handle wealth when money starts coming your way. Otherwise, you will end up going into debt faster than you rose into being a celebrity.
2. Costly Lawsuits
A single lawsuit is enough to strip you of every badge of glory you’ve accumulated over time. It affects so many celebrities, especially when it comes to issues of misconduct, crime, assault, and even road accidents. One could argue that the risks come with the occupation, but this may not always be the case.
Moreover, sometimes, the famous personality isn’t to blame for the accident, but their injuries end up destroying their careers. The good thing is that these days, loans are available for such victims. On this front, Uplift Legal Funding provides loans for lawsuits involving personal injury, auto accidents, property liability, employment law, and a ton of other similar claims. Such funding can help you get by with your financial obligations while awaiting settlement. It can protect you from sinking into debt like lightning, especially since you only pay when and if you win the case.
3. Living Beyond Their Means
Most celebrities are considered rich, but wealth varies. One person may be much wealthier than the other. When some celebs get a taste of stardom, they want to be like those other celebrities they have been worshiping. They want to live the same lives as their idols. In most cases, they want to meet what they think society defines success as. Within no time, they are spending more than they are even making.
Since they have already acquired a certain status that they want to maintain, they look for another way to fund their lifestyle, resulting in significant debts and bankruptcy. For everyone who tends to live beyond their means, they are just on their road to financial ruin.
4. Bad Investments
Celebrities have a tendency to open businesses that are in their own personal brands. Lack of information on the best market choice can lead to them investing in companies that aren’t profitable. This, without saying, can lead to bankruptcy.
Also, most celebrities have no time to personally manage their businesses or investments. They, therefore, delegate these responsibilities to managers some of whom might not have their best interest in mind. Any business in the hands of such an unprofessional manager is bound to fail.
Such businesses that are started without a solid plan and with unthoughtful managers can easily drain all their money and quickly get them into debts as into numerous loans to keep their companies stay afloat. Celebrities who take time to think about their investments have a better chance of starting and maintaining profitable businesses.
5. Divorce
It might sound unrealistic, but yes, divorces do lead to celebrities going broke. It happens all the time. Since most of them rise into fame with their spouses, they might have signed agreements stating that they would lose everything if they ever split. Such contracts are made naively in most cases.
In case of a divorce, lawsuits follow, and eventually, one of them loses more. To keep up with the life they are accustomed to, they opt to go for unnecessary loans. Before they can even get back on their feet, they are too deep into debt.
6. Loss of Fame
It becomes hard to let go when you have been accustomed to a life full of attention and money. While some enjoy stardom their entire life, fame is short-lived for some celebrities. When you have been spending money as if it comes from a spring that will never dry, it becomes hard to let go of that life even when there is no more cash influx like there was before.
Most celebrities will opt to go into debt and loans to try and keep up. If any one of them keeps this up without a solid plan to make extra income, it can quickly lead them into debt.
7. Wealth Excitement
There are two types of celebrities; those that have grown with money and those that have attained wealth with fame. The transition to fame may not be new to those who have lived in wealth their entire life. As for those who have been subjected to poverty, the transition can be shocking. Some may be tempted to over-reward themselves for the achievements made, which in the long run can hurt their finances.
Nonetheless, the opposite is often true. As long as you’re focused and determined, a poor childhood can help make you rich and even famous. Those who know the pain of growing in poverty will do everything to stay on top and help others below them. They are more accustomed to aggressiveness, risk-taking, frugal living, and getting out of their comfort zones. Such a celeb is less likely to succumb to the pressures of being rich and famous, thus minimizing their chances of going broke.
From rocking expensive suits to driving expensive cars, and living in luxurious mansions, those are some of the many things we all dream about. Well, celebrities get them. Celebrities are viewed as wealthy people who make money over a short time and are well known. There are multiple cases of celebrities falling into debt and depression, and many people tend to wonder why this happens. This piece has highlighted some of the most probable causes, alongside a few tips one can learn from.
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