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How to Bankrupt Celebrities

Bankrupt Celebrities are always entertaining... but what can we learn from them?

There have been some high-profile cases of celebrities going bankrupt lately, so I wanted to have a look at how this can happen when someone earns so much money! It’s surprisingly common, and shockingly easy to avoid. So let’s get to some celebrity bashing!

In the UK you can apply to make yourself bankrupt (or someone else can apply to make you bankrupt) if you owe £5,000 and no longer have the ability to repay your debts. Bankruptcy lasts for 1 year and results in most, if not all, of your debts being written off.

The downside to bankruptcy is they’ll take everything you’ve got that’s worth anything (leaving you a few things so you don’t end up on the streets), you’ll struggle to get credit for 6 years, you might not be able to continue working in your profession, and if you earn enough they can make you continue to pay towards your debts for 3 years.

It should be a last resort option for an individual. When it comes to property investing, your credit rating means a lot. So if you want to take mortgages out and expand your portfolio, then you really don’t want bankruptcy on your credit file.

If you’re a cash investor…. Then you won’t owe anyone £5,000 so you’re golden. Skip this blog and go read something else.

List of Famous Bankrupts


  • Mel Brown (Spice Girls)
  • Mike Tyson
  • Shane Filan (Westlife)
  • Michael Jackson
  • Abraham Lincoln
  • Walt Disney
  • Duncan James (Blue)
  • George Best
  • Nicholas Cage
  • Kim Basinger

What do they have in common? Except for Abe and Walt, these people made a shed load of money very early in life, then blew most of it on buying stupid stuff and making really bad investments.

How to Bankrupt a Celebrity in 4 Easy Steps

1. Supply young people (minimal financial education) with lots of money

2. Make them think it will last forever

3. Give them bad financial advice that they never check

4. Forget about taxes

Death & Taxes

It’s true what they say about two things in life are certain. Death and Taxes.

The biggest cause of bankruptcy I’ve found is not paying taxes. From Nicholas Cage owing $2 million in unpaid taxes on a house in New Orleans to Mel B not setting aside any money from her £190,000 a month job to pay the taxes.

If you’ve never been self-employed before, it can be daunting to know exactly what and when you’re supposed to pay your taxes. But the concept of taxes can’t come as that much of a shock to anyone, can it?

Two easy ways to avoid this;

1. Go to the Government website and search for information on taxes

2. Get a good accountant

It’s really not that difficult. I don’t do my own taxes, cos it’s boring as shit. But I do have good accountants who love boring stuff! They are reputable, they have been in business for years, there are several partners at the firm… all these things reduce the chances of being given dodgy advice from someone and finding out in years to come I’ve not been paying any taxes!

But as I don’t trust anyone, I double check what taxes I’m meant to pay and look at roughly how much I am paying. I don’t calculate it, but I know the headline rates for different tax bands.

Property Debt

A lot of celebrities run into trouble due to property debt. Usually on their own home, but often on investment properties as well. It’s lovely that they want to buy everyone in their family a house, but maybe wait until you can actually afford it rather than just giving yourself loads of mortgages.

Hint: the mortgage company probably won’t be happy if you rent a Buy to Let house out to your family members.

How are these celebrities making a mess of a pretty safe and secure investment? Usually through poor advice. As we know, property is full of sharks at the best of times. So throw in a rich, trusting, uninterested investor and all of a sudden everything that professional investors wants to walk away from gets pushed in front of them.

A lot of high risk, off-plan, foreign investments are presented to celebrities. Why they feel the need to go for high risk I don’t know, it’s not like they are struggling for cash!

Kim Basinger bought a whole town in America with the intention of turning it into a tourist attraction. WTF? Dumbass.

Compare these high risk strategies with something like, 2 bed Victorian Terrace properties. Robbie Fowler – the Liverpool football player – bought a crap load of these cheap properties in and around Anfield, Liverpool back in the day. They aren’t sexy investments, they never made him 50% return in a year, but they were great, sensible, long-term investments that are probably now paying him an income higher than he earnt as a footballer.

So how can you avoid making a similar mistake as these celebrities?

1. Don’t get all the debt you can, just cos you can

2. Buy sensible, long-term, sustainable investments

3. Avoid high-risk, high-return investments

4. Work with people who have a good reputation and who are going to be around for a while

How Many Tigers does it Take….

Apparently when Mike Tyson went bankrupt (the most recent time anyway), he owed $25,000 in pet bills in relation to his Tigers. Plural.

Mel B had an armoured Cadillac. And armoured S-Class. And armoured Range Rover. Oh, and a Ferrari and a Bentley.

Michael Jackson had a fair ground (creepy).

Lady Gaga spent $3 million on outfits and backdrops for her tour.

The overly lavish lifestyle that these celebrities go for probably doesn’t appeal to most of us, or if it did, it’s just not possible anyway. But the principle of living within your means still stands.

I’m not one for being a cheapskate. I have no problem with spending tens of thousands on watches. I’ve owned £130,000 Aston Martins and Mercedes CL-AMG. But I did it at a time when I could afford it, not before.

Turns out I’ve stopped being a child now and don’t spend anywhere near as much on stupid shit, but I’d never judge anyone for buying themselves a cool toy because they always wanted one.

I will judge you if you buy it before you can actually afford it. That doesn’t mean you need to have the cash, financing purchases is often sensible. But don’t get carried away with it.

What Can We Learn?

Schadenfreude is real. It’s fun to mock other people’s misfortune, especially if that person was doing really well before.

There is a theory that your level of wealth will always return to your level of financial education. Why did Mel B go bankrupt while Mel C is worth £30m? Which one of them married a property developer and which one married a comedian?

I personally think it works the other way around as well. If you educate to a higher degree, you’ll bring your wealth up to that level over time. And while it’s not necessary to know everything about everything, you need to know enough to make informed decisions.

When you buy a new phone, most of us (or maybe it’s just me) will do a bit of research and find out what people are saying is good. I’ll then go to a shop and talk to a sales adviser. If they tell me something completely different, I’ll be able to test them and ask why they are suggesting one thing over another.

I don’t know anything about phones. I just know enough to detect if I’m being bullshitted, and can push back against their advice. Not saying I can’t be convinced otherwise, but it’s at least a bit of protection.

Same goes for your financial education. Whether it’s property, shares, currencies. There are loads of guides out there on the internet for free, so there is no excuse not to bring your base level of knowledge up several notches.

If you want to learn the fundamentals of property investing, and the intermediate skills needed to either get involved in it directly – or at least know when someone is selling you utter shite – then get in touch and I’ll give you access to a course I helped produce that does just that. I’ll even give you 50% off, cos I loves ya.

Stay safe out there kids, and remember – don’t eat yellow snow.

Damien

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