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What We Can Learn from Pamela Anderson and Other Celebrities in Financial Trouble – Part 2 of 2

{ Posted on Apr 22 2010 by Marcus Alston }

Pamela Anderson, Kate Gosselin, Nicolas Cage and other celebrities have real financial problems just like to the rest of us.  Celebrities and non-celebrities should create a budget to help avoid, manage and reduce debt.  So what can we learn from celebrities in financial trouble?  Below are some lessons I have learned from celebrities that you may be able to apply to your own situation:

  1. Make a budget based on your known and certain income (i.e. amount in movie, record or other written contract) and divide the income over the number of years you expect to live.  In your budget, your monthly expenses must be less than your monthly income or you may run out of money.  Consider savings, salary, royalties, endorsements, etc.
  2. Don’t try to keep up with the Joneses (i.e. the other celebrities) or try to live up to the image the media and fans want and expect all celebrities to have.  Don’t live above your means.
  3. Don’t buy expensive cars or a mansion.  Are you listening Nicolas Cage?  The up-keep alone on these sprawling estates will drain your budget slowly.  Billionaire Warren Buffet still lives in the same house he bought in 1958 for $31,500 in Omaha, Nebraska (although it is 6,000 square feet and probably worth quite a bit today).
  4. Think like a miser.  You may never get another big hit or contract again (see M.C. Hammer and Gary Coleman).
  5. Don’t Live Like a Celebrity. It’s easy for me to say, but be a regular person as much as possible.  While you are at it, lose the attitude also and treat people with respect (this last part is not a financial comment, but it’s just the right thing to do and is often forgotten when people “make it”).
  6. Watch your money (Rihanna) and pick the right person to manage it.  You should hire a professional to help you with your finances, and get references, including bank references, client references, family references, etc. on the professional(s) you hire.  Interview these references and do a separate background check on anyone you hire.  Is there a criminal record?  What training and schooling has your advisor received?  Get evidence of this.  Contact the schools.  Verify the information on the resume.  Check their financial stability.  Do it as if your livelihood depended on it.  It does (Rihanna).
  7. Get rid of the Entourage.  This is tough love.  Besides mom, dad, spouse, kids and your siblings, don’t help or support anyone else financially, unless you are legally obligated to do so.
  8. Save, save, save. Don’t know how much? Click here for help.
  9. Be careful of your credit card usage. Yes, even as a celebrity, you must watch your credit card usage.  Manage your credit card debt wisely and know what not to do.
  10. Invest wisely and do not have family/friends manage your money.  Find financial mentors with a proven track record.  Don’t forget the background check.
  11. Avoid risky business ventures.  Many people will pitch “can’t miss ventures” such as restaurants, record labels, clothing lines, new technology.  Be careful or better yet, just don’t do it or put it off until after your career is over when you can focus your attention on the venture.
  12. Visit the offices of advisors at announced and unannounced times to see what is going on.
  13. Learn industry standards for the services being provided.  What should you be charged so that you are not overcharged?
  14. Get a prenuptial agreement between you and your spouse that determines exactly how much your spouse would get in a divorce.  See Jon and Kate Gosselin.  Speaking of prenups, I wonder how Larry King will end up from a financial perspective after his 8th divorce.  He did not have a prenuptial agreement with wife number 7 (8th divorce-he married and divorced one wife twice). King is reportedly worth $144 million according to a report and is in the middle of a four-year, $56 million contract with CNN.
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6 Responses to “What We Can Learn from Pamela Anderson and Other Celebrities in Financial Trouble – Part 2 of 2”

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