It’s nice to hear inspiring tales of rags to riches, but it’s less than ideal to experience the opposite. One person took to an online forum to ask how some super-rich people end up penniless, and the internet responded with their thoughts.
Note: Some quotes in this piece have been lightly edited for grammar.
1: Fighting Your Finances
The original poster begins by using Mike Tyson as an example, “He had $400m at the end of his boxing career,” they said. “If he did spend it all on mansions and cars, couldn’t he just sell them to come back from debt?” The answer is a little more complicated than that.
2: Trust No One
“When most rich people like that go broke, it usually happens from bad investments rather than spending on assets,” one person said. Especially in the case of millionaire athletes, who often have no choice but to trust other people to invest their money. “If you don’t trust the right people, you can lose it all rather easily.”
3: Piece of the Pie
“When you’re a famous athlete, plenty of people will be looking to take advantage of you,” the previous commenter continues. “Suddenly, every long-lost third cousin, old friend, and the guy who lent you $5 in middle school comes out of the woodwork looking to take a piece of what you have. That doesn’t help either.”
4: Are You Sure About That?
One commenter thinks when rich people say, “I can’t POSSIBLY spend all this money…I don’t have to be careful about how much I spend…” they take that as a challenge and ultimately end up broke.
5: Deep in Debt
Being flippant with credit card spending lands a lot of wealthy folks in hot water fast. “Rich, famous people have a huge target on their back for this sort of thing,” one commenter says. “If you are a bit foolish, they will cheer you on while you bankrupt yourself with credit.”
6: Losses for a Lifetime
“A really bad investment may mean that you sign away vast amounts of money in a single moment of foolishness,” one person says. “You may even wind up with an ongoing legal obligation to continue paying money into a doomed venture.”
7: Nobody’s Safe
What brings rich people’s bank accounts down is the same as anyone else: living beyond your means. “Mansions and cars and airplanes cost money to maintain and have taxes, along with utility costs,” one commenter said.
8: And I Quote
“I think a Hemmingway quote is a rather good explanation for how this happens. ‘Two ways, gradually and then suddenly,'” one person commented. They said they initially overspend, which doesn’t end as badly, but an unforeseen event does the actual damage.
9: Losing Value
Investing money into large assets isn’t always a good thing. “Once you drive a car off the lot, it loses half its value. If you buy real estate at the wrong time, it will cost you money,” one person said. “Your only option to escape it is to make more money. And retirees can never make as much money as when working.”
10: Crunching the Numbers
One commenter boils it down to a simple financial equation: spending more than you’re earning. “Doesn’t matter if it’s $1 or millions of dollars, if you’re spending $1.01 or 101% of what currency you have regularly, then you’ll always have a deficit.”
11: Dangerous Egos
When people get rich, “they get a big head, then spend big money, then get big debt,” one commenter says. Easy as that.
12: Hammer Time
One commenter called on MC Hammer of early 90s fame as an example, who went broke because he had 200 employees working for him. “They were his friends and people from his community. He wanted to help them out. He just didn’t anticipate losing his fame so fast, I guess.”
13: Boatloads of Debt
“People don’t understand that most of these fancy cars, houses, and yachts all have huge maintenance costs,” one commenter said, estimating that a $100M yacht can accrue $10M in maintenance costs alone.
14: Making a Comeback
One commenter said their father was once a millionaire, but when the stock market crashed, taxes and expenses piled up quickly. “He had to take on a steadier job, so he now works as a professor at a top 10 university. We were lucky not to lose our house, but I know quite a few people in my neighborhood who were not so lucky.”
15: Not Quite Bankrupt
“Rich people broke still means they have assets and enough money to retire off of, by the way,” one commenter said. “But there are a lot of idiots with money.”
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