Most of us wouldn’t mind a few extra bucks in our bank accounts. Twenty million extra bucks wouldn’t be so bad either! Such a deluge of money could cover a lifetime of expenses, provide a whole lot of comfort and fun, and still leave a bit for our children when we’re gone. But would it?
It’s no secret that financial literacy is rarely included in the American education system. A few lessons on financial leveraging through 0% interest credit cards and loans, debt repayments, and budgeting could have made a huge difference in the size of our pocketbooks. So, would simply coming across more money solve our problems? Perhaps The Notorious B.I.G. said it best when he coined the phrase “Mo[re] Money, Mo[re] problems.”
The following three gentlemen are famous, world-renowned athletes who have made upwards of $400 million, yet still fell victim to bankruptcy:
Iron Mike’s estimated worth once pushed a solid $400 million, and he spent that in quite outlandish ways. How did Mike Tyson go bankrupt?
Besides his $2 million bathtub, Tyson also dropped $7.8 million on personal expenses, $4.5 million on cars, $3.4 million on clothes and jewelry, $140,000 on two Bengal Tigers, and $125,000 a year on their trainer! The rest slipped through his fingers on various things like three marriages, five kids, Don King, drugs, court, and jail. See this Washington Post article for more mind-blowing details of his bankruptcy.
Including the $34 million from his “bite fight” with Mike Tyson, Holyfield accumulated over $250 million throughout his career. Manager fees, $20 million to his pastor, and about $500,000 per year in child support (Holyfield has 11 children) made a serious dent in his fortune. Even more, his $20 million mansion isn’t too cheap to maintain with 54,000 square feet, 109 rooms, 11 bedrooms, and 17 bathrooms on 235 acres.
Famous for his leading role with Michael Jordan and the Chicago Bulls, Pippen earned nearly $120 million during his successful career. No jail time or drugs for Pippen. Rather, he suffered the same fate of other athletes like Raghib “Rocket” Ismael, Rollie Fingers, Johnny Unitas, and Sheryl Swoopes.
While money may be the root of all evil, Scottie Pippen and friends can testify that doing careful research is the fix to that evil. Much like the rest of us would, these athletes tried to make their money last through sound investments. After losing tens of millions, they realized their advisors had alterior motives. Their recommended ventures sucked the athletes dry of all their money.
First, money can bring out the worst in people. Regardless the amount of our wealth, it is absolutely essential to study up and protect ourselves. Rather than blindly trust anyone’s recommendations, we should always be doing our own due diligence before making important personal financial decisions.
And second, never forget the Golden Rule of personal finance—spend less than you earn. Whether you earn $40,000 or $400 million, breaking this rule can obviously take you down fast.
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