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6 Famous People Who Lost All Their Money

Simi July 27, 2017

It seems that no amount of fame, success, or fortune can protect any of us from making the bad decisions that lead to insolvency and bankruptcy. Even people who have built business empires, collected millions of dollars from award winning music albums, or made hundreds of millions in acting or sports, are not immune to the ravages of a perverse relationship with money and an inability to balance their lives or their cash flows.

Remember this and proceed with great carefulness and humility as you make your plans to build a great fortune. Not you, nor I, nor even the richest man in the world is ever anything but a few bad decisions away from having nothing at all. Here is a list of just six famous people who made vast fortunes and then lost them. There are many more.

1. Donald Trump

Executive Producer and Host of NBC Network’s “The Celebrity Apprentice,” Donald Trump poses for a portrait, on Tuesday, Feb. 26, 2013 in New York. (Photo by Dan Hallman/Invision/AP)

No joke. Donald Trump is a rags to riches to rags again and back to riches story. He’s gone completely broke more than once and his businesses have declared bankruptcy multiple times throughout his decades long career making and losing billions of dollars in real estate, hotel management, and brand development.

Before making his successful bid for the highest office in the United States federal government, Donald Trump was famous for his high profile career as an outrageous celebrity real estate developer with an uncanny ability to self promote. Yet despite all his successes, he has also failed along the way, and his businesses have declared bankruptcy six times starting in 1991 and the last time even as recently as 2009.

Now it may be a stretch to say Donald Trump started from rags and ascended to riches. He did inherit a small family business from his father, but that’s a drop in the bucket of the kind of money Donald Trump has made, and lost, and made again in his career.

When someone managing projects with the sheer magnitude of scale that Donald Trump has throughout his career, failure means failure with a lot of zeros on it. When Trump declared bankruptcy for the first time in 1991, it was because he bit off way more than he could chew, taking on a risky investment- The Trump Taj Mahal- and financing it with massive amounts of high-interest loans.

Its doors hadn’t been open for even a year when it was already $3 billion under water and showing no signs of generating the cash necessary to fulfill Trump’s debt obligations. He personally lost $900 million in the fiasco and had to sell off his also under-performing airline (Trump Airlines) and his personal yacht.

Now if you ask anybody on the street to name a book written by Donald Trump, they’ll say The Art of The Deal, but Trump has also written another book called, The Art of the Comeback based on his early 1990s bankruptcy.

While he brags about how he was a tough negotiator throughout this, what really kept him going and put him in a position to get back up again was belt-tightening, cutting away all the extra luxuries and second-rate businesses he had going and focusing on what he was best at. Same way Jack Welch took General electric from “ran its course” behemouth to 4000% growth stock in twenty years.

2. Willie Nelson

The famed musical weed-smoking icon, Willie Nelson is doing well for himself again, with a net worth estimated to be in the neighborhood of $25 million. It was a different story for him though back in the first half of the 1980s, when the legendary singer got stuck with one of the biggest tax penalties in U.S. history.

The Internal Revenue Service had investigated Nelson and determined that he had been evading taxes by hiding his money in an illegal tax shelter. The bill the IRS sent him was for nearly $17 million. That was back when a million dollars was a lot of money.

Old Willie Nelson’s attorney was able to reach an agreement with the IRS to whittle the bill to a more manageable $6 million, but that was still more than Nelson was able to pony up, so he just did nothing, provoking the IRS to physically raid Nelson’s ranch house in Texas and carry out everything they could sell off to get their money. The only thing poor Willie Nelson got to keep was his guitar that was a gift from his daughter. The federal agency at least had a shred of decency not to take that.

In what has gone down in musical and legal history as an unprecedented deal with the Internal Revenue Service, Nelson got them to agree to settle his tax debt with proceeds from an upcoming album, “The IRS Tapes: Who’ll Buy My Memories,” paying off Nelson’s debts by 1993.

He continued making music throughout the rest of the 90s and beyond and is doing quite well again. These days he still writes music, records albums, and goes touring. He also told Rolling Stone that he thinks the Trump Administration’s Attorney General Jeff Sessions should smoke some weed. That’s just Willie Nelson being Willie Nelson!

3. MC Hammer

Remember MC Hammer, the rapper who became famous for saying, “Can’t touch this?” off his 1990 album “Please Hammer Don’t Hurt ‘Em”? Well it turns out they actually could touch this. Despite having a net worth estimated to be as high as $33 million as a result of the success from his album sales, concert tours, and sponsorships, the Hammer had to file for bankruptcy by 1996.

Born Stanley Kirk Burrell in Oakland, California, the Hammer got his very first taste of fame at the precocious age of 11 as a bat boy and clubhouse assistant for the Oakland A’s. Reggie Jackson himself nicknamed the young man Hammer because of his resemblance to Hank Aaron, also known as: “The Hammer.” The nickname stuck.

At the time MC Hammer had to file for bankruptcy protection, his assets totaled about $1 million and his debts were well in excess of that at $10 million. The judge probably said, “It’s hammer time!” He told Oprah Winfrey many years after that that he wasn’t just spending the money on materialistic things, saying “I took my money and employed 200 people in my community. I had a payroll of a million dollars a month at times.”

But though that spending might sound all philanthropic, don’t be fooled. The rapper kept a staff of 200 people on his payroll to handle pretty much everything you could imagine for him, his laundry everything. And then he’d roll around with an entourage of like 40 people, paying out an insane $500,000 a month to support everybody. That’s pretty extravagant, and maybe bit shallow / materialistic.

He can rap, but he sure can’t math to miss how unsustainable that was. And the man did build his own $30 million mansion with Italian marble floors, and gold plated gates, a recording studio, a 17 car garage, a 33 person home movie theater, a baseball diamond, and all these tennis courts.

These days Hammer is married and has five children. He never did seem to manage doing business as well as he did dancing and singing, because as he’s invested in apps and Internet startups, he’s still almost a million dollars in debt to the Internal Revenue Service.

4. Larry King

You could say that Mr. Larry King of cable news fame and fortune- the most famous name on the ubiquitous CNN, the cable news property of television magnate Ted Turner- is doing alright for himself these days with a cool $150 million to his name by current estimates. With a name and brand like Larry King’s, there’s no financial trouble you couldn’t earn your way out of.

But see at the time King went bankrupt, he didn’t have that brand name and star power that he has today. He was a radio announcer in Miami who says he was “flying high” back in the 1960s while living in Miami, whatever that means. By 1972 Larry King was actually arrested for the crime of grand larceny (fancy way to say stealing) on the accusation that he had stolen $5,000 from his own business partner.

Eventually the charges against King were dropped, but the damage it did to him was lasting. He could not find a job in journalism for years after the legal fight. By 1978 he had to file for bankruptcy with a $352,000 in debts that he could not repay. CNN saved his life when it offered him a late-night talk radio program broadcasting in Washington D.C., which eventually became “Larry King Live” and ran on television to high ratings for a quarter of a century.

Having gone through the experience of money troubles and bankruptcy, and knowing everything he knows now about business and financial success, Larry King’s advice on making your business finances bullet proof includes: Watching expenses, setting adequate gross margins when pricing products for your business, negotiate good net terms with vendors, promptly send invoices, and ask for progress payments on longer projects if you are a service or project based business.

5. Nicholas Cage

Nicholas Cage was once in the upper echelons of earnings among Hollywood actors, in the good company of actors like Leonardo DiCaprio, Will Smith, and Tom Hanks, and making as much as $40 million in some years. From 1996 until the year 2011, Nicholas Cage had more than $150 million from his roles in blockbuster movies.

As it turned out however, Cage had something even bigger and more powerful than his ability to earn money by entertaining global audiences on the big screen: a voracious appetite for spending massive amounts of money on expensive things.

The man would drop fat stacks of cash to keep exotic animals as pets, fly around the world in private jets, relax in opulent mansions, and drive around in flashy sports cars. Worse than that: He has made such frivolous purchases as a $40 million yacht with 12 master bedrooms, a haunted murder mansion in New Orleans, his own 400-acre, $7 million, personal private island, a collection of shrunken pygmy heads for God knows what reason, and a $276,000, 67-million-year-old Tyrannosaurus Rex skull which turned out to be actually stolen.

Other mind boggling purchases that Nicholas Cage actually made during this time include two albino king cobras for personal protection (though it’s rumored that they were for sexual activities), the freaking Shah of Iran’s Lamborghini (for $450,000), a 9-foot-tall pyramid tombstone with a random Latin engraving, the very first Superman comic book ever made, an actual, living crocodile, a pet shark, an octopus, all kinds of rare art, fifteen estate homes around the world, and two European castles.

By 2009 Cage was behind on his federal taxes to the tune of $6.5 million and was dealing with litigation from a former business manager who was suing for a piece of him, and he himself was suing his money manager for fraud and negligence. With a name and reputation like Nicholas Cage however, you can earn your way back out if you cut back your spending and keep working in big films. We’re rooting for you, Cage!

6. Mike Tyson

It never ceases to amaze how some celebrities can earn so much money, vast fortunes that most people can barely fathom being in possession of, and yet somehow manage to vastly overspend these fantastic sums of money they have acquired.

It just goes to show you that people with financial problems aren’t suffering from a lack of money, but an inability to balance cash flow by keeping spending within means. If those same people suddenly had hundreds of millions of dollars, they would likely still end up with financial problems, just like many of these celebrities who are great at acting or boxing, but not at managing money.

Over the 20 years of his successful boxing career, Mike Tyson’s earning power was greater than anybody else’s on this list except for Donald Trump’s, accruing $400 million from boxing, yet he couldn’t make that money last and had to file for bankruptcy in 2003, $23 million deep in the hole. The money he couldn’t pay included a $9 million divorce settlement, back taxes to the IRS amounting to $13 million, and more back taxes to the British amounting to $4 million.

Tyson is making his money back with a memoir published in 2013, a television show, and appearances in Hollywood movies.