The Rockstar’s Guide to Financial Ruin

by Vincent King · 10 comments

Imagine blowing through $50 million dollars.

$50 MILLION dollars.

That’s what Toni Braxton did. Meat Loaf did better — he was only $1.6M dollars in debt. Dee Snyder, Billy Joel, and many more have blown through millions to end up owing millions.

You may not make millions to blow in your lifetime, but you certainly can learn a few financial lessons from these once-rich, now not-so-much rockstars.

How to Waste Money Like a Rockstar

1. Spend recklessly

Spend dollars like they’re drops in a bucket, and you’ll enjoy the same fate as the aforementioned dudes and dudettes. Use your credit card every time you need something — or better yet, want something.

Fix: Learn to do without if it’s not part of that “need” category for living — like a roof over your head, food in your tummy, clothes on your back, and a car for work.

2. Don’t budget

For anything. Don’t worry that you have a finite amount of money: throw it away without allotting it to the appropriate monthly necessities.

Fix: Make and follow a budget. Detail your monthly expenditures, cut out the unnecessary, and satisfy it with what you’ve got coming in. This will help you see where you need to cut, or if you need to increase your income.

3. Use your credit cards for everything

See 1000-thread count sheets that you must have (but can’t afford) a la Toni Braxton? Buy them! Why not? Plastic doesn’t need a reason.

Fix: Don’t buy it with credit unless you can pay it off as soon as you charge it. Credit cards are a necessary evil in today’s world, but their ill-conceived use lands rockstars and normal people like us in big-time debt.

4. Blow surprise income and earnings

Throw away surprise money on frivolities, like faberge eggs or golden toilets. (For us normal people, this would be equivalent to spending a bonus or two on video games or dinners out at a nice restaurant.)

Fix: Take that moolah and tuck it into a savings account, or pay off some debt. You deserve a reward for your efforts; let that reward be peace of mind.

5. Don’t plan for retirement

Retirement? Rockstars don’t have to worry about that. They’ll always have an income — sometimes long after they’re dead. Unlike Dee Snyder, who found himself having to work computer sales and ride a bike because he couldn’t afford a car.

Fix: When you set your budget (remember #2?), include a monthly savings for retirement. When you have enough, consider investing it in an interest-earning account with dividends to help you make up for the time you should have been saving, but weren’t.

6. Say yes to everyone

Sure, be like The Rock and buy your mom a new Escalade. Don’t realize that generosity, though well-intentioned, can cost more than you can afford.

Fix: An empathetic ear and polite answers not only save your friend’s face, but will save you heartache and cash in the long run. Say no.

7. Trust anyone

Let’s go back to Toni Braxton, who lost millions because of her bad record deal. “Unbreak My Heart” made $170M, but she made less than $2,000 on it. She made $2K (not the M!) on a record that made 85,000 times that. If she’d had the contract looked over by a trusted lawyer, she would have made a better deal.

Fix: Don’t invest just anywhere, or with just anyone. Make sure the institutions and people you deal with are trustworthy. Keep a lawyer, accountant, and financial adviser in your corner.

Are you shocked by how much money rockstars waste? What other lessons can we learn from them?

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{ read the comments below or add one }

  • caroline says:

    I’ve often thought that if I came into a large / life-changing sum of money, like rock stars sometimes do, or lottery winners, the first person I’d tell (other than my husband!) is our family’s financial advisor. He is independent, works with people at all different wealth levels, has a thoroughly clean and trustworthy track record and is naturally quite a conservative person. Sure, he’ll grow your money, but he is ”Mr Fine Print” and very careful and prudent. I am not trustworthy or as financially savvy as I should be, and to blow through a large fortune would literally burn me with shame and regret BUT I’d like to have some to enjoy and spend guilt-free… so I’d get someone to help me BEFORE it got into a critical and difficult situation. Otherwise I’d just freeze and do nothing at all… and where’s the joy in that?

  • Kate says:

    Don’t tell anybody you have any money. The instant they know it, they’ll be on you like leeches … or like beggars at an Indian bazaar … screaming “BAKSHEESH!” day and night. Seriously, I worked for a firm that had a lawyer whose sole practice was digging lottery winners out of deep ditches that they took a surprisingly little time to fall into. The first thing he did was get them a reliable financial adviser to conserve what they had left, and then start selling things. His recommendation was for the FA to set up a bank account with an “allowance” that provided them a fixed income per month; the FA paid their bills. If there was enough money, he recommended putting it in a trust or foundation to which anybody wanting contributions for anything could apply. But the main thing was to separate them from the control of their money, and the sooner the better. And to dispose of all the bling……likewise.

    • David Ning says:

      It’s amazing how little self control so many lottery winners possess. I’m sure the FA in this case is raking in the commissions by selling all kinds of products to these lottery winners, but the alternative of having these people manage their own funds may be even worst.

  • kazi says:

    Spend recklessly and use your credit cards for everything – those two are real killers. Great post, Vincent.

    • David Ning says:

      Spending recklessly just about does it on its own, but using credit can amplify that effect tenfold. For people who are making a ton of money, all it takes to right the ship is to just slow down once in a while and think about the situation.

  • On the other side of the coin there are a few rock stars / celebrities that do an awesome job with money. The smart ones realize that what they are doing may very well be temporary and thus use their fame to branch out into other markets. Dr. Dre with beats headphones and 50 cent with Vitamin Water come to mind. These guys didn’t just endorse a product, they took large equity stakes and built the brands.

    One of my favorite celebrities is Dennis Leary, because he applies himself to a wide variety of projects. The man started as a comedian, then did movies and had a successful tv show. He also wrote books, continued to issue out his comedy cds and tour as a comedian, AND did voice acting for movies like Ice Age and for Ford Truck commercials.

    So my top celebrity money lesson is to cultivate multiple sources of income.

    • David Ning says:

      Good examples John. It’s important to remember that many celebrities do turn out okay financially too. After all, many of them, even if the career is short, make a ton of money!

      And with their fame, they have a ton of leverage to jump start almost any type of consumer business. The smart ones would use the free marketing to build their fortunes.

  • Skint Dad says:

    It just proves that everybody is in the same boat.
    I suppose it doesn’t matter what you earn as it just means that you have bigger outgoings but more to lose. If you earn loads you’ll no doubt have a bigger house and bigger mortgage but I agree that it shouldn’t stop you following simple money planning.

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