MrFireStation doesn’t read a lot of celebrity gossip or People magazine, but I can’t help notice stories in which wealthy celebrities sue their accountant for mismanagement and running them into debt. Alyssa Milano, according to the Daily Mail, has been left in “financial ruin” by her accountant. The article, which cites arguments included in a California lawsuit, claims that she was “totally in the dark” that home renovations were running millions over budget and that she and her husband were now ‘millions of dollars in debt and their credit in ruins.’
These celebrities (or athletes) gone broke articles seem to happen with a certain degree of frequency. While we are not sitting on celebrity-level net worth, it is hard to imagine that anyone would be so trusting to a single accountant and allow themselves to be totally in the dark about their finances. Especially when her husband is a talent agent at CAA – a company that specializes in helping stars negotiate financial deals.
Nonetheless, it reminds me of the importance of keeping track of everything on a regular basis. My wife and I spend a good deal of time tracking everything down during our annual Round Up Day and have our financial investments well organized on a day to day basis. While we have a financial, advisor, I see no reason to ‘outsource’ our understanding and tracking of our finances. While he is smarter on investment strategies, I always figure that we are our own primary financial advisor, and Jason is our secondary financial advisor.
Why is it that so many sports, music, and entertainment celebrities fall into this trap?
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5 thoughts on “FIRE Station Fun – In The Dark Financially?”
Agreed. No one cares as much about their own golden goose, more than the farmer who owns that golden goose. Everyone else is trying to steal the eggs =( Or at the very least wanting to share in its’ abundance, at your expense. Which is so odd when celebrities make these mistakes. It’s kinda naive. It’s sad, but they should do a ton of due diligence and regular “audits” to make sure nothing weird is going on.
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Great comment – maybe there is a part-part-time job overseeing someone else’s finances & financial advisors 😉
I suspect there’s some (naive) feeling that with so much money coming in, they couldn’t possibly go broke so there’s less urgency to monitoring the flow of money. But I think it also has a lot to do with the common mentality: we know that we in the PF blogosphere are unusual for the attention we pay to our money. How many of our friends, neighbors and coworkers make or made lots of money and frittered it all away? How many of them didn’t make much and are neck deep in debt? I think it’s more normal than not for that to be the majority.
Celebrities and athletes, for all their talent in a given area, aren’t much different from the average person and their tendency to be afraid of their money, ignore it, or take it for granted. Which is a shame, of course. What a waste of resources!
Great comment – there is a lot of truth to that. I was chatting with someone recently (in their 50s) that said they just started doing their math for retirement.