8 Big Celebrity Money Mistakes

Presenting some of the biggest blunders celebrities have made with their money. These are the reasons why rich and famous don’t always go hand in hand.

Author:
Seth Fiegerman
Publish date:
Aug 24, 2010 7:00 AM EDT

Presenting some of the biggest blunders celebrities have made with their money. These are the reasons why rich and famous don’t always go hand in hand.

Everyone makes money mistakes, but celebrities seem to make more than their fair share. When they do, these mistakes typically cost them much more than the average American, since they have so much more to lose. In some cases, the reason for this is simply because the talents that entertainers and athletes use to get rich do not always correlate with financial savvy. In other cases, it’s just that celebrities make easy targets for financial predators. Here is our roundup of some of the biggest blunders that celebrities have made with their money. These are the reasons why ‘rich’ and ‘famous’ don’t always go hand in hand. Photo Credit: purpleslog

Steve Jobs, CEO of Apple (Stock Quote: AAPL) may be one of the greatest tech visionaries, but when it comes to stock prices, it turns out that Jobs may be a bit short sighted. Back in 2003, Jobs reportedly traded millions of his shares in Apple that were considered overvalued at the time. At the time, Apple’s stock had fallen to around $7 from a previous high of $36 during the dot com era. Unfortunately, Jobs has done such a good job of revitalizing the company in recent years, with products like the iPhone and iPad, that its stock price is now worth nearly $250. So according to MarketWatch’s estimate, Jobs likely lost more than $10 billion by not holding onto the stocks. Photo Credit: Wikimedia.org

Lindsay Lohan, singer and actress, broke one of the first rules of good money management: never spend beyond your means. Earlier this year, sources close to Lohan reported that she had more than half a million dollars in credit card debt because she couldn’t stop herself from spending lavishly, despite the fact that her annual income had dropped significantly. In fact, things got so bad that Lohan was nearly evicted from her home for failing to pay $23,000 in rent. Photo Credit: Hot Rod Homepage

Despite being one of the highest paid actors, Nicholas Cage has had four of his homes foreclosed on in the past couple of years. Part of the problem is Cage mysteriously failed to pay more than $6 million in taxes to the IRS. Yet, as Brian O’Connell pointed out in MainStreet, Cage also made the mistake of trying to invest millions in real estate right before the housing market collapsed. Rather than turning a profit on his investments, he ended up losing big. Photo Credit: Kirk W

Yes, that Abraham Lincoln. Honest Abe may have been a good president, but he was a lousy businessman. Years before he became president, Lincoln opened up a general store in Illinois with a friend, but sales were consistently bad, forcing Lincoln and his business partner deep into debt. Eventually, his friend passed away and Lincoln fell into bankruptcy, losing everything he owned, including his horse. However, Lincoln was in good company. According to CNN, several other U.S. Presidents also filed for bankruptcy at some point in their lives, including Ulysses S. Grant and Thomas Jefferson. Photo Credit: Wikimedia.org

Back in 2008, Annie Leibovitz, one of the most prominent photographers in the world, apparently fell into some serious debt and took out two loans from Art Capital Group for a total of $15.5 million, using her life’s work as collateral. According to a report in the New York Times, the loans were intended to “pay off mortgages and deal with other financial stresses.” Earlier this year, Leibovitz and Art Capital Group agreed to refinance her loan after she failed to meet an earlier date to repay it. But she is not out of the woods yet. According to an estimate from Reuters, Leibovitz so far has incurred at least $16 million in fees and interest from the loans since 2008, not to mention her legal fees. Photo Credit: Wikimedia.org

Wyclef Jean may be busy fighting for the right to run in Haiti’s next presidential election, but the popular musician should be focusing more on his American taxes: he reportedly owes more than $2 million in back taxes to the IRS. On top of this, Jean allegedly took money from his Haiti charity and used it for personal expenses like rent. Photo Credit: christopherharte

Earlier this year, Kenneth Starr, an investment advisor (not Lewinski-gate), was busted for defrauding clients, including politicians like Henry Kissinger and celebrities like Martin Scorsese and Annie Leibovitz, who really just can’t seem to catch a break. Starr, who apparently operated a Ponzi scheme not unlike the one run by Bernie Madoff, allegedly made off with an estimated $30 million from his clients. While we sympathize with anyone who is the victim of an investment scheme, it’s hard not to feel that these celebrities brought some of it on themselves by trusting a supposed financial guru who promised a quick and easy path to even more riches. Photo Credit: World Economic Forum

Tiger Woods is officially divorcing his wife, Elin, according to a joint announcement Monday following a scandal late last year in which he allegedly cheated on her with many different women. At the moment, it is unclear just how much Woods will be forced to pay. He could be worth anywhere between $500 million and $1 billion, but he did have his wife sign a prenup. However, speculation leading up to this announcement was that Woods would pay as much $750 million to keep his wife from saying or doing anything that might embarrass him publicly, though the most recent estimates are for around $100 million. This is on top of millions of dollars that he lost in endorsement deals following the original scandal. Really, the only money lesson we can discern here is that cheaters never prosper, especially when they potentially have more than a billion dollars to lose. Photo Credit: Keith Allison

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Celebrity Money Blunders

Everyone makes money mistakes, but celebrities seem to make more than their fair share. When they do, these mistakes typically cost them much more than the average American, since they have so much more to lose. In some cases, the reason for this is simply because the talents that entertainers and athletes use to get rich do not always correlate with financial savvy. In other cases, it’s just that celebrities make easy targets for financial predators. Here is our roundup of some of the biggest blunders that celebrities have made with their money. These are the reasons why ‘rich’ and ‘famous’ don’t always go hand in hand. Photo Credit: purpleslog

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