Celebrity Money Mistakes
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AP
Walk past a newsstand these days and you'll see dozens of glossy magazines with the faces of the rich and famous staring back at you. Glamour, fame, fortune! But behind the fancy clothes and re-touched photos, celebrities are just people who, like us regular Joes, make serious mistakes. No, not bad plastic surgery or making the Worst Dressed list, we're talking about making serious money mistakes.
Click through our gallery as personal finance experts Ken and Daria Dolan share nine biggies that have made headlines recently...
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Miguel Villagran, AP
Money Mistake No. 1:
Not Signing a Pre-NupMadonna and Guy Ritchie may soon be the latest celebrities calling it quits -- and apparently the Material Girl didn't have a prenuptial agreement. Paul McCartney recently had to pay ex-Heather Mills $48.7 million, so this could cost Madonna dearly.
You don't need to be filthy rich to need a pre-nup. If you bring assets to your partnership that you want to be sure you keep if things don't work out, it's essential to get a pre-nuptial agreement before you are married.
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AP
Money Mistake No. 2:
Out-of-Date WillsActor Heath Ledger's tragic death was compounded by the fact that neither his girlfriend, Michelle Williams, nor their daughter, Matilda, was included in his will. That wasn't a slight... Ledger just hadn't updated his will since 2003, well before either was in his life.
We all get busy, but be sure you update your will to address any major life event, such as marriage, divorce or the birth of a child or grand-child.
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Matt Sayles, AP
Money Mistake No. 3: Losing Homes to Foreclosure
You've probably seen former Tonight Show host Ed McMahon in the headlines lately. In a sad turn of events, McMahon, once famous for knocking on people's door to make their dreams come true, is now facing the nightmare of losing his home to foreclosure.
Records show McMahon is $664,000 behind in payments on his Beverly Hills mansion. How could this happen? Simple: McMahon got caught by the housing bust just like so many other Americans.
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David Paul Morris, Getty Images
Money Mistake No. 3: Losing Homes to Foreclosure
Other celebs to lose their homes this year include queen of soul Aretha Franklin and disgraced baseballer Jose Canseco, who simply abandoned his $2.8 million pad -- just walked away and let the bank take it. (See a gallery of recent celebrity foreclosures here).
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Jeff Chiu, AP
Money Mistake No. 4:
Going BankruptWe know, we know, cry us a river, right? It's hard to muster much sympathy for celebrities who made a fortune and squandered it all, but the list of celebs forced to declare bankruptcy is surprisingly long. The newest member to join this unfortunate club is rapper MC Hammer, who burned through $30 million with his penchant for fancy cars, homes and a huge entourage.
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Getty Images
Money Mistake No. 4:
Going BankruptOther bankrupt celebs include boxer Mike Tyson, figure skating darling Dorothy Hamill and Debbie Reynolds.
Keep reading to learn about the two superstars who are in danger of adding their name to the list...
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Kevin Winter, Getty Images
Money Mistake No. 5:
Oops! I Spent It All AgainAs if pop sensation Britney Spears didn't have enough problems, add spendthrift to the list. According to court papers from her recent custody battle, Britney doesn't save one penny of her $737,000 monthly income. She spends zero on education, savings or investing! ZERO.
Brit's been put on a strict budget now that her dad has taken charge of her affairs, but she's hardly the only superstar to spend frivolously and save almost nothing.
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Kevork Djansezian, AP
Money Mistake No. 5:
Oops! I Spent It All AgainMichael Jackson -- once worth an estimated $500 million -- has been in constant money trouble for years, almost losing his Neverland Ranch this year.
Save early, save often, and avoid the fate of celebs who put their financial future at risk with reckless spending.
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Money Mistake No. 6:
Trouble With the Tax ManThe IRS certainly isn't star-struck! Uncle Sam has no problem going after celebrities who try to cheat the tax man. Actor Wesley Snipes was convicted of failing to file a tax return and was sentenced to the three years in prison. Prosecutors say he failed to pay $15 million in taxes.
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Stew Milne, AP
Money Mistake No. 6:
Trouble With the Tax ManLook, none of us like paying taxes, but they are a fact of life whether you're an average Joe or a superstar. Take advantage of all the perfectly legal ways to make sure you pay your share and not one penny more. But don't think you can pull one over on the IRS, or you might find yourself in a jail cell conversation with Snipes and Survivor winner Richard Hatch (who's doing 4 years for failing to pay taxes on his $1 million winnings!).
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Paul Morigi/WireImage.com
Money Mistake No. 7:
Falling for Investing ScamEvery year millions of people are hurt by investing scams. And stars aren't immune. In recent court papers, talk show legend Larry King admitted he got swindled by an insurance scheme. An unscrupulous insurance agent convinced him to get involved in a series of complex life insurance transactions that involved flipping policies for profit.
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Jeff Zelevansky, AP
Money Mistake No. 8:
Running Up Gambling DebtsBasketball great and TNT analyst Charles Barkley admitted this year that he has lost about $10 million gambling. Golfer John Daly claims to have lost an unbelievable $50 to 60 million. And basketball superstar Michael Jordan once lost $1 million just on a round of golf!
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Michael Conroy, AP
Money Mistake No. 8:
Running Up Gambling DebtsBut it's not just famous athletes that put their finances, careers and families at risk because of a gambling addiction. As many as nine million Americans are problem gamblers. We're not saying it's bad to try your hand at the blackjack table or hit a slot machine or two for fun once in awhile, but never play with more than you can comfortably afford to lose.
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X17online.com
Money Mistake No. 9:
Having Irresponsible HeirsYou think you've been embarrassed by family members? Poor Barron Hilton, patriarch of the Hilton family -- yes, those Hiltons -- was so mortified by his granddaughter Paris Hilton's outrageous behavior, that he cut her out of his will. After watching her sully the Hilton name for the umpteenth time, he decided to take the $2.4 billion he earned from the sale of his remaining share of Hilton Hotels and give the money to charity instead. Wonder if Paris' partying and wild antics were worth the $60 million it cost her?
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We can't help you make the cover of the latest gossip rag, but we can help make sure you don't repeat any of these celebrity money mistakes. Visit us at Dolans.com for tips on estate planning, proven debt management strategies and how to create a simple budget even Britney could follow.
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Recent Comments
Lbisme 03:31:41 PM Jul 08 2008
These are situations not to be laughed at by the average Joe, but to be learnt from. There is not much difference between the haves and the have nots in this world. The haves took a risk at some point in there life and it paid off for them. The have nots never risked anything, settled for mediocrity, and have nobody to blame but them selves for settling. Average Joe should learn from both the mistakes and opportunities of everyone around them.
Good2BCrazy 02:57:13 PM Jul 08 2008
Seems to me that the "rich" had better stay that way- If they had to make it like us regular joes, they'd fall flat! The good die young, and they rich die stupid! No surprise there!
Markletmein 12:54:57 PM Jul 08 2008
Just a reminder...Obumma's as empty headed as these worthless celebs.
Newjeff121 12:32:28 PM Jul 08 2008
THIS IS THE BEGINNING OF THE ANTI-CELEBRITY ERA ---------------We dont want to see or hear about Britney, Rosie, Donald, Mel, or anyone else apart from their music or movie or whatever their real job is supposed to be. ---------- We dont care who is screwing who! ----------We believe that gossip is not only boring, but evil! ----------We dont want to see the latest idiotic fashions or hear about the latest deadly diet craze. We dont believe The Latest Study about anything until it has been proven. ----------We dont believe in Horoscope! Its all Bull! ----------We dont believe in having an AOL Vote on who is innocent or guilty when the trial hasnt even started yet! ----------We want AOL to knock off the crap!
Webguyster 10:46:42 AM Jul 08 2008
I though Heath Leger's $26,000.00 a month apartment, in Soho, with a mattress on the floor was a lil much, and he may have put that movie into something he owned. It happened to be near Washignton park, known for drugs, and around the corner from heroin addict mary Kate Olsen. It was nice he played chess and checkers with the homeless, however.
PIKEPOLE5 03:56:17 AM Jul 08 2008
So called friends are just like money.........When its gone, so are your so called friends.........Many of you are nothing more then ..JIG-A-LOW'S.....Many of you