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Celebrity Foreclosures – How Can it Happen?

by JS 


Two big celebrities faced foreclosure this week, as both Ed McMahon and Evander Holyfield joined the more than one million Americans being sucked under by the dive in real estate values.

Since we idolize and fanaticize about the live’s of the rich & famous, is there a financial reality lesson here?

Ed McMahon

Ed-McMahon-house

Ed McMahon: Well, if you spend more money than you make, you know what happens. And it can happen. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen. You want everything to be perfect, but that combination of the economy, I have a little injury, I have a situation. And it all came together.

Pam McMahon: I think over the years, you know, it’s just a kind of a combination of maybe Ed working so hard and not kind of looking at proper management, which happens a lot. … Because you’re a celebrity, people think you have a lot more than you have. And you always want to take great care of all of your friends and your family and everybody, and you do. And you don’t, and I think, you know, we didn’t keep our eye on the ball. We made mistakes.

King: And are they foreclosing?

Pam McMahon: Yes, they are. …

From Larry King.

Evander Holyfield

holyfield-mansion

The 16,000-square-foot home — located on Evander Holyfield Highway — has 109 rooms, including 17 bathrooms, three kitchens and a bowling alley.

Holyfield defaulted on a $10 million loan to Washington Mutual Bank, which will auction off his home on the courthouse steps.

Holyfield has grossed over $200 million US in his career.

From CBC.ca

How Can Someone Who Made $200 Million Default on a Loan?

Well there is a saying that money is the root of all evil, which personally I don’t believe to be true. But the fact is that money does not come with an instruction manual. Someone without any financial intelligence, even if you give them $200 million dollars, can still have the bad habits that the get the rest of us in trouble.

Add to that, as mentioned in the quote from Mrs. McMahon, celebrity has other pressure, like “keeping up with the Joneses” on steroids as everybody expects you to act like a fountain of money and to never say no to anyone, including friends and family, who come with hands out or shaky business deals.

I find my own dreams of becoming wealthy always get a little bit shaken up when I read stories like this, as it’s not so easy for me to believe that money will provide a live of complete ease and lack of struggle.

This post is featured in this week’s Carnival of Personal Finance hosted at Prime Time Money.

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Comments

7 Responses to “Celebrity Foreclosures – How Can it Happen?”

  1. Donna on June 7th, 2008 7:22 am

    I am sorry, I cannt feel sorry for either of these idiots. Blaming it on the market is just a way of not taking responsibility for a lavish lifestyle. Welcome to the real world Mr. MacMahon. I just do not understand how a multimillionair does not have a home SOMEWHERE that is free and clear. Why live in a 16,000 square foot home? To impress.. Where is your savings???????? Then come on TV wanting us to feel sorry for you and everyone like you, sorry…. it won’t happen. However, I do hope you heal from your broken neck….

  2. The 156th Carnival of Personal Finance: Songs of Summer | Prime Time Money on June 9th, 2008 6:21 am

    [...] from Smart Money Daily presents Celebrity Foreclosures – How Can it Happen?, and says, “Two rich celebrities faced foreclosure this week, as both Ed McMahon and Evander [...]

  3. Trevor @ Financial Nut on March 10th, 2009 9:13 pm

    Wow. That’s all I have to say. Wow.

    By the way, I just found you via Wisebread’s Top 100 PF Blogs. Congrats on making the list!

  4. Mrs. Money on January 13th, 2010 5:47 am

    I think it’s a bunch of crap. I hate when celebs do stuff like this!

  5. Brandon Schmid on April 17th, 2010 1:49 pm

    It just goes to show that earning more money is not the solution.

    I was a financial consultant for years and I remember people saying that if they just earned more everything would be fine.

    No No No! If you make 50k a year and spend 70K or if you ae 70K a year and spend 90k…you’re still broke! Broke is broke! These people just played the game on a higher level.

    More money is not the solution.

    Cheers!

  6. ross on May 19th, 2011 1:44 pm

    I can sympathize with the situation, but it is really hard for me to feel sorry for them.
    Keeping track your money is something you always have to do yourself. If you make alot of money and don’t pay attention to it, there are always people that will take advantage of you.
    Im sure that had bad people around them, giving bad financial advice. But they are the ones that will ultimately be responsible when things go badly.

  7. Sandy @ Yes, I Am Cheap on January 19th, 2012 8:57 pm

    Its unfortunate how much money celebrities squander before they realize the importance of properly managing your finances. Hiring an adviser may help but it is the individual’s responsibility to stay aware of where their money is coming from and who or what it’s going to.

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