Added (1 Feb 2017):
Johnny Depp has been spending US$2m
a month, according to TMG, which is suing
the star for an unpaid loan.
US$75 million on 14 homes, including
a 45-acre (18-hectare) French castle,
a chain of Bahaman islands,
several Hollywood homes,
penthouse lofts in downtown LA
and a horse farm in Kentucky.
US$18 million on a yacht, bought
45 luxury cars and shelled out
almost US$700,000 a month on wine,
private planes and a staff of 40 people,
according to the lawsuit.
200 artworks by Warhol, Klimt and
other masters, 70 collectible guitars
and a Hollywood memorabilia collection
so extensive it is stored in 12 locations.
repayment of a multimillion-dollar loan
and Depp didn't have the money,
the company loaned it to him so that
he would avoid a humiliating financial crisis."
TMG attorney said in a statement.
I have shared this story many times before but I might not have blogged about it and that is how someone I know who was making >$15k a month at work became broke.
This person is quite a few years younger than me but he was very successful in his career and by the time I got to know him a few years ago, I know he was definitely making >$15k a month. It could have been >$20k a month but he wouldn't say.
Home was a 3 bedroom condominium in D10 which he bought a few months before getting married.
He had a Mercedes Benz S something. He was always well dressed and each of his watches (yes, he had more than one watch) would probably have cost me a few months' salary.
He and his wife would go on annual holidays to Italy, France, Switzerland etc. Although he was making a very nice salary, to have been able to have all that he had, he must have been heavy on credit.
When the Global Financial Crisis happened, he lost his job and everything unravelled.
Of course, at that time, it was hard to sell any piece of real estate for a good price. The car would definitely be sold at a hefty loss. Pre-owned big name watches would be worth very much less as well.
For him, it was a swift descend from heaven to hell. Everyone who knew about it was shocked because he always appeared so confident and so wealthy.
What can we take away from this?
1. Everyone needs to learn financial management skills. The younger we learn the importance of financial prudence, the better. At its simplest, everyone should learn how to save and grow our hard earned money.
2. Everyone wants a higher standard of living. So, often, people end up buying expensive cars, expensive homes and expensive everything. However, what this also means is that we have higher costs of living. Can we not have a higher standard of living without a much higher cost of living?
3. Everyone needs to think of all the bad things that could happen to them. I know it can be depressing but it is necessary. How long can we continue in our current lifestyle if we were to lose our jobs? What if we or our dependents were to need long term medical care?
Stress test our finances. If we cannot pass these tests, we better do something to set our houses in order.
Of course, a very good question to ask would be: "Was he ever rich?"
All of us might have friends or family members who are living beyond their means.
Of course, sometimes, people need to suffer a fall before they are aware of their financial mortality but I feel that it is our responsibility to at least talk some sense into them, if we could. It is as much for their own good as it is for ours.
Johnny Depp's story makes my friend's story sounds like a walk in the park? Sorry. To me, there is no difference. To me, broke is broke.
1. A common piece of advice on savings.
2. Wage slaves should be fearful.
3. "How to tell if you are rich" by Alexander Green.