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Financial difficulties can lead anyone to bankruptcy

Anyone can end up needing to file for a personal bankruptcy. And while it happens quite often, some are still shocked when a famous celebrity finds themselves struggling and also needing to file. With so much money, people often wonder just how they ended up with more debts than assets.

Recently, there have been a string of celebrities to file for bankruptcy, such as Gary Busey, Stephen Baldwin, Toni Braxton and Vince Neil. And while each celebrity had his or her own reason for needing to file, it turns out that many of the reasons that celebrities end up declaring bankruptcy, are ones that can effect anyone.

The first is just not having any idea on how money works and how to properly handle finances. And while many celebrities have managers who are supposed to take care of their finances for them, the truth is that their money is not under lock and key and can be accessed at any time. Additionally, many of those managers may be giving bad financial advice, which ends up costing the celebrity in the end.

Along the same line of not knowing how finances work, some overspend without even realizing it. Maybe a person is used to having expensive clothing. He or she keeps spending thinking that the next movie deal is right around the corner. But, what if those deals never come along? Without first prioritizing, a celebrity can find themselves easily owing more than what is possible to pay.

And lastly -- just like anyone else -- celebrities can fall victim to theft and fraud. For example, Kevin Bacon and his wife Kyra Sedgwick, like so many others, ended up losing quite a bit of money through a Ponzi scheme. While it's nice to think that something like this is avoidable, the truth is that plenty of scams look legitimate enough, and that's how people end up losing money.

In the end, the message is the same for Florida residents and celebrities alike: Without proper budgeting and knowing how finances work, it is very easy to slip further and further into debt.

Source: Fox News, "Lifestyles of the not so rich and famous: 5 top ways stars lose all their cash," Hollie McKay, March 19, 2012

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James H. Monroe, P.A.
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