In a transparent attempt to get more people to read this blog, I have decided to do a regular blog entry about celebrity finances. It is easy for most of us to hide our financial problems from our family & friends, celebrities on the other hand have their private financial issues made public. Besides offering some sick and twisted entertainment to the masses, perhaps we can also learn a little something from the public mistakes of others.
(excerpt from an on-line chat on REDIFF.COM)
Princess : So what did the bankruptcy teach you?
MC Hammer : Be very careful of who you put your trust in. And if you give a man a fish, he'll eat for a day. If u teach him to fish, he can eat for life.
According to the The Motley Fool MC Hammer had a net worth of 30 million dollars at the high point of his career. There were several factors that cause MC Hammer to declare bankruptcy.
1. He put his complete faith and trust in his advisers. Not only did his advisers not give him a strict spending allowance, they invested his money in highly questionable investments. Adults with ADD are very intuitive. Most of the time when they have a "gut feeling" they are usually correct. Adults with ADD that trust their "gut feelings" can be perfect targets for people that are experienced in getting a person's trust.
2. He had no idea how much money he was earning or spending. Many adults with ADD let their partner or business advisers handle some aspects of their finances. In general this is not a bad idea because managing the day to day finances can be challenging. When using this system it is a good idea to make sure that you discuss and agree to any major financial decision. It is also a good idea to occasionally review all checking, savings, investments, and credit card bills so that you understand and agree with the decisions your partner or adviser makes. It is important that you have input to how your money is being spent.
3. He did not have a long term plan. Adults with ADD are drawn to careers where there tends to be less stability. This means one month they could earned a lot of money, and in another month they could earn very little money. For MC Hammer this was an extreme case where he earned a lot of money based on one album. If he had good advisers or understood the fact that he was never going to earn this much money again, perhaps he would have saved some of the money for a rainy day.
4. He did not understand financial basics. You don't have to know how to fix a car, but you should understand how a car works so that your mechanic does not overcharge you for needless repairs. This is the same with your finances, having a basic understanding about credit, spending, investment and money management will allow you to ask to the questions and to research about whether your money is being managed properly.
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