Late pop star Michael Jackson was said to be $400 million in debt at the time of his death. Like many celebrities, he lived beyond his means.
Talents as diverse as actor Stephen Baldwin, former baseball player Jose Canseco and former basketball player Latrell Sprewell all lost their homes to foreclosure recently for the same reason.
In fact, the late Ed McMahon was only rescued from foreclosure by an anonymous Northern California real estate investor, according to
The Wall Street Journal! Professional athletes can make incredible amounts of money, but their earning window tends to be for a relatively short period of time. Kathleen Pender of
The San Francisco Chronicle shares a couple of disturbing trends courtesy of
Sports Illustrated magazine:
• 78% of former National Football League players go bankrupt within 24 months after they stop playing.
• Some 60% of former National Basketball Association players go bankrupt within 5 years of retirement.
What's going on here? Economists talk about "marginal propensity to consume" (MPC), an economic theory that says as income rises, spending rises in tandem.
So if you're not saving anything at all, that's a recipe for disaster when the money stops coming in. The King of Pop's $400 million debt helps up see why we should all be paying ourselves first.
