If being famous and owning a fortune were the only prerequisites to being happy and secure, then why are so many of our favorite celebrities busy fending off creditors?
Many think that if they ever had the kind of money celebrities have, all monetary woes would vanish including these pesky outstanding credit card payments which snowball into debt. With credit limits stretching up to a million dollars or more, you would surely have trouble controlling your expenditure. Let’s review how celebrities like Kim Kardashian Tori Spelling, Courtney Love and Ed McMahon have joined the list of those who have dealt with credit card debts. Surely there are lessons to be learnt from regular folks.
The actress daughter of Aaron Spelling, the late billionaire producer revealed in an interview that she owned hundreds and thousands of dollars due to accumulated credit card debt because her TV show, Beverly Hills 90210 was cancelled. She said that she incurred the debt because of her excessive shopping habits. Tori says she was used to starring in a major TV show which was a hit and spent money lavishly. To her everlasting credit, she concentrated on work and escaped the debt-burden on her own, hopefully repairing her damaged credit score.
LESSONS FOR US
Even if you happen to be earning well now, never pick up debts just because you can afford to pay them off later. With a lucrative job today, you could resist the want to whip out that shiny plastic card and live like kings. There is no guarantee that you will retain the job when it’s time to make the bill payments.
How is it so easy to be entangled in a bad shopping habit? That’s because when you spend money it activates the pleasure center in your brain as per experts. Spending money creates waves of pleasure, but credit card usage enables a conscious separation between the expenditure and repayment part and it is easy to enter into a never-ending cycle of overspending because you conveniently ignore the payment part till you receive your statement and realize how much you owe. To end this mindless spending spree, you need to make yourself responsible for your own debt as change is difficult. Tori Spelling could escape her debt because she was determined to not remain stuck in a debt trap.
Before Ed passed away in June 2009, he was deep in debt, facing foreclosure by his bank on his home with $622,000 in outstanding payments and mortgage loan defaults of $4.8 million. Reports revealed that McMahon and Mrs McMahon also had a massive credit-card debt ranging between $180,000 and $750,000 on different cards. McMahon blamed it on spending more than he earned.
LESSONS FOR US
So we wouldn’t dare to rack up any credit card debts. But with huge limits and maybe a spend-thrift partner, debts can get out of hand quickly. When it comes to finances being controlled by a couple, a power aspect is involved, it doesn’t matter if you are making $20,000 or $200,000; so decide what amount each gets to spend, maybe $20 a week. Then discuss and decide about the family financial goals. When each partners have these talks, both can agree which card is to be used for more frivolous purchases.
R&B singer Brandy Norwood once hired Kardashian to be her stylist and Norwood’s mother gave her American Express credit card allowing Kim to make one purchase for clothes and accessories. Kardashian did make the purchase, but she allegedly shared the card details with her sisters who spent $120,000 in total. Kardashian claimed she was permitted to swipe the card for multiple purchases. The matter was ultimately taken to court.
LESSONS FOR US:
The Norwood and Kardashian case was eventually dismissed at court, but the basic lesson here is to be responsible with plastic, even more so if the card belongs to someone else. This is why it is important to explain to your children about the value of money and credit cards, as they are then able to manage their funds responsibly as adults. You have also been warned about granting other people access to operate your card. This is a bad idea and not because you cannot control their spending. It is prudent to not trust anyone with your card as identity theft is often committed by someone you know.
American Express had no love for Courtney as they sued her for not making payments towards her growing $350,000 gold card dues. Love said that she refused to pay these charges because they were fraudulent and this money was never spent by her. According to her lawyers, Love believed that her Social Security number was pinched, forcing her to turn to a private investigator to nab the perpetrators.
LESSONS FOR US:
This situation clearly teaches us that we need to take extra measures to protect ourselves from fraud. Spend time and go through each and every charge which has been levied on your card when your credit card statement arrives. Take immediate action if even one charge looks out of place or suspicious. Freeze your account if you need to, until the problem is sorted and do not delay a dispute, as Courtney Love can now tell you.