They released an astonishing figure a few days ago. There were apparently about 1 million Americans who were in some stage of foreclosure in the month of May 2008. As mind-boggling as that statistic is, what has seemed to catch more of the media’s attention are the names of two of those borrowers: Ed McMahon (Johnny Carson’s previous sidekick on The Tonight Show) and Evander Holyfield (former heavyweight boxing champion). So now that we see that it can indeed happen to anyone, let’s take a look at what happened.
According to Jet magazine (June 23, 2008), his 54,000 sq ft estate/home in suburban Atlanta with 17 bathrooms, three kitchens and a bowling alley is worth $10 million. Now I don’t pretend to know what year he purchased the house, how much money he put down on the purchase, or how much he still owed on the house, but what I do see from the article is that in his 1997 fight with Tyson, he supposedly made $34 million. This is in addition to the other millions that he made during his more than 20 years of boxing. Am I looking at this too simplisticly? I mean, you buy a $10 million home, and you make $34 million income in a fight. Okay, okay, you pay your agent, pay your trainers, pay your accountant, pay your staff, you know… your cost of doing business. But surely he had money left over after the bills were paid, didn’t he? Out of $34 million, didn’t he have at least $15 million left over from that fight? More importantly, didn’t anyone tell him that he needed to pay himself first? If someone had told him to do that, he’d likely have some money to fend off the current foreclosure.
That brings us to Ed McMahon. He was recently on CNN’s Larry King Live trying to answer questions on what has happened. A portion of the transcript can be found here:
http://www.cnn.com/2008/SHOWBIZ/TV/06/06/lkl.mcmahon/index.html
Mr. King basically asked them how they got $644,000 in arrears if they are millionaires. Mr. McMahon talked about the mistakes that he made: “taking care” of his friends and family, ”spending more than you make”, and not being prepared financially for a medical setback.
Lessons from these two celebrities? There are many contained in these two examples that all of us can use to help us to avoid some of their current woes. For those who may be in danger of slipping into a financial crisis, do what neither celebrity did… ask for and get help at the first sign of trouble.
For this and other posts, as well as info on the book series 26 Things to Teach Your Parents, go to www.26thingstoteach.com
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