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Financial missteps can happen to anyone — and some of them can lead to devastating consequences. From high-profile celebrities to everyday individuals, these stories of financial ruin serve as cautionary tales of what not to do with one's money. Whether it was due to poor investment choices, extravagant spending, or falling prey to unfortunate scams, here are 21 real-life examples of terrible financial decisions.
One Redditor shared how a member of their fraternity once received $30,000 for "an undisclosed reason." Feeling confident with this newly found fortune, they went on to wager the entire amount on the Yankees winning a single game. Unfortunately, the Yankees lost, and with that, poof, the money was, too. We bet he was real mad after that (pun intended).
During the height of his career, former heavyweight boxing champion Mike Tyson earned over $400 million. But he quickly squandered it on lavish purchases like mansions, cars, and exotic animals (I mean, the guy really had a pet tiger). He also faced costly legal battles and extravagant personal expenses, leading to a bankruptcy filing in 2003 with debts topping $23 million. Long story short? Don't be like Mike.
"I knew someone who got a loan for their wedding, but decided to blow it all at a casino," writes one Redditor. "Now they have a loan for $20k to pay off and nothing to show for it." Ooof, does that mean the wedding was called off, too? Talk about poor financial planning. But in all seriouness, did the bride or groom dodge a bullet by not getting hitched to someone with a gambling problem? Hooray for silver linings!
Oscar-winning actor Nicolas Cage is known for his extravagant lifestyle, including buying castles, a dinosaur skull, and numerous luxury homes. But his unchecked spending habits and poor real estate investments led to massive debts, resulting in him having to face foreclosure on several of his properties. He also owed millions to the Internal Revenue Service (IRS) in unpaid taxes. Yup, that sounds pretty bad.
Another Redditor shared how their friend, who is known for making poor financial decisions, purchased an expensive "water filtration system" from a door-to-door salesman for $300 a month. The friend was "stoked" because the offer came with a "free set of pots and pans." Fast forward to a year later, his girlfriend left him, and he had to sell the house because he "couldn't afford to live there" anymore.
Now, the filtration system sits unused in a storage unit, still costing him $300 a month because of a multi-year contract. But the real kick in the pants? "We have great water quality in my area," adds the Redditor. Talk about a rough year for this guy.
Despite earning millions from his acting career, Oscar-nominated actor Johnny Depp's spending habits are notoriously excessive. He reportedly spends $30,000 a month on wine alone, and millions on luxury properties all over the world. When asked about his insane wine allowance, he said, “It’s insulting to say that I spent $30,000 on wine,” Depp told RollingStone in an interview. “Because it was far more."
His lavish spending resulted in him filing a $25 million lawsuit against his managers in early 2017 for fraud and mismanagement of funds.
Another user shared the story of a former coworker who "worked every second of overtime" for several years to save for a house. When he applied for a mortgage, he based the payments on all his overtime earnings, despite being warned that it "wasn't a good idea." A few years later, his marriage fell apart because his wife grew tired of him "always working." So now he has to pay for the divorce, too? This poor dude.
Another Redditor shared how they once knew a retiree who "emptied out their 401(k) to open a pet store." But to make matters worse, the business, which was family-run, did not go as planned and resulted in "a lot of resentment and infighting." The store shut down five years later, the Reddit user added. Wondering how you can actually save money as a retiree? We've got you covered with the details.
"A dude who owned a small convenience store in our town spent like $20,000 on fidget spinners," writes another user. "He was posting for like a year begging people to buy them as he would lose his business and his marriage was falling apart due to it." We are guessing the investment did not work out well for said dude. "Why in the world would he need THAT MANY fidget spinners??" questions another user. We concur.
If there's one thing we've learned about the U.S., it's that the IRS is NOT to be messed with. If you owe Uncle Sam money, he will eventually find you. When it comes to taxes, no one is above them — and that includes the rich and famous. Case in point: Willie Nelson, who had to release an album titled "The IRS Tapes: Who Will Buy My Memories?" just to pay off his $16.7 million tax debt in 1990.
The country music legend has also faced other financial struggles, including having many of his assets, like his ranch and prized memorabilia, seized by the IRS.
One Redditor shared how their supervisor once "took out a loan against their 401(k) to pay their rent because 'their credit cards were maxed.'" While that already sounds like a terrible idea, the supervisor then went on to buy a "brand new $60K Lincoln" two weeks later with "basically nothing down" because "'her daughter just had a baby and [they] need a bigger car for that.'" Terrible financial choice, indeed.
Another Redditor shared the story of a coworker with five children who could have all attended USC (University of Southern California) "for free once he had worked there for 15 years," even if he quit afterward. However, said coworker left his job at USC after 14.5 years for another position that "barely paid more." The decision cost all five of his kids a free education at a top school because he just "couldn't wait 6 more months."
Talk about a "generational bag-fumble," adds another user. We have to agree.
According to one Reddit user, a couple they knew once ran up so much credit card debt that they had to file for bankruptcy. Seven years later, after rebuilding their credit, they accumulated a massive amount of debt again. Unable to file for bankruptcy a second time, they turned to "debt consolidation" to settle their money woes.
The real kicker? "The debt didn’t even come from sudden expenses," writes the Redditor. "They just needed to buy things to feel better." Goodness gracious!
"My ex’s stepdad left Boeing right before he would’ve earned a considerable pension," writes another user. "But it turns out he didn’t leave — he was fired for carrying on an 11-year-long affair with another coworker who worked in a different part of the country, [all] on the company’s dime and communicating using company email." The tea is piping hot with this one — and we are here for it. **passes pop corn**
"My coworker has $25k in anime figurines," writes another user. "He is in mega debt right now." Can't say we're surprised. While some collectibles and sports memorabilia can fetch thousands (or even millions) of dollars at auction, they have to be highly sought-after and in pristine condition to command such amounts.
"My brother's ex fell for a Craigslist scam," writes another user. "She found a motorcycle and the seller claimed he 'needed money up front to pay bills' before she could even see it. Despite the family warning her that it was a scam, she said she had "already sent $1,000." The seller was never available to show her the bike, and by the end, she was out $3,000. Poor girl fell for the one of the oldest scams in the book.
Another user shared how their former sister-in-law, who was at the helm of a "thriving medical practice," was so stressed at one point that she "joined Scientology and started taking their classes." Without telling the user's brother, she "opened up five or six credit cards, maxed them out with hundreds of thousands in cash withdrawals, and gave the money to that cult." Talk about a hard pill to swallow.
"My (awful) aunt was the trustee for my grandparents' estate," writes another user. "When they passed, she decided to sell their house to a random realtor who left a leaflet on the door." Despite the Reddit user's pleas to not go with the realtor and accept their matching offer to "actually list the house and have people bid on it," the aunt refused.
"The realtor slapped a new coat of paint on it and sold it a couple of months later for literally a million dollars more than she bought it for," the user added.
Another Reddit user shared how a guy they were dating for a short time joined an "MLM (multi-level marketing) scheme" that sold questionable insurance policies."I listened to his monologue and told him I had no money," the user recounted. "He was furious and tried to sell insurance to our waiter at the restaurant. He failed again. I'm still laughing today, he was no good guy." How embarrassing for this dude.
"Knew someone who answered those scam emails thinking they would get rich," writes one user. "Last I heard, he lost around $50k. Emptied out savings account and maxed out credit cards. Left in debt and had to move back with ailing parents." Ooof, and it only got worse for this poor guy. "Genuinely thought he was going to be a millionaire," adds the user. "They kept stringing him along until the bitter end."
One Redditor shared how their maternal grandmother once "bought an 8-plex to avoid capital gains when she sold her large house." Initially in poor condition, she hired the Reddit user's father to manage and repair the property — and it soon began to make money. But the Redditor's mother, who was divorced from the father, was not pleased with the the arrangement and pressured her mother for years to sell the property.
Eventually, the grandmother, in her 90s, gave in and sold the property, which is now worth millions. "My mom made a poor financial decision based on petty spite," they wrote. "Almost as if financial decisions shouldn’t be made based on who hates whom," adds another user. Why, you don't say.
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