The term “lavish spending” is one that must be dispensed in context.
After all, for some people, lavish spending is going out to dinner one extra night per week. For others, it’s buying that racy new sports car.
Yet no matter who you are, it’s probably accurate to describe the following examples as instances of lavish spending:
• $30,000 a month on wine
• $150,000 a month on round-the-clock security
• $200,000 a month on private planes
• $300,000 a month on a staff of 40 people
• $4 million on a failed record label
• $18 million on a 150-foot yacht
Yet by far, the most lavish of expenses is to spend an alleged $3 million to blast the late Hunter S. Thompson’s ashes out of a cannon.
All this spending is alleged to have been done by Hollywood A-list actor Johnny Depp.
In a countersuit filed Tuesday in Los Angeles Superior Court, the actor’s ex-managers, The Management Group (TMG), allege it was these and other examples of high-dollar spending that have led Mr. Depp to the brink of financial ruin.
The countersuit was filed as a response to Depp’s own lawsuit, filed on Jan. 13. It accuses TMG of defrauding him out of tens of millions of dollars.
What an unfortunate, yet eminently avoidable, mess.
|Image credit: wikimedia|
In his original lawsuit, Depp alleged that TMG had mismanaged his finances. The allegations include TMG taking out loans in his name without his approval, as well as keeping the actor in the dark about the parlous state of his financial affairs.
TMG alleges in the countersuit that they kept the actor fully informed of his precarious financial status. They also say they told him he was spending more money than he was taking in.
Here’s what TMG wrote in its countersuit, as reported by entertainment industry trade publication Variety:
“Depp often responded by rebuking and cursing his business managers for issuing such warnings and advice, while increasing his extravagant lifestyle and spending, and demanding that his business managers find some way to pay for it all,” TMG alleges.
“Depp, and Depp alone, is fully responsible for any financial turmoil he finds himself in today. He has refused to live within his means, despite the best efforts of TMG and the repeated warnings about his financial condition from TMG and his other advisers.”
Now, I think you know where I am going with this next.
After all, we’ve written numerous times over the years about ways to save money, live within your means and boost your retirement nest egg as much as possible.
So, as you might suspect, I am not a fan of Mr. Depp’s seemingly reckless spending habits.
Of course, it’s his money. He’s earned it by using his considerable talents to entertain, and his ability to generate revenue for the companies that produce his films. So, I have no issue in principle with Johnny Depp doing what he wants with his money.
What I do have an issue with is seeing any of my readers fall into similar, yet hopefully much smaller-scale, financial problems.
The key problem here is spending well beyond one’s means — i.e., sending out more money each month than you take in.
This may seem like a “no brainer” for most of us. Yet the American consumer didn’t get saddled with some $747 billion in credit card debt … or $1.14 trillion in auto loan debt … or $1.28 trillion in student loan debt … by living within his or her means.
|Image credit: NerdWallet|
The debt data here comes from the website NerdWallet, which does a great job of reminding us that debt is a way of life for Americans, with overall U.S. household debt increasing by 11% in the past decade.
The other key problem here is having another party involved in the control of your finances.
Most of us don’t have to worry about how our business managers are spending our money. But certainly, I know some people reading this have a close relationship with their financial adviser.
That relationship might even extend to allowing the broker or investment adviser a power of attorney to make trades on your behalf.
This usually isn’t a good thing, although I am not saying there is anything necessarily wrong and/or nefarious going on in any particular relationship.
However, if you want to avoid having to sue another party for financial mismanagement … and facing a countersuit alleging you aren’t doing what you were told to do by your adviser … why not just take the prudent path?
That path is actually so easy it’s almost embarrassing to have to write. But a whole lot of Americans may need this reminder.
So, if you want to avoid a Johnny Depp-like financial mess on your personal scale:
1) Check yourself when it comes to spending. If you can’t afford it, don’t buy it.
2) Don’t allow anyone to have control over your money, and don’t allow anyone to make financial decisions for you without your consent.
Yes, that is simple … but even Hollywood A-listers fail to do the simplest things. And they aren’t the only ones, unfortunately.
What do you think about Johnny Depp’s lavish spending? What have you done in your life to make sure you don’t spend more than you should? Have you had experiences with friends of family who have poor spending habits? Let me know what you think leaving me a comment on our website or by sending me an e-mail.
Punxsutawney Phil predicted six more weeks of winter. And the markets seemed to see their shadow as well, with the Dow closing just south of the flat line.
• Lower fees batter brokerage stocks: Starting tomorrow (Feb. 3), Schwab (SCHW) will offer lower fees ($6.95 vs. $8.95) for standard stock and ETF trades. It also plans to cut expenses for certain mutual funds on March 1. Shares fell 5.3%, and other online brokers (AMTD, -9.5%; ETFC, -8.8%; IBKR, -1.9%) felt the ripple effect.
• Gold climbed 0.9% to $1,219.40, a level last seen in mid-November, thanks to dollar weakness and increased caution in the markets.
• A sharp rise in crude (6.5 million barrels) and gas (3.9 million barrels) inventories in the U.S. last week sent WTI crude down 0.6% and RBOB gasoline futures down 2.9%.
• Worst annual profit in a decade for Royal Dutch Shell (RDS.A) thanks to low oil prices and lower refining margins. Yet shares of Europe’s biggest oil company gained 0.5%.
• ‘So many potholes’: FedEx CEO Fred Smith told Congress that the country’s roads are so bad, the company is going through twice as many tires as it did two decades ago. The news didn’t boost tire stocks, though. Michelin (ML on the Paris exchange) fell 0.3%, Goodyear (GT) fell 0.1% and Cooper Tire & Rubber fell 1.5% today.
• Would you let a computer do your taxes? IBM’s Watson technology will be lending its virtual assistant skills to H&R Block this tax season. IBM plans to unveil its plans during a 60-second Super Bowl ad spot this Sunday.
Good luck and happy investing,
Uncommon Wisdom Daily