Its probably fair to say that there are a lot of people who spend their time stuck in the morning rush hour daydreaming about becoming rich and famous rather than clearing their debt!
Wedged between their fellow damp commuters and standing all the way for the fourth morning in row because of overcrowding, they can be forgiven for letting their minds drift over the Hollywood Hills, where life is a beach and every day is spent living the dream of a massive bank balance, great weather and beautiful people at glamorous parties.
More money, more problems
However, as with most things Hollywood, looking behind the scenes can be very surprising. It’s true to say that the big film stars of today – and indeed of all eras – have always earned big bucks. However, there is a certain lifestyle to be maintained and for many, living well means spending big. It is not by coincidence that Rodeo Drive is home to some of the most expensive retail establishments in the world.
It can be tough at the top
Some big names have filed for bankruptcy over the years. At one time Burt Reynolds’ name on a film credit was guaranteed to make it a box office smash. He commanded huge prices for his performances, yet managed to wind up £4 million in debt. Likewise screen siren Kim Basinger. Her petition for bankruptcy followed a particularly ill-advised attempt to buy a town – yes, an entire town – for £10 million.
Remember, circumstances can change
However, a decision to pull out of a film project at the last minute left her short of capital and forced her into bankruptcy. Perhaps the main lesson to be learned from Ms Basinger’s example is to plan any large expenditures or risky financial ventures properly. According to the Debt Advice Bureau (DAB), a not-for-profit debt advisory service that counsels people struggling with creditors, the financial problems of many people can be blamed on a lack of forward planning – and a tendency to live beyond their means.
Proper planning prevents poor performance
This catchphrase is a favourite maxim of sports coaches in gyms, parks and pitches all over the world. Mike Tyson probably heard it and its something he could have done with taking on board before making such purchases as a pair of white tigers at £4,000 each. A relatively modest outlay for the one-time heavyweight champion of the world, one might think, but just one example of a lavish lifestyle that was conservatively estimated to be costing him £200,000 a month.
Easy come, hard to pay back
Credit is easily available in today’s society. There has never been any time in the history of the UK when British people have had as much personal debt on their heads. The populace is constantly bombarded with advertising for loans, credit cards, store cards and deferred payment – why wait, when you can have it all now? The problem, of course, is that a great many people take out loans and credit cards based on optimistic financial forecasts – or simply with little regard for how to pay it back. Small wonder then, that the first quarter of this year saw the government’s Insolvency Service register 30,075 insolvencies – an increase of 23.9 per cent on the same period a year ago.
Give yourself some credit – but only if you can afford to
However, there is nothing wrong with credit in itself, says Stephen Rose of the DAB, so long as a you are sure you can handle the repayments: "You’ve got to make sure that you know what you’re signing, you know what you’re getting into, and if you’re happy with that and you’re confident that you can repay that, then do so."
Loans can give you some well needed breathing space and unlike a credit card you don’t have to be disciplined about how much you pay back each month – the amount is set and each month the total amount owed reduces.
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