Lessons from the Passing of the King of Pop
Upon reflection, the passing of Michael Jackson is indeed a sad occasion. He was both a musical icon who was a big part of many people’s lives growing up. Yeah, he had his legal problems, and he lived what was, by all accounts, a bizarre life. Still, it’s been a long time since I’ve had seen just about everybody talk about someone’s death (right there with Princess Di, and much more so than with Heath Ledger’s death), so clearly, he was relevant to a lot of people.
Perhaps one of the sad lessons to be learned from him (other than to avoid having twelve year old boys over for sleepovers) was the perils of avoiding the incurrence of significant debt – a situation that could apply to us all. Despite his status as the King of Pop, the sales of 61 million records, the sold out worldwide tours, the merchandise sales, the royalties from his and the Beatles’ music (after he purchased the rights to them), and other income, Jackson died with a reported $400 million in debt. How did he do it? Let me count the ways:
- He spent more money ($20-30 million more) each year than he made;
- He borrowed money to pay debt, leading to more debt and additional costs and expenses that he could not pay;
- He couldn’t make payments on his properties (including Neverland Ranch), causing them to go into foreclosure;
- He got sued a bunch of times, resulting in what we can assume are multi-million dollar settlements.
Other than perhaps the last example, these factors are quite applicable to professionals, including young lawyers, who may find themselves flux with a lot of money from their high incomes and overextend themselves with investments and purchases. Next thing you know, the high income may be reduced or possibly eliminated, and then expenses and debt arise.
So, the moral of the Michael Jackson saga may be to be careful of your spending, avoid borrowing money to pay off debts and don’t live beyond your means.