Money Rehab with Nicole Lapin - Three Celebrity Financial Flops: Lessons From the Rich and the Famous

Episode Date: August 29, 2025

What to 50 Cent, Nicolas Cage and Kim Basinger have in common? They all had high-profile bankruptcies that left lessons all of us should incorporate into our financial lives. Today, Nicole takes us through what went wrong, so we can get it right. This podcast is for informational purposes only and does not constitute financial, investment, or legal advice. Always do your own research and consult a licensed financial advisor before making any financial decisions or investments. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC.  *APY as of 6/30/25, offered by Public Investing, member FINRA/SIPC. Rate subject to change. See terms of IRA Match Program here: public.com/disclosures/ira-match.

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Today we're diving into some of the juiciest celebrity financial flops. Not because I want to be mean, this is a judgment-free zone. But because even though these stories are wild, they have some lessons that are really important for anyone to remember in their financial. lives because fame and fortune don't automatically equal financial security or smarts. In fact, some of the richest, most high-profile celebrities have filed for bankruptcy, faced tax fraud charges, or completely mismanaged their empires. So rather than judging from the sidelines, today we're going to take a close, hard look at the numbers, follow the money trail, and walk away

with lessons that we can actually apply to our own lives, even if we're not raking in millions for movie deals or endorsement contracts. Today, I'll walk you through three of the most high-profile celebrity money mistakes and bankruptcies, what actually went wrong, the mechanics of how it happened, and what it means for you. Then we'll wrap up with a few high-level takeaways and one smart, non-obvious action step you can start using right now. Case study number one. Curtis, 50 Cent, Jackson. 50 Cent. One of the most infamous celebrity bankrupt cases ever. As a side note, it feels kind of ridiculous to call him 50 in this story, but I think it seems weirder to call him Curtis, so I'm just going to go with 50. Anyway, I take it a go 50 cent filed for Chapter 11 bankruptcy

reporting debts around $36 million in assets of about $25 million. Timeout. Filing for bankruptcy with $25 million in assets, it would be almost too crazy to believe if it didn't actually happen because bankruptcy isn't always about how much money you have in your bank account, it's about liquidity and liability mismatches. In other words, if you owe more than you have accessible to pay, you can be legally insolvent, even if you're technically rich. So how did we get here? First, 50 made bank early on. He signed a million-dollar deal with Eminem and Dr. Dre in 2002. In 2003, he put out the album, Get Rich or Die Tryin, which didn't age well. Well, the music did. The name, not so much. But for a while, things were going great. By 2007, Forbes estimated his net worth at $150 million. A big chunk of that wasn't even from his music at all, but from a reported $100 million payday when vitamin water sold to Coca-Cola. 50 cent had equity in the company, not just an endorsement. Cashing a check that big from an investment isn't luck, though. It takes good business sense. So what went wrong? It started with

some lawsuits. In 2015, a jury ordered 50 to pay $5 million to a woman whose private video he had posted online. This was super messed up. 50 cent put a sex tape of a woman on his website. He allegedly thought he had consent to because of a conversation he had with her boyfriend. He didn't even show up in court. It was not good. The court later tacked on $2 million more in punitive damages. Around the same time, another lawsuit. This one related to a failed headphone partnership, added $17 million in liabilities. Combine those legal hits with high living costs, expensive real estate, including Mike Tyson's 21 bedroom mansion that cost over $70,000 a month to maintain and a shrinking music income stream and you've got a textbook case of over leverage. So I know

we're not all living in 21 bedroom mansions and thank God for that. But one key lesson from this is that fixed expenses do not equal an airtight budget. His expenses were fixed. but his income was variable. He didn't adjust his lifestyle as his earnings shifted. And when the lawsuits hit, there wasn't enough liquidity to manage it. Case study number two, Nicholas Cage. Nicholas Cage once made $40 million a year and somehow still ended up owing the IRS over $13 million in back taxes. Between 1996 and 2011, Cage earned more than $150 million, but by 2009, he was heavily in debt.

He had to sell off multiple homes, including a $25 million beachfront estate in Newport Beach, a $15.7 million mansion in Bel Air, and craziest of them all, a private island of the Bahamas. But it wasn't just real estate. Cage reportedly bought a dinosaur skull for $276,000, a shrunken pygmy head, two European castles, and a Gulf Stream jet, because why not? Cage claimed his financial downfall was due to mismanagement by his business manager. The manager said Cage just wouldn't stop spending. Regardless, the core issue was a complete lack of sustainable cash flow management and zero interest in tax planning. Here is the lesson for all of my self-employed money rehabbers. Quarterly taxes are no joke. Nick Cage's failure to pay quarterly taxes on earnings meant that interest and penalties compounded,

turning an unpaid $6 million tax bill into $13 million plus. Case study number three, Kim Basker. This celebrity bankruptcy might be the most instructive for entrepreneurs. Oscar-winning actress Basinger filed for bankruptcy in 1993 after backing out of a film called Boxing Helena. The production company sued her for breach of contract and a jury awarded them $8.1 million. But here's where it gets interesting. She had actually bought a town, yeah, a whole town called Brazelton, Georgia for $20 million along with a group of investors.

The plan was to turn it into a tourist destination. and a film studio hub. But after the lawsuit, she didn't have the liquidity to pay the judgment and service the debt on the property. She filed for bankruptcy, claiming assets of around $5.4 million and liabilities over $10 million. Eventually, she settled the lawsuit for $3.8 million and sold the town. Kim's lesson, concentration risk. She had too much of her net worth tied up in a speculative, illiquid asset.

And when a lawsuit hit, she could not unwind full. fast enough. So let's back up. Most of us are not buying castles or entire towns here, but these stories still apply, especially if you're an entrepreneur or a freelancer. Here are the five golden rules that apply no matter how many zeros you have in your bank account. Number one, net worth liquidity. 50 cent had assets, but they were not liquid. He couldn't access cash fast enough to cover his obligations. The lesson, always have a cash buffer or at least a liquid buffer, like a brokerage account that you can access if needed. Number two, lifestyle inflation is stealthy and dangerous.

Nick Cage didn't become financially unstable overnight. It was a slow creep. Every new dollar he earned was matched or exceeded by new spending. Avoid letting your baseline expenses rise every time your income does. This is called the ratchet effect. And once lifestyle ratches up, it rarely comes back down easily. Number three, taxes are a line item. Cage's biggest problem wasn't just spending, it was failing to proactively manage taxes.

If you're self-employed or have variable income, you need a tax strategy that includes quarterly payments, deductions, and yes, hiring a competent CPA. Number four, diversification isn't just for stocks. Kim Basinger's bankruptcy shows the danger of tying up too much money in one e-liquid bet. Whether it's real estate, crypto, or your own business, don't put all of your eggs in one basket. Number five, liabilities can wipe you out. All three of these celebrities had legal issues, lawsuits, fines, or judgments that played a role in their financial collapse. If you are building a business or a brand, invest in liability insurance and have a strategy. It is not sexy, but it's essential.

You can take straight to the bank. Try a personal risk stress test. This is a step most people never do because it's quite uncomfortable, but it's very powerful. Once a year, go through a stress test scenario with your finances. Ask yourself if I lost 50% of my income tomorrow, how long could I cover my expenses? Or if I were hit with a lawsuit or IRS audit, do I have the liquidity to survive it? Review your debt to income ratio, your cash runway, and how quickly you could liquidate assets without incurring major losses. This is what ultra wealthy people and corporations do all the time.

It's part of risk management and it helps you spot financial vulnerabilities before they become disasters. make it a calendar event once a year, call it Money Earthquake Day, whatever you want to call it. You might not need it, but you won't regret it. Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan LaVoy. Our researcher is Emily Holmes. Do you need some money rehab?

And let's be honest, we all do. So email us your money questions, MoneyRehab at MoneyNewsnetwork.com to potentially have questions answered on the show or even have a one-on-one intervention with me and follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make. Thank you.