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The Most Famous Riches to Rags Stories

We looked at some of the world’s best rags to riches stories a few days ago. These are heart-warming and inspiring tales of people like Oprah Winfrey and JK Rowling, who have turned their financial lives around incredibly.

What about the other side of this issue, though? There must also be lots of people who had it all and lost it all? Indeed there are. Here are some of the most famous riches to rags stories if stars who ended up with serious financial problems.

Mike Tyson – Spending Like There’s No Tomorrow

He was once the scariest man alive and then he become one of the richest men on the planet. Tyson is estimated to have earned more than $400 million throughout his career. There is absolutely no way any sane person could blow that amount of money and end up bankrupt, is there? Well, if you spend $2 million on a bathtub and “invest” in ridiculously expensive Bengali tigers you could probably find a way of eating through a fortune like this. When he filed for bankruptcy in 2003 he had an astonishing $23 million of debts he couldn’t pay back.  As recently as 2010 he was telling the world on chat shows that he was “totally broke”.

Willie Nelson – Those Old IRS Blues

This guy ain’t as scary as Mad Mike Tyson but he has also had his financial woes to deal with. Back in 1990 the popular country singer had the IRS on his tail for $32 million in back taxes which he never paid. Most of his assets were seized from him in order to pay this massive bill. He even brought out a special double album to try and pay IRS. The bill was eventually brought down through negotiation to $6 million and Nelson paid off his debts in 1993. He seems to have been a victim of bad investments and poor financial advice but it looks like he is financially healthy again.

Nicholas Cage – Still Rich But Not Quite as Much as Before

This one isn’t exactly a riches to rags story. After all, how can one of the highest paid actors in Hollywood become completely broke? At one point my wife’s favorite actor was buying houses all over the world in a mad spending spree. He even bought a dinosaur skull for a fortune once, which is a sure sign of having more money than sense. However, in 2009 his financial woes began when IRS (them again?) came knocking at his door. They wanted over $6 million which he hadn’t paid for 2007. Cage blamed his former business managers for the mess and sued them. The problems caused him to lose 3 homes through foreclosure, in Bel Air, Nevada and New Orleans. He is probably the richest person on this list and he isn’t going to be living on the street anytime soon. However, his story shows us that bad investments and poor financial advice can impact even someone who is massively rich.

MC Hammer- Now Got His Priorities Right

The rapper with the capacious trousers filed for Chapter 11 in 1996, despite being worth $33 million just 6 years earlier and selling millions of records across the world during his career. So what went wrong? Spending $20 million on a custom built mansion certainly didn’t help. The mansion was sold for a song after being foreclosed and he later admitted that having a lot of money didn’t help if you had your priorities wrong. Rumors have persisted that he has problems with the IRS but the rapper has stated that he is now financially more stable because he sorted out the priorities in his life.

What other riches to rags stories are you aware of?

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10 Responses to The Most Famous Riches to Rags Stories

  1. dojo says:

    I never knew about these cases. Which comes to show you that you need to be responsible with your money at all times.

  2. Ankit | Getting Money Wise says:

    Great compilation! Goes on to justify that while making money is difficult, managing it wisely is a bigger challenge.

    • Robert Bell says:

      That’s too true Ankit. Even stars with expensive financial advisers can run into trouble. Actually, it seems to be the advisers who cause a lot of the problems

  3. While I was reading the post for famous rags to riches, I was already thinking of the other side of the story and got excited to read your post today. Only, I felt bad that my fave actor Nicholas Cage is in the list. Now I know why I’ve seen a picture, in the Internet, of one of his homes for sale. I thought he just got tired of it and wanted another one.

    • Robert Bell says:

      It looks like we think in the same way Jen. I am sure Nicholas still has enough money to get by. I just added him on the list because it was an interesting story but it wasn’t the most dramatic case of a star losing money

  4. It amazes me that people can blow through that kind of cash so quickly and in such a silly manner. Really: a dinosaur skull? Isn’t there better things to do with your cash, like feed the starving people in the world?

  5. Wow, how sad! I don’t know if I can think of any other famous people who fall into this category, but I have definitely heard of lottery winners who blow through it all within a few years! More examples of the very pressing need for financial education for our youth!

    • Robert Bell says:

      Maybe I should write about those lottery winners who blew it all, as I think there are some pretty spectacular lessons to be learned there

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