The King of Pop was heavily in debt, among other things....
The best thing that has happened to Michael Jackson's finances was his dying, apparently. With Mr. Jackson out of the picture, the wasteful spending and chaos of his life are eliminated, allowing his managers to better manage his affairs and pay off his massive debts. His posthumous record sales have added $200M to the picture as well.
The big problem was his $300M loan which used his stake in Sony/ATV as a guarantee - a stake that could be worth over a billion. Needless to say, creditors would like to foreclose on that. If the executors of his estate can pull it off, they can pay off that debt and leave an estate worth nearly a billion dollars - perhaps more, for his Mother and his three children.
It is bizarre that it worked out this way. While alive, he was teetering on the edge of bankruptcy, but dead, he is a billionaire. Perhaps you could call it "Elvis Syndrome."
But what is curious about the scenario to me, is that while Mr. Jackson took in millions and millions of dollars in income over the years, it never was enough to satisfy his lifestyle requirements. And much of the money he spent was squandered on utter trash.
During one television special (aired shortly after the second round of molestation allegations) they showed a very bizarre Michael Jackson, going on a spending spree in Las Vegas, buying outrageously priced and gaudy trinkets. It was like watching a lottery winner from a trailer park spend it all. His tastes were rather pedestrian, running toward the glitzy and gaudy, which would probably be traceable to his family's impoverished background.
He said in that interview that his favorite form of transportation was a gaudy stretched Ford Expedition, the sort of West Virginia Limo that teenagers might take to a prom, or people from New Jersey might think of as a "nice ride". Good taste was not in his vocabulary.
And yet, most of the junk he bought ended up languishing in one of the rooms of his Peter-Pan like mansion - a fleeting interest that caught his eye, emptied his wallet, and then went off to the dustbin. The Neverland ranch is one of the white elephants that was dragging down his personal finances. And again, in death, it may turn out to be the best investment made - it appears plans are afoot to puchase the ranch in the name of his two children. If so, it could be a tourist attraction that would put Graceland to shame (Graceland being Elvis' white elephant home that has generated more income since his death than he ever made in life).
But on a more personal level, the Michael Jackson effect seems to be mirrored by most people in our society. No matter how much or how little we make, it never seems to be enough money for most of us - we spend, spend, spend, hocking ourselves up to our eyeballs, just for some more toys and junk. And unlike Elvis or Michael Jackson, when we die, our estates won't make more money out of us, but rather just be stuck with our debts.
People who fall into large sums of money, like lottery winners and rock stars, or professional athletes, tend to so the same thing. They get millions of dollars and think (wrongly) that it is more money than they can spend in a lifetime. And they find out, years later, that they were wrong - that they managed to squander a literal fortune in a matter of a few short years and are broke. And who has sympathy for that?
Spend a dollar less than you make - that is the secret to financial happiness. And yet it is a technique that few of us seem capable of sustaining for very long. When Joe Consumer finally manages to claw his way out of debt, it isn't long before he is looking at new car brochures, or thinking of other ways to spend his limited income.
And it doesn't matter how much you make. And in fact, when you make more, it gets worse. The average young professional, when they break that mythical "six figure salary" barrier, starts to think they are "rich" and don't need to keep track of their expenses anymore. Buy a new Lexus! You deserve it! So they lease a $70,000 luxury car, without stopping to think whether throwing money at a depreciating status symbol is really such a smart idea.
I know I fell into that trap. I remember being in college, thinking that when I graduated, I'd be making over $30,000 a year (!!). Back then, the "Yuppies" were saying things like "Don't trust anyone under $30,000 a year" a take-off on their "Don't trust anyone over 30" mantra of the decade before. Thirty grand seemed like a lot of money back then, now its the purchase price on most new cars.
But thirty grand came and went and I still wasn't any "richer" than before - in fact, all I had to show for it was a financed car and an apartment. If only I could make 50 grand! That would be the ticket! And so I went to law school and got a job paying the staggering sum of $53,000 a year. We bought a house, to be sure, but it didn't seem like we were getting any richer. Maybe I could change jobs and make 80 grand a year! That would be staggeringly rich! Well, not exactly. A hundred grand? Hundred-fifty? Two hundred?
The more I made, the more I spent - and the more time I spent chasing my tail. The only fortunate thing I was able to do was to put SOME of the money into savings and invest in Real Estate and not be one of the unfortunate masses who lost it all in the debacle.
Today, my income has dropped way back down again. I barely make more than I did in my first year of law school, which means I don't pay much in taxes, either. But I don't work as much anymore, so it was a bargain I willingly made. And since I am debt-free, I am not worried about making payments on things. And as I cruise toward full retirement, I have set up my life so that I can get by on not a lot of money.
As I look back on my life, I realize that it was foolish to chase wealth and things for their own sake. What I really wanted (and got) was the independence that wealth can provide. And that does not require as much money as you'd think - you need only structure your life to need less and then live on that. Toys and junk actually detract from your independence, and make you dependent on a job, on lenders, and on that steady income stream.
But it seems that many of us fall into the same trap that Michael Jackson did - we think we are "rich" so we spend more - and borrow more - and never get ahead of the game.
It's too bad he went that route - among many other things. And the same is true for Elvis. Suppose they could have managed their affairs better? Exercised some more self-control? Life would have been different for them - and undoubtedly better, too.