“It’s my money,” Johnny Depp said. “If I want to buy 15,000 cotton balls a day, it’s my thing.” Ok sure, but not exactly the smartest thing to do with your money. Maybe that’s why he’s $40 million in debt for spending wildly and living way outside his means. Depp is basically broke, living from giant paycheck to giant paycheck while being in debt and is a sobering example of what not to do with your money.
So how does one of Hollywood’s highest-paid stars go broke?
In 2016, he raked in $48 million from the fifth Pirates of the Caribbean movie in addition to being in Alice Through the Looking Glass. The following year, he sued his two former managers at The Management Group (TMG) for mishandling his money for the past 17 years, getting him into major tax debt, and for taking out high-interest loans without Depp’s knowledge.
TMG counter-sued back that it was Depp’s own doing that led to his financial ruin, revealing his spending lifestyle of $2 million a month that includes:
- $30,000 on wine (which he bought to mature and invest in but allegedly drinks it instead)
- $150,000 on security
- $300,000 on staff (40 full-time employees)
- $200,000 on a private jet
He also spent $75 million on 14 residences, loaded each up with furniture, and oh, casually bought an entire village of 37-acres in the south of France.
Depp also had a 156-foot yacht that he purchased for $18 million, which cost him $350,000 a month just to maintain. He later sold it to J.K. Rowling, who is obviously more private and healthier with her financial decisions while being one of the top 3 highest-paid novelists.
Legal Battles Continue
Currently, the two high-profile lawsuits that Depp was involved in with TMG and one with ex-lawyers for malpractice, Bloom Hergott, have recently settled but he’s still embroiled with accusations of domestic violence from his ex-wife, Amber Heard. He has shot back against her with a multimillion defamation lawsuit with a trial going into February 2020.
Depp’s legal issues continue with allegations of him punching a location manager on set, as well as former bodyguards suing him for unpaid wages and dangerous working conditions.
Learning from Others Mistakes
While it’s painfully obvious that we’re not as rich as Depp, we can learn from these hot mess mistakes.
For instance, not spending $5M in shooting his friend’s ashes out of a cannon. Sure, we’ll never have that amount of money to spend but it’s the financial choices that we make with it.
1. Set a budget so it’s clear how much money comes in and goes out (check out the 50/30/20 to start)
2. Figure out what unnecessary expenses you can cut from your life
3. Live and spend within your means
4. Invest your money (micro-investing is a good start if you’re clueless)
By taking steps like these, you’ll have a better financial hold on your own money and not be in immense debt like Depp.
Most Americans Are Drowning in Debt
It’s easy to scoff at celebrities that are mismanaging their money which ultimately leads to debt but normal Americans are drowning too.
Here’s the breakdown:
- 80.9% of baby boomers
- 79.9% of Gen Xers
- 81.5% of millennials
These debts include mortgage, student loan, auto loan, credit card debt, and also medical debt, with medical being the number one cause for personal bankruptcy filings.
For millennials, their debt revolves more around mortgage debt and student loans while baby boomers and Gen Xers carry much higher credit card debt.
Considering Debt Consolidation
If your total debt (excluding the mortgage) doesn’t exceed 40% of your gross income (your pay before taxes) then you can consider debt consolidation to help pay it down.
This means it rolls all your high-interest debts, like credit card bills, into one lower-interest payment. Debt consolidation helps reduce your total debt and makes it more manageable but you have to make sure your cash flow is consistent enough to make the payments along with having a good credit score.
In addition, you should have a plan in place to prevent yourself from getting into a debt situation again.
Households that carried credit card debt averaged $16,748* and the ultimate rule while paying off the debt consolidation loan is to lock away your credit cards.
This could literally be extreme measures likes locking them away in a safe or freezing them in ice to make sure you don’t accrue more debt. To clarify, you’re not closing the credit card accounts, which can hurt your credit, just putting them away until you pay it off.
If your current debt is considered “small” and you can pay it off within a year, then don’t bother with debt consolidating. Instead, try the debt snowball method.
Don’t wait to get out of debt. Read: Complete Guide to Getting Out of Debt