Celebs Who Ruined Their Finances (And How to Save Your Own)

Just when you thought Madoff was rotting away in prison, along comes alleged Ponzi schemer to the stars Ken Starr, arrested last week on charges of swindling $30 million in Hollywood fortunes. Here are the bold-faced lessons for your own (much smaller) fortune.

1. Savings

You could... ...make $737,000 a month, just like Britney Spears, then save or invest exactly zero dollars. Just like Britney Spears, according to actual court documents.

You should... ...give away some of that gargantuan salary and all the goodies that come with it. George Clooney donated his Oscar gift bag to charity for $45,000, and the IRS is cracking down on swag anyway.

You're probably better off... ...regularly depositing your earnings into a tax-deferred annuity that would support you in old age and shield you from your worst youthful impulses. Also: adhere to a restrained lifestyle, à la Warren Buffett. Note: this is way less fun than racking up $600,000 in credit-card debt, like Lindsay Lohan reportedly managed to do.

RELATED: How to Save (and Spend) Money at Every Age


2. Real Estate

You could... ...make like Nicolas Cage and buy a bunch of castles all over the world, then flip them (headache-free!) for a huge markup whenever you want. And by "for a huge markup," we mean "for a loss of unfathomable millions."

You should... ...get a mortgage for a house - one house - now that rates are at their lowest in decades. And remember: you are the king of the sofa, not Bavaria.

You're probably better off... ...keeping some penalty-free liquid assets. The FDIC has bumped up its insurance guarantee from $100,000 to a just-for-this-neverending-recession cap of $250,000, which you and your spouse can bump up much higher by opening a joint account, two retirement accounts, and dual trusts. Because when you're married, it's always good to have cash on hand for - how should we put this, Tiger? - unpredictable emergencies.

RELATED: How to Blow a Million Dollars

3. Accounting

You could... ...emulate Starr's clients and hand off "total control" of your finances to a mysterious guru - he even allegedly paid their bills - but the federally mandated Securities Investor Protection Corporation only protects $500,000 per account. And the SIPC might deny your claim anyway, as many of Madoff's victims cataclysmically discovered.

You should... ...emulate a (non-dickish) banker and diversify your own portfolio, like Shia LaBeouf claims to have done with a self-made $500,000 in his Schwab account while preparing for Oliver Stone's Wall Street sequel. If you must entrust another, make sure he is not himself entrusting an exotic dancer, a handbag-obsessed secretary, or a "glamorous, club-hopping lifestyle."

You're probably better off... ...double-checking your statements - Uma Thurman's attention to detail apparently led to Starr's arrest. No word on whether she is coming for his scalp with the Kill Bill katana.

RELATED: Celebrities Who Hid Their Money... Poorly

4. Marriage

You could... ...cheat on your wife with as many women as possible, safe in the knowledge that she signed a prenuptial agreement, only to realize - like Tiger Woods - that her lifelong silence costs an estimated $750 million. Which is a terrific bargain, really.

You should... ...marry up if you're going to blow a big payday by taking one for the team. (See John Kerry.) Alternatively, get inspired for a big payday by gambling $50 million on a lack of prenup, then gambling on a boat and some blue guys - just don't feel bitter if she gets your money and wins your Oscar. (See James Cameron.)

You're probably better off... ...staying faithful. Because even Al Gore - forty years, four kids, and all those strong values later - probably won't lose more than his 6,500-square-foot (and energy-efficient!) new mansion. What good is saving the planet if you have no one to share it with?

RELATED: 7 Marriages That Can Teach Tiger (and You) About Saving Money

5. Taxes

You could... ...hide everything from the American government and, in an attempt to fit in with Wesley Snipes (born: July 31, 1962... in Orlando, Florida), declare yourself a "non-resident alien," disown your social security number, use a forged South African passport, and accuse the IRS of intent to "terrorize, enslave, rape or pillage." You could even spend quality time in Namibia, which conveniently lacks an extradition treaty with the United States. And then you could be sentenced to three years in jail, where people actually get raped and pillaged.

You should... ...think about storing that extra cash in a drawer at the summer house. Like The Rolling Stones, who, according to The New York Times, pay The Man just 1.6 percent on all those Exile reissues... in Amsterdam. U2 exploits the same loophole, despite encouraging governments to increase foreign aid - did you know that governments are funded by magic and starlight? Guess you haven't been reading Bono's column... in The New York Times.

You're probably better off... ...avoiding those clandestine European bankers altogether. The Justice Department is seeking the identities of 52,000 Swiss account holders for some $300 million in back taxes. You could always underreport your earnings like Girls Gone Wild founder Joe Francis, who spent a year in jail. Sometimes it pays to just pay up.

RELATED: Can You Really Cheat on Your Taxes?


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Reprinted with permission of Hearst Communications, Inc.

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