| Nicholas Cage is broke. Depending on which side | | | | react to the event is even more important. |
| you believe, Cage brought about his own financial | | | | Unforeseen Illness. |
| ruin with a spending spree that included two | | | | According to in 2009, an estimated 1.5 million |
| castles, 15 palatial homes, several yachts as well | | | | Americans will declare bankruptcy. Many people |
| as a fleet of Rolls Royces. According to Cage, it | | | | may chalk it up to overspending or a lavish |
| was the fault of his business manager and his | | | | lifestyle, but a new study suggests that more |
| mismanagement that brought Cage to financial | | | | than 60 percent of people who go bankrupt are |
| ruin. Nevertheless, he is broke. | | | | actually caused by medical issues. As with car and |
| While you may not be a Hollywood star; if you | | | | homeowner's insurance, having and maintaining |
| own assets, you need to be financially protected. | | | | health insurance is paramount. Should you become |
| The news is riddled with celebrities who have | | | | separated from your employer, you are eligible |
| gone bankrupt; MC Hammer, Evander Holyfield, | | | | for COBRA benefits. Due to a new law, your |
| Willie Nelson, Hulk Hogan, the list goes on and on. | | | | employer must by 66% of the insurance |
| How could someone who earns more than 99% | | | | premium for 8 months. Do not let your health |
| of the general public declare bankruptcy? Let's | | | | insurance lapse. |
| examine some financial no no's and how to avoid | | | | Divorce. |
| financial trouble. | | | | According to a report by the NY Times, |
| Being overly generous to friends and family. | | | | approximately 33 percent of all marriages will end |
| It's not bad to be generous with friends and | | | | in divorce; not the typical 50% as is commonly |
| family. However, spending money on items that | | | | reported. If you happen to be part of that 33%, |
| will alter your lifestyle is a bad idea. While Elvis | | | | you will be financially affected. If the separation |
| could afford to purchase every pink Cadillac that | | | | doesn't kill you, chances are the attorney's fees |
| General Motors produces, those on a $50,000 per | | | | will. I don't have to list all those who have lost |
| year salary cannot. If you are so inclined to | | | | fortunes in divorce. Hire an attorney and have a |
| "spread the wealth", make sure you make it part | | | | good pre-nup drawn up. While it may seem |
| of your budget. Breaking down your income and | | | | callous, think of it as divorce insurance! |
| expenses will make it crystal clear how much you | | | | Making sure you're financially insured will take time |
| have to spend monthly. | | | | and planning. Spend this time wisely and surround |
| Getting sued. | | | | yourself with the best team possible. This will |
| Being served with papers and being informed you | | | | consist of a financial planner, accountant or tax |
| are party to a lawsuit may be one of the scariest | | | | attorney, as well as an insurance agent. Do you |
| moments in your life. If you own assets, you | | | | due diligence when seeking a professional's advice. |
| should sit down with a good tax attorney or | | | | Don't be a victim of the next Bernie Madoff. |
| accountant immediately. A good accountant will | | | | Opportunity Abounds! |
| show you how to properly structure them. If you | | | | While some firms have gone bankrupt, |
| own income producing properties, you should | | | | experienced layoffs and gone through extremely |
| consider incorporating them into an LLC. What | | | | difficult times, some others have flourished. Look |
| would happen if there was a slip and fall within | | | | at Warren Buffet for example (the world's 2nd |
| one of your properties? All of your unincorporated | | | | richest person). Berkshire Hathaway (the |
| assets would potentially be at risk. Are you | | | | investment company Buffet owns) has seen a |
| adequately insured in case of a car accident? | | | | down turn of 20-35% like most stocks. However |
| Although unlikely, what would happen if you got | | | | look at some of the moves Buffet has made |
| into a car accident and killed two passengers in | | | | during the recent recession/depression: |
| the other car? Are you adequately insured? | | | | 1) Bought warrants to purchase Goldman Sachs |
| Please consult with your insurance agent to make | | | | at $115 per share while receiving a guaranteed |
| sure you have enough coverage. | | | | return of 10% return on his investment. Goldman |
| Economic Downturn. | | | | is currently trading above $160. Buffet can either |
| You have been making a decent living, perhaps | | | | exercise his warrants and buy Goldman Sachs at |
| even six figures for several years. You've got a | | | | $115 or continue to receive a 10% return. |
| great apartment overlooking the water in the | | | | 2) Bought all shares of Burlington Northern. |
| swankiest part of town. You're driving around in | | | | 3) Berkshire has spent $3 billion on General Electric |
| your favorite Escalade when you receive a phone | | | | Co preferred stock, $2.6 billion on Swiss Re |
| call on your new $1,000 cell phone. "We're shutting | | | | convertible debt (a Swiss insurance company) and |
| down the office; we're laying everyone off as of | | | | a total of $750 million on securities from |
| Friday". Think this can't happen? Ask those in the | | | | motorcycle maker Harley-Davidson Inc. He also |
| financial services industry. Bear Sterns had been in | | | | purchased debt from packaging company Sealed |
| business for over 100 years. In a blink of an eye, | | | | Air Corp and building materials maker USG Corp. |
| the company was gone; a distant memory. You | | | | All of these investments generate annual payouts |
| may have already experienced an event very | | | | of 10 percent to 15 percent. |
| similar to this. The current unemployment rate is | | | | Because Buffet was prepared for this economic |
| currently at 10%. Most would argue that it is | | | | downturn, he was able to pick up assets at |
| much higher, as those not eligible for | | | | bargain levels. He did this in the '70s when he |
| unemployment benefits aren't counted anymore. | | | | purchased American Express, Coke and Proctor |
| As evidenced by this crushing downturn, the good | | | | and Gamble. Buffet has shown time and time |
| times don't last forever. The roaring 20's gave | | | | again he has the financial smarts to take |
| way to the Great Depression in the 1930's.Those | | | | advantage of a crisis situation. He had cash to |
| 20-30% annual gains in the real estate market | | | | spend when everyone else needed it. |
| have now given way to the biggest foreclosure | | | | Wrapping it all up. |
| disaster the world has seen in the last 30 years; | | | | In closing, there is no better time than the |
| some would say ever. If you learn one thing; | | | | present to get your financial house in order. |
| anything can happen. Those who decided to bury | | | | Invest some time and bomb proof your |
| their head in the sands and blindly buy houses with | | | | investment and your assets. As you've seen by |
| no money down or buy stock on margin have | | | | the latest financial debacle, those who are |
| been financially buried; bankrupt with no way out. | | | | prepared not only survive, but will prosper when |
| While an economic disaster may occur, how you | | | | the economy recovers. |