A Fool And His New Money Are Soon Parted / Real Life

Moments where Fools and their New Money are Soon Parted in Real Life.

• When poor or middle-class people win the lottery, gain an inheritance, or otherwise come into a large sum of money very quickly, there's a good chance that they'll be broke a short time later. Unlike on TV, there's rarely a Reset Button. This sort of thing is so common that the condition was given the name "sudden wealth syndrome". According to the TLC show "The Lottery Changed my Life," around one-third of lottery jackpot winners go bankrupt within five years of winning.
  • And God forbid you let other people know about your sudden increase in wealth if you can stay anonymous. Lottery winners such as Abraham Shakespeare have been murdered in an attempt to steal their earnings. Lottery winners are thirty times more likely to be murdered than the average person, and 130 times more likely to be murdered by a family member. Having a sudden influx of wealth generally makes you a target for the likes of con artists, beggars, phony debt collectors, and kidnappers (to try and get ransom money). Ways to get around this include hiring security, moving to a secured location before securing the winnings, and having a trusted law firm claim the earnings for you (which would mean a cut of the earnings going to them, but better than having the full amount and getting killed for it). If you're thinking "Well, I'll just ask the lottery people to not announce that I won", in most US states you can't. Only a handful of states in America ^*Delaware, Kansas, Maryland, North Dakota, Ohio, South Carolina and Texas as of this writing allow you to claim your lottery winnings anonymously.
  • Michael Carroll, the self-proclaimed "king of the chavs", is a notorious example in Britain. A rubbish collector who won £9.7m in a lottery in 2002, he continued to have run-ins with the law (and, being well known for being rich and widely disliked, run-ins with the other side of the law), and spent his winnings as if it grew on trees. By 2010, he had filed for bankruptcy and gone back to his old job, but has expressed no regrets about how he spent the lot. ^note  Although he still works as a binman, he has slightly restored a bit of his money (he calls it his "pension pot") by investing in a foreign exchange scheme - needless to say, he learnt from his experience and isn't going to touch the money until he retires.
  • In 2000, in France, Jacques and Martine Riez, who had debt issues, won €1.5 million; 15 years later, they ended up poorer than before, living in a council house they might be removed from for non-payment of rent.
  • Viv Nicholson was a textbook example in Britain. In 1961 her husband Keith won £152,000 on the football pools (the equivalent of over £3.5 million today) and Viv declared that they were going to "spend spend spend". They did just that, and within a few years, it was all gone. Their story was later turned into a BBC drama written by Jack Rosenthal entitled "Spend, Spend, Spend".
• Professional athletes seem disproportionately susceptible to this trope, moreso if the player came from a poor background. ESPN's 30 for 30 documentary "Broke" opens by quoting a 2009 Sports Illustrated article stating that around three out of every five NBA players are broke within five years of leaving the sport, and four-in-five NFL players are in "serious financial trouble" within two years of leaving. Usually the culprit is some combination of the following:
  • Their unusual annual income structure — pro athletes only get paid during the 5-7 months out of the year their sport is in season. During the 2011 NFL lockout, stories circulated of players trying to get advances on their paychecks because otherwise they couldn't pay their bills.
  • Short career length — the average tenure of a pro athlete is only four to six years - most will be out of work by age 30.
  • Failure to plan beyond the sport — because most of their income comes so early, their financial strategy needs to be different from other people. They should be planning as though they were seniors going into retirement, since their income is going to tank very fast.
  • Taxes — If they grew up poor, the athlete probably never had to worry about paying income tax. Thus it can come as a shock that their newfound wealth not only means they now have to pay, but puts them in a very high tax bracket where up to half of their earnings may be owed.
  • Big money purchases of items of with poor resale value (like cars and jewellery), high running costs (like planes and yachts) or dubious utility (buying a new house is one thing, buying an eight-figure mansion with twenty bathrooms and an eight-car garage is another).
  • Rich young athletes will inevitably attract lots of women, which in turn often leads to hefty divorce settlements and child support payments further down the line.
  • Their own fame becoming a liability — players' contracts are publicly listed. So everyone, including unscrupulous agents, con artists and gold diggers, knows you're young, naive, and have tons of money. In addition, everyone tends to think that just because you're a pro athlete, you make millions like the most famous athletes. The majority of players' contracts aren't much higher than the league minimum.
  • The myriad number of injuries their bodies can accumulate during their career will often mean very large medical expenses later in life. Physical infirmities may also limit their ability to move on to other jobs after their athletic careers end.
  • The competitive mentality that leads to success on the field leads to a disastrous arms-race with their checkbook. They have to outspend the other guys right now; if a teammate has an expensive watch, you have to get one even more expensive. If he's got a Ferrari, you need to own two. The drive to make more money often results in favoring high-risk ventures rather than safe investments with low returns.
• Irish football legend George Best earned a fortune and lost almost all of it through his celebrity lifestyle. When asked what happened to the money he had earned, Best quipped: "I spent a lot of money on booze, birds (women) and fast cars. The rest I just squandered."
• The documentary Reversal of Fortune involved giving a homeless man $100,000 in cash and seeing what he did with it. It was gone within 6 months, and indeed he wound up in even worse financial shape then he was before.
• Pirates were notorious for spending their fortune after a successful raid on booze and prostitutes in a matter of days. This was because their lives were not quite safe. If you have got a lot of money but could die soon, it can be understood that they considered spending it immediately as a better option than risking never being able to use it.
  • Even if a pirate was in a fiscally-responsible mood there were few things they could do with their plunder aside from blow it all at the nearest port. Few if any banks would deal with a known pirate (though they might deal with privateers) and many pirates operated in parts of the world where there were no banks to begin with. The best they could do with their gold was hide it somewhere, and only two pirates (Captain Kidd and Sir Francis Drake) were ever confirmed to have done that, and neither of them managed to return to dig up the loot (though Drake only buried the money he couldn't fit on his ship after a truly spectacular haul, and did quite well for himself on the money that did fit in his ship).
• German actor Klaus Kinski typically starred in a successful movie, then spent all his salary on partying with friends, expensive clothing and 5-star hotels (and drugs), resulting in him becoming broke after a short time. After he had to live in a run-down single-room apartment for a few weeks, he often resorted to phoning his old friend Werner Herzog once again to ask if he had any more film roles available. Rinse and repeat.
• Heather Mills reportedly burned through her £24.3 million divorce settlement from Paul McCartney in less than two years. She claimed to have given the bulk of the money to various charities, but that's still pretty impressive.
• In June of 1984, Michael Larson was a contestant on the game show Press Your Luck. In the months before his appearance, he would watch the show excessively and noticed that the electronic board used for the "Big Board" portion of the game utilized a series of pre-programmed patterns. He memorized a few of the most beneficial patterns (that would usually lead to winning thousands of dollars & an extra spin every time), and Larson timed his spins almost perfectly for the entire game, racking up $110,237 in cash and prizes. After CBS concluded that he didn't break the rules Larson kept his winnings, but over the next 15 years, Larson would lose virtually all of his money through a combination of poor financial planning and high-risk ventures fizzling out, and he was even on the run from the Securities and Exchange Commission (SEC) for his role in an internet fraud scheme. Larson would pass away from throat cancer in Febuary 1999 at the age of 49.
• The Three Stooges: Defied hard in real life by Moe Howard. When he saw how Larry and Curly were spending their money (Larry was a gambling addict who almost went bankrupt after Columbia stopped making shorts with the Stooges, and Curly kept spending his money on wine, food, women, homes, cars, and dogs), he took it upon himself to manage their paychecks and their estates so that they wouldn't be penniless in their old age, a fate which did eventually befall many of their contemporaries.
• Can happen in entire countries suffering from resourse curse: basically, the economy is geared towards a very valuable product, crowding out the rest of the economy. As a result, if this income source fails due to falling prices or tapping out, the rest of the economy can't compensate, leading to financial ruin. The economy of Nauru was one of the more infamous cases: they tried to set up funds for when their phosphorous mines inevitably ran out, but proceeded to constantly dip into their trusts. When the mines did run out, Nauru was broke. They've had to resort to taking money from Australia to house migrants that the Australians apprehended trying to enter the country illegally by sea.
  • Oli-rich Dubai, knowing full well that the oil fields will eventually dry up or the increased use of alternative energy will sharply lower the price of oil (or most likely both), has made contingency plans for this and invested heavily in trying to become the Middle East's financial center and premier tourism destination. Kuwait, Bahrain, and Qatar have likewise poured money into making sure there's life after oil.
• Wanda Rhodes pushed her daughter Wanetta Gibson to falsely accuse fellow student Brian Banks of rape. He got convicted, and they won a $750,000 settlement from the school district (some sources claim $1.5 million), which they squandered on cars, game consoles, big screen TVs and other stuff. They had to flee from house to house just to stay ahead of the debt collectors. Then Banks finished his jail term, Gibson contacted him to reconnect, and eventually confessed she lied (on hidden camera). Banks got exonerated, the school sued Gibson for the fraud, and she was on the hook for $2.6 million. After that, she went into hiding.
• Chico Marx's gambling addiction cost him millions of dollars by his own account. When an interviewer in the late 1930s asked him how much money he had lost from gambling, he answered, "Find out how much money Harpo's got. That's how much I've lost." The Marx Brothers made A Night in Casablanca because he'd filed for bankruptcy a few years prior. Because of his out-of-control gambling, the brothers finally took the money as he earned it and put him on an allowance, on which he stayed until his death.
• Of The Monkees, Micky Dolenz fared the best when it came to royalty payments because he trusted his mother to handle his money, which she invested carefully in "safe" stocks and holdings. As for the others, Peter Tork gave most of his money away, Davy Jones lost most of his in bad investments, and Michael Nesmith spent his on family luxuries and artistic projects.
• Because The Who's early stage act relied on smashing instruments, and owing to Keith Moon's enthusiasm for damaging hotels, the group were in debt for much of the 1960s; John Entwistle estimated they lost about £150,000. Even when the group became relatively financially stable after Tommy, Moon continued to rack up debts. He bought a number of cars and gadgets, and flirted with bankruptcy. Moon's recklessness with money reduced his profit from the group's 1975 UK tour to £47.35 (equivalent to £390 in 2018).
• MC Hammer has become a byword for this among rappers, with Nelly snarking "blow 30 mil like I'm Hammer" in track "Country Grammar." He didn't get fully hit by this until the mid-90s, when his career hit a slump and he could abruptly no longer pay his bills. He bought massive mansions, multiple cars, thoroughbred racehorses, and gold chains for his dogs, and kept an entourage that ballooned to nearly 200 people. He had to file for bankruptcy in 1996 as a result of this overspending, and he remains a symbol of living beyond one's means.
• Telltale Games was a relatively small company that put out small episodic adventure games that were often based on licensed properties. It suddenly struck gold with its version of The Walking Dead, which won tons of acclaim and sales. Unfortunately, Telltale's heads thought that the best way to spend all this new money was to try to repeat The Walking Dead's success by buying up lots of licenses to base games on, making as many adventure games as possible, and hiring a larger staff. Far from repeating its success, Telltale found that almost none of its games made their money back. Coupled with a market they oversaturated by themselves and employees leaving in droves, Telltale folded in 2018. They have since re-established but did so as a clean slate.
• In a similar manner to Telltale Games, Crytek was a small-time video game studio that was more like a tech demo company. While the first Far Cry game was a modest success, the company would strike gold with Crysis. Crytek used their newfound success in buying and establishing multiple studios (including saving Free Radical Design from closing down) and trying to create new IPs in an attempt to compete with Epic Games. However, their post-Crysis titles never found the same level of success, and by 2014, they had closed down their US studio (which they established only a year prior) and sold their UK studio (and with it the Homefront IP, which they got only just a year earlier from the THQ bankruptcy, to Deep Silver). By 2016 they sold their Sofia studio to Sega and closed down all but their main studio and their Kyiv and Istanbul studios, and in 2018 they sold the Timesplitters IP to Deep Silver. They even filed for bankruptcy twice in 2014 and 2016 respectively. They have since recovered with Hunt: Showdown being decently successful and Crysis Remastered Trilogy doing well enough to make them greenlight Crysis 4 but their glory days of the early 2010s are long over.