Last Updated Aug 4, 2010 10:36 AM EDT
Khloe Kardashian, star of the E! reality show "Keeping Up with the Kardashians," is making headlines as the most recent celebrity to get herself into a financial pickle. TMZ reports Khloe owes $18,490.74 in back taxes from 2007. Reportedly, she did pay the tax lien with her old accountant, but then he dropped the ball and neglected to hand it over to collectors. Oops.
Here are four financial lessons we can all learn from celebrities.
1. Do Your Due Diligence
Khloe Kardashian can probably vouch for this: Don't trust anyone just because they have a diploma hanging on their office wall or because your best friend's uncle "knows a guy." Make sure you do all your background checks and hold proper interviews before hiring a financial advisor, accountant or lawyer - especially if they'll be making any money decisions on your behalf.
And even if you think they're on top of their work, check in once in a while to review their steps. One extreme case of celeb money mishandling was Dana Giacchetto, the scamming money manager to Leonardo DiCaprio, Cameron Diaz and Matt Damon, who stole roughly $10 million from his clients. And let's not forget the king of all schemes, scams and swindles: Bernie Madoff.
2. Live Within Your Means
B-list actor Stephen Baldwin, musician Tom Petty and rapper MC Hammer have all filed for bankruptcy at one point in their careers. Even former president Abraham Lincoln fell behind on paying back some friends who had lent him money to start a business. He didn't go broke, but he had some pretty ticked-off friends, I would imagine. Celebrities' money mistakes prove it doesn't matter how much you make.
3. Consider a Prenup
Just ask actors Reese Witherspoon and Ryan Phillippe, who divorced in 2005. They had to split their earnings in a divorce settlement, even though she was making almost 10 times more at the time. On the other hand, Sandra Bullock won't have to give her cheating ex a dime from her estate, thanks to a prenuptial agreement that kept their assets and properties separate. If you have any assets you would like to preserve and protect in the event of a divorce, it makes huge sense to have a prenuptial agreement, though many of us still avoid the topic. Emotionally it doesn't feel right to write up a contract and identify what's his and hers in a divorce, but as we know our emotions don't always lead us to the best decisions.
4. Pay Your Taxes
Leona Helmsley, Willie Nelson, Darryl Strawberry and Wesley Snipes have all run into trouble for failing to pay Uncle Sam. And they're not alone. Paying your taxes is common sense, but estimates of the cost of individual tax evasion in the U.S. range from $40 to $70 billion, according to Congressional research.
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