Don't Be Like Johnny Depp
How much money would you need to make before it became impossible to spend it all? $1 million? $5 million? $100 million? Or would you need more? How about $650 million?
Believe it or not, that is how much money Johnny Depp has earned in his long acting career. And it’s all gone.
The $3 million he made for Edward Scissorhands? Gone. The $50 million he made for Sweeney Todd? Gone. The more than $300 million he made for all the Pirates of the Caribbean movies? Unbelievably, gone as well.
Not only has Depp spent every one of the 650 million dollars he’s earned, according to thesmartwallet.com, he’s actually $40 million in debt. This means he’s somehow found a way to blow through $690 million since 1984, when he appeared in his first film. That’s an average of over $18 million a year, if you’re doing the math.
How is that possible? How does someone who has made $650 million lose it all?
Well, for starters, you buy fourteen houses. And when I say “houses”, you know Depp wasn’t buying “3BR, 2BA” type-houses. You also buy a boat for $18 million. And since you know you’re going to get thirsty on the yacht, be sure to buy $30,000 worth of wine, every month!
In short, Johnny Depp simply spent more money than he had; he lived outside his means. And if someone who has earned more than half a billion dollars can run out of money, so can we.
How do you avoid falling into this trap?
First, you get a clear understanding of your financial situation. This means knowing exactly how much money you make each month. If your monthly paychecks stay the same, this should be easy to figure out.
If you get paid by the hour or a portion of your paycheck comes from commission or tips, simply look at your last six months of paychecks and calculate the average amount of money you earn each month.
Once you’ve figured out your monthly income, add up your monthly expenses. This takes some work, but it’s worth it. Look at old credit card bills or your bank statements to make sure you don’t miss any expenses. A financial app like Personal Capital is one I’ve used that makes this task a bit easier.
It’s easy to remember the recurring expenses you have every month, but don’t forget to include the ones you might have only once or twice a year, like property taxes. Also be sure to calculate how much money you spend on things like birthday and Christmas gifts.
Once you’ve got all your sources of income and every expense you can think of listed, compare the figures. The most important question to ask yourself is, “Can I pay all my bills in full every month?”
If the answer is “no”, then you’re going into debt and in danger of becoming like Johnny Depp. To fix the problem, you’ve either got to earn more money or spend less money each month.
Usually it’s easier to cut back on expenses: eat out less, buy used instead of new, borrow instead of buy, use the library more instead of buying new books, cancel cable, etc.
Cut back on enough expenses until your monthly income is greater than your monthly bills. Once you’ve achieved this goal, move on to other financial goals, such as establishing a fully-funded emergency fund, paying off your mortgage, and saving for retirement.
When you are intentional about spending less money than you earn each month, you are living within your means. And that is the best way to guarantee you won’t go into debt, whether you’re a Hollywood actor or not.