I have a confession to make. Please don’t judge me when I say this but the Real Housewives on Bravo are my guilty TV pleasure. I know it is mindless and inane but I think that is why I find them interesting. You have tons of manufactured drama, intrigue, suspense, sadness, and financial misdeeds and mismanagement. Yet, even as I watch shows like the Real Housewives on Bravo, I am continually amazed at how many people (especially faux celebrities) get bad or no advice when it comes to finance, taxes, and investing. And so, some highlights and lessons, yes even lessons from faux celebrities.
Don’t worry about how much you spend! Budget, What’s That?
Of course that is not completely true, but it seems to be a running theme in the show. There have been 6 different cast members of the show that overspent their way into significant financial difficulty and ultimately, into bankruptcy. The prime example of this is Sonja Morgan from the New York cast. She was forced to declare bankruptcy in 2010, but continues to say that everything is, “just fine.” The other example is Alexis Bellino from the Orange County cast who was always bragging and showboating about the expensive cars, homes, jewelry and businesses that she and her husband Jim were buying. The problem is that they were robbing Peter to pay Paul, and ultimately they had to declare bankruptcy in 2012.
The real lesson is that spending does matter and the truly wealthy live well below their means.
Everyone needs a $4 Million Dollar Mansion…Cough mortgage cough…
If you watch any of the seasons of Real Housewives you will be amazed at the homes these people live in. Now I know a lot of people who live in amazing homes, and I am not saying that there is anything wrong with it. However, I am suggesting that you should not spend more than 35% of your net take home pay on your mortgage. If your income is high enough to support a $4 million home, then congratulations, however, for the rest of the 99.8% of the population, stick to the rule of 35%, and you will most likely avoid the troubles of 8 cast members from the Real Housewives who lost their homes to foreclosure which was primarily due to how they took on more home than they could reasonably afford.
Make Sure you Get Good Tax Advice.
You have heard about Teresa and Joe Guidice, right? Well, just in case you haven’t, the pair recently plead guilty to fraud charges and failure to file tax returns from 2004 to 2008. Everyone needs to pay the proper taxes on their income. There are no exceptions to this. The pair were recently sentenced to 15 and 41 months in prison, respectively. As I was told early in life there are no short cuts, and the follow-up to that is good tax advice and tax planning will keep you out of jail. So here’s to being better than “fine.” Because, we all know that everything is never, “just fine.” Let’s get to planning
A better than fine thought from the Factory on Main.
Peter Huminski, AWMA
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.