#FinanceFriday Lessons from 50 Cent’s Bankruptcy

Rapper 50 Cent

personal financial planning

 

On Monday, July 13, 2015, Curtis James Jackson III, also known as the rapper 50 Cent, filed for bankruptcy. How does someone whose net worth was reported at $155 million a few months prior suddenly claim to have assets and debts between $10 and $50 million?

Part of the issue is related to rapid, large, but short-lived income. For those individuals who quickly make huge sums of money in a short time (think pro athletes, lottery winners), it is easy to forget that the level of income will not go on forever. These people might spend too extravagantly, buying big houses and shiny, fast cars, not understanding the cash flow needs (I.e.- maintenance) of these assets when the money stops flowing in. In the case of 50 Cent, his bankruptcy documents stated his “debts are primarily consumer debts.” One of his other business ventures also recently filed for bankruptcy as well.

No matter how much money you have, it is important to have a good group of advisors. This group should include CPAs, lawyers, insurance agents, and investment managers. Good advisors should help you make important financial decisions. They can help you evaluate if you can tolerate the risk of investing in a sexy startup company or need to put more money into retirement accounts, and hopefully keep you from going bankrupt.

Need a recommendation for an advisor? Contact me and I’d be happy to recommend a colleague.

What To Do When You Owe The IRS Money And You Can’t Pay It

IRS payment plan

Scenario- you filed your tax return and it turns out you owe money.  Way more money than you thought.  And you can’t afford to pay it all at once.  What do you do?

One option is to set up a payment or installment plan with the IRS.  If you owe less than $50,000 total (taxes plus interest and penalties) you can set up a payment plan. You can apply online at http://www.irs.gov/Individuals/Online-Payment-Agreement-Application or file the paper application Form 9465.

Information you will need

Make sure you have the following information handy:
– Bank account information (you will be setting up an electronic payment)
– Your employer information
– Tax return information
– Prior year’s adjusted gross income amount
– Your (and your spouse if you filed jointly) social security number and date of birth
– The amount per month you can afford to pay

It is very important that if you set up a payment plan you stick with it!  If you default on your payment plan the IRS will move you into their collections process.  You also need to make sure that you get your tax payments caught up in the current year either through payroll withholding or by making estimated quarterly tax payments.

Tweet it! If you owe less than $50k to the IRS and can’t pay it all at once you can set up a payment plan. bit.ly/1kJOVvv @BetteHochberger

recite-payment plan