What do Abe Lincoln and Mike Tyson have in common? Would it help if I told you they had the same thing in common as Tom Petty and Henry Ford?
The answer is Bankruptcy. Each of these well known (wealthy) people have filed for bankruptcy.
Abe Lincoln was the nation’s 16th President. He was forced into bankruptcy in 1833, due to a poorly performing retail business and back payments of debt. Lincoln lost his last two assets, his home and some surveying equipment, and spent 17 years paying back the rest of the money to all the friends who had lent him funds to start his business.
Retired former heavyweight boxing champion Mike Tyson won the WBC title as a 20 year old and quickly became one of the most famous athletes in the world.
He went on to have a very successful boxing career, becoming known for his ferocious style in the ring and controversial behavior outside of the ring. Although Tyson received over $30 million for several fights and a career income estimated at $300 million, he filed bankruptcy in 2003.
He had a very difficult and public divorce from ex-wife Robin Givens blaming his financial situation on excessive spending on mansions and expensive cars. Tyson also blamed bad financial advisors and embezzlement as other causes for his bankruptcy.
Mike Tyson’s Estimated Net Worth today is under $5 million.
Tom Petty’s first albums were a smashing success with his band the Heartbreakers, although his bank account did not grow along with his fame. Record companies are infamous for restrictive recording contracts with conditions that keep even top selling artists in the poor house. When Tom Petty’s label, Shelter Records, was sold to MCA he jumped on the opportunity to declare himself a free agent. When MCA balked, Petty paid $500,000 out of his own pocket to record his next album and held it back as a bargaining chip against MCA. In 1979, he finally declared bankruptcy to gain more leverage in the legal dispute to get out his unfavorable recording contract. MCA ultimately gave in, allowing Petty out of his original contract and signing a new $3 million contract with him.
His new album, “Damn the Torpedoes” was finally released featuring “Don’t Do Me Like That” and “Refugee”, went certified double platinum, and made Tom Petty and the Heartbreakers into true rock and roll superstars.
Henry Ford was a perfectionist who had a tough time producing enough cars to make a profit. He went broke and filed for bankruptcy in 1901, and reorganized his business several months later. He eventually left that business behind and finally got his car company production methods right by 1903, when he founded a new business that went on to become very successful, called the Ford Motor Company.
The list is long….
In addition to these folks, I think we’ve all heard the story of Walt Disney and his bankruptcy. He certainly had his setbacks, as well. Setbacks of the rich and famous surprises us. It surprises me anyway. Even Donald Trump has used bankruptcy protection in his casinos.
My vision of success doesn’t always see the road taken to get there, I see the results…the symptoms if you will, of success. I judge my own “critical path” of achievement comparatively against theirs. Since we don’t look at the entire journey…only their success….Boom, set up for failure.
The numbers of “regular folks” filing for bankruptcy has hit staggering numbers. Here’s a visual from the National Bankruptcy Stats from American Institute.
I’ve always though about bankruptcy and the ultimate in financial failure. My husband and I, although it didn’t include bankruptcy, went through our own personal financial failure. About six years ago, we had a choice to make. Take a transfer offered to him by his company or be unemployed. The transfer would take us to another state…again. We were certain we were going to retire in the home we owned. Real Estate prices were falling rapidly and we had only owned our house for about 6 years. We purchased it brand new from the builder and touched every square inch of that cold, stark builders model of a house and turned it and the into something we were really proud of. There was a place for my grandchildren to play and plenty of room to entertain. We loved it. But unemployment was rising just as fast as house prices were dropping, in the town we lived in… if we had chose to stay and look for another job in order to stay in our home and stay close to our kids, the outlook was just as grim.
We chose to take the transfer and sell the house. Of course we couldn’t sell the house….nobody had a job in this town. We were among those many people that now owed more on their house than the house was worth. We moved, continued to pay for a house we didn’t live in for months. The bank refused any offer below that which we owed, and we knew we were never going to get it….we were screwed. We sought the advice of a financial advisor….he told us to throw in the keys and walk away. After struggling with that decision and struggling with paying for a new place to live AND this house we would never come back to, we took his advice. We threw in the keys. This wasn’t bankruptcy, but it was something that just wasn’t part of our makeup.
We felt completely broken. Mind, body and spirit. We worked so hard on a house we loved. It was so much more than a structure, it was the place we played with our grandkids….a place we planted things and watched as they grew. Leaving it behind this way just felt wrong. I wondered if we would ever feel normal again.
We resolved to never have to go through this again. We would take drastic measures…Neither one of us wanted to owe anybody anything….that way nothing could be taken away from us. We cut all of our credit cards up, tallied up the balances and began an aggressive plan to get out of debt. I no longer drove a new car, he no longer drove a new car. We stopped eating out whenever we were bored or hungry and we thought about every purchase we made. We were so accustomed to getting whatever we wanted, whenever we wanted it. We both made good money, but that changed too.
It’s been 6 years since then. We’ve moved three times for the company and are getting ready for yet another move… We’re good at it now. We’ve downsized drastically. Our lifestyle has changed tremendously. We’re doing things we never would have done if we had stayed in our beloved house….gone places we never dreamed of and living in parts of the country we had no previous desire. We are also (as of this week) debt free…even our cars, the loss on the old beloved house has been repaid and we don’t use charge cards. This is a time I couldn’t even come to envision back in the house we loved so much. It took money to keep up with the lifestyle we created for ourselves.
Out of our perceived personal financial failure came a resolution and a change we didn’t think we could ever, would ever see. To be Debt Free! Now, we’re more flexible to do the things that interest us. My husband would love to retire and open his own Audio Store. Now that our nut isn’t so big to cover, it suddenly is a possibility.
So, out of our ashes of failure rises a victory we didn’t think we could ever achieve and it took the failure to get us there. We were watching a TV show last night and a line in the show summed up our experience. “Tough times don’t last, tough people do”.
Success. Peace of mind.
just like Winston Churchill said “when you’re going through hell, keep going.” It makes no sense to stop in the middle if a mess, you need to get through it. Congrats on being debt free!