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Even Celebrities Can Fall On Hard Times And Face Home Foreclosure

Published 6/8/08 (Modified 3/8/11)
By MoneyBlueBook

Even Celebrities Can Fall On Hard Times And Face Home Foreclosure

When you think of Ed McMahon, you don't exactly associate or lump him with big time wasteful spenders like MC Hammer and some of the other well known celebrities of the past who rose to fame and fortune quickly but ultimately frittered away their money into bankruptcy on trivial pursuits. No, when you think of Ed McMahon, you think of the aging but charismatic late night show announcer, the TV personality, and the face and voice of the American Family Publishing sweepstakes team (not to be confused with the more popular Publisher's Clearing House sweepstakes) that arrives unannounced at the homes of winners to present them their grand prize. You certainly don't see or hear about him throwing his money away on fast cars, fast women, or holding lavish sleaze parties to great excess.

So I was quite surprised when I learned that someone like the now 80 plus year old Ed McMahon has now found himself in difficult financial straits and faced with the prospect of mortgage foreclosure on his multi million dollar home. This housing bubble and credit crisis seems to be quite merciless and universally brutal, even to those who simply lived their lives with the best intentions, but still succumbed to hard times. With little regard to feelings or reason, the mortgage credit crisis and the powerful forces of housing supply and demand have devastated many good families.

Ed McMahon and His Wife Pam Speak Out About Home Foreclosure and The Possibility Of Losing Their House

Ed McMahon recently appeared on the CNN Larry King Live show (CNN video clip) with his wife to discuss their difficult foreclosure nightmare and explain how a former multi-millionaire such as himself could fall from financial grace after all these years and have his house foreclosed on. During the conversational interview with Larry King, many of Ed's words about how it all happened rang true:

"If you spend more money than you make, you know what happens. A couple of divorces flown in - a few things happened. You want everything to be perfect, but that combination - the economy, a little injury, breaking my neck - you just can't work with this thing around your neck."

"In some sense, I want to speak for the million people who now have foreclosure signs on their houses. I just want to give them hope, give them optimism and some guidance. Get the best corrective people you need around you, keep working at it, don't stop. There's a lot of people who are hard workers, did everything right, didn't do anything wrong, and all of a sudden they are in this boat, and I speak for all of them as far as I'm concerned."

"For everyone out there who's going through this, we really sympathize with you. Be optimistic. It can be done. All kinds of things can happen. Let it work out great for you."

When asked by Larry King to comment on the public assumption that the McMahons are multi millionaires and asked how they could have fallen behind $644,000 on their house mortgage payments, McMahon's current wife Pam chimed in (tearfully at times):

"People do assume that you have hundreds of millions of dollars, and I think over the years it's a combination of Ed working so hard and not looking at proper management which happens a lot. Because you're a celebrity, people think you have a lot more than you have. And you always want to take great care of all your friends and family in all you do. We didn't keep our eye on the ball and we made mistakes."

"But you have to not give up. Whether we keep our house or we don't keep our house. The whole financial issue might be the thing that ruins marriages, ruins relationships - but our marriage is strong."

"You have got to realize that you can get through it. You never know what good things can happen for you tomorrow. Keep the faith."

My Thoughts On Upper Class Celebrities, Ordinary Middle-Class Americans, and How To Protect Oneself From The Realities Of The Recessive Economy and Housing Market

After listening to the interview, I have to say I really started to sympathize with the plight of those in foreclosure. I know Ed McMahon and his wife Pam aren't exactly representative of the classic foreclosure case, but at least they can relate to the pains of someone who can no longer afford his or her home mortgage loan payment and compelled to face the reality of home foreclosure. It's an embarrassing and even humiliating experience that no one wants to be forced into. Home ownership is the American dream and when you can't afford your pride and joy any longer, it's a tough pill to take.

As I am currently still a happy renter and have not yet become a home owner, it is in my own personal and financial interest to see that there is no housing bailout whatsoever instituted by the government. This would obviously be the most self centered and self motivated route to take as opposition to any housing foreclosure bailout or assistance would help to ensure a growth in the glut and oversupply of available homes on the market, thereby substantially driving down real estate prices for the next 2-3 years until I decide to finally enter the housing market as a buyer.

But I do sympathize with most of the owners of the more than 1 million American homes (CNN news article) that are now shockingly finding themselves in foreclosure jeopardy. Sometimes in life, you do everything right with good intentions and yet bad things still happen when you least expect it. In Ed McMahon's case, he may have lived an early life of entertainment and celebrity success and held to great esteem in his work, earning millions of dollars through the process, but apparently he failed to adequately plan for the future and prepare himself for inevitable financial emergencies.

The reality of home ownership life is that even those with good Fico credit scores who are able to qualify for and obtain prime fixed rate loans on their houses, bad things still may happen. Sometimes through no intentional fault of their own, people lose jobs, divorces happen, child custody battles rage on, or injuries and illnesses come up making one unable to afford one's house anymore. With a stagnating economy in recession and plummeting real estate market prices eliminating much of the home equity built up in homes, such drastic and hard financial times can hit the best of folks. Without a proper emergency fund or savings set aside to handle such occurrences, even millionaires and celebrities, let alone ordinary people like you and I, can get hit by troublesome cash flow crunches.

The solution I think is to know and realize early on that life is inherently unpredictable and fraught with financial peril. Like the stock market, no one can accurately predict the good and the bad that will happen in the future. We can only anticipate and plan for the worst but hope for the best. While there are basic financial planning steps to take, such as investing for retirement through tax deferred vehicles like a Roth IRA account, one of the most important decisions is to save and build up an emergency fund. The amount that you will need to set aside for emergencies will vary from person to person, but it's important to plan for emergencies. For example, my car recently broke down and I had to face a sudden and emergency $1,200 auto service repair bill to replace my vehicle's alternator and battery to get it working again. Fortunately, I had saved enough on the side to handle such an emergency occurrence and expense.

The other important thing that we should glean from the Larry King - Ed McMahon interview is to stay optimistic and keep fighting. Never give up in despair. For those who are mired in housing foreclosure, credit card debt, or even perpetual unemployment, there is light at the end of the tunnel. Don't forget, there are many similarly situated people out there trying to stay financially afloat just like you. Just keep plugging through and maintain the faith.

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9 Responses to “Even Celebrities Can Fall On Hard Times And Face Home Foreclosure” 

  1. JimmyDaGeek says:

    I sympathize with no one on foreclosure, except those that are jobless, suffering catastrophic expenses and fraud victims. The financially irresponsible, the investor, and the ARM gambler deserve everything they lose. McMahon and his wife are financially irresponsible, the lowest crud on totem pole. They have blown more than I will make in my lifetime. Let them pay their bills like the rest of us. No money? Have a garage sale, sell on eBay or Craigslist. If they really want to be like ordinary people, let them suffer like ordinary people.

  2. Raymond says:

    JimmyDaGeek,

    I hear you on some accounts. I do understand the viewpoints of those that refuse to sympathize with those mired in a housing foreclosure. Particularly with so-called rich people like the McMahon's it's just hard to sympathize when they're talking about foreclosure on a multi million dollar mansion. But I personally don't think they bought the house on speculative intentions nor were they ARM interest gamblers. They simply got hit by bad fortune - recession, poor economy, health injury, and several divorces. I'm not sure they went on CNN to gather sympathy but rather to let others know that they aren't alone and that financial mistakes happen to the best (and worst) of us.

  3. JB says:

    This is an unfortunate story. The weird thing is though, that the newscasters always mention that 'he's been unable to work for the past 18 months while recovering from a neck injury.' This is very true, but he's obviously in the retirement age bracket as well. Doesn't he have money saved for his retirement/old age, did he plan on working forever?

    It's scary to think someone could have millions and spend it/lose it all and potentially have no retirement savings.

  4. Raymond says:

    JB,

    I think the unfortunate reality is that many of us do think we will live forever and continue working at the same pace and strength as we did during our younger years. But like cars, even human parts will eventually creak and break down with age. But like McMahon indicated, you throw in a couple of divorces, health situations, and a faltering economy and you have a recipe for financial tragedy.

    I'm still fairly young but I'm already saving like crazy for my retirement. When it comes to the power of compound interest savings, the earlier the better.

  5. Brian says:

    ED didn't plan on failing he just failed to plan. If he did everything right he would have had disability insurance, he would have had plenty of investments to draw on, and should have downsized many years ago.

    "Get the best corrective people", hello like maybe a accountant and financial advisor? Thanks for your advice Ed, but I continue to get mine from Bloggers like the Money Blue Book

  6. Joe W says:

    Boo-hoo a multi-millionaire is losing his house, sniffle-sniffle. He's still got plenty of money to buy a townhouse like everyone else. He's 85 not 35, how much longer does he realistically have left? And I wouldn't worry about his trophy-wife - his life insurance policy will keep her in riches for the rest of her money-grubbing life.

  7. Joe W says:

    Maybe they went on CNN to just get publicity to finally unload their house since no one had bought it yet. Why else would you publically humiliate yourself like they have been?

  8. Steve says:

    This just goes to show that the state of the economy is affecting everyone, including the wealthy, negatively.

  9. san diego realestate market says:

    How about a good real estate joke? If you think no one cares you're alive, miss a couple of house payments.

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