It’s no secret that the internet loves drama – especially when it comes to stories about our personal finances. As it turns out, 2014 was a banner year for stories of people winning it all, losing even more – and sometimes fabricating their entire fortunes. Fortunately, there are lessons to be learned from the year’s most retweet-worthy financial fiascos. Here are the top personal finance fails of 2014, with some advice on how to avoid them next year.
Jack Johnson of the Columbus Blue Jackets learned the hard way that you need to be careful who you put in charge of your finances. Johnson’s parents were part of the team managing his fortune, which included $18 million earned in just nine years. Thanks to their mismanagement (and a host of luxury purchases, including multiple homes and cars) Johnson now carries between $10 and $15 million of debt. By having his parents at the helm, Johnson trusted that his money was being handled properly. What he didn’t realize was that some of those luxury purchases went into collections, which resulted in three lawsuits. His current paycheques (at a salary of $5 million per season) are being garnished so heavily he has almost no take-home income. Ouch.
The Lesson: Always be aware of where your money is going. Make sure you understand how much is coming in and how much is going out. And if you don’t have the time or knowledge to manage your finances yourself, find a professional who can.
For whatever reason, a handful of Minnesotan #humblebraggers took to Instagram last year, and posted selfies with their paycheques and bank details. Months later, 24 would-be thieves were charged with conspiracy to cash counterfeit cheques (totalling $2 million), after they used the details in these social media photos to open bank accounts.
The Lesson: Don’t post your personal financial details online, ever, ever, ever – not under any circumstances. If you get a raise and feel the need to tweet about it, just tell the world what you’re going to do with the extra money and leave the pictures out of it.
Late in 2014, this story went super-viral before collapsing within just days. The teen in question, Mohammad Islam, claimed that trading stocks on his lunch breaks was allowing him to live an incredibly lavish lifestyle, including owning a brand-new BMW he wasn’t even old enough to drive. Only two days later, his claims were revealed to be fabricated. In shock and disappointment, it’s been reported that his parents want to disown him, and his reputation – as well as the reputation of the journalist who told his story – is permanently damaged.
The Lesson: Don’t lie about your financial situation – it only ends in trouble. This is how people get into debt, hurt their credit scores and damage their relationships. See? All trouble. So be honest, even if the truth hurts (or isn’t as exciting as you’d like it to be).
We’re certain you heard about this story. A Canadian couple took a trip to the U.S., when the wife was six months pregnant. Two days into their trip, her water broke and she was put on bed rest for six weeks, to try and prevent early labour. Despite best efforts, their baby girl was still born nine weeks prematurely, which meant she needed a little extra care before she could go home. Despite being assured by their insurance broker that everything was covered, Blue Cross denied the claim – saying the wife had a pre-existing condition (had gone to the doctor re: some bleeding before the trip) – and now the family’s stuck with a $1 million bill. Yikes.
The Lesson: Do your due diligence and know what your insurance includes (and does not include). This goes for all types of insurance: travel, home, car, life or whatever. Being informed will prepare you for any situation, no matter how unpredictable.
It’s easy to forget Wi-Fi isn’t free, but maybe someone should have reminded this unfortunate traveller before his plane took off. After buying a $30 Wi-Fi access package on a Singapore Airline flight, he landed and was greeted by a $1,000+ bill for extra data usage. The worst part? The airline says their process is completely transparent, so this unlucky traveller is still on the hook for the bill, since the agreement did say usage above and beyond his 30MB package would incur extra charges.
The Lesson: This story illustrates how important it is to read the fine print. Whether it’s service charges on a product, or terms of an investment, the devil’s in the details. By skipping five minutes of reading, you might set yourself up for huge liabilities down the line.
Finally, we saw an Ohio couple live the high life, after stealing personal information from Carmelo Anthony, 50 Cent and five other high rollers in the U.S. Most purchases were made online or by phone, and all of the information they used to make the purchases was gained from details freely available on the Internet, in addition to stolen credit card numbers.
The Lesson: Pay attention to your credit card statements and keep your credit card information under wraps. “Dozens” of Vespas is a pretty big red flag – but you have to watch for it!
We hope you’ll pay attention to these lessons, so we can keep you off the list of personal finance fails next year! And if you’re thinking of getting a new credit card in 2015, make sure no wannabe thugs drive away with your hard-earned rap royalties. Rack up your own points by comparing the best credit cards in Canada on RateHub.ca. And if you’ve already gone overboard, don’t worry – Consolidated Credit has you covered.