What You Could Learn from Fergie’s Money Mistakes

Photo courtesy of Klem via Wikimedia Commons

This guest post is brought to you by The Digerati Life, a general personal finance blog.

When we think about celebrities or even royalty, we tend to think that they live charmed lives. Maybe they do. Maybe they’re more fortunate than us regular folks, but they’ve got their share of troubles, too, and go through some of the same financial challenges that regular folks have to contend with. In fact, they may even go through these trials on a bigger scale.

Consider the story of one of British royalty’s most controversial women, Sarah “Fergie” Ferguson. We’re not here to criticize her mistakes; rather, we’re here to learn from them.

The way we see it, her life is just like any other person’s life: She has her share of joys and miseries, except that she lives these in the public eye. Also, her triumphs and defeats are lived out on a bigger scale and in the public eye. Let’s look at her story as the story of another woman who’s struggled with financial management. Let’s learn from her mistakes and see if we can sidestep some of the stuff she’s had to go through.

In this story by The Daily Mail, there are three things that are of interest to us:

1. The bulk of the Duchess’ debts were due to business deals that went awry.
2. She’s been successful at paying off her personal debts.
3. One of her debts was a £65,000 bill that she owed to a personal trainer.

Let’s discuss each point and see how we could avoid making a mistake in a similar area and learn how the Duchess worked out her problems.

Spot Bad Business Deals

As an entrepreneur, you’re taking on a certain amount of risk, especially if you’re financing your business through personal loans and business credit cards. Before you get into a business deal or pursue an idea, do some market research and see if there are any legal hitches that you may encounter. Better yet, give your idea some time to bake before you take the plunge.

Not all seemingly lucrative deals are going to turn a profit; some may barely break even. Take a look at all the angles and carefully evaluate risk vs reward. Listen to your intuition–if you feel like something can go wrong, then take a step back before making commitments. It bears repeating: Make sure you assess the potential for growth as well as the risks of any transaction that comes your way.

Having NO Personal Debts Is a Great Thing!

The sooner you’re able to get rid of your debt, the better. Always be sure you have a budget and that you are smart with how you use electronic banking and payments, as well as credit. Take advantage of certain financial tools, products or resources as well.

For example, by using generous cash back credit cards, you’ll be able to earn rewards, points and cash back for your purchases. Now if managing your plastic is not one of your stronger points, then think about using debit cards such as the RushCard prepaid cards, which can help put a cap on your spending.

Fergie was on the right track when she eliminated her personal debts first. As Dave Ramsey advises, a debt snowball is the best way to get out of debt: Pick off the small debts before going for the bigger ones.

Don’t Let Anyone Rip You Off

Fergie has a major handicap in this case: She’s British royalty, a celebrity and she’s probably one of the top targets for fraud and scams. While most of us won’t likely experience the same problems she does, the best ways you can avoid being the victim of a ripoff are:

• Keep an eye on bills. Don’t accept everything your creditors present you with. Make sure you know the details and make sure their services are accurately reflected on the bill. Don’t tolerate “little” discrepancies. Looking the other way only encourages these companies to continue taking advantage of you.
• Have a zero-tolerance policy for people who lack integrity. Especially financial integrity. The first time somebody fleeces you in a big way, cut off all ties with the person and file a lawsuit if necessary. For honest mistakes, have the three-strikes rule. Tolerating people’s abuse will only make you miserable so don’t let it happen to you.

We believe that Fergie can get out of her personal predicament. We believe that as she learns from her past mistakes, she can surely rebuild her life. If you’ve fallen into a similar ditch, know that there’s always hope and a way out.