I read that when Michael Jackson died, he was $500 million in debt. How does someone get into that kind of debt?
In: Economics
Being rich doesn’t mean that you don’t take loans or contract out services. It also doesn’t make a person good with money, it just means they *handle* a lot of money.
If that $500M is accurate, its the money he owed to loans and contracts, but doesn’t take in to account assets.
If you borrow $10M to buy a mansion you are $10M in debt, even if you have $20M in the bank. Also, you own the mansion which has value as well. Banks are more than willing to loan $10M to someone with $20M. The person with $20M likely would rather borrow $10M at say 3% to keep their $10M invested returning 10%.
The better picture of wealth is to look at net value, that will be the result of all assets minus debts.
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