Westlife's Shane Filan: famous bankrupts and what they tell us

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Shane FilanFiona Hanson/PA Wire/Press Association Images

Shane Filan, Westlife star and all round National Irish Treasure, has been declared bankrupt at the age of 32. As he prepares for the band's farewell tour, he is also bidding farewell to a life of privilege, as he admits to debts amounting to a shocking £18 million.

So what can we lean from his experience, and from the famous faces of bankruptcy?

Filan was part of a pop phenomenon which managed an impressive 14 million number one singles in the UK - the third highest in history and equaling Cliff Richard's impressive tally. However, it wasn't any kind of pop excess that took Filan's finances over the edge. It was property.

Lesson one: Consider the downside

Filan owns Shafin Developments Limited with his brother Finbarr. The property company was involved in developments in Ireland - including one estate of 90 houses - and borrowed millions in order to build them. The idea was that property prices were booming, he could borrow some of the easy money on offer, pay low rates on it, and then sell the houses for an enormous profit.

When the crisis hit, the price of property crashed, and properties were selling for less than they had cost the company to build them. In the end, the company went into receivership in May.He issued a statement saying: "I have worked long and hard to try to reduce my debts, and I am devastated that it came to this conclusion."

No-one is saying he could or should have considered the possibility of a massive economic crisis. However, whenever we take a risk in life, we need to ask, 'what would happen if something went wrong?' Filan either didn't do this, or decided it was worth the risk.

Lesson two: If you don't understand something, get some help

TV presenter Miquita Oliver was just 27 when she was declared bankrupt in February this year. The final straw was an unpaid tax bill of over £174,000. The accountant appointed her trustee did not comment on the reason for the unpaid bill, and we can only speculate.

However, as a freelance worker with fluctuating earnings, and a long period between earning money and having to pay the tax on it, there's every possibility she simply spent more than she should have because she didn't know she needed to set money aside in order to pay her taxes.

This serves as a useful reminder that we're sometimes responsible for financial affairs that we really don't understand. If in doubt it's always best to ask for help and advice. You may feel slightly stupid in the short term, but it will prevent you from feeling terrible later.

Lesson three: Know what you are spending

The celebrity proving this point is one from 1990s, MC Hammer (also known as Stanley Kirk Burrell). At the height of his early fame he was famous for having an entourage of 40 people, which reportedly cost him $500,000 a month. At the time he was reported to be making $33 million, but somehow he managed to spend beyond his means.

Clearly we all have months sometimes when we spend more than we should, and we are all tempted to live beyond our means. However, if we don't have a grip on exactly what we are spending, there's a risk this will spiral into dangerous debts.

Lesson four: Don't rely on a golden bullet

Anna Nicole Smith was a classic example. After marrying a 90-year-old oil billionaire when she was 27 she may have expected to be set for life, but after he died leaving her nothing she was left in trouble. She tried to sue his estate for some of his billions, but the costs pushed her into bankruptcy. Eventually her suit was rejected by the Supreme Court last year - four years after she had died.

Whether we are expecting an inheritance, a windfall, or holding out for a lottery win, we need to take real care. In every case it makes sense to live within your means until the cash is in your hands - at which point you can revisit your lifestyle choices.

Lesson five: Don't spend more than you earn

It's not rocket science, but it has been the downfall of a host of celebrity bankrupts from Kerry Katona to Mike Tyson.

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