This article discusses bankruptcy. Before I start, let me say that I wholeheartedly believe that bankruptcy is sometimes the best option. In fact, people often wait too long to declare bankruptcy, causing their ultimate net worth to decline even more and postponing the recovery period. I’ve even gone so far as to recommend bankruptcy to members of my own family after looking over their balance sheets and income statement. My comments here are in no way an indictment of the bankruptcy process.
Sometimes, as the saying goes, **** happens. Forgive yourself, move on and start rebuilding. You should not be ashamed any more than someone who had an affair or needs to lose weight. We all make mistakes. Our lives our the sum culmination of the decisions we’ve made in the past. Learn from what you did on and start making better decisions, but hold your head up and never think you should be embarrassed.
Giving People Money Doesn’t Solve Their Problems

New research shows that lottery winners are just as likely to go bankrupt as non-lottery winners despite a large infusion of cash in your lives. The reason is simple: If you know how to manage money, you are already rich. If you don't, you are eventually going to spend it all and end up broke again because money is the by-product of behavior.
A lot of times, people convince themselves that if “they just had a little more money” they wouldn’t be in the financial dire straits they are. Their bills would be paid. They wouldn’t have financial stress. The problem is, everyone else in their life is giving them the side-eye thinking, “Yeah, you’ll be right back in this situation in a few years” but no one wants to say it aloud.
You see it all the time with high school and college students who go into professional sports. Last year, I wrote an article at Investing for Beginners talking about a finding that a staggering 78% of NFL players were bankrupt or broke within 2 years after retiring! At least the NBA is a bit better (but not much) – according to The Toronto Star, 60% of NBA players are bankrupt or broke within 5 years of retiring.
Laura Rowley has a great article over at Yahoo Finance that illustrates a point that has been well-known in financial circles for years: Lottery winners go bankrupt just as often as non-lottery winners because they don’t know how to manage money. Now, it seems, there is empirical evidence to backup this claim.
According to Rowley’s article, Mark Hoekstra, assistant economics professor at Pittsburgh, co-authored the paper with Kentucky’s Scott Hankins and Vanderbilt’s Paige Marta Skiba. Their methodology: (more…)




