10 Incredible Lost Savings Stories and Lessons Learned from Them

Category: Financial News

Have you ever experienced losing your precious savings because of a miscalculated risk or a bad decision? Or perhaps, your financial account may have slowly sunken to negative balance because of circumstances beyond your control, like an illness or personal troubles. Whether the lost happened under a dramatic circumstance or simply as a result of carelessness, losing one’s savings is not common only to low-income or average earning people. Like many of life’s lemons, these things happen. Learn how best to protect your lifetime savings from threats that lurk about in your life, and even from your own uncertain self. Read on and find out how.

The US Courts report showed that there were 1.3 million debtors that filed for personal bankruptcy in 2011. An interesting detail can be seen in Chapter 13 filers (which cover pleas for debt adjustment of an individual with regular income). Of the 239,793 cases filed on or before October 2006 (the review of appeals takes time), a whopping 77.4 % were dismissed. Nationwide, failure to make plan payments was cited in 48% of the cases as the reason for the dismissal. This only proves how hard it is for people with no savings to start anew no matter how sincere they are to straighten their financial condition.

Here are ten shocking stories of money saved and lost, and in some cases, thankfully found or rebuilt again.

1. J.K. Rowling (1965 – )

J.K. Rowling had no savings and depended on social security before she became a billionaire author, thanks to Harry Potter.

J.K. Rowling had no savings and depended on social security before she became a billionaire author, thanks to Harry Potter.

Joanne Rowling was hurdling poverty when she first conceived the idea for the novel Harry Potter. Her family’s finances was even strained by the lingering illness of her mother who was suffering from multiple sclerosis. Seven years after graduating from university in 1986, Rowling considered herself the biggest failure – divorced and jobless, with a dependent child which she raised on social security benefits, she lost it all.

In 1990, while on a four-hour delay on a train, the idea of a maltreated boy going to a school of wizardry came to her. The first of the seven series was finished in 1997, while the last was completed in 2007.  Rowling’s novel has been translated into 65 languages and gave birth to the blockbuster movie franchise. Far from her broke days and social security passes, Rowling has joined the ranks of internationally-acclaimed female billionaire authors.

2. James Dyson (1947 – )

As a relentless inventor, Dyson went through 5,126 failed prototypes of his vacuum cleaner and in doing so, lost his savings for over 15 years. But the 5,127th prototype worked and now the Dyson brand is the best-selling vacuum cleaner in the United States.

During his ‘experimental” years, his wife supported him financially with her meager salary as an art teacher. Dyson continued his vacuum cleaner development and came up with the G-Force vacuum in 1983, but no manufacturer or distributor would touch it. Unfazed, Dyson launched it in Japan through catalogue sales and his innovative ideas won his vacuum cleaner awards, but did not earn him profits. A decade later, he opened his research center and factory and used TV advertising campaign to sell his vacuum. His slogan, “say goodbye to the (dust) bag,” made it for him.

The Dyson Dual Cyclone became the fastest-selling vacuum cleaner in the UK, and in 2005 became the market leader in the United States. From those days of depending on his wife’s meager income due to his lost savings, he now chairs the board of trustees of the Design Museum and runs the James Dyson Foundation, with a net worth of £1.45  billion in 2011.

3. Tyler Perry (1969 –  )

Tyler Perry lost his savings in a flopped staged play and lived in his car before he became the first African- American to own a major entertainment studio.

Tyler Perry lost his savings in a flopped staged play and lived in his car before he became the first African-American to own a major entertainment studio.

Perry is the first African-American to own a major Hollywood film and television studio, the Tyler Perry Studios which sits in a 30-acre property in Atlanta. Before becoming an actor, director, producer, songwriter and playwright, Perry grew up in a poor neighborhood in New Orleans. Poverty challenged him but he held on to his ambitions. At a young age, he wrote his first gospel play “I Know I’ve Been Changed” about child abuse survivors.

He moved to Atlanta in 1991 and found work as a bill collector, scraping off his savings to rent a small venue where he staged his play. It was a flop with only 30 people in the audience. He lost his savings from long periods of hard work, yet he continued to strive, often living in his car due to lack of money.

Perry’s life changed in 1998, when a show promoter, impressed with his play, booked it in a concert hall in downtown Atlanta. It became a hit and soon, he travelled the US. His first movie pitch, Diary of Mad Black Woman was rejected many times before it was produced by Lionsgate and earned ten times its $5 million budget. Perry’s movies and TV shows have grossed over $400 million.

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4. Henry Ford (1863-1947)

Henry Ford (center) made sure his family will have permanent control of the Ford Motor Company even after it lost money.

Henry Ford (center) made sure his family will have permanent control of the Ford Motor Company even after it lost money.

The founder of the Ford Motor Company, his very first auto company went out of business, the second one dissolved because of fight with friends while the third stopped operation because of declining sales. Needless to say, he almost lost his life savings. However, as a true self-starter, he exhibited smart business decisions  and  he went on to become one of the greatest American entrepreneurs.

From the success of the Model T in 1918 to the mass-produced cars from the Rouge plant in Michigan in the 1920s, it seemed the Ford company was unstoppable. However, by 1932, the company started losing money at a rate of $10 million a month, and Ford’s failing health led to leadership incompetence. In 1945, bankruptcy became a serious threat. His grandson Henry Ford II assumed the presidency and the rest, as they say, is history. Despite losing money, what saved the Ford’s personal family fortune was his action of arranging for his family to have permanent control of the company he founded, preventing a planned government takeover and executive coup attempts. Clearly put, thinking ahead and planning for the worst are two things that can be learned from Ford in his journey of money failure and success.

5. Walt Disney (1901-1966)

The co-founder of The Walt Disney Company along with his  brother Roy, Walter “Walt” Disney had an annual revenue of $36 billion (using 2010 financial year) during his peak earning days. But before he reached the filthy rich pedestal, he lost significant amounts of money, but not his artistic and business drive. In 1920, he left a failed business in Kansas City to become a regular employee in an advertsing company, and became interested in cel animation. Together with showman Frank L. Newman, he formed a studio for producing animation works called the Newman Laugh O’Grams. But the profits were not enough to pay for salaries and other costs.  Soon, the studio became heavily indebted  and was bankrupt. Like his first attempt at business, Disney’s money was gone all too  soon because of inadequate business and financial skills.

Not losing his drive, Disney and his brother pooled their remaining money and set up a cartoon company in Hollywood, where they created the cartoon series Oswald the Lucky Rabbit. Problem arose when distributor Charles Mintz refused to continue working with them if their studio refused a lower pay. Disney’s studio artists were pirated by Mintz, his company lost the rights to Oswald, and they were back to zero capital. It was during this challenging period  that Mickey Mouse was born, which financially and professionally saved Disney, who never wallowed over his lossed as he started anew.

Some of the most shocking tales of money saved and lost came from people with more than enough money skills and experience that ought to have prevented them from a financial crisis, but still got shortchanged or bankrupt. In contrast to our savings winners, here are five stories of people who once had everything, but fell on a downward slope after losing their life savings. The money and other things may be forever gone, but not the valuable lessons they share.

6. Kim Basinger (1953 – )

Kim Basinger never seemed to learn her lessons, losing her savings several times.

Kim Basinger never seemed to learn her lessons, losing her savings several times.

From being a Bond girl and a multi-awarded actress, Kim’s popularity soon came from the infamous divorce proceedings she had involving ex-husband Alec Baldwin and a bitter child custody case of their only daughter. Apart from draining her savings due to legal costs in 1993, Basinger had also been ripped off with her wealth a number of times.   

In 1989, some of her relatives urged her to buy the small town of Braselton, Georgia for US$20 million and proposed the establishment of a tourist center complete with a movie studio and a film festival. Nothing came out of the projects and Basinger was forced to sell it to a developer. Worse, she never came back to good terms with her relatives.

In 1993, seemingly unable to learn her lesson the first time, Basinger again encountered financial difficulties after backing out of the controversial movie Boxing Helena where the studio filed for $8.1 million damages against her, and won. The actress filed for bankruptcy that ended with a lower $3.8 million payment instead, but still it drained her savings.

7. Scottie Pippen (1965 – )

On the court Chicago Bulls player Scottie Pippen could do no wrong. He helped give the Bulls six NBA titles in the 1990s with a record 72 wins. Off court, poor money management cost him most of the $120 million he racked up during his career. Raised in a poor household, Pippen chose the financial security of a long-term contract with the Seattle Supersonics rather than negotiating for what he’s really worth. Pippen would also endorse anything offered to him to make sure money kept coming in. But bad business deals left him nearly broke around his retirement.

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One of his infamous money mistakes was the the 2002 purchase of a $4 million Gulfstream jet which was poorly inspected and led him to spend another $1 million fo repairs. The jet was never used. He filed fraud charges and included his lawyers in the lawsuit for their failure to monitor the purchase. He won but was awarded with only $2 million of his loss.

8. Curt Schilling (1966 – )

The former Red Sox pitcher’s video game company, 38 Studios, filed for bankruptcy after missing loan payments. He currently owes $150 million and has just $21.7 million in assets. Schilling formalized his retirement in an announcement on March 23, 2009, after a career in professional baseball for 20 seasons. For the longest time, he has developed an interest in the board game Advanced Squad Leader.

He used some retirement money to build  the company Green Monster Games, later renamed to 38 Studios. The company developed and released Kingdoms of Amalur: Reckoning in February 2012. Three months after, Schilling had financial troubles and fired all of his staff. Some $50 million he saved playing baseball was gone on the failed video game venture.

9. Toni Braxton (1967 – )

Spending habits that went out of control coupled with huge medical bills brought down Grammy winner Toni Braxton.

Spending habits that went out of control coupled with huge medical bills brought down Grammy winner Toni Braxton.

Braxton’s career was rather stellar. She won an amazing six Grammys, seven American Music Awards and nine Billboard Music Awards. Her music made $170 million in worldwide sales. Who would have thought that she would be filing for bankruptcy in the last 15 years? Braxton first filed for bankruptcy in 1998 because of her spending habits that went out of control. She admitted to losing touch with reality with her expensive home décor addiction that consisted of art, precious plates, Faberge eggs and 1,000 thread-count linens, among others.

She filed for bankruptcy again in 2010  due to millions of dollars in debt and financial problems exacerbated by her health condition, notably her heart problems and lupus. Braxton’s debts ranged from $10 to $50 million. The court ordered her properties liquidated to pay off debts and she had to sell her house, while thankfully sparing what’s most valuable to her – her six Grammys and a piano.

For our last story, here is a failed savings episode involving a young couple that proves keeping money secrets and immaturity in viewing joint savings could lead to serious cracks in relationships. These kinds of stories ring nearer to home as they can very well happen to you or anyone you know.

10. Shaina S.

She is a Latin American and her Dutch husband Paul live in Brooklyn, NY. Naturally, they have some differences which they try to overcome as a married couple. Shaina is frugal, and while Paul exerts effort in cutting his spendings, his boyish love of cars often get in the way. In 2008, a post in Craigslist for a second-hand Corvette had Paul drooling over the “cheap” offer. Knowing that Shaina will never agree to it, he  decided to strike a deal with the sellers after a parking lot test ride and bought the car using money from their joint account meant for a small deli business. He figured Shaina will calm down when she sees the “hot toy,” and besides they needed “wheels”.

The car that halted mid-way before Paul made it home was just a prelude of things to come. There were problems with the battery leak while the stirring wheel and seat covers needed urgent replacement. Worst, the insurance was a mess. The Craigslist guys obviously duped the overeager Paul. As it turned out, the couple needed to spend more than what he paid for just to straighten out the faults.  Shaina was frustrated so much that she left Paul for a while. “It was a bad period in our marriage. I felt betrayed and my emotions neglected by the person whom I trusted. We reunited soon after, but it became hard for my husband to gain back my trust and our money again,” Shaina shared.

From our ten stories, it is obvious that losing money is one of the harshest beatings that life may throw us. This is because saving money is not as easy as it sounds, especially when there is a goal attached to it beyond making a major purchase at the end of the year.

Like most things in life, there is no guarantee in keeping and enjoying a lifetime worth of savings. For those who have been in this situation at one point in their lives or are still recovering from its effects, the important thing is coping and recovering: accepting what happened, resolving to make a turnaround in the proper time, and learning from your mistake – and even the mistakes of others.

Got a savings story that backfired?
Share those valuable lessons in the comments field below.

By Louie Andre

B2B & SaaS market analyst and senior writer for FinancesOnline. He is most interested in project management solutions, believing all businesses are a work in progress. No stranger to small business hiccups and drama, having been involved in a few internet startups. Prior to his for-profit ventures, he has had managed corporate communications for a Kansas City-based Children International unit.

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