THIS WEEK: $354 MILLION DOT COM BOOM TO BUST

I once heard Donald Trump say that he much
rather learn from other’s mistakes.  He states it
is a lot cheaper and a lot better than having to
experience the mistake himself. Trump calls
this “education.”   Although I do not wish bad
things to happen to people, I do agree that we
can learn from other’s mistakes. Thus, this helps
avoid the misfortune and shortens the learning curve.

This week I would like to discuss the financial woes
of Internet millionaire Hasley Minor as an educational
piece so people understand how easily your money
can be lost by bad financial decisions.

First, let me commend the success of Hasley Minor
who co-founded an internet company called CNET.
In 2008, the company was sold for $1.8 billion dollars
to CBS.  Minor’s take in the deal was $200 million.
He also played instrumental early roles in the
companies that would become known as Salesforce.com,
Rhapsody, NBCi, and GoogleVoice. Minor was featured
in a tech segment of Forbes magazine as one of
the “Masters of the Universe.”  His success far
surpasses the American dream with a reported
$354 million dollar net worth. However, recently
his American dream has turned into a living nightmare
because of the way he mishandled his wealth.

With so much wealth, you would think that he
was set for life.  Last week, Minor filed for chapter 7
bankruptcy in Los Angeles and states he is down
to having $50 million in assets. He owes as much
as $100 million to creditors because of his bad bets
on real estate and other ventures that took him out
of what he calls his, “technology comfort zone.”

What went wrong?

As a financial coach, I look at how people handle
money and then work toward strategies to get
them on the road to financial independence.
After doing research on how Hasley Minor
handled his fortune leading up to his bankruptcy,
this is what I found:

1. HE HAD MONEY PROBLEMS FROM THE BEGINNING.
If someone doesn’t know how to handle money before
becoming rich, nothing will change once hitting the big money.
Businessweek reported that Minor had at least one brush
with bankruptcy early on. It was the early 1990s, and he
was trying to get CNET off the ground.  He had maxed out
his credit cards, expenses were piling up “and he was $40,000
in the hole,” according to the magazine. A 2.5 million investment
by Microsoft Corp. co-founder Paul Allen in 1994 and a second
investment gave the company a lifeline to survive.

2. LIVING LIKE A BILLIONAIRE ON A MILLIONAIRE’S INCOME.
This is a common problem I see over and over.  Not living
within your means.  In his case, he tried to keep up with the,
“Billionaire Joneses.”  He went on spending sprees.
Minor spent big on real estate, race horses and art.

Some of his acquisitions:

A $12 million estate in Charlottesville, Va.

A $15.3 million plantation in Williamsburg, Va.

A $20 million home in Bel Air, which he’s been
trying to sell without success; it’s now listed at $11.4 million.

A $22 million house in San Francisco’s Presidio Heights
neighborhood, for which he’d hired celebrity designer
Michael Smith to oversee a $15 million makeover.

A $30 million luxury hotel development in downtown
Charlottesville, now on hold amidst a lawsuit.

A $3 million deposit on the $58.5 million Gulfstream G650 jet.

A modern art collection, including several works by Richard Prince,
whose estimated value runs into the tens of millions of dollars.

3. STRETCHING HIS FINANCES THAT DROVE HIM INTO INSOLVENCY.
Instead on living on his own terms, he stretched his finances
to the max and lived on everyone else’s terms.  In the bankruptcy
filing there are listed more than 60 creditors, including
Bank of America Home Loans, the California Department of
Motor Vehicles, Dominion Virginia Power, the Internal Revenue Service,
tax collector offices in Los Angeles and San Francisco,
and several law firms.

Minor has recently lost lawsuits to an arm of Merrill Lynch
for $21.6 million and $6.7 million to the Sotheby’s auction
house for three pieces of art work he would not pay for.

California declared Minor and his wife to be the state’s
top income-tax delinquents, with an unpaid bill of $10.5 million.

4. BETTING ON THE “SWING FOR THE FENCES” BUSINESS VENTURES.
He launched expensive ventures into hotel management and
horse breeding. With all the money and prior success in the
technology arena, he figured he could bet big on these
new business enterprises.  The people who successfully
make it in business are those who start out on a smaller scale
and then build from there.  Take Steve Jobs, for example,
who started Apple Computer in his garage.   Hasley Minor
now has his work cut out for him.  He has to start all over
and a lot of people are going to loss because of his spending habits.

So what can we learn from this reversal of fortune:

1. Money issues will always be there no matter how
much money you have. Nothing will change until you
make the changes.

2. Keeping up with the Joneses is a path to being broke.
Living within your means and having a clear spending plan
in place will lift the fog and get you on the path to winning
with your money.

3. Stretching yourself thin by taking on too much debt
is a bad financial decision.  Why live on everyone else’s terms?

4. When investing money in a new investment or business,
start out small until you have the experience and confidence
in knowing what you are doing will work then you can
increase the size. Betting big in the beginning decreases
your odds.  Put the odds in your favor.   If he only took it
one step at a time instead of trying to live like a king for
a day, he would have lived like a prince for the rest of his life.

To get more insight into winning with your money,
listen to the Money on Your Terms Show, Thursday’s
evenings from 8:00-8:30 pm PST on blogtalkradio.com.
You can catch past shows from the archives 24/7.

If you are interested in:
Getting a Free Financial Strategy Session: Call 818-292-2548

You will learn:
-How to get off the Roller Coast Ride
-Eliminate debt
-Get on the path to Financial Independences

For winning strategies with your money, read the Amazon.com
bestseller Money on Your Terms available on Amazon: http://tinyurl.com/l59pws8

Remember when it comes to your money,
it’s on your terms and no one else’s terms.

Tim