For those who think winning the lottery is a ticket to financial freedom, you may want to compare two well-known celebrities – Nicholas Cage and Warren Buffett. Cage is 55 years old and only a few years ago had $3 million for every year he was on the Earth. Warren Buffer is 88 years old and has about $1 billion for every year he has been alive. Unfortunately, Cage has had that per year average drop to a measly $500,000 a year because he doesn’t know how to handle money – or people.
Cage’s net worth exceeded $150 million a year ago until he lost perspective of actually how little that amount can be if you are willfully ignorant or have poor character judgment. In Cage’s case, both are true to a degree. Ultimately everyone is responsible for their own wealth, no matter how large it may accumulate. Cage blames his financial advisor for his precipitous drop of net worth, but he had to decide who he would trust with 9 figures of wealth. He chose poorly.
So just how did Cage manage to spend (or lose) $125 million? For starters, not paying your taxes to the IRS can create levels of financial chaos not previously experienced. Cage decided he wasn’t going to pay the IRS back in 2002, and they came around to knock on his door. He was hit with a $14 million bill for back taxes, which comes to about 10% of his net worth. But net worth is not necessarily all cash, and as we will see, he cut the IRS a check for $6 million cash and had to sell off some of his assets to make up the difference. Think of it as a double whammy on your total net worth.
Three properties that were sold to make up the difference were his $8.5 million home in Las Vegas, his home in Bel Air, California, and a $16 million Rhode Island property. For Cage, selling the properties was not just about breaking even with the IRS. When you write a $6 million check, chances are you don’t have much left in the bank to make a drive-thru stop at McDonald’s. Also, those numbers are not what Cage sold the properties for, but what their market value was. When you’re hurting for short term cash, you’ll take what you can get. Desperate people do desperate things.
One thing is certain: financial advisors usually don’t hand out marriage advice. Cage was obviously not a someone who you would trust giving dating advice, as he would marry Patricia Arquette, Lisa Marie Presley and Alice Kim – all three ending in divorce. His marriage to Lisa Marie Presley would last only a few months. But his latest marriage train wreck comes after a marriage to one Erica Koike that lasted an embarrassing 4 days. In the divorce papers, Cage claims she has a criminal history with charges currently pending. It’s not clear how much his list of ex-wives got as a result of his petulance, but what is clear is that Cage is a bizarre personality. By the way, Koike is asking for spousal support.
An old saying reflects reality, as there are people who know the price of everything but the value of nothing. In this chaotic part of his portfolio, the blame can be placed on both his financial manager and Cage himself. First, he spent $25 million on a piece of real estate in Newport Beach, California. This sounds more like a financial advisor type of decision rather than a personal one. Cage had two properties in Las Vegan and Rhode Island that roughly totaled that amount. If you’re keeping a tally, between the IRS and this purchase, Cage spent about $40 million, or one fourth of his net worth.
Next come the purchases only a financially challenged mind can decide on. There was the apparently testosterone driven bid of $276,000 to take home a 70-million-year-old dinosaur skull over a bidding competition with Leonard DiCaprio. (In case you’re wondering, DiCaprio’s net worth was double that of Cage’s at the time.) There is no need to ask what the average person would prefer – $276,000 or a dinosaur skull. Maybe Cage did one too many museum movies. But things get scarier. He would go on to buy a haunted house in New Orleans for $3.4 million. That trend of spooky places continued when he bought not one but two European castles for an eerie $12.4 million. As a retreat from his chaotic personal life he paid $3 million for an isolated island. Finally, and thankfully, there is the pet octopus he paid $150,000 for.
Of course, when things go wrong in America the first place to go is to court. Cage sued his financial advisor or mismanagement of funds and hopes to recoup some of his losses. It can be safely presumed that his financial advisor advised him not to pay his taxes, so there is $14 million that is untouchable. The same can be said for his pet octopus and dinosaur skull, adding another $400,000 to the total. As for his marriages, only he and his exes know how much their blissful days of marriage cost him. A best guess is that Cage will be able to get less than $20 million of the $150 million lost back from his advisor – if he is found guilty.
If you are wondering how someone treats money like water, look no further than the fact that Cage is a nephew of Francis Ford Coppola, the legendary film director. There’s nothing like having a rich uncle, though Cage did establish a name for himself in Hollywood due to his acting talent. But when the paychecks started coming in, Cage apparently thought he had his uncle’s net worth (estimated at $300 million). One difference is that Coppola is 80 years old and pays his taxes.
On a positive note, Cage is only 55 and relatively marketable. He can turn his naturally bizarre personality into a movie character without even acting and bank a cool $20 million. But first he will have to find a producer who is willing to take a chance that he won’t simply be taking a lead role for the money and turning in a wretched performance. But if some paparazzi takes a pic of him eating squid at a restaurant, his thoughts may be elsewhere and his situation may be deteriorating more than we think.