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New Jersey has been gaining a worldwide reputation thanks to the plethora of newer television programs featuring the state. It may have started with The Sopranos, but Jersey Shore, Jerseylicious, The Real Housewives of New Jersey, and Jersey Couture have continued. The state government has been providing a tax credit encouraging filmmakers to bring their production to the Garden State. The incentive hasn’t resulted in New Jersey becoming “Hollywood East” as was either hoped or feared, depending on your point of view, when the state created the tax credit.

New Jersey is not alone in this approach. New York City has offered a similar tax credit to bring film production to the east, benefiting many films and television series, and along with film production comes many jobs.

Jersey ShoreThe tax credit in this state doesn’t just apply to entertainment about New Jersey. Parts of the film Transformers 2 was filmed here, as well. I haven’t seen the movie, but as far as I know about the film, there’s nothing included that could tarnish the reputation of the state’s citizens, unlike some of the other projects filmed here. Most notably, Governor Chris Christie singled out Jersey Shore. In his role as governor, Christie has revoked the $420,000 tax credit for production of the series filmed for MTV. As a New Jersey resident, I’m acutely aware that the personalities of the characters on Jersey Shore don’t reflect the reality of the greater community within the state.

I don’t necessarily think the tax credit should be repealed based on a show’s content, however. The goal of the tax credit is not to encourage marketing in favor of the state’s reputation (propaganda) or tourism, but to bring an industry and that industry’s jobs to the state, many of which might not have been here otherwise.

It’s valid to argue that the tax credit shouldn’t exist in the first place. Producers would naturally gravitate towards locations where it is more economical to produce. A tax credit gets in the way of market forces. I’m fine with tax credits for certain industries if it benefits the state economically, and it’s easy to see that the tax credit program for filmmakers does that. As a New Jersey citizen, I’d prefer hat the tax credit be used to produce quality entertainment, but that’s a judgment call. It’s an opinion, and one that the government shouldn’t be using for policy decisions.

The governor most likely wants to kill the tax credit altogether, and is just using Jersey Shore as an example of entertainment that “uses” the credit to enhance the negative reputation of its citizens. He understands that appealing to the state’s reputation could be an easier fight than killing a job-producing tax credit on its merits as government intrusion on a free market. I’m no fan of Jersey Shore, but either kill the tax credit entirely or don’t arbitrarily decide who should receive the benefit. Move the funds to the marketing and tourism budget if the government decides funds should be dedicated only to entertainment that sheds a positive light on the state.

Photo: wfyurasko
Yahoo News, New Jersey Motion Picture & Television Commission

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A typical professional athlete may be a prime example of the situation in which an individual might find himself suddenly wealthy. The idea that a person could consider himself middle class or lower one day and wealthy the next is a recipe for financial disaster. It’s easy to look at athletes because their trials and tribulations are often front page news. Michael Vick had some problems with the law, but now he’s dealing with financial fall-out. He has declared bankruptcy, and for the first time, the public is getting to see the choices he made with his money.

Vick listened to the wrong people and was perhaps a little gullible and trusting. His seemingly unlimited income gave him the opportunity to spend with zeal. He paid $223,000 a year for dubious financial advice, $78,000 a year for allowances for his family members, and an extra sum of $209,000 for his mother. His obligations included various house payments for his family in addition to the allowances, salaries for his entourage, $10,000 per month on jewelry for a period of 20 months, payments for his own houses (four), boats (five), cars (eight), and horses (unknown).

Gold Bars MoneyAnd then he wasted his money on failed business ventures for which his friends and advisers convinced him to part with more of his money, like a rental car franchise, janitorial operations, a restaurant, and of course the issue that eventually landed him in jail, the dog fighting ring.

The result of all his money missteps was bankruptcy, with a variety of companies staking claim to his future earnings. At least in Vick’s case, he is getting a second chance. With his new contract, and with a new approach to managing his money, he should be able to meet all his financial obligations.

The thought of having a sudden influx of cash, particularly if it puts you in a significantly different financial situation that those who are closest to you, is frightening. Suddenly, friends and strangers might approach you with investment ideas or pleas for help. Many suddenly wealthy individuals are grateful for their situation and want to help others, but responding to these requests can be a quick road to losing everything.

Ron Lieber, columnist for the New York Times, offers a three-pronged approach for people, not just professional athletes, whose financial situation changes significantly, quickly: slow, small, and scrutiny.

Slow

Don’t make decisions right away, and keep the money invested safely in cash or bonds from the outset. Don’t give in to the immediate pressure you may receive from friends, family, and strangers looking for investment capital or financial help, even though you may strongly desire to help those closest to you. Decisions made quickly could end up hurting your financial security later, so slow down your approach and resist the temptation to immediately go after investments that promise to pay off handsomely. It’s true that the wealthier you are, the more access you have to potentially lucrative, but complicated, investments, but keeping money invested safely for a while helps you wait until you can make more rational decisions.

Small

The good-hearted among us will want to use newly-acquired wealth, particularly if there is more money available that any one family could use in a lifetime, to make grand gestures with large amounts of money, making the world a better place. The adviser quoted in Lieber’s article points out that many athletes invest in a city only to find out they would be traded to another city the next year. Keeping gestures small would make more sense.

Additionally, if we’ve seen anything from celebrities in Hollywood, there’s often a temptation to use wealth to buy a massive house. Many people, even the wealthy, aren’t prepared for the expenses involved with maintaining a house, particularly if that house is large. There’s always a chance that it proves to be a good investment, if another celebrity makes the risky decision to buy the mansion at a higher price down the road, but there are never any guarantees. In the case of athletes, many become wealthy at a very young age — and they may have never even lived on their own before. The article suggests buying a small home to start, perhaps even a condo.

Scrutiny

Shady advisers appear out of the woodwork when there’s money to be made. The article says it’s a good idea to have an adviser, but be very selective. I’ve written a series about selecting and working with financial planners, and weather you’re suddenly wealthy or looking to build wealth over time, the same concepts apply. The most important factor is finding a fee-only financial planner to serve as a fiduciary, which means they are bound to advise in your best interests only. Even this doesn’t prevent an adviser from taking advantage of a client, though.

I would also argue that a good, solid education about basic money management can go a long way in reducing the need for outside “expert” opinions about how to hold or invest your money.

An athlete signing a professional contract, a lucky individual who wins the lottery, or an entrepreneur selling his company to Apple all might have to deal with a sudden influx of wealth. Keep cool and don’t make any sudden moves. Wait before offering any financial help or investment capital to friends, family, and advisers. From a practical point of view, these are likely to be good priorities:

ESPN, New York Times

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Most theatrical performers become professional actors because they have a talent or a love for what they do. They have a drive to entertain, and they can’t imagine spending their limited time on this planet doing something other than what they love. By the time they’re adults, unless they have seen outstanding success as a child, they have given up any dreams of making a fortune doing what they love, or being a movie superstar. Most just love their jobs, look forward to the hard work, and aspire to meet their next dramatic challenge.

Most successful actors aren’t rich, but the actors who are rich tend to be very wealthy. Have a few Academy Award nominations, a win or two, and you can command salaries a bit higher than union scale.

Forbes analyzed box office success and the contracts of the major movie actors from a recent rolling year (May 2010 through May 2011) and determined which five movie actors likely earned the most. The numbers are a bit staggering. They may not be Warren Buffett’s net worth numbers, but these figures are still sums the vast any typical American will never see in his lifetime.

  • Leonardo DiCaprio, star of Shutter Island, Inception, and Growing Pains, probably walked away with $77 million.
  • Johnny Depp, star of the latest Pirates of the Caribbean as well as 21 Jump Street, added $50 million to his balance sheet.
  • Adam Sandler, who starred in Grown Ups and Saturday Night Live, somehow pocketed $40 million.
  • Will Smith, who will be appearing soon in Men in Black III but is better known to me as The Fresh Prince of Bel-Air, represents Philadelphia with $36 million.
  • Tom Hanks, who flopped in Larry Crown but is everyone’s bosom buddy, is splashing around in a big (pause) money pit full of 35 million dollar bills.

The top five movie actors earned $238 million in total. It’s no wonder the movie industry is moving away from big names towards ensemble casts and relatively unknown actors. Most films can’t earn enough revenue to justify the large guaranteed payouts that the top movie stars require. To be fair, actors have quite a bit of expenses to pay. Agents and managers take their cuts, tax bills are high, and someone needs to pay to maintain those California mansions. Regardless, after taxes and expenses, there’s a lot of money that could be put to good use rather than just sitting in a bank account or invested in a stock market index fund.

Successful movie stars often put their money, their mouths, and even their hands behind issues that are important to them. Being a star commands the public ear, and with that responsibility, many — not only actors — feel they have an obligation to endorse causes they find important and those they believe are important to the world.

Searching some listings for background actors or extras in New York City, I see there’s a going rate of about $300 a day (for eight hours). As a full-time job, this is not a bad living, though it’s probably not enough to live comfortably in this city. Most actors won’t find this work full-time, however. It’s a long road from being an extra to becoming a top movie star taking home an eight-digit income.

Photo: ctrl z a.k.a rahma
Forbes

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The market for Hollywood Hills homes of the stars hasn’t been immune to the real estate downturn. Although she purchased the house for $7 million in 2007, the asking price is now $4.59 million. Judging from the photographs on CNN Money, the villa looks like a great place to live.

CNN Money often profiles houses for sale. Occasionally readers see fantastic homes like Scarlett’s, and other times the website features houses on the other end of the spectrum. A few months ago I read a feature about a family that was having a hard time selling their home. It was on the market for six months, but potential buyers would pass it over. From the photographs, it was obvious this family didn’t care for their home. If you want to sell in a tough market, and you want to get a good price, you have to treat the home like a presentation.

Judging from the photographs of Scarlett’s mansion, there is not much she needs to do. The villa sells itself as long as there are enough millionaires ready to buy.

Scarlett Johansson

Having your home featured on CNN Money, if it is in good condition rather than a joke, could bring more attention to your sale. Although most of the millions of readers will not be looking for a home in your area, any publicity is good publicity.

Buy Scarlett Johansson’s hilltop manse, Ben Rooney, CNN Money, February 9, 2010

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The Music Business, it is a-Changin’

by Flexo

The winners in the music business has almost always been record companies, not the artists. There are notable exceptions of course, but in the grand scheme, when a record company foots the bill for the production of an album, they also own most of the profit. Jeff Kwatinetz, the CEO of a talent management company ... Continue reading this article…

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You Will Go To The Moon

by Flexo

Stephen Hawking, author of A Brief History of Time, says that humans should consider colonizing the moon, Mars, and eventually another star system, in order to ensure our species’ survival. Here on earth, our risk of being wiped out by a natural or man-made disaster is increasing. The scientist cites “sudden global warming, nuclear war, ... Continue reading this article…

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I’ve Returned From California

by Flexo

Earlier today, I arrived back at my apartment. My vacation is complete, and I already miss being in California. There is still more my girlfriend and I would have liked to do on the west coast but we didn’t have time for. It’s back to the mundane for me: tonight I plan on finishing up ... Continue reading this article…

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Regular Rundown

by Flexo

* Google breaks past $400 * MIT presents its new $100 laptop, whose special features include a hand crank. * Interview with ex-head of IRS: Honest guys are getting screwed. * Gift cards have tricky fees. * States ranked by highest average closing costs when buying a house. There’s more variation in the top 10 ... Continue reading this article…

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