In 2002, a nineteen-year-old garbage man in the U.K. named Michael Carroll won a lottery jackpot worth $14 million dollars. Instead of making smart money moves with his winnings, he spent his fortune on jewelry and a mansion where he threw lavish parties with drugs and prostitutes.

A decade later, he was broke and working in a cookie factory. At the peak of his debauchery, he’d wake up and snort a line of cocaine and chase it down with a can of beer. After his “crazy days” were over and the money was gone, he switched to bran flakes for breakfast. If you’re gonna spend it all anyway, might as well go broke spectacularly.

Liquor, Ladies, and Leverage

In a recent interview on CNBC, Warren Buffett offered his opinion on buying stocks with borrowed money

It is crazy in my view to borrow money on securities. It’s insane to risk what you have and need for something you don’t really need… You will not be way happier if you double your net worth.

(says the guy with the $84 billion net worth). Buffett is talking about margin debt. Margin lending is a service that brokerages provide to qualified customers. Investors who believe their short-term investment strategy has a high chance of success may leverage their investment with margin, or borrowed money, to increase returns.

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Source: RetireBeforeDad