“Money is freedom.”
This popular money script contains considerable truth. Having money can offer a lot of options and flexibility that are not possible without money. However, since all money scripts are partial truths, money does not always bring freedom. It can create physical limitations, restrict relationships, reduce leisure time, and exponentially increase responsibilities.
In the words of one of the richest people in the world, “Possessions weigh you down in a way. “
Elon Musk, who can be considered an authority on this subject as his net worth is around $ 160 billion, said this in an interview with the London Times on May 16, 2020. He added that possessions are “of a kind attack vector… People say, ‘Hey, billionaire, you got all that.’ “
Musk found that his “stuff,” especially his seven houses, kept him from focusing on his dream of starting a commercial space travel business. So he decided last year to liquidate all his houses. He hinted at The Times that he was selling them in part for spiritual reasons.
After selling his last home last month, Musk now lives in a small $ 50,000 house near his SpaceX headquarters in Boca Chica, Texas, according to a Yahoo News article by Sophie Dweck on July 8. She reports that the residence he leases from SpaceX is a 400 square foot transportable unit. It is laid out as a studio and has a fully equipped kitchen, a bathroom, a living room and a bedroom.
If homelessness was described as not owning a home, one of the richest men in the world is now homeless. Of course, Musk isn’t really in danger of living on the streets. He can afford to live in wealth almost anywhere in the world.
Yet for most people, owning a home is considered part of the American dream, something that many people work hard to achieve. Owning things seems to be in our DNA. The concept of “it’s mine” runs so deep that it’s probably ingrained in our brains. To prove it, just try to take a toy from a 2 year old and listen to the cries of “Mine!”
Owning is often the financially advantageous option. For example, financial experts tell us that it is better to own a car than to rent it. And who would think of not owning the clothes you wear? However, it is common to confuse “ownership” with “control”. They are not the same. While ownership includes an aspect of control, control of an asset does not need to include ownership.
Oddly enough, control of an asset is often even more valuable than ownership. If you could lease a new car for $ 25,000 for one dollar a month for 10 years, would you really care that you didn’t own it? ” Probably not. In fact, you would be much better off financially, with higher net worth, if you didn’t have it.
Or take a middle-aged tenant with a life lease on a rent-controlled property that pays rent at one-tenth of current market rates. Who has the most value of this asset, the tenant or the owner? The tenant has a valuable leasehold interest which in some cases could be worth more than the property interest.
If we can have regular access to something, whether it’s using a family beach house, sharing power tools, or renting a trailer to haul a piano, we don’t need to own it. Often times, we are financially ahead of not owning it.
Musk has come full circle in his property, from no house to seven and again to none. It’s clearly a choice he made to cut down on the “stuff” that he said was weighing him down.
Rick Kahler is President and Owner of Rapid City’s Kahler Financial.