Mindset, Elon Musk, and the Family Home
Updated: May 16, 2022
The family home is often one of the most prized financial assets, and often the largest. It may also encompass hopes, dreams, and memories. Emotions can bleed into and complicate the financial picture, and vice versa. This can make the family home one of the more difficult financial aspects of divorce.
A great deal of scholarly work has been done that “links memory to space,” said Scott Huettel, chair of the department of psychology and neuroscience at Duke University. Researchers have studied how a physical space can be tied to memory and, consequently, be imbued with significant value beyond anything monetary.
Dr. Huettel’s field is neuroeconomics, which uses information about our biology and brains to better understand decision-making, especially when it comes to finances. His research has shown that the ventromedial prefrontal cortex, a region at the base of the frontal lobe of the brain, is involved with not just emotion but also reward, motivation and value.
“We have memories and associations that are connected to all of those things that make houses so heavily connected to ourselves,” he said. That might make the place where you grew up, or brought your children home from the hospital, feel invaluable and hard to part with, even though it is ultimately just a physical thing with a price tag attached. (1)
So Many Financial Aspects to Consider
There are numerous financial avenues to navigate in divorce. The family home, in addition to being a large asset, may also have a lot of equity tied up. The same can apply to and may be further compounded by other illiquid holdings like generational estates, private business interests, artwork, etc. It may be difficult to compensate the other party without a sale. With long term ownership, sizeable tax liabilities may lie in waiting (although there are some favorable tax nuances that may be applicable in divorce). Recently, fast moving markets have caused some to ask whether they should use the valuation now for divorce asset valuation purposes or the value further down the road. Transaction costs and substantial and/or time-consuming repairs can add to the stress. Other frequent financial questions include whether it makes financial sense for either side to stay in the home or whether it should be rented out, short-term ala Airbnb or with a long-term lease.
Emotions Around the Finances
Dr. Huettel’s studies help to explain a large part of why I personally had a hard time letting go of the family home in my own divorce.
Dr. Huettel said that it was impossible to try to turn something like buying or selling a home into a cold, emotionless, solely financial transaction. Our brains simply won’t let us. “You can’t just be dispassionate about value and cut off all the memories and evidence that have accumulated.” (1)
Besides the memories and the original intention of living in the house for the rest of my life (ala Warren Buffet), I wanted to make sure that the kids and my ex were Okay on the other side. In hindsight, I recognize that holding up a divorce for financial reasons is not healthy for anyone in the home. I also grew to appreciate how divorce is a financial negotiation that can entail much more creativity and flexibility than I originally imagined. In my case, the eventual sale of the home was the key catalyst for me to push forward with the divorce to the finish line. As part of my process, I became a certified divorce financial analyst (CDFA®) to help others who may be in a similar situation gain financial clarity and make the process easier.
We can safely say that Elon Musk is in a different financial demographic than nearly everyone else. Although it might be difficult to relate to him on financial grounds, perhaps you can gain some wisdom from Musk as he tries to separate himself from material things.
Speaking to Joe Rogan, Musk admitted that he is in the process of selling his many homes because he no longer wants any “material possessions.” Although Musk stated that it makes him “slightly sad” to part ways with his houses, he said that he believes that possessions are an “attack vector” and that people tend to target him due to his lavish, billionaire lifestyle.
He said that he will keep things that have sentimental value to him, and probably “a few Teslas” but that he is working on seriously paring down the number of material objects that he owns, and that he doesn’t want to be defined by the things that he has. (2)
Hopefully the last part is something that you can relate to - not being defined by the things you own. Perhaps you can find comfort in the message. Shift your thinking, define yourself through your values, not your possessions. Gain some strength to move forward. You’re in better company than you may think. We are here to shed light on and guide you through this process.
(1) “When a House Is So Much More,” Jen A. Miller, NYTimes.com, 8/3/18. Accessed 6/13/21. https://www.nytimes.com/2018/08/03/realestate/when-a-house-is-so-much-more.html
(2) “Elon Musk Talked to Joe Rogan About Why He’s Selling All of His Houses,” Christina Nunn, cheatsheet.com, May 24, 2020. Accessed 6/13/21. https://www.cheatsheet.com/entertainment/elon-musk-talked-to-joe-rogan-about-why-hes-selling-all-of-his-houses.html/
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