Did you know you can be extremely wealthy and still be broke?
Doesn’t sound like that makes sense, does it, unless you are talking about wealth in some abstract way, as in “my family and friends make me the wealthiest man in the world.”
Well, actually, you can.
One person who is apparently is Elon Musk, who is said to have been used as a model for Tony Stark in the recent Iron Man movies, and is best known for being a co-founder of Paypal, rocket scientist and founder of SpaceX, and co-owner/founder of Tesla Motors.
According to this article, he is broke- as in out of cash- relying on loans from friends for the appx. $200,000 he spends every month.
Apparently, he is going through a divorce and sank his last $35 million into Tesla Motors, leaving him extremely wealthy on paper, but without sufficient cash flow to pay the bills, so to speak.
You can have all of the assets in the world, but if you can’t pay your bills due to insufficient cash or cash flow, you will likely run into problems- at least most people will.
The article goes on to mention that Tesla Motors is valued at appx. $1.4 billion, and Space X has a contract with NASA for appx. $1.6 billion, meaning in reality, Mr. Musk is actually worth quite a bit.
Although things may be looking up- Tesla Motors had their stock IPO (initial public offering) yesterday in fact, which likely netted Musk in the neighborhood of $15 million dollars, so perhaps he can start to put his cash flow problems behind him.
There are a couple of money-related lessons can be learned from this- it is a dichotomy of sorts.
Cash flow is king. Most of us won’t be able to borrow large sums of money if we have all of our money tied up in investments, especially ones that might be business related- I know my friends don’t have enough to lend me $200k a month 
.
Many people who end up really wealthy follow their passions and are willing to take risks- big ones-with their money, investing in what they believe in. Putting their money where their mouth is, so to speak. I don’t know about you, but I would probably have trouble investing my last dollars into a business if I knew I would be running into major cash-flow problems. Would you?
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{ 3 comments… read them below or add one }
This kind of reminds me of the whole situation with actors like Nicolas Cage who let their managers handle their money and paid the price. Even when you are really wealthy, you still need to understand what your money is invested in and how much of it you have. Otherwise, you can pay the price and end up just as broke as everyone else.
Yes, that does seem to happen to a lot of celebrities- I guess they get caught up in living a certain lifestyle. Although in this case, Elon Musk seems to be worth in the millions or even billions on paper, but it’s all tied up in businesses and not liquid.
Hi RC,
I have to agree, you cann’t just trust the accountant because he says he knows what he’s doing. You need to understand the value of money for yourself and know where your limits are. No one in their right mind would gamble all thir money on a business venture, without leaving themselves a safety net fo a rainey day. Just in case the venture went belly up