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-   Archive through October 28, 2007 (http://www.wakeworld.com/forum/forumdisplay.php?f=517108)
-   -   Re-finance boat on credit card? (http://www.wakeworld.com/forum/showthread.php?t=511348)

acurtis_ttu 10-15-2007 8:22 AM

I got a CC offer in the mail yesterday at 0% for 12 months. I can write a check for myself with a max fee up to $75. So I started thinkingÖ..What are the downfalls if any. I want to pay off my boat loan with the credit card check. This way I can pay my monthly payment but at the end of 12 months have paid down my principal significantly, then just re-finance (the remaining balance) near the end of the CC term. Anyone ever done this? Iíve bought smaller boats (under 15k) on CCís but never something like what I have now.

showtime 10-15-2007 8:35 AM

adam, makes good sense, b/c your 500+ a month goes directly toward principal.. however, who knows what the market will hold 12 mts from now.. another thing is, if you pay it off w/ a CC the titles will be sent to you, you can also maybe save some money on the insurance requirement. definitely something to think about. also another thing is what happens w// the cc on the 13th month -- if not paid off, is hte interest accrued -- htis is the WHOLE kicker... it could bite you in the ass....

acurtis_ttu 10-15-2007 8:39 AM

I figure I start looking to re-fi in month 10...giving me a 60 month grace period. <BR> <BR>I know rates will change in 12 months but the swing can't be that big, or at least not enough to offset the interest saved. <BR> <BR>My other concern is what will my credit look like showing a revolving credit balance that is very clsoe to my maximum limit ont he card?

05mobiuslsv 10-15-2007 8:40 AM

Unless you own next to nothing on your boat this would be a terrible idea, for most of the reasons stated above.

showtime 10-15-2007 8:45 AM

maybe apply for 2 CC's of the same nature... <BR> <BR>if your credit is good enough to have a card w/ that limit, i don't see it affecting you but so much... you will definitely have to play your cards right....

atloutbackv 10-15-2007 8:55 AM

good concept except..... when the boat gets paid off with the first CC then the title is yours... why would anyone give you a loan to finance something you already own? you cant re-fi something you already totaly own.....

jbarber3orange 10-15-2007 9:07 AM

I've taken bank classes teaching how to read credit reports, improve credit scores, etc. Having that much of a balance on a credit card will affect your credit score (ie. from the banks perspective it's never good to have a credit card maxed out). But, as tickle (showtime) said, if your credit is good enough to have a card with that limit, it MIGHT not hurt your score too bad. You are definitely gonna be taking a risk.

acurtis_ttu 10-15-2007 9:10 AM

Chris, good point. <BR> <BR>I guess you could do this before your getting ready to trade in or sell the boat. <BR> <BR> <BR> <BR>(Message edited by acurtis_ttu on October 15, 2007)

psudy 10-15-2007 9:17 AM

If there is enough equity in the boat, a bank shouldn't have a problem refinancing it off a credit card. As long as you have stellar credit, I would not worry to much about that. You might want to find out what the LTV limits are for your bank on used boats though. Also keep in mind that the boat will be another year older and not worth as much, and usually the older the boat, the higher the rate.

nasty530 10-15-2007 9:40 AM

It would be a good financial decision if: <BR>1. The amount owed on the boat at the end of 11 months is going to be less than book. Thus making it easier for a bank to loan on it. <BR>2. You are going to be saving at least 5% interest. In other words if you have a low interest loan currently, dont try to make a good thing better. <BR>3. You are 100% financially stable with job, wife, etc. IF anything comes up, you certainly do not want the CC to hit the 13th month. If you lose your job or something and your credit goes down, this could make it very difficult to finance the boat later. <BR>4. You will have other CC with available amounts on them. If your are maxed on one card but have a fair amount available on other cards, it should not drop your score too bad.

jon4pres 10-15-2007 10:03 AM

There is a pretty good chance that you can just continue transfering the balance every 12 months to a different credit card for quite a while, keeping the 0% rate. <BR> <BR>I agree with Paul, You should not have trouble refinancing it as long as there is value there. <BR> <BR>Just make sure you are out paying depriciation.

wake1823 10-15-2007 10:11 AM

T-bag, even if the loan is low, it still makes sense.....look at the amortization schedule on lets say a 60k loan over 15 years. year one you probably pay close to $4k in interest.

kal_dude 10-15-2007 10:20 AM

you need to make sure when you write the check to yourself, you get the 0%, some of the cards have got wise to this, and state in fine print, that the checks must be writen to a debtor, and if you write it to yourself, you will be charged the cash advance rate!!! also, you could transfer the bal at the end of the 11 mo. to another 0% card. make sure with your bank that they will finance something you own, i had a problem wiht my credit union when i was buying my boat. if you use your card to pay it off, your bal. will go down pretty quickly because all of your payments will go to principal bal. good luck!!

kal_dude 10-15-2007 10:22 AM

you need to make sure when you write the check to yourself, you get the 0%, some of the cards have got wise to this, and state in fine print, that the checks must be written to a debtor, and if you write it to yourself, you will be charged the cash advance rate!!! also, you could transfer the bal at the end of the 11 mo. to another 0% card. make sure with your bank that they will finance something you own, i had a problem with my credit union when i was buying my boat. if you use your card to pay it off, your bal. will go down pretty quickly because all of your payments will go to principal bal. good luck!!

hal2814 10-15-2007 10:47 AM

Watch your balance transfer fees. Most credit cards charge 3%. Keep in mind that you're paying 3% up front. IF you only keep it 10 months, you're looking at about 3.5%-4% interest for the loan. Also keep in mind that some dealers have limits on what they'll put on a credit card. What we did on our Jeep Commander was put our down payment plus the extra we figured we'd pay in a year on our 0% no transfer fee credit card and financed the rest. <BR> <BR>I would strongly disagree with T-Bag's #3. If your financial situation gets bad with the boat on your credit card, the most the lender can do is ding your credit and sue to get a judgement. If you have a boat loan in that situation, they could repossess your boat and still sue you for the difference between what they auction it off for and what you owe on the loan.

cbk 10-15-2007 1:19 PM

I can definitely see your point, but you will out yourself through alot of trouble just arranging the financing in the end. Just as others have stated, who knows what the market will hold. My opinion...Unless you have a great deal of equity in your boat I would just keep it with your current lender. Just seems like a headache for a 12 month deal and very risky. Roulette?

05mobiuslsv 10-15-2007 1:51 PM

Not to mention the marine survey you will have to get when financing a used boat without buying from the dealership which is anywhere from $250-500 bucks.

wake1823 10-15-2007 2:00 PM

No survey needed if you finace thru key bank. <BR> <BR>Team CBK.....trouble of aranging hte financing??? you write the check to yoru self, call the bank, send the money. in month 10 you call key bank say you need to finacne a used boat (if your real lazy hire a broker--$200) sign paperwork. DONE. <BR> <BR>yes I would say it's worth it. your putting alot of money staright towrads principal...do this could potentially save.make you $4-6k on your boat. woudl take you maybe 8 hours worth of work. <BR> <BR>what people arent' getting is this is not a loan!...it's free money for a year. a loan has structured pmts to principal and interest..interest portion being huge up front on a typical 15 year term.

showtime 10-15-2007 2:09 PM

SAM is correct..... <BR>I also second key bank. <BR>I just got a loan on a used boat for 7.5%, 0-down for 15yrs..... Bought directly from an individual --very painless process, took 4 days from phone call to boat delivery---- <BR> <BR>I will be happy to give contact info to anyone interested....

psudy 10-15-2007 2:27 PM

They are lending you money you have to pay back. Its a loan.

dcooper 10-15-2007 2:35 PM

Cash-out on a boat loan refi, could be different than a purchase. More risk than the purchase = tigher lending guides. <BR> <BR>With everything that has happened recently in the credit markets, a lot could change in the next year with guidelines, Especially if their a lot of repo's over the next year. The home foreclosure rates for the 1st qtr of 2008 are extimated to be higher than now. That says to me people will stop paying on a boat/rv loans before their homes. A local boat dealer also told me they are seeing people declined for boat loans much more now. <BR> <BR>That is too risky for me.

wake1823 10-15-2007 2:37 PM

ok paul, this is not a simple or compound interest loan. sorry I needed to clarify.... <BR> <BR>at a maximum the CC company will make you pay 1% of the value/per month.

rodltg2 10-15-2007 3:17 PM

will key bank finance a boat you already own?? <BR>i bought a boat cash because i couldnt wait to get all the financing done. i figured i would finance it later. well i couldn't find a bank that would do it since i already owned the boat. i had to get a personal loan at a much higher interest rate. <BR> <BR>(Message edited by rodltg2 on October 15, 2007)

monkey 10-15-2007 3:27 PM

IMHO, you should NEVER put a boat on a credit card, under any circumstances, no matter what, even if someone is holding a gun to your head... don't do it, don't do it, DON'T DO IT!!! <BR> <BR>I also think you should never finance a depreciating asset (ex. a new boat) ... In fact, just don't buy things until you can afford them, period. Look at how the numbers play out. It's just not worth it. You'll be servicing your debt for years to come, long after your boat is gone. It's a HUGE financial trap, and people just don't get it.

bamacpa 10-15-2007 4:28 PM

Be very careful of any late payment. Bill gets lost in mail, falls in floorboard of car, etc., one late payment = instant 20%+ rate. I think it makes sense if you stay on top of it and continue paying at least what you are paying now every month. It's sometimes too easy to make just the minimum payment.

rodltg2 10-15-2007 4:31 PM

well tim if everyone followed your advice wakeboard boats would not be what they are today.not too many people could afford to pay cash, boat manufactures would hardly move any units, therefore not making wakeboard boats. we'd all be still riding behind 85 mastercraft technology. the only ggod thing would be alot more glass!

iridelow1998 10-15-2007 5:08 PM

I was told that once your balance on a revolving account goes over 50% that's when your credit takes a dip. Don't ask me why it goes down but a friend in the industry told me no matter what to keep it below 50%.

phatboypimp 10-15-2007 5:37 PM

I would be interested if you will qualify for enough credit to extend your entire loan on a credit card (obviously not knowing what your balance is today). Based on your credit history and your Debt/Income ratio, you may not be able to cover your loan amount with your credit limit. It would be interesting to find out. Secondly, your credit report will show when you transferred your balance to the card and what your daily/monthly average is on your credit card. I would not assume that you will be able to find another 0% interest rate for 12 months at the end of your initial 12 months with the first card. Then you will be back to paying all the loan servicing fees required to move back to a traditional loan, and they know when they have you by the balls.

05mobiuslsv 10-15-2007 6:08 PM

Dirt dog is right your credit will suffer badly. You will not qualify for another 0% balance transfer after the 12 months most likely.

texastbird 10-15-2007 6:28 PM

I did exactly the same thing on a car I bought. I had to transfer the balance twice to give myself enough time to pay it off. I found plenty of CC providers were happy to extend me a 0% offer the second time around. <BR> <BR>I think transferring the balance to a 0% CC is a great idea, but I also think that if you do it you should commit to paying it off as aggressively as you can. Take the opportunity to kill the debt.

monkey 10-15-2007 6:37 PM

Rod, I'm not particularly concerned with the livelihood of boat salesmen. Here's how the numbers play out... If you started with ZERO money in the bank, took your low $500/month boat payment and invested it in a simple stock market index fund instead of a boat... over the period of the 15 year term of your "low payment" boat loan, you'd have roughly 1/4 of a million dollars in the bank (assuming a conservative average return and no better). If you took that same money and sank it into a $50K or $60K new boat, all you'd have to show for it in the end is some old pictures of you and all of your buddies who rode with you while they invested their own money. <BR> <BR>When I got into boating/wakeboarding, I bought a used Bayliner, cash, and kept the rest of the money invested in stocks, until I had enough $$$ to buy something nicer... I took most of my investment gains and bought a house in Lake Havasu, cash, then I rode the housing market trend upward, took a cash out refi on the house at the exact payment level that the house was netting in vacation rental $$$, and used that cash to buy another vacation rental house in Big Bear, and so on and so forth... Today, I have a fairly new Nautique (among other toys). This is my 3rd boat, and I have zero loan payments on any depreciating assets. I'm in my 30's, btw... <BR> <BR>Yes, the balance to limit ratio of any credit line is very significant to your credit rating, and your credit rating is very significant to your future. The only way to sell out your financial future quicker than financing a depreciating asset, is to finance a depreciating asset using a lending instrument that wasn't designed for it and charging it up to the limit. Don't do it. If you want financial advice, go see a financial professional. Don't get it on a forum. <BR> <BR>Getting your head straight with respect to finances is one of the most important things you can do. If you make the wrong decisions, you're going to spend the rest of your life regretting it. <BR> <BR> <BR>(Message edited by monkey on October 15, 2007)

rodltg2 10-15-2007 6:56 PM

tim obvoisuly you have made some wise financial choices and im not saying that its not a a smart move. all im saying is that if no one financed boats, the industry would be dead.

showtime 10-15-2007 7:14 PM

tim, i agree w/ you completely -- but you can't put a price on memories... and if everyone had that concept, the economy would crash.... why work your ass off for the future... squirl away fora rainy day.. but you only live once... if you aren't in debt, you don't have anything...

nasty530 10-15-2007 7:26 PM

I am pretty sure if we were all like Tim, the Bayliner Pride thread would have been HUGE and not but 3 or four posts in the others. Enjoy life and make the best financial decisions you can while still doing what you want to do. You dont have to be a millionaire to be happy.

monkey 10-15-2007 7:28 PM

double post <BR> <BR>(Message edited by monkey on October 15, 2007)

monkey 10-15-2007 7:30 PM

Tickle, you say you agree with me, but based on what you write, I don't think you really do. Either that, or you're not understanding me. <BR> <BR>In fact, the economy would be better off, as would the boat industry, if more people invested in the future of businesses rather than selling out their own future. When you invest, you're giving companies the capital they need for research and development and ultimately to expand their business. Effectively, you become the lender, only you're lending on something that's a whole lot more economically viable and has greater long term prospects than a boat, which is why the return is typically much better than the interest rate you pay on a loan. Furthermore, with a little patience, you'll have considerably more money to spend on toys, and you won't have to worry about making the payments on them and getting into debt when you buy them. It's a win win situation. The only downside is that it does require patience, which is something that our increasingly obese, pop culture, fast food, modern society seems to have quite a bit of trouble with these days... patience.

rodltg2 10-15-2007 7:41 PM

some industries would benefit, but i bet malibu, mc, and cc would be out of business. that or still only selling one model. not to many people have the will power, patience or know how to invest 500 a month instead of making the payment.

willytown12 10-15-2007 7:49 PM

not to mention we would all be 40 years old when we bought a boat. Thats alot of missed riding time <IMG SRC="http://www.wakeworld.com/MB/Discus/clipart/happy.gif" ALT=":-)" BORDER=0>

showtime 10-15-2007 7:54 PM

Tim, i bought my 5th boat on friday.. have paid cash for all of them up until this one... i decided to take the money from the last boat and pay everything i owe off, except a bit left on the house.. and use someone elses money. i do agree w/ you, but w/ our government, coupled w/ human nature, it'll never happen. at the same time i know better than to buy new.. get in one right, add a couple hundred hrs and sell. <BR> <BR>a bit of money in the bank give most a sense of security, but most of those that don't spend are miserable. save for a rainy day, but live life to the fullest.. if you want a soda, buy it. if you wait til you can afford it, the kids will be grown.. have a drive and a work hard ethic, you will rise to the occasion.. debt is not bad as long as it is managed.. the problem is our gov't does nothing to help those on their knees..

lakeski 10-15-2007 8:35 PM

Tim is absolutely correct. <BR> <BR>Patience is the key. Don't load up on debt. While you may help a boat company make its profit goals, what about your own personal profit goals? You want to retire some day, don't you? <BR> <BR>Loading up on debt to buy depreciating assets will set you back. If you do a lot of this, it will set you back for the rest of your life, so why start down this path? Credit cards are a trap - stay away - even if it seems like a short term sweetheart deal. <BR> <BR>Significant debt should only be used for a mortgage or prudent investments. If you use debt for these purposes, and you are patient, you will find that you will eventually be able to buy a boat, cars or a home with cash. <BR> <BR>Until then, buy used cars, used boats, etc. and minimize your debt. Your memories will be just as good, and you'll be much happier knowing that you aren't running a juggling act to make ends meet. <BR> <BR>Tim's story on how he did it is absolutely correct.

882001 10-15-2007 8:42 PM

tim has some good dave ramsey style advice

wake1823 10-16-2007 7:48 AM

I have to side with tickle. Good advice <BR> <BR>"debt is not bad as long as it is managed"

kinger 10-16-2007 8:32 AM

Tim, no disrespect to your point of view, because to each their own, but that type of thinking is archaic. To say people should not take out loans on depreciating assets, well no one would have purchased a house between 2001-2005, because those at that time were going to be depreciating assets. Every company that takes out a loan to get going spends anywhere from 50%-70% of that money on depreciating assets. Based on your theory private universities would not exist, since they are mostly funded by federal lending, and anyone who does not think education is a depreciating assets has not been in the professional world for longer then 5yrs. The fact of the matter is that our economy runs on lending and borrowing, there is no way it would be better of if everyone lived by your theory. The fact is that debt does not ruin people, but people who don't understand how debt works and how to manage it are where the problems start.

showtime 10-16-2007 8:44 AM

Well put Erik. <BR> <BR>I do agree, there are too many peeps that just go all out.. Start small and make sure boating is what you want to do. Buying new is almost never smart. It would be wise if everyone made themselves a payment for the first year. Then put that money down. If this was the case most peeps would not buy a boat. Also many look at the monthly payment and not the entire cost of owning a boat. To enjoy the boat, you will spend 100 + dollars a weekend.....

jon4pres 10-16-2007 8:49 AM

I agree with Erik and in Adam's case the best way to manage his debt is to get the lowest interest rate to pay it off. If he can do it at 0% it seems like a great idea to me.

monkey 10-16-2007 9:06 AM

Erik, your profile says you're a financial analysist. I'm floored! You've been taught to put houses, educational institutions, and business expenses in the same "depreciating asset" category as ski boats? Where are they teaching this? You think the long term prospects of business investment, real estate, and education are negative? Maybe this is the mindset that got us into this subprime crisis. Where is it coming from? <BR> <BR>I give up. You guys are right. Go ahead and get yourself into debt any which way you want, using whatever justification you'd like (help out the boat company, save a saleman's job, help the industry). Eventually some sleasy, big thighed politician will come along and bail you out, convincing the "majority" that it wasn't your fault, and that we should all pitch in to pay for it... with our tax money... because that will "level the playing field". <BR> <BR>You don't have to be a "millionare" to make good financial decisions, but even better than that, you don't have to be level headed to vote. <BR> <BR>(Message edited by Monkey on October 16, 2007)

wake1823 10-16-2007 9:32 AM

I don't know to many millionaires, but ask them if they got where they are today paying cash....lol. <BR> <BR>Tim, FYI...homes do not always appreciate. <BR>Almost all business expenses stem from depreciating assests ( aside from land in some cases) . Everythign on a balance sheet flows thru to the income statment eventually. Every assest will be expensed sooner or later.

tparider 10-16-2007 10:09 AM

I like the "idea" of paying cash and investing like Tim says in his posts above. However, if most of us started taking Tim's advice now, we'd be too old to enjoy wakeboarding once we were able to pay $60k cash for our new boat. <BR> <BR>I agree with the "managing debt" statement from Tickle. I probably have waaay too much debt in most people's eyes, but because of my debt, my interest payments and other depreciable items keep my tax liability extremely low.

kinger 10-16-2007 10:58 AM

Tim, <BR>There is no depreciating asset "category" on a balance sheet, that is what they teach at business school. By your statement you showed that you think certain investments, even though they are depreciating, are smarter investments then a boat. Well that is for each person to decide, there is no straight answer

kinger 10-16-2007 11:01 AM

Sorry, to clear up statement above, Depreciating assets are not put into specific categories, they are just that depreciating assets all grouped together.

c640947 10-16-2007 11:19 AM

Yes I think the "managing debt" approach seems appropriate. You have to balance living in the now versus planning for the future. A lot of the problems with people having too much debt (for what is appropriate for their situation) is they either have bad balance between the two, have an incorrect view of future earnings, or expect to die soon. I mean just coming out of college with a good career outlook, it is acceptable to have a high debt/equity ratio. As you get older and start to peak out in your earnings, you have to realize that and adjust your debt/equity ratio. And yes, some things you can't have as much fun doing when you are older, so you have to say "I will work longer when I am older in order to have this cool experience now." I think as with most things being reasonable is the key. We'd all love to pay cash for everything but that isn't always the reality of life I suppose. I have financed things in the past and I'm sure I will in the future. <BR> <BR>My rambling 0.02.

helinut 10-16-2007 11:48 AM

Having my $50K boat gives me the drive to work hard and play hard. Granted it's a bit of a stretch on the finances this year, but it'll only get better. I plan on paying it off in less than 10 years and paying cash for my next boat. My wife wanted to wait another year or two, but I just had to have it. ( part of that "have it now" mentality!" ) <BR> <BR>My brother in law saves a fortune for the future. He says he wants all that money for when he retires. Problem is his dad died in his mid 40's and his whole family has health issues. Why bust your ass today for things you won't be able to do when your 60? Or for that matter, when you're dead. <BR> <BR>I say plan for the future, have a nice retirement, but enjoy the now! You only go around once, make good decisions for your retirement, but live life to the fullest any way you can.

jon4pres 10-16-2007 12:16 PM

Don't forget you don't have to buy a 60k boat to have fun wakeboarding. I had a lot of fun when I was in high school behind a fish n ski, now I have an 82 Nautique and have a great time. <BR> <BR>I am not trying to bash anyone for having a nice boat with a nice payment. I think it is all about priorities. <BR> <BR>Going in debt over non money makers and non essential things are a bad financial decision regardless of how you justify it but not enjoying life and your friends and family is also a bad decision. If you have to borrow money to buy something that makes your life more enjoyable and you can pay it back then I say live and let live.

waterfreak 10-16-2007 1:01 PM

I am doing well today but I got here by taking on a lot of debt. At one point no one would lend me anymore money no matter what, as I was completely tapped out (I am talking more than 6 figures). I did this all for bigger payoffs and the debt was work related meaning not for toys etc. I get all my money back and more but I could not have gotten to where I am at today by not taking on debt. I am finally at a point where my assets far outweigh my debt but it has been a long road and one that was debt filled in the past. To say only pay in cash is a nice concept and one I follow now but debt is also a huge piece of the financial puzzle.

monkey 10-16-2007 1:52 PM

water freak, it sounds like you used debt to finance appreciating assets and ventures, rather than depreciating assets and ventures, correct? From my perspective, that's the whole point of this discussion... shedding light on the distinction between debt as a leverage mechanism and debt as a mechanism to effectively trap people into lifelong indentured servitude.

bp909 10-16-2007 2:08 PM

I never met someone who owned a boat that regretted it.

waterfreak 10-16-2007 3:05 PM

Yes appreciating assets and ventures i.e. not toys.

monkey 10-16-2007 5:29 PM

No, I didn't sit there and punch this into a calculator... it's a computer program. <BR> <BR>Initial investment: $2000 <BR>Money you will invest per month: $500 <BR>Percentage annual return: 11% (market index average) <BR>After 1 years, you have $8571.80 <BR>After 2 years, you have $15866.50 <BR>After 3 years, you have $23963.61 <BR>After 4 years, you have $32951.41 <BR>After 5 years, you have $42927.85 <BR><b>After 6 years, you have $54001.71</b> (can you buy a new boat with that?) <BR>After 7 years, you have $66293.69 <BR>After 8 years, you have $79937.77 <BR>After 9 years, you have $95082.73 <BR>After 10 years, you have $111893.62 <BR>After 11 years, you have $130553.71 <BR>After 12 years, you have $151266.42 <BR>After 13 years, you have $174257.50 <BR>After 14 years, you have $199777.63 <BR>After 15 years, you have $228104.95 <BR>After 16 years, you have $259548.28 <BR>After 17 years, you have $294450.38 <BR>After 18 years, you have $333191.72 <BR>After 19 years, you have $376194.50 <BR>After 20 years, you have $423927.72 <BR> <BR>Initial investment: $5000 <BR>Money you will invest per month: $750 <BR>Percentage annual return: 20% (Motley Fool Rule Breaker portfolio, 10 year average return, for instance) <BR>After 1 years, you have $15947.85 <BR>After 2 years, you have $29085.28 <BR>After 3 years, you have $44850.18 <BR>After 4 years, you have $63768.07 <BR>After 5 years, you have $86469.52 <BR><b>After 6 years, you have $113711.26</b> (I'm pretty sure you can buy a new boat with that) <BR>After 7 years, you have $146401.36 <BR>After 8 years, you have $185629.45 <BR>After 9 years, you have $232703.17 <BR>After 10 years, you have $289191.59 <BR>After 11 years, you have $356977.69 <BR>After 12 years, you have $438321.03 <BR>After 13 years, you have $535933.00 <BR>After 14 years, you have $653067.31 <BR>After 15 years, you have $793628.50 <BR>After 16 years, you have $962301.88 <BR>After 17 years, you have $1164710.00 <BR>After 18 years, you have $1407599.50 <BR>After 19 years, you have $1699066.75 <BR>After 20 years, you have $2048827.50 <BR> <BR>(Message edited by monkey on October 16, 2007)

05mobiuslsv 10-16-2007 6:35 PM

Not many people average 20% on their returns though.

lakeski 10-16-2007 7:10 PM

I wonder how many people reading this thread who are justifying significant debt for a boat today will be regretting it when they are in their 60's and 70's and have to work until they drop. <BR> <BR>Tim and waterfreak are correct.

canecorso 10-16-2007 7:46 PM

I say put a significant down payment on the boat and plan to pay it off in 5-8 yrs. Pay off all debt and only have mortgage and boat payment, thats what were doing. <BR> <BR>Waiting until you have all the cash is wasting life, who knows you might not be able to physically be able to do it at an older age. <BR> <BR>One more note make sure to get a kick ass deal on a new boat so depreciation isnt as much, also buy a quality boat hence if you decide or need to sell it it still will be worth good money. <BR> <BR>Lifes short play and ride hard. BTW-- I agree totally with Tim but for each his own.

waterfreak 10-17-2007 7:12 AM

nu bu This year I have averaged 18.5% return on my investments. Last year it was around 15%. Get a good financial advisor.

showtime 10-17-2007 7:50 AM

while i agree, still those investments are not a sure thing. i am @ 19.3% for the year, but again most are not. for that kind of return it is a gamble and high risk. most w/ that amount of money will not gamble like that..

kinger 10-17-2007 7:56 AM

Hope your "good financial advisors" doesn't have you expecting those same type returns over the next 3yrs. Everyone saying how much you could have saved based on past returns, well hind sight is 20/20. "If I would have invested that savings money in lottery tickets I might have won and then I would have been the smartest person on this board"...The past 10 yrs have been great on returns but what happens when the market re-prices itself and return are low over the next five years, and then Tim Monk's 6yrs to buy a boat takes 10yrs instead because of low return. I understand this "invest...invest...invest" mentality has been cemented into everyone's thinking since they were young but this idea about how "evil" depreciating debt is, that is crazy.

hal2814 10-17-2007 8:15 AM

Debt not used to generate wealth is "evil" from a financial standpoint. There are times when borrowing to pay for a depreciating asset is a good financial move. For example, a business borrowing to purchase office furniture is financially sound since the business will need that furniture to operate effectively. The value of the furniture itself depreciates but its value as a tool to help generate revenue outweighs the depreciation. Unless you use the boat specifically for some kind of work or entertain clients on it, there's just no wealth generating justification for the boat. That makes it a bad financial move to buy the boat and a worse financial move to finance it. <BR> <BR>That being said, if you're getting the kinds of returns Tim is talking about on a consistent basis and you're going to buy the boat anyways and you have the cash available, borrow for the boat and invest your cash. You'll come out ahead gaining 11% on returns and borrowing at 8%-10% for the boat.

05mobiuslsv 10-17-2007 8:37 AM

"nu bu This year I have averaged 18.5% return on my investments. Last year it was around 15%. Get a good financial advisor." <BR> <BR>Exactly you're not averaging 20% like your model showed. That was my point putting up numbers like you did saying 20% is extremely unrealistic, expecially for 20 years. I have a buddy that's a hedge fund manager and he does very well, no need to worry about me. I put away plenty and have 6.74% on the boat loan which I owe less than 50% right now.

absoluteboarder 10-17-2007 8:56 AM

... its all about monthly cashflow....who cares how much interest you actually pay......if I had to wait to buy my dream boat.....I'd be over the hill baby! (some may say I already am). <BR> <BR> <BR>.....something for you to consider (especially home owners).....A house that was bought in 1950 for 12000 dollars and then the owners busted their balls trying to pay it off quick and sacrificing life (WHICH ONCE LOST NEVER COMES BACK)...do you think they would have cried when they sold their house in 1997 for 230000 but had in actuality never paid of their mortgage and maybe even bought a nice boat for 10000 years after they originally bought their house...and then not paid it off either? but instead always carried the debt with minimum payments. So 230000 - 22000 debt =200008....I think they would have been happy either way in the end but enjoyed some of their earlier life more. Said house is worth 750000 today and I owe more than what I bought it for in 1997....but in another 15 or 20 years it wont matter much as long as I can manage the debtload! <BR> <BR>....and dont forget inflation which is the main cause of prices going up over at least the past three generations of folks......and the beauty is the loan you make today stays at that price forever and doesn't get adjusted up for inflation ...isnn't that sweet!....but your income rises on average 3% a year (given other things do to but not your loan) <BR> <BR> <BR>.....yes and the return on my bad investments (although I do have some financially good ones)......is quality of life and enjoyment of these things.....not all returns should be expressed fiancially.......my quality of life returns are priceless!! <BR>(Message edited by absoluteboarder on October 17, 2007) <BR> <BR> <BR> <BR>(Message edited by absoluteboarder on October 17, 2007)

olskooltige 10-17-2007 9:00 AM

You can't take it with you. Enjoy it, especially if it is someone else's money. I think my boat cost me 8 bucks a pay period (finance charges) during the time it was financed. Just don't go financing a 68k boat or a house in SoCal and you can have your cake and eat it too.

waterfreak 10-17-2007 9:09 AM

nu bu.. it was not my model it was Tim's and it was only an example.

jon4pres 10-17-2007 9:43 AM

Since this is already way off topic. . . <BR> <BR>Can you consider your home an investment? <BR> <BR>Sure it is going to appreciate but as long as you are alive are you ever going to cash out? If your house goes up everything else will as well. So unless you either want to move to a less desirable place or live in a much smaller home you will never actually see the appreciation on your house in your pocket.

monkey 10-17-2007 10:01 AM

Dante, it might be smarter to do that kind of thing using a margin account, so you can deduct the interest against the gains, don't you think? <BR> <BR>Btw, about the returns I used as examples, 11% is the market average return over more years than any of us have been alive. As for the 20% I used, go see <a href="http://www.fool.com/" target="_blank">http://www.fool.com/</a> Their newsletter returns have averaged better than 20% over the last 10+ years. They're for real.

cbk 10-17-2007 10:05 AM

Tim Monk - I agree with you 110%.... <BR> <BR>"Live like no one else so you can live like no one else" - Dave Ramsey

canecorso 10-17-2007 10:17 AM

Be like my friend, save money &amp; never buy anthing--thats a good way to get rich and have nothing except cash. <BR> <BR>My 401k averages 7%, I think I need to relook at my investments if your getting averages of 11% <BR> <BR>Get a home equity loan buy a boat and deduct the interest. Anyone doing that?

bill_airjunky 10-17-2007 10:29 AM

Setting that up as we speak, rG.......

c640947 10-17-2007 10:51 AM

"By Jon (jon4pres) on Tuesday, October 16, 2007 - 11:16 am: Don't forget you don't have to buy a 60k boat to have fun wakeboarding. I had a lot of fun when I was in high school behind a fish n ski, now I have an 82 Nautique and have a great time." <BR> <BR>I totally agree. I used to have a 95 ProStar 190 and I had a blast on that boat. Only when I could afford it did I upgrade. I am surprised at the number of brand new boats I see out there. <BR> <BR>But then again, buying a used boat can be scary - knowing how some people treat their boats (don't know better or don't care) I would really have to put a lot of effort into finding a good used boat if I had to go that route. I (my family) have always bought new, but my prostar lasted 12 years. And with the lack of decrease in value of some of the old boats (due to the increase in the price of the alternative - a new boat) I barely lost any money and used the heck out of it for 12 years. Of course that also speaks to taking care of your boat.... <BR> <BR>(Message edited by c640947 on October 17, 2007)

absoluteboarder 10-17-2007 12:13 PM

...yes jon it is an investment...and better than most. How many people do you know that stay in the same house for 50 years? having said that if you do live off your house sort to speak and use cheap credit to buy things with the knowledge....that when you sell you will still have plenty of money to buy a house elsewhere or downsize.....thats our plan. But the key is to stay in the same house till you retire...

jon4pres 10-17-2007 12:42 PM

That is exacly what I said. If you are willing to downsize or move to a less desirable area is the only way you will ever see any of the cash out of your house. <BR> <BR>I have heard a lot of people say that but then when it comes to downsizing they either don't want to move or they "downsize" to a smaller house that is actually nicer and in a better community(I dont blame them, they spend most every day there all day long.)

monkey 10-17-2007 2:06 PM

Jon, if you end up with considerable equity in a property, there are several ways to extract that equity without actually selling the property. <BR> <BR>1) Do a cash out refinance <BR>2) Open a revolving, Home Equity Line of Credit (HLOC) <BR>3) If you're older and without children to give your money too when you pass away, and you want to stay in your home, you might even consider a reverse mortgage. <BR>... <BR> <BR>When you reach retirement age, if you had a family, and they're all grown up and out of the home, you might also consider splitting up the enormous equity position you have in the bigger house that you needed while you raised the kids and lived near work, by selling it, and moving that money into 2 or more smaller homes away from the more expensive employment center areas, and closer to the vacation areas on the "exurbs" (ski resorts, lakes, mountains, etc)... which, if you follow property investment, seems to be the trendy thing to do if you're a baby boomer right now... Use your enormous equity position(s) to buy vacation homes, dumping the devaluating employment center real estate...

bruce 10-17-2007 2:24 PM

Why not move down in boat? Buy a 8-10k boat you can pay cash for and make yourself the payment and save up for it. If you can't afford to pay cash for it then you can't afford it. <BR> <BR>I love the example Tim Monk showed. Most people resign themselves to the fact they will always have a $400 car/boat payment. If you just saved up enough to buy a modest used car/boat and keep trading up as you can afford it you would have 1 million dollars in 30 years. HOPE YOU LIKE THE BOAT! <BR> <BR>Live like nobody else now so you can live like nobody else later.

05mobiuslsv 10-17-2007 2:30 PM

Thats nice but 1mill in 30 aint $hat... And this little piece of advice coming from a boat owner as well, come on. <BR> <BR>How about this. If you can't afford a boat and be able to save as well, then maybe then you should be re-evaluating your financial situation. If you can do both and not overextend yourself then you're probably gonna be ok.

jon4pres 10-17-2007 3:00 PM

Tim, You are the man against debt and now you are saying that at retirement is the right time to cash in you equity by using debt. I was talking about getting the equity for free not paying interest to use your equity. <BR> <BR>You can always take the equity out of your house in the form of debt but I think that is a little different than actually cashing in your equity to retire. At retirement most people's income is going to go down. If you use a home equity loan then you are actually going to be adding a payment to your already smaller income(assuming you had the house paid for already).

etakk7 10-17-2007 3:29 PM

I agree with many of the statements of Tim and others, but I also believe that I won't be doing inverts on a wakeboard or kneeboard when I'm 50 or 60. That's the reason why I own a nice boat now. I had an I/O, and it wouldn't cut it for the wake I wanted, so I got a V-drive. I don't care how you sack out an 18' Bayliner, it still has a terrible wake with terrible speed control. <BR> <BR>To Tim's point I bought a house and a cabin on a Lake and afforded those payments before I ever bought a boat. I used a deductible home equity line to buy the boat as well.

monkey 10-17-2007 3:46 PM

Jon, If you read carefully, I'm the man against financing depreciating assets, not the man against debt. Debt is leverage, and as investors, most of us use (and need) leverage. <BR> <BR>When you get to be retirement age, the dynamics of the game change. Your objective is simply to keep enough capital around to see you through to the end of your years. You can't take it with you, and if you leave too much of it behind, the government is just going to take it away from the people you left it to anyway.

kinger 10-17-2007 10:11 PM

So let me get this right: if you bought a house last year in California the market decline over the year was 3-4% and inflation was at 4-5% rate. So this year your so called "appreciating asset" lost you 8-9%. Now yes on average you will make that money back plus some, but the economics of capitalism is not just as easy as save $500 a month an then pay cash, because you don't know what $50K in 5yrs will buy. Several people on here are contradicting themselves. So Tim's theory lets say I financed 80K @ 7% for 15 yrs and then used the 80K I saved by financing and made 11% in investments I could have the boat early and pay it off w/my investment earnings in 6yrs. So ultimately I had a nice boat well I was young and still made money...sounds like the best of both worlds to me.

monkey 10-18-2007 12:23 PM

I'm over it. Let's let this thread die. Finance away! <img src="http://www.wakeworld.com/MB/Discus/clipart/smile.gif" border=0>

garman 10-18-2007 8:05 PM

Tim, I agree..... Here's another idea... If lenders didn't allow 15 yr loans for boats, I bet the boats wouldn't cost $65K. Boat companies wouldn't go under, they just wouldn't charge as much for the same product. If people will pay $65K.. what do you think the price will be?

05mobiuslsv 10-18-2007 9:09 PM

Chad I think you're onto something..

canecorso 10-19-2007 6:45 AM

I wonder how much profit they make on a 65k boat, and/or what they cost to build

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