Cash or Debt
 

I'm a firm beleiver in paying cash for big ticket items. Have longed for a 36-42' Skater/Nor-Tech/Spectre Cat with canopies. i just can't bring myself to finance a purchase like that. Instead, i went and bought a decent family boat - 30' Scarab Sport. My intention is to get a sweet pad on teh water in the next 1-2 years, taking advantage of the soured real estate market. Then, with the family satisfied, we'll get the over-powered Cat.

My question to all of you is, who paid cash for their super boats and who financed most/all of the purchase. I'm curious if the current economic slowdown has hampered your lifestyle bacuase of large payments on the toy.

As soon as I'm finished printing it, I plan to pay cash for my Skater.

:evilb:

Good plan... I financed... money was too cheap. Do what make ya feel good. One question???? Does "family Satisfied" mean that you are new to the family thing? Hope your wife feels the same as you. My Girlfriend (now wife) told me that she could help make the payment on a boat. I told her that she can tell people it's her boat also, but only if she recognizes I'm buying without her help and she has no say in any final decisions. We should stay together for a long time.

Why pay cash for a big ticket item. Invest that money and let it work for you. Use the banks money. Just my 2cents worth.

can I borrow the plates when your finished? I found an Apache I would LOVE.

big difference in $ between a 30 sport and a 40 skater, majority of high dollar performance boats are financed

I'm a buy-and-keep person. Also, own a large financial planning practice and work with clients on paying down debt as they built towards, enter and sustain retirement. Being debt free at 36 years old with plenty in the investment accounts and plenty of 'tangible assets' allows me to sleep at night regardless of what the political hacks do with our country.

Having the family satisfied means we get the big house. We sold our starter home a few years ago, moved into a sweet, new 3 story town house in Hyde Park. You could say my rent is subsidized. The owner is terribly upside down, cannot sell it and the market for rents doesn't allow her to fully cover teh big payments, fees, taxes and insurance.

So each time we are out on the boat and one of you knuckle-draggers blows by in your Skater or Nor-Tech, she knows I'm dying to move up. But ther is something to be said for having your own house to install the lift behind. right now, I installed it behind my father's place.
(He couldn't understand why i bought a 13,000# lift for this boat. When i wake his geriatric neighbor at 3AM with my 42' of liquid adrenaline, he'll get the point.)

In the meantime, I do wonder if our beloved sport will see further declines because of bad financing before recovering. for me, I look forward to someday stroking a fat check to buy the boat.

I did some financing and will use some "Play Money" out of the sock drawer.. I would finance the whole thing like one of the other members said but I wanted my payment to be manageable if something was to go south in my business!!

I never know what my income will be from one year to the next (business owner). I feel I must have the toys completely paid for so I don't have to sweat payments during bad years (like 2008).

Dam by Thur. I'm putting my beer on a credit card.

If i go down!!! Im going down in Flames!!! Nuff said!

Free & clear is what I'd do:drink:they cost too much to have a loan on top of docking & winter storage my 02:ernaehrung004:

Pay cash if you can and it is paid for.You will enjoy it that much more, not worrying about next payment.

X2!!!!

That's a reasonable strategy in a decent market...but saving 6% is like a guaranteed, tax free return. The S&P was down 38% last year. Right now I'm glad I paid cash for mine; if not I would have lost 38% in the market and the depreciation on top of it. The way I look at it I'm now 44% ahead by paying cash.

Paying cash also keeps you from living beyond your means. Like the good old days...save up then buy it.

Agree 100 %. Pay cash for toys.
Bob

In fact, we're seeing the ressurgenc of "lay away." peopl eused to use that before credit cards became the mainstream rage. Now that credit dried up, people have to wait for the impulse item.

In 2009, we will hear about teh plight of credit card companies (read: banks again). This time, no one will feel sympathetic about giving tax dollars to the bozo's that have been raping consumers with 20%+ rates.

My philosophy is to buy used, big hit on cost is already taken.
Never finance more than you can afford, not just monthly payments but also if you ever need to unload the boat in a fire sale. Don't get upside down in the financing. Even in this market, I could unload my boat and cover the loan and put money in my pocket.

I would guess that 90% of boats are financed. I have financed every boat I have ever owned. I, like most people, don't have the cash to pay.

Finance smart, use a decent down payment, and never get upside down.

I don’t buy anything unless I can pay cash for it. With that said, that doesn’t mean I pay cash for it. I believe in keeping strong cash position in my businesses and personal life. For example, there is NO resale market for boats right now. The ~300K looks a lot better in my bank right now then in my boat. If it was in the boat and I need access to the cash right away for an investment opportunity or an emergency how could I get it out of the boat today? Go ask Lehman of Bear….

This philosophy goes for my house too. It allows you to stay within your means and also use the system for it true use.

Cash on the incremental road to h*ll plan for me. The only thing worse than blowing 80 cents on the dollar would be owing 80 cents on the dollar :eek:.

Cash for toys, period. No truck payments, no boat payments. I sure dont have the trickest shi+ on the pond, but I can sure relax when I decide not to use it one weekend.

Interesting question-
 

I'm a bit different than most.

I buy almost everything outright (quads,bikes- trucks, cars) & I have no debt aside from my house- and my new boat, I own the old boat outright and all other toys outright. Im a buy good stuff and hold it guy.

I have a "rule"when it comes to financing large non-deductible toys.

I can only buy them when I develop a NEW sustainable income stream double the amount of the liability- i.e. I use assets to pay for liabilities not "my own finances".

I could have written a check for the new ride -but why when the money is so cheap?

The amount of money I can make with the actual cash I have makes the interest part of the note a paltry if nonexistant sum.
Even if I let the money sit, I'm still making interest on the money.

This way when more investment opportunities arise I have the money to make the money.

No one "saves their way out of trouble" you earn your way out, and people just digging further into debt reaching into their savings are fools.

When it makes sense I ALWAYS use other peoples money.

As a previous poster says- the 300K in the bank looks pretty good now.


Uncle Dave

Check out my new LaveyCraft 2750 in the Laveycraft forum under "Out of the mold I'm blown away."

Laveycraft 2750 - 710 Ilmor
Laveycraft 20.8 Sebring 406/ITS

This is why the repo yards are full ! :eek:

I don't have the cash to buy so I speak in the hypothetical, but if I was sitting here with 100k in my pocket and faced with the decision on whether to invest it and leverage the boat, or just pay cash with the boat I think that my decision would remain to invest the money and use someone else's money for the boat. My equity Line is UNDER 4% right now and you get a third of that back at Tax Time. As far as I am concerned that is REAL cheap money, hence the reason my boat and all 4 cars are on it.

I sleep great at night - but since I'm young I would like to reserve the right to revisit this post in 10 years when my situation has changed and be able to pull the "I was young and stupid" card!!!

Cash for toys, cars, trucks, loans on home/rental property, that's how we roll in the Ferry household. I really don't like financing something that depreciates and has no tax write off on.

Interesting thoughts. Rates are very cheap on mortgages and HELOCs right now. But we could go back to the days of late 70's/early 80's when rates soared in short time. That saw huge jumps in interest charges for existing debts. Be careful, but have fun.

I like many of the posts about financing, but doing it well within your means. When i bought this Scarab in March '08 ( I stole it), I placed the money in a CD at the bank as collateral and used a loan. Then, when the economy really soured, I didn't want the payment anymore so I released the CD and paid off the loan. So I guess I dipped my toe in the finance water, but was glad I simply bought a CD and didn't have it in the market.

BTW< my speculative investment money was invested in a position offering 2x the opposite direction of oil.

I pay cash for toys. My toys are not on the level of alot of you guys, and I could afford alot more if I financed, but I don't have to worry near as much as my friends with payments on everything. My old lady lost her job and although the loss of income sucks, with everything paid for but the house, it doesen't greatly affect our lifestyle.

Mine is tied to Prime as most are, and realistically I don't think that the Fed is going to make money more expensive anytime soon. We know too much about monetary policy now. After the crash in 29 the Fed (ignorantly) raised rates, and lowered the money supply causing a further depression. We are smarter now knowing that in order to drive the economy into an expansionary period money has to be available, and that will keep rates low for the forseeable future. Another driver will be the scare of deflation, which will also keep the rate tempered for years to come.

Sure if it doubles to 8% in the next 5 years you are paying more money, but again, after taxes it is still just over 5%, and if they do raise the rate it will be during a time of inflation further dampening the "real" interest rate.

My HELOC has a minimum monthly payment of interest only, which is nice in case you had something catastrophic happen where you needed money and couldn't pay anything to principal. I think it is a great arrangement and having the toys makes the small amount of interest a non-issue to me especially when I'm ON the boat!!!!

Again - this is easily said by someone without the cash:cool:

Being comfortable with the method is the most important. I financed more than half of my little dinghy at 6.5%, but I have no car payments, and don't buy all the toys I want. Paying out 3500 smackers a month so the ex can live in a house I bough, but don't live in, plus child support, puts an automatic damper on my spending sprees. But that's for another 2 plus years, not forever.

My feeling is this, housing comes first, having no debt is golden. If you can afford a $200,000 boat, find one for half that, and sit on the rest. In this economy, it should wake people up to the fact that not getting sick when the mailman comes by is priceless. If you can't set aside $500 or $1,000 a month in a savings account now, IMO, you have no business buying a boat. And for all those twenty and thirty somethings out there, I know all too well how great it is to be able to get that shiny new toy. But a far greater feeling is to have a shiny new toy that you can afford, and not be sweating about bills when you're a fifty-something. Remember, we old guys boat too :cool-smiley-027:

There is some very good advice in this thread and being as I am finishing up my thirty somethings, have four kids with one a couple of years away from college it is very important for me to control my finances. We have no dept other then our home and the a loan on the boat. Cars are paid for, no CC's other then what we use for the business and pay off monthly, and college funds are in place.

It's my philosophy to make your money work for you. If it makes sense to pay cash, pay cash.. it makes sense to invest the cash and finance a portion, then go that route. Lets face it, especially in an economy like the one we have today its critical to get the best bang for you buck. That requires discipline, focus and long term goals.

I don't think there is a clear winner in either scenario, because arguments can be made for both paying cash and financing. It comes down to what makes your money work best for you without over extending yourself.

Borrow the money at 6% and send the principle to Bernie Madoff to get 15% guaranteed, that way you will make 9% on your money! What are you people stupid or something? :drink:

Buy it right, yes that means lowball/ tire kicking/ whatever...
Paying MSRP for anything combined with 0% financing will still make you upside down for life.........

Don't get into variable rate financing/ intro rates like Formula offered for years (0% rate for 2 years then 8% or whatever so your payment goes from $599 to $1599), that is the equivalent of negative amortization financing on houses....

Buy what you like (like Reggie Jackson says, don't ever buy a car you don't love so if you have to keep it atleast you love it).
Buying a cruiser to make a spouse happy will make you miserable everytime you use it, spend money on it, etc....

Buy something you can afford to insure/maintain.....yeah a 40 Skater is awesome if you can afford the refreshes/ insurance whatever. The mechanics don't feel bad for you if you are broke trying to get your boat fixed.

Don't buy weird stuff...... Fountain with ice cream cones all over it, probably won't be hot on resale.....killer cat with weird italian engines and two speed trannies won't appeal to buyers.....

Cash vs. credit argument....... go 50/50 most can't get hurt, will have low rate due to high downpayment, will be right side up on loan and still have 50% left in cash to help in bad times.

I'm liking the 50/50 idea. Or maybe 65% cash/35% financed.

If I buy something like this, I want to keep it for many years. Not interested in flipping in and out (seriosuly, no pun intended).

Refreshes and such are fine. But I'd look for a time tested design, paint scheme and power set-up. I want it to be faster than I am comfortable with. To me, nothingis worse than something that goes slower and slower each time you use it.

[QUOTE=LaughingCat;2772675]I'm liking the 50/50 idea. Or maybe 65% cash/35% financed.

65/35%.. That is me too. I like to pay it off as fast as I can when I can.. I hate owing on anything. I am the type that likes to keep things too. I drive a 99 F-350 Dually... I love it.. I got 180k on it and there is nothing wrong with it. i put Nav in it... Still extremely comfortable to drive. Outside is still 98% Immaculate... I look all the time at new stuff and just can't break down to spend 60k on another truck that runs the same as mine.
Most will probably laugh but If it ain't broke... Don't fix it!!

[QUOTE=mmareno;2772680]X2!

I Have All My Money In Debt, This Way I Dont Worry About The S & P Down 38 % !!!!

not saying stocks being down 38% is not bad but if you've been in the market the last 10 years your probably still up or close to even, 100K invested 10 years ago averaging 5% would be 160K less 38% is 100K, unless my math is off

buying a 100K boat with cash 10 years ago? worth maybe 50K?

btw, I finance with 20% down and keep it a level I can easily afford

Hey Laughing Cat,

Do not discount the advice on the "refreshes". Offshore Steve and the others are on the money here.

If you are going to truly jump into High Perf boating, in a big 100mph + boat, with the good stuff and really use the boat. $50-$100K in additonal repairs and upgrades will go away in a hurry.

If you like the rush of the speed and power your gonna use and abuse it.

The first time your baby rips a drive off or pops a rod can be a drag. The estimate and repair bill can make you gulp. If its real fast stuff it will happen more than once. Puts a lot of guys upside down and on back on the trailer. Budget accordingly.

If you are going to save up 300-400K on a USED Big SKater, Mti, Fountain ect. You better save another 300-400k to keep it running. I bought my little 28 Skater 5 years ago for 85k and now have 165k in it:eek:(it has been re- rigged and re powered twice) this figure does Not include insurance, storage, gas, oil or maint.Hell I still need a new paint Job
Just a little food for thought

Everybodys circumstances are different. One thing that is very troubling to me is that ( not so easy in todays economic crises ) lenders give loans on go fast boats for up to 15 yrs. they lose 20% when they leave the dealer. All the partys involved except the uneducated 1st time buyer knows that the chance of having any equity in the boat at anytime is zero but the bank wants to lend the money only to sell the loan as fast as the wrote it. the buyer dosen't want to know anything except when can I pick up my new boat. it's financial insanity. And people wonder why there is so many insurance jobs on boats