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Old 04-21-2012, 07:45 AM
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Default Am I in the position to buy a used boat?

Hello

I need your input to help me determine if I am in position to buy a used boat or why I should not buy one. Annual expense will be about $2,000, which includes slip, fuel, insurance, etc. I will not buy boat cash even though I can. I am looking to buy 10 to 20 years old boat on a 5 years (not 15 years) loan for less than $10,000. My feeling is that paying cash on toy is not a good idea. If I am in the bind, I can turn it around and sell it while I still have plenty of savings. On a good month, I can snowball it. I have been thinking about it and wanting to get another one as I am very passion about boating. I was even a member of Untied State Coast Guard Auxiliary. I sold my last one 6 years ago to clean up my debt.

Our financial health as of today:

Mortgage is 15 years loan (about 13 years left) with 3.75%, and it is less than 25% of our net income (including tax and insurance).

No other payments or loans.

We never carried a balance on CCs after we (mostly me) wised up 6 years ago.

15 months emergency fund in liquid state (savings account)

Have plenty of savings in non-emergency savings account that will cover for repairs. I am also a handy man, so I can n do my own repairs.

25% of my income is going to 401k and Roth. We are 38 years old, so we have about 25 years to go. We already socked away more than $100,000. We are little behind, but at 25%, we will catch up.

Once in a while, I buy some ETFS, Bonds, etc. for med to long term investment.

Steady job and if I lose it, I automatically qualified for SSDI, which can take about 1 month to 6 months to process because of the nature of my disability.

I am a graduate student with two more courses left and I have no student loan. I am expecting at least $10,000 raise after I get the degree as I work in IT field.
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Old 04-21-2012, 08:26 AM
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Default

Quote:
Originally Posted by emanon1501 View Post
I will not buy boat cash even though I can.

My feeling is that paying cash on toy is not a good idea.
If you can't pay cash for a toy, you shouldn't be buying it.

From what you've posted, it sounds like you are in pretty good shape. I do wonder if $2,000/year is an accurate estimate of the ownership costs for the boat, though. I am not a boater but considering fuel costs alone, that sounds rather low but I honestly have no basis for that opinion. Just a gut feeling.

I think someone saving 25% for retirement, no debt except a reasonable mortgage and a more than adequate EF can afford to buy a toy for cash for less than 10K.
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Old 04-21-2012, 08:56 AM
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Agreed. You already have too much sitting in cash. And you're in a good position overall.

No reason to pay the bank to borrow money your own money.


You also should review whether you really need a 15 month EF in cash. That's subjecting yourself to a lot of inflation risk.
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Old 04-22-2012, 05:24 AM
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The two best days for a boat owner.



The day they buy it.

The day they sell it.
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Old 04-22-2012, 09:12 AM
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you know what boat stands for?

Bust
Out
Another
Thousand
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Old 04-22-2012, 12:24 PM
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Since you've could afford to pay cash if you chose...you have a clean balance sheet so I think you need to indulge your passion. You've likely low balled costs but hey...you can manage the expense.
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Old 04-23-2012, 07:42 AM
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I wouldnt take a loan to pay for the boat as it appears you are doing great financially.
It does seem that the costs associated with the boat may be underestimated....
Or it may be a sailboat....HMMM
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Old 04-23-2012, 07:48 AM
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A boat is a hole in the water you pore money into.

The best boat is someone else's.


OK, jokes out of the way. I have a couple of friends with power boats, they enjoy them and I've enjoyed a few rides. But they really have been money pits. One friend had all his electronics stolen while it was in storage. Then he had a prop strike which was expensive to repair. The other friend had a nice boat, but decided he wanted an even better one, which he bought before he sold the first one. Guess what, he couldn't sell it, last I heard he still has 2.

I have a kayak. No cost to maintain, store, license, etc.
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Old 04-23-2012, 07:57 AM
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Boats are expensive toys. They shouldn't be financed. I'd pay cash if I had the means to do so.
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Old 04-24-2012, 06:36 PM
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I am fully aware of all associated costs when it comes to owning a boat as I owned several in the past. $2,000 is normal for a mid size boat that gets taken out few times a year.

In any event, my wife and I decided not to get one. Instead, we want to move to near Austin, TX. Within the next few days, I will be posting some questions about it.
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