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Old 10-06-2019, 09:49 AM   #1
Art
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Boat Ownership - Ca$h Deal - or - Loaned $$$

This is to find out how many boaters own their boat[s] outright or have a mortgage to pay.

And... is the mortgage is above or below 50% of boat value.

I'm the first... Every boat we ever purchased is a 100% cash deal, i.e. bought and paid for. Wife and I are the same way with everything we own!

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Old 10-06-2019, 10:24 AM   #2
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Own ours outright, we don't like to finance toys , and it keeps us within our budget when making a decision on these type of purchases.

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Old 10-06-2019, 10:28 AM   #3
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I paid cash for all 3 boats I've purchased.

The only purchase I will make with money I don't have is a home mortgage. Everything else it's either cash or if the funds invested make a better return than the cost of the interest I may take out a loan.

I will never take a home equity loan or any similar loan against my home to buy a boat or any other non necessary item.
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Old 10-06-2019, 10:35 AM   #4
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Pay cash, by all means. I can't imagine a mortgage on a boat in addition to all the other recurring expenses like insurance, dockage, etc.

You need to remember that a boat is not an asset. Not exactly a liability but not something you can turn into cash quickly in the event of an emergency.

Also.. don't let the purchase drain all your cash reserves. Every reason you built up reserves will still exist after you purchase a boat. In fact there will be more reasons for a reserve. Boats are notorious for unexpected expenses.

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Old 10-06-2019, 10:44 AM   #5
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I chose to keep a significant amount of cash on hand and to finance the boat. Adequate and reliable Cash flow can be a determining factor.
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Old 10-06-2019, 11:00 AM   #6
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Cash for all toys. A boat mortgaged only as liveaboard is exception.
As for disposable cash flow, you will need that for maintenance and operation.
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Old 10-06-2019, 11:04 AM   #7
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80% financed. I could have bought it outright, but the expense of preparing for the trip home would have depleted my cruising, insurance, slip fee, and maintenance budgets for the first ~5 years of ownership. Plus, I planned to live on the boat someday and didn't mind having a mortgage on a second, someday principal, 'home.' I got a good rate but that rate was only available for a 20-year loan. I'm paying extra to pay it off in 15 and have the option to pay it off when I retire. Financing gave me options that I'm glad I had/have.
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Old 10-06-2019, 11:07 AM   #8
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As for cash flow, you will need that for maintenance and operation.

I believe it would depend on your specific amount of cash flow and your specific note.
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Old 10-06-2019, 11:08 AM   #9
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You've heard of DINKS (double income, no kids) well, we're SIOKOV's (single income, one kid, one vehicle) so have to be careful with money. House and truck were paid for before we got the boat, which we paid cash for.

We were lucky though, in a way, because we had our daughter fairly late so were well set up before she came along.
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Old 10-06-2019, 11:11 AM   #10
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I believe it would depend on your specific amount of cash flow and your specific note.
corrected;
As for disposable cash flow, you will need that for maintenance and operation.
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Old 10-06-2019, 11:17 AM   #11
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Always bank money. My money makes 6%, bank money cost 4.5%. I could sell some stock but I would pay 20% in taxes. Much cheaper to pay with bank money and pay the bank off with cash flow. Easy for me to say this, my bank loans always get paid off in 5 years or less.

Cash is right for some, bank loans for others but don’t be like my neighbor. He built his boat in his back yard with cash. Took 20 years, floated the boat and was just waiting for his sails to be delivered when he passed away last week from a heart attack.
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Old 10-06-2019, 11:28 AM   #12
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Originally Posted by Art View Post
I'm the first... Every boat we ever purchased is a 100% cash deal, i.e. bought and paid for. Wife and I are the same way with everything we own!
I am in the very same boat as Art, in that a boat is a depreciating asset & doesn't justify paying interest on a loan to finance it. Money spent to keep it up or modernize it is bad enough.
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Old 10-06-2019, 12:21 PM   #13
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Mortgaging toys is a US thing.

In Canada, we don't get to write off our mortgages, unless the asset mortgaged is part of our business.
We usually don't finance our toys, or if desperate for the toy, re-finance the house. That will put reasonable limits on the amount financed.
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Old 10-06-2019, 12:53 PM   #14
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My boat was financed, and I get to retire when its paid off.

If you look at the cash buyers, they in most cases (but not all) choose boats in a modest price range.

For those that choose a boat with a less modest price to it, (and that number is different for all of us) financing the boat is the only viable option.

Yes there are some that are either older (time to build assets), or very fortunate that can write a check for a substantial dollar amount, but that number of people in this world is small.

The rest of us finance our boats using a a loan of some kind.

Myself I chose a loan secured by my boat. I specifically chose not to mortgage my home, or use a 401-k loan. We worked hard to pay off our primary home in our late 40’s and simply replaced our home mortgage payment with a 10 year boat loan of approximately the same dollar amount.

For this person it was either 49 or never to trade up from my cabin cruiser. Any later and I could not pay for it before my planned retirement. Any earlier and I could not afford it. One moment in time to make a decision.
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Old 10-06-2019, 01:13 PM   #15
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If you want a broader representation of circumstances, then I'd suggest a poll so people can answer anonymously.

I've said "cash only" before and seen many say it here and feel like I'm being a bit condescending in some ways as it's not an option for most people to pay cash for everything. I wouldn't say a person should deny themselves a home or car if they can't pay cash for one, nor would I say they should deny themselves a boat. One needs to examine their own finances. My only advice is not to assume more debt than you're certain you can easily handle and to keep in mind that buying depreciable assets is never an investment and that money is not easily recovered if one's circumstances change.

We can take a hard stance and deny ourselves unreasonably. A simple statement like "I'm not going to buy a boat until I can pay cash" may mean one isn't ever going to buy a boat.

So my only real advice is not to extend yourself further than you can afford in buying non-necessities.
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Old 10-06-2019, 01:18 PM   #16
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Originally Posted by ksanders View Post

Myself I chose a loan secured by my boat. I specifically chose not to mortgage my home, or use a 401-k loan. We worked hard to pay off our primary home in our late 40ís and simply replaced our home mortgage payment with a 10 year boat loan of approximately the same dollar amount.

For this person it was either 49 or never to trade up from my cabin cruiser. Any later and I could not pay for it before my planned retirement. Any earlier and I could not afford it. One moment in time to make a decision.
Looks to me like a lot of very wise decisions along the way. I find that you didn't use your home or your 401-k also most interesting and, in my opinion, a wise protection. Seems to me you said "I can pay my boat loan fine, but I recognize there is always some risk of events in my life, even if only 1/10 of 1% risk that could keep me from doing so and I'm not putting my other assets at risk." I've seen people speak to their banks about boat loans and get talked into home equity and it's always concerned me. I've seen it backfire on a few.
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Old 10-06-2019, 01:24 PM   #17
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Own outright with a maintenance budget.
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Old 10-06-2019, 01:25 PM   #18
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cash for the fun stuff. Both retired, house and cars all paid for, but just finishing putting son thru college this quarter. There is always something to pay for.
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Old 10-06-2019, 01:44 PM   #19
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I financed 70% of the purchase.

Everyoneís financial situation is different. For me, it made more sense to finance the boat than to pay cash. I can write off the interest on the boat as a second home. That reduces the effective cost by 30%. At that point I get a better return from my investments than it costs to finance. It doesnít even make sense for me to accelerate the payments on the loan just as it doesnít make financial sense for me to accelerate the payments on my home mortgage at this point.
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Old 10-06-2019, 01:48 PM   #20
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Looks to me like a lot of very wise decisions along the way. I find that you didn't use your home or your 401-k also most interesting and, in my opinion, a wise protection. Seems to me you said "I can pay my boat loan fine, but I recognize there is always some risk of events in my life, even if only 1/10 of 1% risk that could keep me from doing so and I'm not putting my other assets at risk." I've seen people speak to their banks about boat loans and get talked into home equity and it's always concerned me. I've seen it backfire on a few.
That was exactly my thoughts. I could have used my home as collateral and saved a couple percent on interest, but the risk was too high.

Although no bad things happened and I am approaching my boats pay off time, the plan was always that we could dump the boat if necessary and be happy in our paid for home on the lake.

I read a statistic once that 68% of males go through a forced job change in their mid 50’s, and never financially recover. That was a shock to me, but you hear about it all the time. We are replaced by younger people making 2/3 our salary in what the companies that we were loyal to call a “corporate restructuring”. That never happened to me, but it did happen to several friends, and they were unprepared
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