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Old 11-26-2013, 11:45 AM   #21
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Originally Posted by Off Duty View Post
Like most things in life, to each their own.

I chose law enforcement and the military (reserves) as career options. Not a great money makers, but very rewarding in so many other ways.

I now own one very cash flow intensive-non-maritime related-business, and a maritime related startup (coming up on 2 years), so cash flow is limited at best at the moment. I've managed to keep my businesses debt free for the most part, but it's always a struggle.

As for pulling the trigger on a boat loan, I have a LOT of regrets not making a vessel purchase while my kids were young. When utilized properly, a boat and the water can be a great teacher of "life lessons", and can go a long way toward keeping kids out of trouble.

My business associate and I use our marine related business and his 23' Proline CC for various youth and charity related events throughout the year. I will assure you that, as long as my health allows, Trawler or not, I will ALWAYS have a small boat available for such operations.
The magic that comes out of these events is unequivocably amazing!!

My granddaughter lives with us and has since birth. At 7, she already has her "papa's" love for the water, can tie several knots quick as you can bat an eye, and hops on a boat at the drop of a hat!

So yes, when the "right" boat comes along, I'll pull the trigger. Will I be able to drop cash? Who knows? Depends on too many factors. But I'll not let another child's lifetime slip away while I "wait" for the "right time."

I agree with the percentages stated previously for luxury purchases.
And I do believe in having an emergency fund, and being prepared for retirement, but I also know for a fact, that you can't take it with you.
Thus, the HELOC or Home loan.

First, INSURE the loan!
If something happens to me, the loan's paid and the wife is taken care of by our other savings, retirement and investment.
It also allows us to continue investing and saving, while getting things done that need to be done, and getting a small benefit on our taxes each year.

The same would hold true for a vessel purchase.
If you have the equity, use it to get what you want to enjoy life (*yes, this is a luxury purchase, and no, Dave Ramsey would not agree).
Insure it and take the tax deduction!

Mark mentioned business ventures.
Hell, start a business related to it, get a top flight accountant, and reduce your tax burden as much as you can. Maximize the purchase, or as my CPA says, you beat the IRS with their own rules.

If something happens to you or the vessel, since both should be insured, the loans are paid off. If something happens to you, your other half has options. Either way, the lending institution (or your money market account) is now made whole, and your spouse has the vessel, and options. Keep it and continue to live life to it's fullest, or sell.

Back to the OP's question, I'd seek out a credit union (first), or a small local/regional bank (second). I'll bet you'll feel more at home with them than most of these POS mega banks.

BTW-Rick, what are the "3 f's"?
I know what they are in my world, but I'm guessing we're talking two separate languages

OD
Well stated. At 50, I have a lifetime of memories behind me, and (God willing) many more years to enjoy boating. Memories of:
  • my son catching his first bluefin tuna
  • my daughter catching a huge lobster on hook and line
  • overnighting on the boat in San Diego
  • 4th of July by the Queen Mary with family and friends
  • a cooler full of rotted fish carcasses that was so bad we hooked up the trailer and dumped the cooler straight off the boat into a dumpster!
  • my daughter teaching a US Marine how to drive the dinghy
  • day trips to Catalina
  • laughter echoing across the water
  • being caught up in several pods of orca while drift fishing- some so close to the boat we got hit by spray when they breached to breathe!
  • my father on the sundeck, relaxing with a pipe and a cup of coffee, while Mom jigged up lingcod!

Never matter if the boat was financed or not, or if the boat was a palatial MY or a tired old Apollo that needed constant maintenance. My kids and parents enjoy recounting so many stories about being on the water, and sharing a laugh about some of the silly times underway.

Some people golf, or build things, or chase fantasy football. We chose to boat, and will continue to do so.
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Old 11-26-2013, 12:22 PM   #22
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The are two sets of interplays at work:
  • Entrepreneurs, banks and capitalists create and manage wealth.
  • Wealth is not stored away but used to generate more wealth by lending it to worthy souls to invest in businesses, buy good/necessary assets (houses, cars, combines) or bad assets (toys)
Whether in China, Russia, North America, Europe, Australia etc the above interplay behaves essentially the same.

So if you have a good job and money in the bank you can become a mortgaged trawler owner and land the dubious distinction of pouring money into a wasting asset.
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Old 11-26-2013, 01:29 PM   #23
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I feel bad for starting this crap storm gang, that was not my intention. There's nothing wrong with how you conduct your business affairs I merely stated a personal preference for how I conduct mine. Lesson learned from going 2 years with zero revenue many years ago. Best thing that ever happened to me though in hindsight.
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Old 11-26-2013, 07:19 PM   #24
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I`m no fan of borrowing to buy depreciating assets, but, life teaches me:
if within reason, you can afford the time and money for something you want to do, do it.
How long we have available, to do and enjoy our activities, with our loved ones, is unknown. If that means financing a boat, with the cost reasonably within financial capacity, go for it. There can be little joy in attaining financial nirvana, and finding you are no longer fit or well enough to go boating, and regretting not incurring an interest liability you could have serviced.
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Old 11-26-2013, 08:01 PM   #25
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I`m no fan of borrowing to buy depreciating assets, but, life teaches me:
if within reason, you can afford the time and money for something you want to do, do it.
How long we have available, to do and enjoy our activities, with our loved ones, is unknown. If that means financing a boat, with the cost reasonably within financial capacity, go for it. There can be little joy in attaining financial nirvana, and finding you are no longer fit or well enough to go boating, and regretting not incurring an interest liability you could have serviced.
Amen!!
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Old 11-26-2013, 08:02 PM   #26
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Don't finance any of the 3 Fs.

If it .Flies , Floats or F,,,, its better to rent than buy.

From an old Captain that could never keep his pants up and had 3 alimony payments per month.
Ok, I should have seen that one coming!
(*hint* we're close!)
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Old 11-26-2013, 08:05 PM   #27
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Originally Posted by Pau Hana View Post
Well stated. At 50, I have a lifetime of memories behind me, and (God willing) many more years to enjoy boating. Memories of:
  • my son catching his first bluefin tuna
  • my daughter catching a huge lobster on hook and line
  • overnighting on the boat in San Diego
  • 4th of July by the Queen Mary with family and friends
  • a cooler full of rotted fish carcasses that was so bad we hooked up the trailer and dumped the cooler straight off the boat into a dumpster!
  • my daughter teaching a US Marine how to drive the dinghy
  • day trips to Catalina
  • laughter echoing across the water
  • being caught up in several pods of orca while drift fishing- some so close to the boat we got hit by spray when they breached to breathe!
  • my father on the sundeck, relaxing with a pipe and a cup of coffee, while Mom jigged up lingcod!
Never matter if the boat was financed or not, or if the boat was a palatial MY or a tired old Apollo that needed constant maintenance. My kids and parents enjoy recounting so many stories about being on the water, and sharing a laugh about some of the silly times underway.

Some people golf, or build things, or chase fantasy football. We chose to boat, and will continue to do so.
Exactly, and as you said, well said!
You can't buy back time and memories, no matter how much $$$ you have.
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Old 11-26-2013, 08:19 PM   #28
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Exactly, and as you said, well said! You can't buy back time and memories, no matter how much $$$ you have.
Yep. We decided we couldn't wait to get on with pursuing our dreams. My mother was diagnose with Alzheimer's and my grandmother on my father's side had it too. Soooooo, I suspect I will have it too. Financing was a must for us. Sure, the argument could be made that if we were able to pay it off in four years we could have saved for it, but patience is not our best trait and it really only cost us a few grand in interest to do it now rather than later (my grandfather is rolling in his grave). We will never regret it. The past five years have been awesome!
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Old 11-26-2013, 08:40 PM   #29
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Finally think I might have my boat search down to one. One problem is I can't afford to pay for the boat outright. The boat is 30 years old and many sites tell me that boats that old can't be financed. Does anyone know of any banks or agency that will make loans on an older boat?
Call me or email me. I have the guy for you.
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Old 11-27-2013, 03:34 PM   #30
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The last 6 vessels that I completed a pre buy inspection were Home Equity Loans and also 2 via Fed. Credit Union. Buyers were happy with terms they were given, as they paid fair prices for them.
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Old 11-27-2013, 04:35 PM   #31
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I agree that if you have a hard time financing the boat, get an equity loan on your home if you can. The interest rate will likely be lower and much less of a hassle to get than a boat loan.

Just because one finances a boat doesn't necessarily mean that that person doesn't have the funds to pay for the boat in full. Sometimes our investments are earning a higher interest rate than the going loan rates, which makes it unwise to use such money if you can borrow for cheap. Also when you are under a certain age (62?), tapping into your money that is in some type of retirement savings like IRA will cost you a 10% withdrawal penalty. Yet another reason to borrow.
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Old 11-27-2013, 05:07 PM   #32
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I agree that if you have a hard time financing the boat, get an equity loan on your home if you can. The interest rate will likely be lower and much less of a hassle to get than a boat loan.

Just because one finances a boat doesn't necessarily mean that that person doesn't have the funds to pay for the boat in full. Sometimes our investments are earning a higher interest rate than the going loan rates, which makes it unwise to use such money if you can borrow for cheap. Also when you are under a certain age (62?), tapping into your money that is in some type of retirement savings like IRA will cost you a 10% withdrawal penalty. Yet another reason to borrow.
Personally, I believe that if kept within reason, there is nothing wrong with financing some portion of a boat purchase. What is "within reason" differs from person to person. I am not a tax expert though, and I would get some professional advice regarding whether interest on a home equity loan is deductible. It may be; but I would sure ask.
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Old 11-27-2013, 07:02 PM   #33
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I feel bad for starting this crap storm gang, that was not my intention. There's nothing wrong with how you conduct your business affairs I merely stated a personal preference for how I conduct mine. Lesson learned from going 2 years with zero revenue many years ago. Best thing that ever happened to me though in hindsight.
Nothing to feel bad about. Anytime there's a question that can't be answered with a definitive YES or NO, there's going to be debate.
In the end, you actually may have helped a fellow member (see below):

Quote:
Originally Posted by Daddyo View Post
Call me or email me. I have the guy for you.


Happy Thanksgiving everyone!

OD
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Old 11-27-2013, 08:33 PM   #34
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I for one have no problem with financing a boat, and no problem saying my boat has a mortgage.

The simple fact is that my boat is the largest purchase my admrial and I have ever made, including our lakefront home.

If I were to save up non tax deferred cash I honestly would have never been able to buy a boat of this magnitude.

Yes we could have mortgaged our home, or we could have raided our 401ks but those would have been poor decisions in the long term.

Having a reasonable down payment and then sinking approx our boats purchase price into a total refit (cash for this) left us in a position where I have exactly the boat I wanted. If we want to we can cruise safely and comfortably anywhere along any coast in the Americas.

Seven years from now I'll be 58, able to draw my pensions, so I'll retire, and have a beautiful paid for yacht in the harbor. yes, we actually have a plan. This purchase at exactly the stage of life we were at, was planned precisely based on my retirement date.
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Old 12-27-2013, 11:09 PM   #35
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To continue the slight thread drift....

I''ve got old school ideas on this, and don't finance boats, cars or anything that goes down in value.

Also - I had some wise advice when deciding on my latest boat.
"Don't spend more than 10% of your overall worth (house, share investments, savings etc) on any boat."

There are times that I wish I'd ignored the above and bought a Nordy, but not often.
And just when as you know it will be your last day boating?
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Old 12-30-2013, 12:25 PM   #36
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If you do finance remember that the interest is deductible from US income taxes as a second home. If you do not have a primary home it is not likely that you will be able to finance a boat anyway.
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Old 12-30-2013, 12:40 PM   #37
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If you do finance remember that the interest is deductible from US income taxes as a second home. If you do not have a primary home it is not likely that you will be able to finance a boat anyway.

That's a sweet deal. Here in Canada we don't get dem der breaks.
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Old 12-30-2013, 12:47 PM   #38
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Find a boat you can afford to pay cash for. Maybe a smaller one does the trick of a larger one? For example a Doral 25'SE has more cockpit seating than a Sea Ray 40', AND has the same sized berth. Many boat designs are just wasted space due to poor design.
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Old 12-30-2013, 12:48 PM   #39
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If you do finance remember that the interest is deductible from US income taxes as a second home. If you do not have a primary home it is not likely that you will be able to finance a boat anyway.
Huh? Never heard of this- I'm a full time liveaboard here in Seattle, and we financed our boat. I insure hundreds of liveaboards and thousands of renters that financed their boats- boats from 11' to 80+' feet.

Do you have any basis for your opinion?
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Old 12-30-2013, 01:04 PM   #40
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I wrote off loan interest for years and still deduct property taxes. Here's the law:

Publication 936 (2013), Home Mortgage Interest Deduction

Qualified Home

For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.

Deduction Allowed in Year Paid

You can fully deduct points in the year paid if you meet all the following tests. (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid.)

Your loan is secured by your main home. (Your main home is the one you ordinarily live in most of the time.)

Paying points is an established business practice in the area where the loan was made.

The points paid were not more than the points generally charged in that area.

You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them. Most individuals use this method.

The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes.

The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. The funds you provided are not required to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. You cannot have borrowed these funds from your lender or mortgage broker.

You use your loan to buy or build your main home.

The points were computed as a percentage of the principal amount of the mortgage.

The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.

Note.

If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan.
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